CI&T Reports Sequential Revenue Growth in 1Q24 Results
CI&T (NYSE: CINT) announced 1Q24 results, reporting net revenue of R$523.5 million, a 0.2% sequential growth from 4Q23 but a 14.2% decline year-over-year from 1Q23. Net profit decreased to R$22.4 million, down from R$43.6 million in the previous year. Adjusted EBITDA was R$84.3 million, with a margin of 16.1%. The company recorded an adjusted net profit of R$41.7 million, down 33.1% year-over-year. CI&T ended the quarter with 6,083 employees. CEO Cesar Gon highlighted AI integration and guided for a sequential revenue increase of at least 3.5% in 2Q24, aiming for a resurgent growth period. The cost of services provided decreased by 12.7%, while SG&A expenses fell by 2.1%. The company also reported an 11.8% rise in cash generated from operating activities.
- Sequential revenue growth of 0.2% from 4Q23 to 1Q24.
- Cash generated from operating activities increased by 11.8% year-over-year.
- CEO forecasts at least 3.5% revenue growth in 2Q24.
- Net financial costs reduced by 38.1% compared to 1Q23.
- Income tax expense decreased by 17.9% year-over-year.
- Cost of services provided decreased by 12.7% year-over-year.
- Net revenue dropped by 14.2% year-over-year.
- Net profit fell to R$22.4 million, down from R$43.6 million in 1Q23.
- Adjusted EBITDA decreased by 27.7% year-over-year.
- Adjusted net profit decreased by 33.1% year-over-year.
- Adjusted gross profit margin declined by 1.0 percentage point compared to 1Q23.
- Adjusted EBITDA margin fell by 3.0 percentage points year-over-year.
Insights
The latest financial results from CI&T shows a mixed outlook for investors. The company's
Despite the revenue drop, CI&T managed to control operating expenses effectively, reducing costs of services and SG&A expenses. This cost management led to a net profit of
A critical aspect to watch is the company's adjusted EBITDA margin, which stood at
For retail investors, while there are some positive signs in cost control and cash flow, the decline in revenue and adjusted EBITDA margin highlights some caution.
CI&T's positioning as an 'AI-first company' is pivotal for understanding its strategic direction. The CEO's comment about integrating AI into operations and fostering a culture of innovation suggests that the company is investing heavily in AI technologies. This can potentially provide significant value creation in the long run by automating processes, enhancing client solutions and driving efficiency.
Moreover, the emphasis on AI could differentiate CI&T from its competitors in the crowded digital technology sector. However, the actual impact of this AI integration on financial metrics and operational efficiency will need to be observed over subsequent quarters. Investors should consider how quickly CI&T can leverage AI to drive cost savings and revenue growth and whether these investments pay off in concrete financial terms.
The company's stated ambition to capitalize on AI opportunities sets a forward-looking tone, but the tangible benefits of these technology investments will be critical to justify the current expenditure and strategic shift.
First quarter of 2024 (1Q24) operating and financial highlights
-
Net Revenue was
R compared to$523.5 million R in 1Q23 and$610.0 million R in 4Q23, a sequential growth of$522.6 million 0.2% . -
Net Profit was
R compared to$22.4 million R in 1Q23.$43.6 million -
Adjusted EBITDA was
R compared to$84.3 million R in 1Q23. The Adjusted EBITDA margin was$116.5 million 16.1% . -
Adjusted Net Profit was
R compared to$41.7 million R in 1Q23. The Adjusted Net Profit margin was$62.4 million 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
The cost of services provided in 1Q24 was
In 1Q24, selling, general and administrative (SG&A), and other operating expenses were
In 1Q24, the adjusted EBITDA was
In 1Q24, net financial costs were
Income tax expense was
The net profit was
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
Business Outlook
We expect our net revenue in the second quarter of 2024 to be at least
For the full year of 2024, we expect our net revenue growth at constant currency to be in the range of -
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
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
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 |
- |
Consumer Goods |
110,002 |
116,156 |
- |
Technology and Telecommunications |
60,628 |
125,060 |
- |
Retail and Industrial Goods |
91,058 |
75,814 |
|
Life Sciences |
54,372 |
63,281 |
- |
Others |
59,729 |
54,897 |
|
Total |
523,509 |
609,991 |
- |
Net Revenue by geography (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
|
217,945 |
263,386 |
- |
|
222,682 |
240,616 |
- |
|
61,127 |
73,726 |
- |
|
21,755 |
32,263 |
- |
Total |
523,509 |
609,991 |
- |
Top Clients (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Top Client (1) |
33,839 |
67,425 |
- |
Top 10 Clients |
215,116 |
270,461 |
- |
| (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 |
- |
Net Revenue at Constant Currency |
536,299 |
609,991 |
- |
Adjusted Gross Profit (in BRL thousand) |
1Q24 |
1Q23 |
Var. 1Q24 x 1Q23 |
Net Revenue |
523,509 |
609,991 |
- |
Cost of Services Provided |
(355,948) |
(407,861) |
- |
Gross Profit |
167,561 |
202,130 |
- |
Adjustments |
|
|
|
Depreciation and amortization (cost of services provided) |
8,032 |
9,410 |
- |
Stock-based compensation |
2,757 |
2,376 |
|
Adjusted Gross Profit |
178,351 |
213,916 |
- |
Adjusted Gross Profit Margin |
|
|
-1p.p |
Adjusted EBITDA (in BRL thousand) |
1Q24
|
1Q23 (Restated) |
Var. 1Q24 x 1Q23 |
Net profit for the year |
22,409 |
43,634 |
- |
Adjustments |
|
|
|
Net financial cost |
12,353 |
19,968 |
- |
Income tax expense |
16,810 |
20,471 |
- |
Depreciation and amortization |
21,876 |
25,053 |
- |
Stock-based compensation |
3,772 |
5,393 |
- |
Government grants |
(71) |
(140) |
- |
Acquisition-related expenses (1) |
1,350 |
2,124 |
- |
Business restructuring (2) |
5,758 |
- |
|
Adjusted EBITDA |
84,258 |
116,504 |
- |
Adjusted EBITDA Margin |
|
|
-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 |
- |
Adjustments |
|
|
|
Acquisition-related expenses (1) |
12,144 |
14,836 |
- |
Business restructuring (2) |
5,758 |
- |
|
Stock-based compensation (3) |
3,772 |
5,393 |
- |
Tax effects on non-IFRS adjustments (4) |
(2,335) |
(1,446) |
|
Adjusted Net Profit |
41,749 |
62,418 |
- |
Adjusted Net Profit Margin |
|
|
-2.3p.p |
(1) |
Includes amortization of intangible assets from acquired companies totaled |
(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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240521341471/en/
Investor Relations Contact:
Eduardo Galvão
investors@ciandt.com
Media Relations Contact:
Zella Panossian
ciandt@illumepr.com
Source: CI&T Inc.
FAQ
What was CI&T's revenue growth for 1Q24?
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How many employees did CI&T have at the end of 1Q24?
What is CI&T's revenue guidance for 2Q24?
How did CI&T's SG&A expenses change in 1Q24?
What was the change in CI&T's cash generated from operating activities in 1Q24?
