Good morning, everyone. Welcome to CI&T Earnings Call for the Fourth Quarter of 2022. I am Eduardo Galvao, Investor Relations Director at CI&T and it's a pleasure to be here again to talk about our results. With me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Co-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 question-and-answer session for analysts and investors only. If you'd like to submit a question, please send it via e-mail to investors@ciandt.com. The presentation is available on the company's Investor Relations website at investors.ciandt.com 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 and as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors described in our earnings release and discussed in the Risk Factors section of our annual report on Form 20-F. In other reports we may file from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they're valid only as of the date when made. During this presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS financial measures in the appendix for more details. Our agenda for today includes an update on our financial highlights followed by some of our successful business cases. We'll then talk about our people and ESG strategy and deep dive on our quarterly financial results. After the presentation, there will be a Q&A session. Now, I invite Cesar Gon to begin our presentation.

Thanks, Eduardo. Good day, everyone. It's a pleasure to be here with you today. As we reflect on 2022, I want to take a few moments to talk about our vision for the future. Innovation is the ability to create a president and effective solutions to solve complex human problems. The best opportunities arise from the intersection between 2 secular forces, changes in values and behaviors of society and exponential advancements of technological possibilities. Its new tech paradigm always demands a radical shift in the practice, process and methods for connecting the dots of digital strategy, customer-centric design and full stack software engineering. And before the advent of these new ways of work, it's impossible to capture and scale the value of the latest technologies. CI&T's core competency is method driving innovation for large and fast-growing corporations by reshaping the way we connect new technologies, management systems and leadership models, CI&T created a sustainable impact in the corporate world. It's undisputed now that a powerful set of emerging technologies, such as artificial intelligence, IoT, blockchain and 5G are reaching maturity and critical mass to move consumers and enterprise. Notably, the whole industry should thank the team of open AI for bringing generative AI to the forefront of public and corporate consciousness. It creates ideal momentum to speed up the adoption of AI and accelerate the flywheel of digital as a secular trend. In such a rapidly changing landscape, CI&T has an essential role in helping our client is to capture digital opportunities efficiently -- we call it digital efficiency and to increase the perfect time for companies to turn years of foundational investment into scalable business ventures. At CI&T, we are obsessed with efficiency for our clients and for ourselves. We have always been in the cutting edge of digital…

Thank you, Cesar and good morning, everyone. It's a pleasure to be here again to talk about our people and our operations. We ended 2022 with an outstanding mark of over 6,900 CI&T-iers, a net addition of 1,300 people. Since 2019, we have pretty much tripled our global team. Our strategy to attract and hire the most talented people is based on processes and practices we have been evolving for decades. More recently, we are penetrating new talent markets based on the work for anywhere approach which has proved to be a successful model in our industry. The working environment that we created at CI&T based on a culture of trust, allows us to retain our people for longer. Our attrition rate at the end of 2022 was 14% compared to 16% in 2021 and continues trending down on a monthly basis. The leadership attrition remains below 5% guaranteeing consistency and quality in our delivery. In 2022, we strengthened our global presence with bright people from acquisitions in 4 different geographies, adding complementary expertise in industry verticals and technologies. We are proud to have such a diverse and global team of almost 7,000 people, creating a company that stands out, not only based on its growth and financial performance but mainly based on its human values and its contribution to improve the lives of the people we touch. Today, we published our second ESG report, detailing our initiatives, actions and goals in the environmental, social and governance front. ESG is a key pillar at CI&T and being able to share our progress with our stakeholders is a matter of proud for all of us. Our ESG strategy is driven by a shared vision to create equitable advancement opportunities for everyone, provide educational and workforce experience for under-representative groups and reduce…

Thank you, Bruno and good morning, everyone. I'm glad to be here with you to talk about our financial results. Starting with our performance in the fourth quarter of 2022, our net revenue was BRL612 million, an increase of 34% year-over-year, eliminating the FX variation, our net revenue grew 42% compared to the fourth quarter of 2021. Our adjusted EBITDA in the fourth quarter was $127.4 million, 25% higher than the fourth quarter '21. Adjusted EBITDA margin was 20.8%, a reduction of 1.5 percentage points compared to the fourth quarter '21 due to higher SG&A expenses in the quarter. Sequentially, the adjusted EBITDA margin improved 1.6 percentage points from 19.2% in the third quarter '22 to 20.8% in the fourth quarter '22 due to better utilization rate and lower SG&A expenses as a percentage of revenue. The adjusted net profit was BRL54.5 million in the fourth quarter of '22, 4.3% higher than the same quarter in 2021. The adjusted net profit margin reduced from 11.4% in the Q4 '21 to 8.9% in the Q4 '22, mainly due to a negative foreign exchange variation of BRL25 million in the comparable period that impacted our financial expenses. Now let's deep dive in our annual results. For the full year of 2022, our net revenue was BRL2.9 billion, a 51.5% growth compared to 2021, of which 36% was organic growth and 15% was the contribution from the companies acquired in 2022. The negative foreign currency translation impact was 6.4%. So the net revenue growth at constant currency was 58%. The 2022 net revenue is 3.2x the net revenue of 2019, recording a CAGR of 48% in the period. Let me break down the components of our high-growth profile. Our net revenue retention rate was 126% in 2022, demonstrating our ability to continuously strengthening…

Thank you, Stanley. As I mentioned, we are bullish regarding a growing number of technology advancements and the imperium for companies to continue to increase their investment in digital initiatives. Nevertheless, the global economic situation remains with a high level of unserved hold [ph]. As our clients define our budget for 2023, we see consistence in keeping the current digital investments and programs. But we noted a more conservative we're opening new initiatives. We also see less tolerance for low performance and a focus on efficiency, increasing the room for CI&T and a drop of a digital efficiency and more opportunities to replace low-performance competitors, including more willingness to near sharing services. So reflecting this macro scenario in our projections, we expect our net revenue for the first quarter of 2023 to be at least BRL590 million, a 20% growth year-over-year. And we are also projecting sequential growth throughout the year. So for the full year of 2023, we expect FX-neutral net revenue growth in the range of 13% to 17% year-over-year. We expect our adjusted EBITDA margin to be at least 19% for the full year of 2020, maintaining our current margin level. Our 2023 outlook is based on the current market conditions and reflects the uncertainties we see in the demand environment. Finally, I sincerely thank our stakeholders, clients, investors, partners and CI&Tiers for our continued support and commitment to our long-term shared vision and goals. Thank you all for attending our call today. We now conclude our presentation and may begin the Q&A session. Thank you.

Thank you, Cesar. Thank you all for joining us today. We'll now begin the Q&A session. I'll announce each participant name once you hear it, please unmute your line and ask your question. Then when you're done, please mute your line. First question comes from Ashwin from Citi.

My question is on if you could provide various incremental revenue metrics for '23 in terms of how the revenue projection breaks down organic versus inorganic? And given that you are now more diversified, how do you see growth across your various regions, if you can start with that.

I think let me start by giving you the components. Our 15% of projected growth for year-over-year for 2023 is estimated now to be 9% organic growth and 6 percentage points coming from M&A. And regarding -- we are forecasting an incremental sequential quarter increase along the year. And but in terms of geographies, I think we are -- what we are seeing since last year and it will continue this year is more traction on the U.S.A. and Europe. And I think it's based on marketing conditions but also, I think there is a specific fact that we acquired amazing companies in those geographies. So we have plan opportunities for upselling, cross-selling organically expanding this new acquired platforms for growth. So basically, we are expecting a sequential expansion along the year.

And the follow-up is taking a look at the underlying both macro assumptions as well as you look at your own conversations with your clients, how would you characterize the visibility that you currently have? Many other companies that we have spoken with have kind of mentioned that maybe things slowed down dramatically in the December time frame, January was very quiet. But in February, things have maybe started normalizing. Some say things have started picking up. Are you seeing actual visibility that things are picking up as we go out as budgets get set and so on and so forth. Any color that you can provide on visibility would be helpful?

Sure. Based on my conversation with our clients, I believe the macro and the demand of and there is -- you can always see the half full blast and they have less. I think first, I would start saying that we are bullish regarding the growing number of technology advancements, a lot of trends in consumer behaviors and we still see the imperative for companies to continue to increase their bets, their investment in digital. I think this is reinforce our vision of -- long-term vision of digital as a secular opportunity. Nevertheless, I think December and early January, we could note that this global economic situation adds a lot of uncertainty during the budget process of our clients. And as they define the budget for 2023, we could saw first consistence. They are keeping their current digital investment and programs but we also noted, I would say, a more conservative editor regarding open new initiatives. And then, as the year move on, I think I see the half-full glass now because what I see that is resonated with CI&T is much less dollars for low performance and a focus on efficiency. This increased the room for CI&T value prop of digital efficiency and a lot of opportunities regarding replacing low-performance competitors, including more willingness to nearshoring services in the developed economies. I think this is a good prospectus for the way we are positioning and the way we are fostering efficiency among our clients.

Next question comes from Tyler DuPont from Bank of America.

Just to dive a little bit deeper into Ashwin's visibility question. Particularly, are you seeing any change in client contracts or changes in what clients are looking for with those contracts? For example, have you seen any elongations or client delays in new or existing projects? Any clarity there would be helpful.

I will get this one, too. What I see is changing in the nature of the use case. I think there is a great prevalence of focus on proven use case. We call Horizon 1 and Horizon 2 initiatives over more experimental initiatives we name Horizon 3 more, I would say, long-term bets on digital and technology. So if you go for a vertical, you're going to see financial services, banking and insurance companies focus on concrete things like customer experience, online banking, open finance that is training now. Of course, you have more Horizon 2 initiatives like blockchain trading from [indiscernible]. And if you go for retail, you're going to see omnichannel, e-commerce, marketplaces. And of course, if horizon you AI customer serves remain reality, you're going to see less of this in more concrete I would say, use case that are a proven in the vertical and the same for consumer goods and so on. So I think the main change that we note is a more pragmatic approach on digital that again, resonates with CI&T, very prop of really combining strategy in engineering, very short cycles to see results, concrete results and then expand from real evidence of success.

And just regarding as a follow-up to the go-to-market strategy. I'm just curious if you can speak to the revenue contribution mix between winning new logos and upselling cross-selling within the existing client base and just the -- how willing clients are to take on those up-selling/cross-selling opportunities given the current market environment?

Sure. Tyler, 2022 was an impressive year of expansion in our portfolio. Our net revenue rotation reached 126% all in the year and we could add 84 new clients, long-term clients with revenue above BRL1 million. So was a good combination of land expand. And the way we are seeing 2023 is, I would say, the same mix that's probably the growth. Our results were basically 85% to 90% based on expansion on current relationship with the current clients and 15%, 10% max comes from new logos, even though we always emphasize that it's important, the discipline of every single quarter, you add new logos to the game because this is -- we will not be relevant in terms of revenue in the short term but will be very important for -- in the year 2, year 3 for sustainable long-term growth. So of course, this uncertain time is as an special moment where you need to reinforce the commercial -- the business even disciplined enough, not possibly the current portfolio and expansion on them but also keeping the traction of adding new logos to our portfolio.

Next question comes from Puneet Jain from JPMorgan.

So you had like a very strong new client addition and expansion in existing clients during this quarter. In fact, both metrics were better than what they were in third quarter. How do we view those metrics against like the backdrop of deteriorating macro environment throughout last quarter, what drove those clients to sign with CI&T considering that that is going to be a big part of sequential growth beyond Q1.

As I mentioned, I think there is this change in the nature of the use case. And also, there is, for us, normally, I think in the last years, if you look at the kind of engagements and the way we -- the entry point for CI&T was normally half of our new engagement started with strategy, digital strategy and then we follow with design and the full stack software [ph]. I think -- and probably 25% to 30% was regarding replacing poor performance, really turnaround of engagements that was not moving in a good way in our clients prospect. So -- but now we see probably 70% of what we are doing is regarding digital efficiency and meaning replacing or adding CI&T approach method driving innovation approach to engagements that are already running and now we are really transferred to CI&T portfolio. So I would say that this is probably the main difference. There's last new initiatives in this beginning of the year and more focus on engagements where efficiency -- or digital efficiency and turnarounds are the main point of the engagement.

And can you also share various puts and takes for margins this year? Like what do you expect for wage inflation, supply pressure, pricing utilization rates? And what should we expect for hiring over the near term?

I think it's Stanley can get this right?

Yes. Well, we see with regard to inflation, Pune, lower pressure compared to the previous year. So we see things settling down in the field. We -- as you may recall, in our operation, we have this seasonality in terms of margins because in the first quarter, we have the salary adjustments in Brazil. And throughout the year, we improved margins again when we have the price adjustments. You know also that in Brazil, we have the built-in price adjustment clause in the contract. So -- and we see, as we navigate in this type of digital engagements that we have high flexibility in terms of talking about pricing and negotiating -- once a year, we sit with our clients to add new functionalities, adjust our contracts. So we see a normal environment for that. Of course, we have all the efficiency conversations going on and this is also an opportunity for us to adjust in our proposal or value prop in each of our clients. So we see a good perspective in -- for the year in that manner.

Got it. And what should we expect for hiring like your net headcount was about flattish on a sequential basis from 3Q to 4Q. What should we expect for hiring trends over the near term?

I can take that one. So similar to the seasonality, so Q1 is usually slower, right? So we see that speeding up sequentially over the next quarters. So probably you're going to see more additions in Q2, Q3 and Q4 than we're going to see in Q1. And the market, of course, has kind of -- with the economic downturn, it's been easier to hire, of course, across the board in geographies that we operate. So that's the new reality there. It's still competitive, that's easy. It's just easier.

We have a question here, Vimeo from Cesar Medina from Morgan Stanley.

Amid macro uncertainty, are you seeing any signs of demand stabilization improvement? Or is it too early to tell? And then we have a follow-up here on -- can you comment on the FX losses during the fourth quarter?

I can start with the second part of the question, the FX variation here. Medina, thanks for the question. The -- as you may recall, we have an operation, a nearshore operation. So that's with regard to the accounts receivable in the Brazilian operation as we -- we have a functional currency in Reais. We have to record through the P&L, all the fluctuations the account receivables in dollars. The counterpart, the accounts payable in the U.S. operation as we have the functional currency in dollars, we don't pass that into the P&L. It's a noncash event. So that's mainly the main factor behind that variation in the Q4. The first part of the question, maybe.

We commented a Second and thank you, Medina. Great to see you. Well, in terms of -- I think the budget process was very affected to give us visibility on the current engagement that allow us to project a solid year based on the certainty of -- that we will continue a lot of big, very critical digital engagements with our clients. What we have less visibility is regarding the launch of new initiatives. I think December and January it was very cloudy. Now we see discussions happening. So more say, evolution in our pipeline for new stuff. And that gives us some positive perspective regarding the year. But I think it's too early to say that it will -- the speed of the demand we will get with a high level of tractor, I would say. That's why we are guiding 15% that is conservative. But I think based on the current market conditions and what we have been discussing with our customers.

Okay. We have a few questions here from the buy side. So I'm going to go through them. I want to touch on the talent side and get your view on what's the current level of the attrition rate and how is that performing over time?

I can take that one, Galvao. Thank you for the question. Attrition, given the slowdown and overall market, attrition, of course, is going down. So it's training of 14% in Q4 against the 16%. But for that in the last 12-month base and we continue to see it trending down, right? So if you look at the first month it continues to go down which is good. The most important one, I think just to reinforce for us, it's actually turned over on the leadership, Agilent and that's well under control. That's actually what has sustained our growth and the consistency of our quality and delivery and that's well under control and that we're happy with. Also, I think on the talent side, I think it's important to note is the evolution of our diversification strategy, right? So we're coming from a 92% concentration of our labor force in Brazil in the end of 2021 to 85% in the end of 2022. So, we continue to diversify. We fund strategy in order to work anywhere over Latin America and also Canada in many different regions in Europe as well. So that's kind of given a -- gives us an opportunity to kind of tap into even a bigger talent pool and continue to support our clients globally.

Thank you, Bruno. So the final question here is actually a combination of 2 topics. Could you please provide more color on the potential disruption of generative AI in your industry? And how are you guys preparing for that? And the follow-up and how are you thinking about M&A in 2023? Can you talk about your objectives here and comment on the recent acquisitions you've done in recent quarters?

That's a lot of questions there. I can take the generative AI. So we see generative AI as like a big same of a new disruptive change that will affect many industries, including ours. So we're actually already working with some clients, as you see -- as we saw in the video. There's -- anywhere there's a massive body of content. And generative AI can be agreed to kind of help us synthesize and make sense of them. So in health care, for example, we're already working with clients, you'll try to kind of synthetize and make sense of medical information and research to help doctors and to help our clients in pharma, for example, educate their salespeople to help those conversations. We see many use cases in retail and financial services as well. So and of course, there's the impact that we have in our own industry in software development. And that's -- so we're eating our own caviar to later help our clients to serve that caveat for our clients. So we've been experimenting with many tools, not only Chat GPT but also copilot from GitHub and Tabnine. And our developers are getting ahead really trying to use those tools to kind of get more productive, eliminate rebutted tasks. And it's not only software development. It's all over the streamline even design, like a creation of new visual elements. We're using tax to image type of tools, even research, right? So we just completed a project with a client where we kind of synthetized 5,000 user journey kind of interviews in a matter of days just using generative AI. So it's all across the board. We'll create exponential gains in terms of productivity. Things will be able to be done much faster and much more powerful. So we're very excited with what can bring to us and to our clients. And we're ahead of the game and we will continue to be ahead of the pack there and helping our clients navigate this world.

Well, I can get the M&A one here. We -- as we announced previously, we concluded our first wave of acquisitions. And we concluded earlier than planned, -- we will now fully dedicate into the integration of those recent acquired companies. We are reinforcing this imperative of this long-term organic growth which is -- we've been growing throughout the history on top of that. We also are aiming focusing this year on a solid cash generation and get prepared for the next wave of M&As. But for this moment, we are focusing on the integration and reinforcing this sustainability and long-term organic growth principle.

Let me chime in and add some comments on Stanley. I think we mentioned with ENTERSOL, we conclude an amazing cycle and create a robust platform for organic growth. Another update that in [indiscernible], I think it's that some Box 1824 transpire [ph] NTERSOL are already fully integrated from the business standpoint. Operating has growth units, CI&T growth units under the CI&T brand, of course, except Box 1824 which will preserve its identity. And as Stale mentioned, back-office functions are being integrated in a much more careful manner. And so -- and of course, we see tremendous value on M&A. We are in a very fragmented market, a lot of opportunities of geographies, competence, verticals, expertise that we can speed up to M&A. But we, as Stanley mentioned, 2023, you should see less activity in this manner but moving ahead, you should see M&A as part of our long-term strategy.

All right. So that concludes our Q&A session. Thank you all for attending our event today. I'll now pass it to Cesar Gon to proceed with his closing remarks. Cesar.

Sure. Thank you, everyone, for your time and attention. Thanks, Eduardo, Stanley, Bruno for joining me today. Well, I think our results reflect the talent and hard work of our team and I'm proud to work with all the CI&Tiers across the globe. Confident we are confident that our foundations are solid and we will continue our journey of growth and value creation for all our stakeholders. Thank you once again for your support. Stay well and we look forward to seeing you next quarter. Bye.