NEW YORK--(BUSINESS WIRE)--CI&T (NYSE: CINT, “Company”), a global digital specialist and fast-growing technology company, today announces its results for the first quarter of 2024 (1Q24) in accordance with International Financial Reporting Standards (IFRS). For comparison purposes, we refer to the results for the first quarter of 2023 (1Q23) and the fourth quarter of 2023 (4Q23).
First quarter of 2024 (1Q24) operating and financial highlights
- Net Revenue was R$523.5 million compared to R$610.0 million in 1Q23 and R$522.6 million in 4Q23, a sequential growth of 0.2%.
- Net Profit was R$22.4 million compared to R$43.6 million in 1Q23.
- Adjusted EBITDA was R$84.3 million compared to R$116.5 million in 1Q23. The Adjusted EBITDA margin was 16.1%.
- Adjusted Net Profit was R$41.7 million compared to R$62.4 million in 1Q23. The Adjusted Net Profit margin was 8.0%.
- CI&T ended 1Q24 with 6,083 CI&Ters compared to 6,111 at the end of 4Q23.
Cesar Gon, founder and CEO of CI&T, commented, "Our first quarter of 2024 has been truly transformative as we continue to make tremendous strides in our journey to becoming an AI-first company. By integrating AI into our operations and fostering a culture of efficiency and innovation, we capitalize on the amazing opportunities for value creation in this next chapter of the digital revolution. As early results, we are pleased to announce a 70 basis point revenue growth above our guidance in 1Q24 and to guide at least a 350 basis points sequential increase in 2Q24, resuming our growth trajectory. We anticipate this momentum will accelerate in the following quarters, leading to a period of resurgent growth in 2024 and beyond."
Comments on the 1Q24 financial performance
The net revenue was R$523.5 million in 1Q24, a decline of 14.2% compared to 1Q23, or a reduction of 12.1% at constant currency. Compared to 4Q23, net revenue grew 0.2%. The geographic distribution of net revenue for 1Q24 was 41.6% from North America, 42.5% from Latam, 11.7% from Europe, and 4.2% from Asia Pacific.
The cost of services provided in 1Q24 was R$355.9 million, 12.7% lower than in 1Q23, and the gross profit was R$167.6 million. The adjusted gross profit in 1Q24 was R$178.4 million, with an adjusted gross profit margin of 34.1%, 1.0 percentage point lower than in 1Q23.
In 1Q24, selling, general and administrative (SG&A), and other operating expenses were R$114.4 million, a reduction of 2.1% compared to 1Q23. This reduction can be primarily attributed to the non-recurring M&A expenses incurred in 2023, partially compensated by business restructuring expenses and increased sales efforts to resume growth in 1Q24.
In 1Q24, the adjusted EBITDA was R$84.3 million, a reduction of 27.7% compared to 1Q23. Adjusted EBITDA margin was 16.1% in the quarter, a reduction of 3.0 percentage points compared to 1Q23, mainly due to the decline in the gross profit margin and higher SG&A expenses as a percentage of net revenue.
In 1Q24, net financial costs were R$12.4 million, 38.1% lower than in 1Q23, mainly driven by lower net foreign exchange volatility in the comparable period, and lower net debt position and interest rates.
Income tax expense was R$16.8 million in 1Q24, 17.9% lower than in 1Q23. The income tax paid (cash effect) was R$3.3 million, equivalent to a cash tax rate of 8.4%.
The net profit was R$22.4 million in 1Q24, compared to a net profit of R$43.6 million in 1Q23. Adjusted net profit was R$41.7 million, a decrease of 33.1% compared to 1Q23. The adjusted net profit margin decreased from 10.2% in 1Q23 to 8.0% in 1Q24, mainly due to lower Adjusted EBITDA, partially compensated by lower net financial costs and tax expenses, as explained above.
As of 1Q24, we are adding back stock-based compensation expenses to calculate Adjusted Net Profit, a non-IFRS financial measure, to align comparability with our main peers. For more details, please refer to the Non-IFRS Financial Measures and Reconciliation tables below.
Cash generated from operating activities was R$130.3 million in 1Q24, 11.8% higher than in 1Q23, due to an improvement in working capital, specifically in trade receivables.
Business Outlook
We expect our net revenue in the second quarter of 2024 to be at least R$542 million on a reported basis, equivalent to a 3.5% growth compared to 1Q24. It assumes an average FX rate of 5.04 BRL/USD in 1Q24.
For the full year of 2024, we expect our net revenue growth at constant currency to be in the range of -2.5% to +2.5% year-over-year. In addition, we estimate our Adjusted EBITDA margin to be in the range of 17% to 19%.
These expectations are forward-looking statements, and actual results may differ materially. See "Cautionary Statement on Forward-Looking Statements" below.
Conference Call Information
Cesar Gon, Bruno Guicardi, Stanley Rodrigues and Eduardo Galvão will host a video conference call to discuss the 1Q24 financial and operating results on May 22, at 8:00 a.m. Eastern Time / 09:00 a.m. BRT. The earnings call can be accessed on the Company’s Investor Relations website at https://investors.ciandt.com or at the following link: https://www.youtube.com/watch?v=FA14fVjgLuY.
About CI&T
CI&T (NYSE: CINT) is a global hyper digital specialist, a partner in AI-powered digital transformation and efficiency for 100+ large enterprises and fast growth clients. As digital natives, CI&T brings a 29-year track record of accelerating business impact through complete and scalable digital solutions. With a global presence in nine countries with a nearshore delivery model, CI&T provides strategy, data science, design, and engineering, unlocking top-line growth, improving customer experience and driving operational efficiency. Recognized by Forrester as a Leader in Modern Application Development Services, CI&T is the Employer of Choice for more than 6,000+ professionals.
Basis of accounting and functional currency
CI&T maintains its books and records in Brazilian reais, which is the presentation currency of its unaudited condensed consolidated interim financial statements, and the functional currency of our operations in Brazil. CI&T prepares its unaudited condensed consolidated interim financial statements in accordance with IFRS, as issued by the IASB, and International Financial Reporting Standard No 34—Interim Financial Reporting (“IAS 34”).
Non-IFRS Financial Measures
We regularly monitor certain financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. These non-IFRS financial measures include Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net Profit Margin, Net Revenue at Constant Currency, and Net Revenue Growth at Constant Currency. They should be considered in addition to results prepared in accordance with IFRS, but not as substitutes for IFRS results. In addition, our calculation of these non-IFRS financial measures may differ from those used by other companies, and therefore, comparability may be limited. These non-IFRS financial measures are provided as additional information to enhance investors’ understanding of our operations’ historical and current financial performance.
CI&T is not providing a quantitative reconciliation of its forward-looking non-IFRS Net Revenue Growth at Constant Currency and Adjusted EBITDA to the most directly comparable IFRS measure because it cannot reasonably predict the outcome of certain significant items without unreasonable efforts. These items include, but are not limited to, stock-based compensation expenses, acquisition-related expenses, the tax effect of non-IFRS measures, foreign currency exchange gains/losses, and other items. These items are uncertain, depend on various factors, and could have a material impact on our IFRS-reported results for the guidance period.
We calculate Net Revenue at Constant Currency and Net Revenue Growth at Constant Currency by translating Net Revenue from entities reporting in foreign currencies into Brazilian reais using the comparable foreign currency exchange rates from the prior period to show changes in our revenue without giving effect to period-to-period currency fluctuations.
In calculating Adjusted Gross Profit, we exclude cost components unrelated to the direct management of our services. For the periods presented, the adjustments applied were: (i) depreciation and amortization related to the costs of services provided and (ii) stock-based compensation expenses.
In calculating Adjusted EBITDA, we exclude components unrelated to the direct management of our services. We calculate Adjusted EBITDA for the periods presented as Net Profit, plus net finance costs, income tax expense, depreciation and amortization, plus: (i) stock-based compensation expenses; (ii) government grants related to tax reimbursement in our Chinese subsidiary; (iii) acquisition-related expenses, including the present value and fair value adjustment to accounts payable for business acquired, consulting expenses, and retention packages; and (iv) business restructuring expenses, associated with employees' separation from acquired companies.
In calculating Adjusted Net Profit, we exclude components unrelated to the direct management of our services. For the periods presented, the adjustments have been made for (i) acquisition-related expenses (including amortization of intangible assets from acquired companies, present value and fair value adjustments to accounts payable for business acquired, consulting expenses, and retention packages); (ii) business restructuring expenses, associated with employees' separation from acquired companies; (iii) stock-based compensation expenses; and (iv) the tax effects of non-IFRS adjustments.
Cautionary Statement on Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact that may be deemed forward-looking statements include, but are not limited to: the statements under Business Outlook, including expectations relating to revenues and other financial or business metrics; statements regarding relationships with clients; and any other statements of expectations or beliefs. The words “believe,” “will,” “may,” “may have,” “would,” “estimate,” “continues,” “anticipates,” “intends,” “plans,” “expects,” “budget,” "scheduled,” “forecasts” and similar words are intended to identify estimates and forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from our expectations. These statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such statements in this press release. Such risk factors include, but are not limited to, those relating to: the ongoing war in Ukraine and the economic sanctions imposed by Western economies on Russia, as well as the conflict between Israel and Hamas, and their impact on our business and industry; the impact of competition on our business; uncertainty regarding the demand for and market utilization of our services; our ability to maintain or acquire new client relationships; general business and economic conditions; our ability to successfully integrate the recent-acquired business; the impact of pandemics, epidemics and disease outbreak; and our ability to successfully implement our growth strategy and strategic plans. Additional information about these and other risks and uncertainties is contained in the Risk Factors section of CI&T's annual report on Form 20-F. Additional information will be made available in our Annual Reports on Form 20-F, and other filings and reports that we may file from time to time with the SEC. Except as required by law, we assume no obligation to and do not intend to update these forward-looking statements or to update the reasons why actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Unaudited condensed consolidated statement of profit or loss |
|||||
(In thousands of Brazilian Reais) |
|||||
|
|||||
|
Quarter ended March 31, |
||||
|
2024 |
|
2023 |
||
|
|
|
Restated |
||
Net revenue |
523,509 |
|
|
609,991 |
|
Costs of services provided |
(355,948 |
) |
|
(407,861 |
) |
Gross profit |
167,561 |
|
|
202,130 |
|
|
|
|
|
||
Selling expenses |
(46,250 |
) |
|
(45,554 |
) |
General and administrative expenses |
(68,112 |
) |
|
(71,222 |
) |
Impairment loss on trade receivables and contract assets |
(1,787 |
) |
|
(1,605 |
) |
Other income net |
160 |
|
|
324 |
|
Operating expenses net |
(115,989 |
) |
|
(118,057 |
) |
|
|
|
|
||
Operating profit before net finance costs and income tax expenses |
51,572 |
|
|
84,073 |
|
|
|
|
|
||
Finance income |
10,703 |
|
|
20,664 |
|
Finance cost |
(23,056 |
) |
|
(40,632 |
) |
Net finance costs |
(12,353 |
) |
|
(19,968 |
) |
|
|
|
|
||
Profit before income tax |
39,219 |
|
|
64,105 |
|
|
|
|
|
||
Current |
(8,437 |
) |
|
(13,401 |
) |
Deferred |
(8,373 |
) |
|
(7,070 |
) |
Total income tax expense |
(16,810 |
) |
|
(20,471 |
) |
|
|
|
|
||
Net profit for the year |
22,409 |
|
|
43,634 |
|
|
|
|
|
||
Earnings per share |
|
|
|
||
Earnings per share – basic (in R$) |
0.16 |
|
|
0.33 |
|
Earnings per share – diluted (in R$) |
0.16 |
|
|
0.32 |
|
|
|
|
|
||
Weighted average number of basic shares |
137,385,836 |
|
|
133,834,456 |
|
Weighted average number of diluted shares |
140,078,180 |
|
|
137,279,821 |
|
Unaudited condensed consolidated statement of financial position |
||||||||||
(In thousands of Brazilian Reais) |
||||||||||
|
||||||||||
Assets |
March 31, 2024 |
|
December 31, 2023 |
|
Liabilities and equity |
March 31, 2024 |
|
December 31, 2023 |
||
|
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
360,296 |
|
211,638 |
|
Suppliers and other payables |
20,196 |
|
|
21,690 |
|
Financial Investments |
- |
|
3,164 |
|
Loans and borrowings |
133,680 |
|
|
112,719 |
|
Trade receivables |
312,016 |
|
471,951 |
|
Lease liabilities |
15,708 |
|
|
17,862 |
|
Contract assets |
250,998 |
|
147,620 |
|
Salaries and welfare charges |
210,748 |
|
|
196,396 |
|
Recoverable taxes |
38,400 |
|
23,588 |
|
Accounts payable for business acquired |
110,180 |
|
|
13,365 |
|
Current Tax Assets |
4,255 |
|
17,483 |
|
Current Tax liabilities |
1,744 |
|
|
2,602 |
|
Derivatives |
7,135 |
|
9,620 |
|
Other taxes payable |
14,294 |
|
|
15,275 |
|
Other assets |
28,991 |
|
27,072 |
|
Contract liability |
29,632 |
|
|
48,079 |
|
Total current assets |
1,002,091 |
|
912,136 |
|
Other liabilities |
15,844 |
|
|
27,290 |
|
|
|
|
|
|
Total current liabilities |
552,026 |
|
|
455,278 |
|
Recoverable taxes |
742 |
|
959 |
|
|
|
|
|
||
Deferred tax assets |
19,407 |
|
18,284 |
|
|
|
|
|
||
Judicial deposits |
7,471 |
|
7,280 |
|
Loans and borrowings |
660,269 |
|
|
614,744 |
|
Restricted cash - Escrow account and indemnity asset |
29,779 |
|
29,061 |
|
Deferred tax liabilities |
77,659 |
|
|
68,465 |
|
Other assets |
1,168 |
|
1,027 |
|
Lease liabilities |
25,395 |
|
|
27,037 |
|
Property, plant and equipment |
34,926 |
|
38,584 |
|
Provisions |
9,696 |
|
|
9,620 |
|
Intangible assets and goodwill |
1,691,283 |
|
1,669,865 |
|
Accounts payable for business acquired |
30,802 |
|
|
122,689 |
|
Right-of-use assets |
35,936 |
|
39,695 |
|
Other liabilities |
14,067 |
|
|
7,807 |
|
Total non-current assets |
1,820,712 |
|
1,804,755 |
|
Total non-current liabilities |
817,888 |
|
|
850,362 |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
Equity |
|
|
|
||
|
|
|
|
|
Share capital |
37 |
|
|
37 |
|
|
|
|
|
|
Share premium |
983,194 |
|
|
980,893 |
|
|
|
|
|
|
Treasury share reserve |
(4,143 |
) |
|
- |
|
|
|
|
|
|
Capital reserves |
176,774 |
|
|
174,153 |
|
|
|
|
|
|
Retained earnings reserves |
376,649 |
|
|
354,240 |
|
|
|
|
|
|
Other comprehensive loss |
(79,622 |
) |
|
(98,072 |
) |
|
|
|
|
|
Total equity |
1,452,889 |
|
|
1,411,251 |
|
|
|
|
|
|
|
|
|
|
||
Total assets |
2,822,803 |
|
2,716,891 |
|
Total equity and liabilities |
2,822,803 |
2,716,891 |
|
||
Unaudited condensed consolidated statement of cash flows |
|||||
(In thousands of Brazilian Reais) |
|||||
|
|||||
|
March 31, 2024 |
|
March 31, 2023 |
||
|
|
|
Restated |
||
Cash flows from operating activities |
|
|
|
||
Net profit for the period |
22,409 |
|
|
43,634 |
|
Adjustments for: |
|
|
|
||
Depreciation and amortization |
21,876 |
|
|
25,053 |
|
Loss (income) on sale and write-off of fixed assets |
326 |
|
|
(95 |
) |
Interest, monetary variation and exchange rate changes |
18,410 |
|
|
24,584 |
|
Unrealized gain on financial instruments |
(243 |
) |
|
(4,544 |
) |
Income tax expenses |
16,810 |
|
|
20,471 |
|
Impairment losses on trade receivables and contract assets |
1,787 |
|
|
1,605 |
|
Provision (reversal of) for tax and labor risks |
76 |
|
|
(273 |
) |
Share-based plan |
3,772 |
|
|
5,393 |
|
Changes in present value of accounts payable for business acquired |
1,063 |
|
|
1,589 |
|
Others |
10 |
|
|
41 |
|
Changes in operating assets and liabilities |
|
|
|
||
Trade receivables |
166,683 |
|
|
49,460 |
|
Contract assets |
(101,257 |
) |
|
(18,900 |
) |
Recoverable taxes |
(7,119 |
) |
|
245 |
|
Suppliers |
(319 |
) |
|
(11,672 |
) |
Salaries and welfare charges |
12,177 |
|
|
(7,628 |
) |
Contract liabilities |
(19,587 |
) |
|
(12,657 |
) |
Other receivables and payables, net |
(6,603 |
) |
|
256 |
|
Cash generated from operating activities |
130,271 |
|
|
116,562 |
|
Income tax paid |
(3,303 |
) |
|
(6,808 |
) |
Interest paid on loans and borrowings |
(7,019 |
) |
|
(15,534 |
) |
Interest paid on lease |
(820 |
) |
|
(1,148 |
) |
Net cash from operating activities |
119,129 |
|
|
93,072 |
|
Cash flows from investment activities |
|
|
|
||
Acquisition of property, plant and equipment and intangible assets |
(11,175 |
) |
|
(4,247 |
) |
Redemption of financial investments |
3,164 |
|
|
1,474 |
|
Net cash used in investment activities |
(8,011 |
) |
|
(2,773 |
) |
Cash flows from financing activities |
|
|
|
||
Exercised share-based compensation |
921 |
|
|
478 |
|
Payment of lease liabilities |
(5,707 |
) |
|
(5,919 |
) |
Proceeds from loans and borrowings |
49,801 |
|
|
- |
|
Proceeds from settlement of derivatives |
2,728 |
|
|
2,839 |
|
Payment of loans and borrowings |
(8,924 |
) |
|
(19,432 |
) |
Payment of installment related to accounts payable of business acquired |
- |
|
|
(1,235 |
) |
Repurchase of treasury shares |
(4,143 |
) |
|
- |
|
Net cash from (used in) financing activities |
34,676 |
|
|
(23,269 |
) |
Net increase in cash and cash equivalents |
145,794 |
|
|
67,030 |
|
Cash and cash equivalents as of January 1st |
211,638 |
|
|
185,727 |
|
Exchange variation effect on cash and cash equivalents |
2,864 |
|
|
(1,207 |
) |
Cash and cash equivalents |
360,296 |
|
|
251,550 |
|
Net Revenue Distribution
|
|||
Net Revenue by industry (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Financial Services |
147,720 |
174,783 |
-15.5% |
Consumer Goods |
110,002 |
116,156 |
-5.3% |
Technology and Telecommunications |
60,628 |
125,060 |
-51.5% |
Retail and Industrial Goods |
91,058 |
75,814 |
20.1% |
Life Sciences |
54,372 |
63,281 |
-14.1% |
Others |
59,729 |
54,897 |
8.8% |
Total |
523,509 |
609,991 |
-14.2% |
Net Revenue by geography (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
North America |
217,945 |
263,386 |
-17.3% |
Latin America |
222,682 |
240,616 |
-7.5% |
Europe |
61,127 |
73,726 |
-17.1% |
Asia Pacific |
21,755 |
32,263 |
-32.6% |
Total |
523,509 |
609,991 |
-14.2% |
Top Clients (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Top Client (1) |
33,839 |
67,425 |
-49.8% |
Top 10 Clients |
215,116 |
270,461 |
-20.5% |
| (1) | The top client considered in one period may differ from that disclosed in another period. |
Reconciliation of various income statement amounts from IFRS to non-IFRS measures |
|||
|
|||
Net Revenue (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Net Revenue |
523,509 |
609,991 |
-14.2% |
Net Revenue at Constant Currency |
536,299 |
609,991 |
-12.1% |
Adjusted Gross Profit (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Net Revenue |
523,509 |
609,991 |
-14.2% |
Cost of Services Provided |
(355,948) |
(407,861) |
-12.7% |
Gross Profit |
167,561 |
202,130 |
-17.1% |
Adjustments |
|
|
|
Depreciation and amortization (cost of services provided) |
8,032 |
9,410 |
-14.6% |
Stock-based compensation |
2,757 |
2,376 |
16.0% |
Adjusted Gross Profit |
178,351 |
213,916 |
-16.6% |
Adjusted Gross Profit Margin |
34.1% |
35.1% |
-1p.p |
Adjusted EBITDA (in BRL thousand) |
1Q24
|
1Q23 (Restated) |
Var. 1Q24 x 1Q23 |
Net profit for the year |
22,409 |
43,634 |
-48.6% |
Adjustments |
|
|
|
Net financial cost |
12,353 |
19,968 |
-38.1% |
Income tax expense |
16,810 |
20,471 |
-17.9% |
Depreciation and amortization |
21,876 |
25,053 |
-12.7% |
Stock-based compensation |
3,772 |
5,393 |
-30.1% |
Government grants |
(71) |
(140) |
-48.9% |
Acquisition-related expenses (1) |
1,350 |
2,124 |
-36.4% |
Business restructuring (2) |
5,758 |
- |
0.0% |
Adjusted EBITDA |
84,258 |
116,504 |
-27.7% |
Adjusted EBITDA Margin |
16.1% |
19.1% |
-3p.p |
(1) |
Include present value and fair value adjustments on accounts payable for business acquired, consulting expenses, and retention packages. |
| (2) | Associated with employees' separation from acquired companies. |
Adjusted Net Profit (in BRL thousand) |
1Q24 |
1Q23 (Restated) |
Var. 1Q24 x 1Q23 |
Net profit for the year |
22,409 |
43,634 |
-48.6% |
Adjustments |
|
|
|
Acquisition-related expenses (1) |
12,144 |
14,836 |
-18.1% |
Business restructuring (2) |
5,758 |
- |
0.0% |
Stock-based compensation (3) |
3,772 |
5,393 |
-30.1% |
Tax effects on non-IFRS adjustments (4) |
(2,335) |
(1,446) |
61.5% |
Adjusted Net Profit |
41,749 |
62,418 |
-33.1% |
Adjusted Net Profit Margin |
8.0% |
10.2% |
-2.3p.p |
(1) |
Includes amortization of intangible assets from acquired companies totaled (R$10,794) thousand in 1Q24 and (R$12,712) thousand in 1Q23, present value and fair value adjustment on accounts payable for business acquired, consulting expenses and retention packages. |
(2) |
Associated with employees' separation from acquired companies. |
(3) |
As of 1Q24, we are adding back stock-based compensation expenses to the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ. |
(4) |
As of 4Q23, we are contemplating the tax effects on non-IFRS adjustments as part of the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ. |
