Good morning, everyone. Welcome to CI&T Earnings Call for the third quarter of 2022. I am Eduardo Galvao, Head of Investor Relations 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. This presentation is available on the company's Investor Relations website at investors.ciandt.com. 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, 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 and 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 are valid only as of the date when made. During this presentation, we will comment on certain non-IFRS measures to evaluate our business.

Please refer to a reconciliation table of non-IFRS measures in the appendix for more details. Our agenda for today includes an update on recent events, followed by some of our successful business cases and a few highlights. We will then talk about our people strategy and discuss our quarterly financial results.

At this time, I would like to invite Cesar Gon to begin our presentation.

Cesar, please?.

North America, Latin America, Europe and Asia Pacific. So we conclude this first cycle of M&As by reinforcing that organic growth continues to be our primary focus and strategy for value creation. That said, let's take a look at our quarterly financial highlights.

We are glad to present another set of high revenue growth with solid profitability metrics. Our net revenue in the third quarter of 2022 grew 49% year-over-year, of which 35 percentage points were organic growth and 14 percentage points were acquisitions.

Eliminating FX fluctuation, our net revenue at constant currency grew 51% above our guidance of 46% for the quarter. We reached 147 clients with annual revenue above BRL 1 million from 76 in the third quarter of 2021, adding 71 new clients in the last 12 months.

The adjusted EBITDA margin in the quarter was 19.2% and continues improving sequentially as planned. We ended the third quarter of 2022 with 6,900 CI&Ters, a net addition of 1,500 employees year-over-year.

I'm never tired of mentioning how proud we are of our consecutive revenue growth throughout 25 quarters, even during challenging times with events such as the COVID pandemic outbreak and the war in the Eastern Europe.

This consistency demonstrates our ability to adapt according to market conditions and continue to generating value for our long-term clients. Stanley will dive into our financial results in more detail shortly. But before that, I want to express my gratitude to all CI&Ters that have been committed to making this happen. Thank you.

Now let's see some examples of our engagement towards clients worldwide and some of our business highlights for the quarter..

So now I invite Bruno to talk about our global talent strategy..

Thank you, Cesar, and good morning, everyone. Great to be here again. Our global talent base continues expanding, and we ended the quarter with almost 6,900 CI&Ters, a 28% growth year-over-year.

I'm very proud to tell you that last month, CI&T was ranked fourth in a Great Place to Work Brazil within the large companies category and first among tech services companies, as presented in the video. This is our 16th consecutive year being awarded this recognition in Brazil.

And we also have been recognized as a Great Place to Work in all countries we operate. This remarkable achievement demonstrates our ability to keep attracting and retaining the best talent in the industry and providing them with an engaging and diverse environment where they can be themselves and reach their full potential.

As we expand our operations globally, we have strengthened our talent base in strategic regions to guarantee global coverage to our global clients. Recently, we increased our talent base in Australia with the acquisition of Transpire and expanded organically in Colombia, in the U.K.

Brazil used to represent 93% of our headcount a year ago and now represents 87%. And this trend of talent-based diversification should continue going forward. For example, the acquisition of NTERSOL will practically double our own site team in U.S., which is our fastest-growing market.

Finally, we continue to enhance our remote work and work from anywhere programs integrating them into our daily operations and benefiting from what we think it's a huge opportunity to tap into new markets for talent. Now, I invite Stanley to give you more details about our financial performance..

lower net financial expenses as a result of positive foreign exchange variations in the third quarter '22, partially compensated by higher interest rates on loans and a reduction in income tax expenses because of our corporate reorganization concluded at the end of last year in connection with our IPO.

Wrapping up, as Cesar mentioned, our priority continues to be fostering our organic growth, including leveraging the recently acquired companies. And now I invite back Cesar to comment on our business outlook.

Cesar, please?.

Thank you, Stanley. Based on current market conditions, we expect our net revenue in the fourth quarter of 2022 to be at least BRL 605 million, a 41% growth year-over-year on a constant currency basis.

For the full year of 2022, we are increasing our outlook and expect net revenue growth of at least 58% year-over-year on a constant currency basis and reported revenue growth of at least 51%, which includes a negative FX impact of approximately 7 percentage points.

And we are maintaining our adjusted EBITDA margin guidance of at least 19% for the full year of 2022. Thank you all for your trust in CI&T and for attending our call today. We now conclude our presentation and may move to the Q&A session. Thank you..

All right. We'll now begin the question-and-answer session. I'll announce each participant's name. Once you hear your name, please unmute your line and ask a question. Then when you're done, please mute your line. The first question come from Puneet Jain from JPMorgan..

And nice quarter. I wanted to ask about client priorities. If you've seen any changes there over the last 3 months. Are you seeing any delays in any project starts or clients preferring cost-saving deals over digital transformation at all? Have you seen any changes in the way clients award new contracts or the type of projects that they award..

Thank you, Puneet. I can get this one. I believe we still see a strong pipeline from our clients, but there is some trends-related demand, as you mentioned. I think this is basically -- I think we can see on 2 perspectives. First is speed. I think customers are selecting initiatives based on the time to return.

So shorter cycles between investment and getting evidence of the results. And a second trend is efficiency. I think it's important in such a macro environment. And our metric has demonstrated that a high performance team can deliver 10x more than a low performance team.

So there's a lot of opportunities to increase throughput without necessarily increasing investments. So in, I believe, these two trends, speed in the sense of time to return shorter cycles for greater results on the digital initiatives and efficiency. A huge discussion about how we can do more with the investment we're already doing around digital..

Got it. No, that makes sense. And then if you can talk about directionally, if you can talk about expectations for 2023 growth. A lot of concerns around macro. They are not just for you, but generally for the sector. So how should we think about like as we build our model, your Q4 guidance is high.

How should we think about 2023 trends, growth trends on constant currency organic basis?.

Sure. We are still working on our 2023 budget, and we will disclose a full year guidance on our next earnings release. But what I can anticipate is after this solid 2022, we expect another solid year, even considering the macro environment. I think we have by now great visibility for our long-term clients.

And as Bruno and Stanley mentioned, we have a consistent net revenue rotation rate in the past, and we foresee that will continue. This year, we had 53 new long-term clients in the last 9 months, so new platforms for growth. And also, I think we create a robust footprint for growth with the recent acquisitions in different regions.

So now we have a better footprint for Australia, for U.K. or even for U.S. with NTERSOL. So we are still working on this, but we are confident in our ability to deliver solid growth next year, as demonstrated by our track record..

Our next question comes from Tyler DuPont from Bank of America..

Just jumping off of Puneet's earlier question. Are there specific geographies or verticals that are seeing particular signs of strength or weakness? And the conversations you're having with clients around that. I mean when looking at each vertical, it looks like there's pretty strong growth sequentially, particularly within TMT.

So is there anything else specific to call out there? And maybe just comparing that to financial services, which looks like it was relatively flat quarter-on-quarter..

Thank you, Tyler. I can start this one, too. We don't see any specific difference. We have been growing consistently in all verticals and geographies. I believe there's big trends on specific verticals. I can highlight financial services is too strong.

I think based -- mainly based to the customer experience award from the competition among the traditional big players, and the fintechs. We see new trends coming from crypto and blockchain use case around trading custody of digital assets, international payments, peer-to-peer transaction, NFTs and so on.

We see open banking, not only the regulatory demand, but also new services like personal finance, payments, insurance and other services. If we go for retail, we see massive investments around e-commerce, omnichannel and marketplace strategy is still a big trend in this sector. But now I think combining with maybe more advanced programs around data.

With advanced analytics, machine learning approach, providing, I would say, valuable and actionable recommendations for retail companies and also a trend of combining sales journey in-store and online logistics around same-day delivery and this kind of payments, a lot of new stuff comes on the payment and so on.

If we go for consumer goods, I think data is the main use case, especially using productive analytics and big data to understand consumer behaviors and foster digital sales or accelerate product development. And mobility, a lot of innovation around mobility, connecting wearables and a lot of use cases around that, too.

So I think this is across the board. Of course, it's -- I mentioned every single product now has a meticulous discussion about the value what it's going to be created. The speed, you can demonstrate the results and efficiency how productive the teams are and how effective you are along these opportunities..

Okay. Great. Well, I appreciate that. And then just kind of on the other side, on the supply side. Maybe if you could speak to any of those specific supply-side dynamics that you're seeing, whether that's attrition, utilization.

And if you're seeing any wage inflation pressures still or if those have subsided and just kind of update how that flows into margins, that would be helpful..

Bruno can get this one..

Yes, I can take that one. Yes, we're seeing that competition subsiding a little bit with the recent slowdown and with the startup [indiscernible]. So attrition is trending down like we were down 1 notch to 15% compared to 16% last quarter on a last 12-month basis. So and we're expecting that it will continue to go down going forward.

So that's good news. It's still a hot market, right? So I think we're back to levels pre-pandemic, which is not necessarily kind of an easy market. It's still very competitive, but it's certainly subsided a bit from what we were like 9, 12 months ago..

The next question comes from Diego Aragão from Goldman Sachs..

Yes. First, congratulations on the quarter, very nice print. I guess my first question is just a follow-up on the previous one about your pipeline of projects. You mentioned a good number of new client additions this quarter.

But are you seeing existing clients postponing projects or even like increasing the time length of digital transformation projects given current macroeconomic environment?.

Thank you, Diego. Well, Diego, I think I mentioned that. I think there is a more meticulous process in the client side. They are looking careful what to do and what start doing, what stop doing. And basically, I think it's regarding this time to return. I think this is the main point of decision.

Our reinvest initiatives that we see we can get returns, concrete returns in short cycles. I think this resonates a lot with CI&T value prop of combining strategy, design and the full stack software engineer to deliver short-term results to show evidence that, that initiative or that set of hypothesis are correct in the right place to invest.

So loans sales cycle, for sure, for everyone across the board because of this meticulous analysis of what we should do and not due to this economic and macro environment..

This makes a lot of sense. And I guess my second question is about M&A. You did a couple of transactions since the IPO last year.

So I was wondering if you would consider doing further deals in 2023? Or actually, the coming year would be more focused on properly integrating these companies and extracting, let's say, the potential synergies you were seeing from those businesses..

Amazing question, Diego. Basically, I think we are ending with NTERSOL, we are ending this, I would say, first wave of M&A using the proceeds of the IPO, as I mentioned.

And basically, with that, we created an amazing footprint, especially in the regions -- in the Asia Pacific with the acquisition of Transpire in Australia and also in Europe with the acquisition of Somo in U.K. And a new vertical expertise, new capabilities with NTERSOL in the USA in financial services.

I think this is an amazing footprint for future growth too. Now as you mentioned, our priority is to leverage this platform for organic growth. I think organic growth is our main value creation strategy, and M&A is just a way to speed up our presence, especially in new verticals and geographies.

So you should expect now lot of folks on leveraging these platforms, and we are very confident that with these moves were a spectacular add to our footprint..

Thanks, Diego. Our next question comes from Ashwin from Citi..

My question is with regards to M&A and more about how much M&A you could be doing it at once? What's your bandwidth to handle multiple M&A all at the same time in terms of integration and so on and so forth.

And I guess the follow-up to that is, would we expect a slowdown in M&A given that you have so much on your plate right now?.

Yes. I can start and then Stanley can chime in. Ashwin, I think we have, I think, an amazing strategy for leveraging the companies we acquire. I think probably you remember, CI&T has this entrepreneurial organizational model based on growth units -- independent growth units. By now, we have 31 growth units around the world.

And every company we acquired, we integrate as a new growth unit. That gives a lot of stability in this process of integrating because we keep the customer being supported by the same team, by the same leaders and incrementally adding CI&T global muscles to each 1 of these operations.

I think this is -- in the business perspective, this allow us a very low-risk integration. Of course, we select careful targets, companies with a very solid customer base with a very, I would say, near CI&T culture leadership type and so on. So I think this is basically criteria that allow us to execute the business integration in a very smooth way.

And of course, there is a more careful process regarding back office system process integration. It happens in a different time line. So having said that, I think as I mentioned, we are concluding an amazing first wave of M&A. I think M&A will be a long-term strategy for speed up our organic growth.

But now we are totally focused on leveraging those new platforms. I don't know Stanley, if you want to chime in and add some colors..

Yes, Cesar. What I would add to that is that in parallel, going back to the question, how we can proceed parallel integration? Basically, when we started, for example, in Australia, we first sent the executives on a greenfield mode, let's say, to understand the market. And later down the road, we made acquisition.

And from there, we have both teams already, CI&T and Transpire teams working together in that geography. The same thing happens in Somo, same fashion. We went first in greenfield mode, and then we have those executives CI&Ters together with Somos and so on.

So the parallelism happens because we have teams, different geographies independently working in that growth unit approach that Cesar mentioned. And then, of course, those things go connect back to the back-office, which is a different streamline. And we've been proceeding the many integrations in parallel as well.

But of course, we have a preparation in parallel going on, and that allow us to do the many acquisitions also in the systems and back office perspective. So mainly that's the approach..

Understood. The other question I have is with regards to just talking about the specific acquisitions themselves. And it was good to see the videos on Transpire and so on with the emphasis on culture.

The question is if you could provide a little bit more granularity on where their clients are, the relative profitability there to billing rates, things like that for them and for interest, I would imagine NTERSOL being U.S. has higher billing rates.

How should one think of the contribution of those financially? Sorry, if you covered it in different parts, I might have missed it, but you could go into that..

Sure. Ashwin, I will start this one, too. I think this company is, the 3 acquisitions, especially Transpire, Somo and NTERSOL, these are companies that work basically with all short teams so you can expect higher price and also higher costs.

And these companies normally operate in the range of the mid-teens in terms of EBITDA, below CI&T EBITDA that is in the range of 20%. So -- and we expect that along 1 to 3 years, we can add the nearest component, our global technology perspective in this current client portfolio and bring their EBITDA to the levels of CI&T.

So this is part of the value creation we see for each one of this acquired capital. Of course, there's a lot of opportunities on cross-selling or on scale, these engagements and leverage and adding new capabilities platforms, I think that has 7,000 company can provide to a customer.

Stanley, do you want to add more colors on the specifics?.

Yes. What I would add that that's the main objective when we go with this M&A strategy is to add that -- to expand faster our capacity for organic growth. And of course, as we expand in the many different geographies, but we'll have a different blend of on-shoring, near-shoring and that will be evolving throughout the time.

So we should expect that change in profile in the blend, let's say, and in both ways because at the same time that we acquired some operations that they are heavily based on on-shoring. We also want to add near-shore capacity to that operation, and both worlds will happen, will evolve, let's say, together in parallel..

We have a question from e-mail here from Cesar Medina from Morgan Stanley. Can you please elaborate on the discussions you are now having for your 2023 budget for growth even if not a specific guide made so a big picture trends. Some of your peers in the industry have noted below 20% growth next year.

Could this be the case for CI&T, especially with what is happening on the fiscal front post-election?.

I can get this one. Thank you, Medina. As I mentioned, we are still working on our 2023 budget, and we would fully disclose our guidance in our next call. We have -- we are really confident that after this solid 2022, we will really -- even considering the macro environment. Again, we have good visibility from our long-term clients.

We have a good number of new clients. And we mentioned 53 new clients on-boarded in the last 9 months. And this footprint of new M&A from the M&A, new geographies and verticals we can explore. So basically, we are confident on our ability. Of course, there is a lot of adaptation in our strategy, go-to-market strategy.

I mentioned a lot of emphasis on speed, efficiency. It's always -- there is always opportunity when there's a change in the macro environment.

And it depends on your ability to adapt the way you are approaching each one of your clients, the kind of relationship you establish and you can leverage opportunities even on a more, I would say, cloudy macro environment. So we are still working on that, but we are confident we will provide another solid year..

Thank you, Cesar. So that concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar to proceed with his closing remarks.

Cesar?.

Thank you, Eduardo, Stanley, Bruno for joining me today. Thank you all for participating in another call again. I want to thank all CI&Ters for the amazing impact we are delivering as a team, and clients, investors and partners for their continued support. And of course, a great FIFA World Cup for everyone.

Stay well, and I'm looking forward to seeing you all in a couple of months. Bye..