CI&T Inc

Good morning. Welcome to CINT earnings call for the second quarter of 2024. I am Eduardo Galvão, Head of Investor Relations at CINT. Joining me on today's call are Cesar Ghosn, Founder and CEO, Bruno Guicardi, Founder and President for North America and Europe, and Stanley Rodrigues, our CFO. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a Q&A session. If you'd like to submit a question, please send it via email to investors at cint.com. The presentation is available on the company's investor relations website and the replay will be available shortly after the event is concluded. Some of the matters we'll discuss on this call, including our expected business outlook, are forward-looking statements. They are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on these forward-looking statements, as they are valid only as of the date when made. During the company's presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS measures in the appendix for more details. Our agenda for today includes an overview of our quarterly highlights, followed by some of our business cases. We'll then talk about our people and our financial results. At this time, I'll pass it on to Cesar Ghosn to begin our presentation. Cesar.

Thanks, Eduardo. Good day, everyone. Thank you for joining us today. It's always a pleasure to discuss our recent performance and strategic advancements with you. A year ago, we proudly announced the launch of CI&T Flow, our end-to-end AI-powered platform, alongside a bold vision to radically transform CI&T. It was a decisive moment to fully commit to a future boosted by artificial intelligence. Today, I'm thrilled to share the remarkable advances, learnings, and tangible results we have achieved. Thanks to the unwavering partnership and trust of our clients and the extraordinary dedication of our teams who have embraced this vision and made it a reality. In our vision, the AI disruption will unfold along the next 10 years in three Actes. Act 1 is efficiency and hyperproductivity, paving the way for Act 2, customer experience and hyperpersonalization. And this progression then leads to Act 3, decision-making and new business models. Now CI&T is totally focused on Act 1 by turning our teams into AI-boosted teams. Thus far, this approach has generated impressive results in time-to-market quality and productivity. What is important to learn is that the adoption of generative AI is not a straightforward process. It is not natural for the enterprises or for the teams. So it demands a structured, method-based approach. For the companies or clients, you need to introduce tangible benefits of AI in an enterprise-wide approach, meaning within guardrails of reliability, security, and privacy. For the teams, you need to combine a re-skilling roadmap with a concrete view of purpose. So during the last 18 months, we cracked the nut with CINT Flow for these two fronts, awarding more than 100 clients and achieving almost 70% adoption across CINT teams. Bruno will address our engagement metrics shortly. And this is just the beginning of this new chapter. We have a lot more to do regarding efficiency the active one, and we are barely touching the active two, the customer experience disruption that is ahead and is inescapable in a timeframe of three to five years. With the continuous evolution of technology, we see possibilities once unimaginable becoming reality. Artificial intelligence is redefining our methods, enhancing our capabilities, and accelerating our results. As we resume our growth trajectory, we are expanding our teams to accelerate AI initiatives across the globe. This is an exciting time for all of us immersed in a world of digital and software engineering, challenging us to rethink what is possible. Now let me comment on the financial highlights for the quarter. In the second quarter of 2024, our net revenue totaled R$ 565.7 million, an increase of 8.1% compared to the first quarter of 2024, exceeding our guidance and market expectations. This strong growth was primarily driven by the expansion of our existing engagement with our top clients, with additional contribution from ramp-ups of some new clients we recently acquired. Our AI growth machine, a sales team of experts, strategists, and AI specialists continue to enhance our speed and precision in understanding client needs, making us more effective in proposing unique solutions. These efforts are reinforcing our reputation as a trusted partner, and this trend supports our positive outlook for the second half of the year and into 2025. Our value proposition is to deliver state-of-the-art digital services in a hyper-productivity way, powered by CINT Flow. As a result, we have been growing our business in the U.S. and Brazil, our core markets, while also fostering growth in emerging regions for us, such as Europe and Asia-Pacific. We ended the quarter with an adjusted EBITDA margin of 19.2%, demonstrating our ability to deliver high growth with solid profitability metrics. Finally, our cash generation from operating activities was R$ 131 million in the first half of 2024, 11.6% above the same period last year. Our cash flow profile allows us to continue investing in strategic initiatives and drive long-term growth. As we announced two days ago, and you might have noticed, And I hope you did. We have refreshed our branding to better reflect our identity as an AI-first technology partner. CIT stands for Collaborate, Innovate, and Transform, and it highlights our core mission and values. We are thrilled to embark on this new chapter and continue our mission with renewed energy and focus. Now let's explore some concrete examples of how we are creating value for our clients and revolutionizing our offerings through the power of AI.

In the competitive landscape of corporate benefits and expense management, Alelo, a company with 21 years of expertise, embraced the challenge of hyperproductivity. In collaboration with us, they embarked on a digital transformation journey, integrating CINT's Flow platform into their software development lifecycle. Alelo's quest for innovation led to a significant revamp of its software development, which focused on three core areas. User Story Refinement The objective was to trim the average time spent on user stories, refine their breakdown, and standardize their structure. The results were outstanding. The story creation time was reduced by 61% and speed increased by 2.55 times, reducing from 5.6 to 2.2 days per item. Development Phase Aimed at saving development time through more detailed and cohesive stories, Achievements included more precise acceptance criteria, fewer business-related queries, a smoother development flow, and less rework, leading to a 51% reduction in development time and a 2.05 times increase in speed. GenAI cut down time from 7.4 to 3.6 days per item. Testing The goal was faster test scenario creation and increased execution speed. Results showed a 21% reduction in test execution time and a 1.27 times increase in speed, with GenAI improving efficiency from 3.3 to 2.6 days per item. The Alelo CINT partnership has delivered remarkable efficiency and productivity, substantially enhancing process speed and quality in software development.