Eduardo Galvao:

Welcome to CI&T Earnings Call for the Second Quarter of 2025. I am Eduardo Galvao, Director of Investor Relations at CI&T. Presenting our results with me today are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. This event is being recorded [Operator Instructions]. 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 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 this 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 earnings release for more details. At this time, I'll pass it on to Cesar Gon to begin our presentation. Cesar Nivaldo Gon: Thank you, Galvao, and good afternoon, everyone. Today, companies demand more than innovation. They want measurable business impact. AI may be overhyped to some, underhyped to others. But one thing is clear, technology investments must deliver strategic returns. That's where CI&T stands out. We adapt constantly to meet our clients' needs, powered by two engines, our expert teams and our specialized AI platform, CI&T FLOW. Together, they orchestrate mission-critical projects in real-time, delivering fast execution, higher quality and a strong return on investment. We call this Tech Integrated Business Solutions, seamlessly combining business transformation with technology and AI. It gives leaders the clarity and predictability they need and it's deepening our partnerships, especially with our largest clients. We believe the future belongs to companies that unite business and technology into one integrated strategy. The strength of this approach is reflected in our results, which I'm pleased to share with you now. Now let's review our second quarter 2025 financial highlights. Our strategy of embedding deeply with large clients and delivering clear value has allowed us to maintain our momentum and deliver strong performance. Our revenue reached $117.2 million, which represents an organic growth of 12.3% at constant currency compared to the same period last year. On the profitability front, our adjusted EBITDA margin was 18.4%. As expected, this represents a sequential improvement from the first quarter, underscoring our commitment to operational excellence and disciplined cost management. Furthermore, our adjusted profit margin stood at a healthy 10.4%. This solid financial foundation allowed us to continue investing in the key pillars of our growth particularly in our AI-first offerings, which are reshaping what's possible for our clients. [Presentation] These are just a few examples of our strategy in action. I will now turn it over to Bruno to discuss our offerings and talented strategy that brings these results to life. Bruno Guicardi: Thank you, Cesar. It's a pleasure to be here to talk about our AI initiatives. Our ability to achieve true enterprise-wide adoption has been a key differentiator for CI&T. Through a structured approach, we have successfully scaled AI across our entire organization. This positions us ahead of the market, allowing us to guide our clients with proven experience, not just theory. Our AI-powered platform, CI&T FLOW has been central to this success and has become a significant factor in our go-to-market strategy, proving instrumental in both landing new clients and expanding our relationships with existing ones. We channel this expertise into three core offerings: unlocking measurable business impact with hyper-efficient teams, driving AI-led modernization and empowering clients with a safe and compliant AI-first transformation. Now let me show you a concrete example of hyper-efficiency and practice. Our hyper-efficiency offering answers our clients' critical challenges, how to innovate faster, adapt to change and drive growth. Our approach is not about a tool, but a powerful combination of three core elements. First, our adaptive teams, which bring the right expertise and a collaborative mindset. Second, our processes, which are designed from start to finish with AI in the center; and third, our AI-powered technology orchestrated by our CI&T FLOW platform. The results of this integrated approach are tangible and significant. As you can see, we are delivering efficiency gains of over 50% across the entire digital creation cycle for major clients in industries like insurance, retail and consumer goods. This is achieved through a powerful partnership between our people and AI. We augment our expert teams with AI agents, allowing them to focus on how value strategic work while AI accelerates complex tasks. [indiscernible], this is about more than just speed. It's about delivering a superior value proposition, enabling our clients to achieve their business goals with greater quality and predictability. We ended the second quarter with over 7,600 CI&Ters, a growth of more than 22% year-over-year. This deliberate expansion ensures we have the capacity and skills to meet the increased demand for our AI-first solutions. Stability is just as important as growth, and our voluntary attrition rate remains at a healthy 10.6%. This industry-leading retention directly reflects our culture, which fosters growth, learning and impact. Together, this growth and stability create a powerful people platform that enables us to deliver on our promises and drive sustainable growth for the company. Now I will pass it on to Stanley to comment on our financial performance. Stanley Rodrigues: Thank you, Bruno, and good afternoon, everyone. I'm happy to walk you through the results of another strong quarter for CI&T. In the second quarter of 2025, our revenue was $117.2 million, an increase of 8% from the same period last year. When adjusting for currency fluctuations, our organic revenue growth at constant currency was 12.3% year-over-year. This marks our third consecutive quarter of double-digit organic growth at constant currency. This consistent and predictable performance underscores the resilience of our business model and reinforces our confidence in achieving our full year guidance. Our consistent growth is supported by a resilient and diversified business model anchored in our two most representative regions, North America and Latin America. In the second quarter, revenue from LatAm increased by 26% year-over-year, and we see continued momentum there in both landing new logos and expanding our existing partnerships. North America grew by a solid 7%, showing consistent performance on top of a relevant base from 2024. In addition, revenue from our top 10 clients grew by 12% compared to the same period last year. This growth demonstrates our ability to expand within our largest accounts by consistently delivering efficiency and tangible business results. This chart clearly shows our land and expand strategy in action. We expanded our high potential cohort of clients in the $5 million to $10 million range from 11 clients in 2024 to 15 over the last 12 months. This growth is a key leading indicator, building the pipeline for our next generation of strategic accounts, fostering sustainable growth. For the second quarter of 2025, adjusted EBITDA was $21.5 million, making a 3.1% year-over-year growth. This corresponds to an adjusted EBITDA margin of 18.4%. In the first half of 2025, our adjusted EBITDA grew 8.5% and the adjusted EBITDA margin was 30 basis points higher compared to the same period last year. Cash generated from operating activities for the first half of 2025 amounted to $33.7 million, achieving an 82% cash conversion from adjusted EBITDA to operating cash. Our strong financial position provides the flexibility to pursue opportunities that enhance our competitive standing and create long-term value for our stakeholders. In this context, we have a share buyback program in place, and we remain active. Finally, adjusted profit recorded $12.2 million in the second quarter of 2025 compared to $12.5 million in the same period previous year. This led to an adjusted net income margin of 10.4%. In the first half of 2025, the adjusted profit was $21.8 million, a 4.3% increase over the first half of 2024. Our adjusted diluted earnings per share was $0.09 in the second quarter of 2025, a 3.6% increase compared to the second quarter of 2024. Now I invite Cesar to comment on our business outlook. Cesar Nivaldo Gon: Thank you, Stanley. Based on our consistent performance over the past quarters and the strong commercial momentum we are carrying into the second half of the year, we are confident in our outlook. In the third quarter of 2025, we expect net revenue to be at least $124.4 million. This represents a strong sequential step-up and a year-over-year growth of at least 10.5% at constant currency. For the full year of 2025, we are narrowing our range and raising the lower bound of our revenue guidance, now expecting organic revenue growth at constant currency between 10.5% and 15%. This means our midpoint has also increased to 12.75%. Assuming the FX rate of BRL 5.50 to the dollar for the remainder of the year, we expect our revenue growth at constant currency to be around 210 basis points above our reported revenue growth. In addition, we are maintaining our adjusted EBITDA margin guidance in the range of 18% to 20%. This increased confidence is the direct result of our strategy in action, a robust commercial pipeline, continued expansion with our largest clients and AI-first offerings that deliver tangible value, accelerating our growth. To conclude, I want to express my deep appreciation to our CI&Ters around the world. Your commitment to innovation and to delivering value to our clients is what makes these results possible. This concludes our presentation. We will now begin the Q&A session. Thank you. Eduardo Galvao: [Operator Instructions] The first question comes from Puneet Jain from JPMorgan. Puneet Jain: Can you talk about like adoption of CI&T FLOW among your clients and internal stakeholders? Like of the $120 million or so of quarterly revenue, how much of those projects or revenue include some portion of FLOW-driven services? Cesar Nivaldo Gon: Thank you, Puneet. I can get this one. Basically, our adoption, the adoption of CI&T teams regarding CI&T FLOW is reaching 90% of our team. So we can, as a proxy say that 9% of our revenue now has some influence of AI and CI&T FLOW. This is not directly related to use cases -- business use case relating to Generative AI, but saying that now basically everything we do, 9% is somehow boosted by artificial intelligence and FLOW. Puneet Jain: No, that's great to hear. It seems like it's definitely higher than a lot of your peers. Another question, like are you seeing any differences in AI adoption across different verticals? It seems like financial services was very strong in the quarter, retail, not quite as much. So what would you attribute the differences in growth rates across verticals to? Cesar Nivaldo Gon: I think financial services clearly ahead in terms of investments related to AI-first because the level of return on investment just with efficiency is amazing. And also, especially in Brazil, we see the beginning of a new customer experience based on chatbots combined with WhatsApp becoming the new trend. So the consumers are migrating from traditional channels, digital channels like apps and websites to interact with the products and services through WhatsApp and AI. So this is a huge trend and generate a lot of demand related to creating this new layer of customer experience based on AI. So then we see -- I see a lot of move in retail regarding AI, again, both in efficiency and also in creating this new layer of customer experience. But I think in retail and even in consumer goods, there is a foundation to be created yet. Companies still have to migrate a lot of -- to modernize a lot of legacy systems to create the data layers, create a level of, let's say, robustness in their architecture before they can leverage real benefits from AI. But this is also the source of a lot of demand, what we call kind of horizontal demand related to AI that is basically using AI for accelerate application modernization, cloud migration, several data engagements preparing the foundation for future AI-driven world. And we see, of course, maybe 30%, 40% of our demand is vertical demand. So improved customer experience journeys, boosting chatbots, as I mentioned, some more consulting AI-first transformation programs where the focus is AI adoption and also a growing number of use case related to personalization based on AI. So a lot of things happening in this space. I think financial services has an edge for sure. Eduardo Galvao: Our next question comes from Vitor Tomita from Goldman Sachs. Vitor Tomita: So a couple of questions from my side. The first one is on the guidance that you increased. Was that in part due to the year being halfway done, you're having more visibility, which allows you to be less conservative or is demand from customers shaping up generally better than expected, being surprised positively? And also thinking across regions on that line, are there -- my second question would be if you see now some regions where you are now more optimistic or less optimistic than before in terms of demand compared to earlier in the year? Cesar Nivaldo Gon: Sure. Great to see you here, Victor. I think in terms of our guidance, I think this new outlook is supported by two factors. The first is our consistent performance in the first half of the year. So we delivered ahead of our initial expectations. And the second is the current solid commercial pipeline for Latin America and North America. So to give you a data point, pipeline now is 25% higher than in the same period last year with a healthy conversion rate. So this -- so basically, we did a very strong and consistent Q1 and Q2, and we have a very strong pipeline that increased our confidence in our forecast and guidance. The second question regarding regions, I think we are -- we continue to bet a lot on North America and LatAm. That is basically 90% of our revenue. And we see stability from Q3 and Q4 for the Europe and APAC regions. Maybe a small increase in the last quarter for these emerging regions and a good prospect for 2026. Eduardo Galvao: Our next question comes from Gustavo Farias from UBS. Gustavo Farias: So I'd like to start off by asking about the revenue growth. If you could break it down between the components of new engagements, both new clients and the ramp-up of current clients and also the price, what comes from price component? And the second one, we've seen some sequential improvement in LatAm, which was very positive in our view. I'd like to compare it to your view from last quarter. There has been some volatility in IT budgets. Just wanted to know your view on that, if it has improved or how you see the overall landscape in the industry? Cesar Nivaldo Gon: Thanks, Gustavo. The first question -- regarding our growth is 90% expansion inside our current portfolio and 10% is contribution from recently acquired clients. So this is basically in general, our land and expand ratio, and we are keeping the same pace this year. Regarding regions, and particularly you mentioned Latin America, I think -- and we grew 26% year-over-year this quarter in reported revenue. I think it's driven by, I would say, a surprisingly fast AI adoption in Brazil, both among customers, consumers and enterprise. It's -- I see, especially in financial services, I think a pace that is unique even comparing to more developed markets like the U.S. So I think this is probably part of the explanation why we have such a attraction in Brazil and in financial services. Eduardo Galvao: Our next question comes from Bryan Bergin from TD Cowen. Bryan C. Bergin: Can you hear me? All right. Great. So my two questions. First, just on EBITDA. We'll talk margins first here. Can you talk about the EBITDA margin drivers on a year-over-year basis in the second quarter and the path to hitting the guide in fiscal '25. It seems like FX headwinds may be a bit at play, but I'm just curious where you feel most comfortable in that 18% to 20%. And then my follow-up, could you just discuss -- you've had good hiring in the first half. Can you talk about hiring intentions in the second half and how you expect to exit the year? Stanley Rodrigues: Bryan, thank you for the question. Well, with regard to your first question, I can handle that one. EBITDA, we haven't delivered. We improved sequentially, delivering 18.4% of EBITDA -- adjusted EBITDA in the second quarter. And basically, we have a seasonality built in our business throughout the quarters, right? As in the first quarter, we have a salary increase. And typically, we, throughout the year, pass on prices and improve margins. Also, we are -- in the first half, we've been investing in hiring, preparing ourselves for the second half demand that is ahead of us. And of course, those resources, those people when they mature and they become billable in the second half, this will also improve gross margin and EBITDA. Also another driver is efficiency gains from AI that we are experimenting at the G&A level, together with a very disciplined cost management there and of course, the scalability that it provides. We continue to balance this strategic investments in hiring, training and in our AI platform to support our growth. And typically, looking ahead, we expect our margins to continue improving in the second half with the combination of all those factors. So we are very confident to -- in our ability to deliver this full year adjusted EBITDA margin guidance of 18% to 20%. Cesar Nivaldo Gon: Just to complement on the staff growth, Bryan. Most of that staff growth is actually coming from our trainee program kind of we hired like 500 people at the beginning of the year that, as Stanley mentioned, we will start billing in the second half of the year. So that's the most part of that -- the higher rate of people growth and revenue growth that you see there. So that will kind of balance out in the second half. And that's why we're very excited about this special addition of the training program because this will be the first generation that we are kind of enabling the people to only work with AI, right? So there's no adaptation or kind of learning curve. It will be the first native AI developers [indiscernible]. We're super excited to put that in action. Eduardo Galvao: Our next question comes from Luke Morison from Canaccord. Lucas Lincoln Morison: I got a couple here for you. So great to see your largest client continuing to grow really strongly, real testament to the strength of that relationship. Could you maybe just share like what's working particularly well with that customer? And if possible, clarify like what does constant currency look like with that client today? And then across the rest of your top 10 clients today, are you seeing similar momentum and/or potential? And again, would it be possible if you could also just frame constant currency growth within that group? Cesar Nivaldo Gon: Sure. Hey Luke, great to see you here. I think our -- we see a very solid and consistent growth in our largest clients. We had sequential growth in 8 out of 10 of our top clients. Of course, top 1 was a very good performance. It is a very large financial organization. So we expand across several business units. Basically, we credit that to our ability to demonstrate the kind of differential productivity and effectiveness of CI&T FLOW and our AI approach. So driving efficiency and also leverage AI adoption across the board, I think is probably the main reason why we are expanding in such an amazing way. But we see the same happening in different areas of our largest clients, everyone now is looking for both combining find a way to be more effective regarding more concrete regarding the benefits of adopting AI, but also starting to prepare the foundational legacy systems, data lakes and so on to really drive value in the next phase of Generative AI and the evolution of the capabilities of these large language models. So in terms of constant currency, I don't know if Stanley. Stanley Rodrigues: What I can bring here, Luke is, for the top client in terms of constant currency, we grew year-over-year 92%. The top 10 clients, I don't have the constant currency data here. It's close to 12% growth year-over-year, right? And if we get -- of course, as we have top 10 clients, they vary year from another -- from one year to another year. If we take the current existing top 10 clients, that cohort grew 23% year-over-year, right? So it's another data point. So the existing top 10 clients, they grew 23% year-over-year. That's a reported currency. I don't have a constant currency for that as well. Lucas Lincoln Morison: Excellent. Very good color. And then maybe just a follow-up. How would you say -- is there any difference between your U.S. client base and how that's trending relative to Brazil today? Are you seeing any differences in spending patterns or project types, maturity in terms of adopting AI? And then are there any signs of macro caution or tariff-driven instability in either market that you're seeing with recent geopolitical stuff going on. Cesar Nivaldo Gon: Sure. I can start here, and Bruno, feel free to add on. I see, especially financial services in Brazil, where we have a very competitive environment, investing a lot and with a very high sense of urgence regarding artificial intelligence. I see solid moves in the U.S., but maybe not as we are seeing in Brazil. We have -- of course, for the U.S., we have a larger exposure to consumer goods that has a different dynamic. It's also leveraging the benefits of AI and this new age of disruption, but in a different fashion than a pure tech business like financial services. Bruno Guicardi: If I may add, look, if you divide the opportunity in two sides, Luke, one is internal, right, the efficiency play, right, that Gen AI can bring. And that I think there's very little difference regional or even vertical, right? So everybody is kind of trying to seize that opportunity. So all verticals, all regions, people are investing to kind of try to seize the opportunity of increasing productivity, right? I think what is different here, and I think the big picture, if you look at the big picture, we're going to see massive investments in Gen AI when there's consumer pressure. That's when there's consumers asking for this new different way to interact with brands and organizations. And to be absolutely frank, we haven't seen that yet. We didn't reach critical mass yet from consumer to actually -- to consumers to be provoking, challenging their banks, their telco companies, the companies that they interact with asking for that different experience. But that will come -- that will certainly come. That's down the road. It's just a matter of consumers getting used to it. And to Cesar's point, we've already seen this started in Latin America, right? So when that started, then the genie is out of the -- it's out of the box and then there's no putting back. And then the level of investment, we expect it to increase exponentially because that's not to capture a couple of percentage points in margins. It's actually to survive to kind of to fight for consumer attention and relevance. And then the investment will speed up and will increase significantly. And that will come. It's hard to predict when, if it's in 6 months or 18 months, but it will come. Lucas Lincoln Morison: Excellent. Very helpful color. And maybe just to the last part of that question, the tariff-driven instability. Are you seeing anything there? Bruno Guicardi: No, not particularly. I think we are, again, financial -- not directly, right? So our clients are kind of protected from that. We will have a big exposure as financial services and consumer goods and even consumer goods, it's majority of that consumer goods portfolio is actually food and beverage. It is kind of a more local supply chain. So very little exposure there in the portfolio of clients for the tariffs. But if it's -- no one is 100% protected, but that's where we are right now. Eduardo Galvao: Our next question comes from Maria Clara from Itau. Maria Clara Infantozzi: So the first one is related to the revenue buildup of CI&T. We hear from some channel checks that the evolution of AI is probably having a deflationary impact in top line growth trends of this industry going forward. So just wanted to check if you agree with this information and if you could share with us how you think about the evolution of volume and price going forward in the following quarters? And the second question is related to utilization rates. You have been accelerating the hiring. So just wanted to know how you think about the potential improvement ahead. Cesar Nivaldo Gon: Sure. Thank you for your questions. I can get the first one and Bruno can get this -- handle the second. Regarding -- we don't see -- this is such a fragmented market. IT services is very hugely fragmented across the world. So we don't see a shortage of demand. What we see now is a lot of difference in performance among the players, and this is a huge opportunity. We believe we are in the frontier of productivity and effectiveness of using AI to streamline the whole production of digital solutions. So we are taking advantage of this edge to replace poor performance competitors. And so we basically are seeing a lot of opportunities to expand our client wallet by replacing no AI or poor performance competitors and also increase our land capabilities with the new set of offerings we are designing around the new possibilities regarding artificial intelligence. There is -- regarding pricing models, I think the rise of AI in the IT services industries inevitably, we will open space for more flexible value-based pricing models closely -- maybe more closely tied to the business outcomes. We also see the need to gradually monetize the intellectual property embedded in those new agent architectures. So -- and when we look at our cohort of large enterprise, we anticipate a gradual shift from traditional [ time ] material or fixed price projects to these new models over the next few years. So it's an amazing and perfect moment to proactively test and refine this approach with our clients, and we are already doing so in several fronts in, I would say, in a very controlled way. And we have some encouraged early results. And it's going to happen gradually along a set of years. And I see as a midterm opportunity to translate superior performance into margins while maybe mainly strengthening our clients' partnerships by giving them more options in terms of pricing model. I think this is a good news for the whole industry and the companies with more ability to execute with more strong confidence on their execution capabilities, we'll capture more value for sure. That's the way I see pricing models evolving in the IT service industry and how I see CI&T benefiting from it. Bruno Guicardi: If I can add to the volume discussion, Maria Clara, thanks for the question. That's the $1 trillion question. The volume -- back to my previous point, I think people are looking at this from the current lenses, which is kind of just efficiency lenses and the internal use of Gen AI. I think, again, when we move to the consumer-facing interfaces and the experiences and how Gen AI will be embedded and completely rechange the shape of digital experiences, right? So with agents, with completely different experiences -- replacing all the mobile apps and websites and the transactions that we know today. This will all have to be rebuilt and rewritten, right? So this is a tsunami of volume that is ahead of us, right? So -- and not to mention also there's -- yes, productivity will go up by a lot. And this will also will tilt the scale in -- between packaged solutions and custom built software, right? So a lot of those build versus buy decisions that we see today will completely change in 3 to 5 years, right? So -- and we tilt towards building our own software because it will be cheaper and faster than depending on a provider that has a package solution, right? So that is also -- will kind of tilt the balance towards volume, towards services. So I think those things are underestimated because they're not being seen today, but they're massive and they're coming, and we're very excited that they will come. Eduardo Galvao: Utilization rate? Bruno Guicardi: Continues to be very high, around 85% to 89%. So our kind of delivery machine continues to be a shiny and well-oiled one. So that we're very proud that we have a solid and very well-established delivery processes. It's not coincidentally that 90% of our growth comes from the portfolio because you keep happy clients that keep buying more and increasing wallet share. That's the recipe, and we continue to execute on that. Eduardo Galvao: We have a follow-up from Bryan Bergin from TD Cowen regarding client behavior around Gen AI and Agentic work. Clearly, you're gaining traction with FLOW. Have you had any trends where clients thought they could do it themselves and then have circled back to CI&T because it was too complex and they needed help. If so, how broad-based has it been? And if that has occurred, was there any different behavior where it may have been more design agency type activity versus pure software development type activity? Cesar Nivaldo Gon: I can start this one. Thank you, Bryan, for your question. I think there is a lot of clients that are afraid of the complexity of the capabilities they need to develop if they want to have a full stack competence around AI. But there are some clients that are strategically, they see themselves as future tech-based companies. So they have a long-term ambition to have a more -- a larger set of tech and AI capabilities internally. And we have a value prop for both archetypes. So we can really partner part of our clients and expand their capabilities with CI&T, full stack AI and tech capabilities. And also we have some clients where we are helping them to internalize the new set of AI capabilities and methodologies and CI&T FLOW also as part of a way to speed up adoption of AI and creating hands-on experience for the technical teams and nontechnical teams or, as we say, for the coders and noncoders. But now I think every single professional need to be reskilled with the AI possibilities to expand their problem-solving capabilities. So FLOW is not only designed for coders. Of course, there's a lot of things there regarding improved the beauty, the technical beauty of digital solutions, but also there is a lot of things happening in the space of creating the right environment for noncoders, for professionals from HR, from marketing, from finance from any area of -- support area of the company to increase their AI abilities and leverage value creating new agents, AI agents and workflows around AI. So huge opportunity. We are preparing for any kind of demand our clients have. And I see a mix of companies counting more on outsourcing and strong partnerships with companies like CI&T and companies decide that they -- in the long term, they will need to internalize part of this or a good chunk of this expertise, and we are there to help them too. Eduardo Galvao: All right. That concludes our Q&A session. Cesar, back to you to proceed with your closing remarks. Thank you all. Cesar Nivaldo Gon: Sure. Thanks, Galvao, Bruno, Stanley. Thank you all for joining us today. I'd like to extend my sincere appreciation for all CI&Ters around the world. We are almost 8,000 CI&Ters now, and I'm always amazed for you with your dedication. And again, amazing results this quarter, and let's keep pushing. A special thank you as well for our clients for choosing CI&T as a partner for co-creating this exciting new area of AI-driven innovation. Stay well. See you soon.