CI&T (NYSE: CINT, “Company”), a global digital specialist,
today announces its results for the first quarter of 2023 (1Q23) in
accordance with International Financial Reporting Standards (IFRS).
For comparison purposes, we refer to the results for the first
quarter of 2022 (1Q22).
First Quarter of 2023 Operating and Financial
Highlights
- Net Revenue was R$610.0 million, an increase of 24.0% compared
to 1Q22 or a 24.3% growth at constant currency.
- The number of clients with annual revenue above R$1 million in
the last twelve months grew from 110 in 1Q22 to 180 in 1Q23.
- Net Profit was R$52.4 million compared to R$29.2 million in
1Q22, a 79.2% increase year over year.
- Adjusted EBITDA was R$116.5 million, a 37.9% growth
year-over-year, equivalent to an Adjusted EBITDA margin of
19.1%.
- Adjusted Net Profit was R$67.2 million, 70% higher than 1Q22,
with an Adjusted Net Profit margin of 11.0%.
- Cash generated from operating activities was R$116.5 million in
1Q23, compared to a cash consumption of R$47.0 million in
1Q22.
- CI&T ended 1Q23 with 6,522 CI&Ters, compared to 6,435
at the end of 1Q22.
Cesar Gon, founder and CEO of CI&T, commented, “I'm glad to
kick off this cloudy 2023 with solid results from top to bottom,
demonstrating our agility in maintaining a lean structure and
adapting to changes in the external market environment.
“At the same time, I believe that we are on the verge of
probably the most disruptive moment in the history of computers on
Earth. AI is a transformative technology with real-world
applications and rapid advancements. And we, at CI&T, are
moving thoughtfully fast with our clients, co-creating the future
in this new chapter of innovation and endless possibilities.”
Comments on the 1Q23 financial performance
The net revenue was R$610.0 million in 1Q23, an increase of
24.0% compared to 1Q22, or a 24.3% net revenue growth at constant
currency. We experienced growth in net revenue across all regions
we operate in compared to the same period last year.
The cost of services provided in 1Q23 reached R$407.9 million,
24.0% higher in relation to 1Q22, and the gross profit was R$202.1
million. The Adjusted Gross Profit in 1Q23 was R$213.9 million, an
increase of 23.4% compared to 1Q22, and the Adjusted Gross Profit
margin was 35.1%, in line with 1Q22.
In 1Q23, selling, general and administrative (SG&A), and
other operating expenses were R$116.5 million, 15.8% higher when
compared to 1Q22, mainly attributed to an increase in personnel
expenses, and higher amortization of intangible assets from the
acquired Companies. As a percentage of revenue, SG&A and other
expenses decreased to 19.1% in 1Q23 from 20.4% in 1Q22, as planned,
since SG&A are mainly fixed expenses.
Depreciation and amortization expenses totaled R$25.1 million in
1Q23, 29.2% higher than in 1Q22, as a result of an increase in the
amortization of intangible assets from acquired companies, from
R$7.6 million in 1Q22 to R$12.7 million in 1Q23.
In 1Q23, the Adjusted EBITDA was R$116.5 million, 37.9% higher
compared to 1Q22. Adjusted EBITDA margin was 19.1% in the quarter,
an increase of 1.9 percentage points compared to 1Q22, mainly due
to the dilution of SG&A expenses.
In 1Q23, net financial expenses were R$20.0 million, 19.5%
higher than 1Q22, mainly driven by a higher debt position, an
increase in interest rates, and a negative foreign exchange (FX)
variation in the period. In 1Q23, the reported net FX loss was
R$2.2 million, while in 1Q22 it was a net FX gain of R$ 1.3
million. In 1Q23, income tax expense was R$11.7 million, a
reduction of 23.4% in relation to 1Q22.
The net profit was R$52.4 million in 1Q23, 79.2% higher than in
1Q22. Adjusted Net Profit was R$67.2 million, an increase of 70%
over 1Q22. The Adjusted Net Profit margin increased 3 percentage
points, from 8.0% in 1Q22 to 11.0% in 1Q23, mainly as a result of a
reduction in SG&A expenses as a percentage of revenue and lower
income tax expense.
Business Outlook
We expect our net revenue in the second quarter of 2023 to be at
least R$570 million compared to net revenue of R$525 million in the
second quarter of 2022, a 9% growth on a reported basis.
For the full year of 2023, we are maintaining our net revenue
growth in the range of 13% to 17% year-over-year, assuming a
constant currency outlook. In addition, we estimate our Adjusted
EBITDA margin to be at least 19% for the full year of 2023.
These expectations are forward-looking statements and actual
results may differ materially. See “Cautionary Statement on
Forward-Looking Statements” below.
Share Repurchase Program
On May 17, 2023, the Board of Directors approved a share
repurchase program, pursuant to which CI&T may repurchase up to
1.5 million of its outstanding class A common shares in the next 12
months. The program was approved taking into consideration the
Company's commitments to deliver shares under its stock-based
compensation plan and M&A transactions.
Conference Call Information
Cesar Gon, Bruno Guicardi, Stanley Rodrigues, and Eduardo Galvão
will host a video conference call to discuss the 1Q23 financial and
operating results on May 19, at 8:00 a.m. Eastern Time / 9:00 a.m.
BRT. The earnings call can be accessed at the Company’s Investor
Relations website at https://investors.ciandt.com or at the
following link:
https://youtube.com/live/u-QkX4MFGjA?feature=share
About CI&T
CI&T (NYSE:CINT) is a global 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 28-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 6,500 professionals.
Basis of accounting and functional currency
CI&T maintains its books and records in Brazilian reais, the
presentation currency for its unaudited condensed consolidated
interim financial statements, and the functional currency of our
operations in Brazil. CI&T prepares its unaudited condensed
consolidated interim financial statements in accordance with IFRS,
as issued by the IASB, and International Financial Reporting
Standard No 34—Interim Financial Reporting (“IAS 34”).
Non-IFRS Financial Measures
We regularly monitor certain financial and operating metrics to
evaluate our business, measure our performance, identify trends
affecting our business, formulate financial projections and make
strategic decisions. These non-IFRS financial measures include
Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net
Profit Margin, Net Revenue at Constant Currency, and Net Revenue
Growth at Constant Currency, and 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’ overall understanding of our operations’
historical and current financial performance.
CI&T is not providing a quantitative reconciliation of
forward-looking Non-IFRS Net Revenue Growth at Constant Currency
and Adjusted EBITDA to the most directly comparable IFRS measure
because it is unable to reasonably predict the ultimate 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
adjustments, foreign currency exchange (gains)/losses, and other
items. These items are uncertain, depend on various factors, and
could have a material impact on 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 average 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 herein, the adjustments
applied were: (i) depreciation and amortization related to 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. For the periods herein,
the adjustments were: (i) stock-based compensation expenses; (ii)
government grants related to tax reimbursement in the Chinese
subsidiary; and (iii) acquisition-related expenses, including
present value adjustment on accounts payable for business
combination, consulting expenses, and retention packages.
In calculating Adjusted Net Profit, we exclude components
unrelated to the direct management of our services. For the periods
herein, the adjustments applied were acquisition-related expenses,
including amortization of intangible assets from acquired
companies, present value adjustment on accounts payable for
business combination, consulting expenses, and retention
packages.
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 are statements that could
be deemed forward-looking statements, which 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 expectation or belief. 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 what we expect.
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 differ
materially from results expressed or implied in this press release.
Such risk factors include, but are not limited to, those related
to: the current and future impact of the COVID-19 pandemic, the
ongoing war in Ukraine and economic sanctions imposed by Western
economies over Russia on our business and industry; the effects of
competition on our business; uncertainty regarding the demand for
and market utilization of our services; the ability to maintain or
acquire new client relationships; general business and economic
conditions; our ability to successfully integrate the
recent-acquired companies; and our ability to successfully execute
our growth strategy and strategic plans. Additional information
concerning these and other risks and uncertainties are contained in
the “Risk Factors” section of CI&T's annual report on Form
20-F. Additional information will be made available in our annual
reports on Form 20-F, and other filings and reports that CI&T
may file from time to time with the SEC. Except as required by law,
CI&T assumes no obligation and does not intend to update these
forward-looking statements or to update the reasons actual results
could differ materially from those anticipated in these
forward-looking statements, even if new information becomes
available in the future.
Unaudited condensed consolidated
statement of profit or loss
(In thousands of Brazilian Reais)
March 31,
March 31,
2023
2022
Net Revenue
609,991
491,872
Costs of services provided
(407,861
)
(328,992
)
Gross Profit
202,130
162,880
Selling expenses
(45,554
)
(35,129
)
General and administrative expenses
(71,222
)
(64,921
)
Impairment loss on trade receivables and
contract assets
(1,605
)
(1,066
)
Other income (expenses) net
324
(515
)
Operating expenses net
(118,057
)
(101,631
)
Operating profit before financial
income and tax
84,073
61,249
Finance income
20,664
69,582
Finance cost
(40,632
)
(86,294
)
Net finance costs
(19,968
)
(16,712
)
Profit before Income tax
64,105
44,537
Current
(14,780
)
(5,408
)
Deferred
3,057
(9,906
)
Total Income tax expense
(11,723
)
(15,314
)
Net profit for the period
52,382
29,223
Earnings per share
Earnings per share – basic (in R$)
0.39
0.22
Earnings per share – diluted (in R$)
0.38
0.22
Unaudited condensed consolidated
statements of financial position
(In thousands of Brazilian Reais)
Assets
March 31, 2023
December 31, 2022
Liabilities and equity
March 31, 2023
December 31, 2022
Cash and cash equivalents
251,550
185,727
Suppliers and other payables
21,542
33,376
Financial Investments
93,884
96,299
Loans and borrowings
233,583
231,296
Trade receivables
445,455
501,671
Lease liabilities
19,922
21,539
Contract assets
232,459
217,250
Salaries and welfare charges
251,801
260,156
Recoverable taxes
15,051
7,619
Accounts payable for business
combination
72,005
71,650
Tax assets
1,256
2,959
Derivatives - hedge accounting
40,052
35,169
Derivatives - hedge accounting
30,698
19,637
Derivatives
450
4,109
Derivatives
9,240
11,194
Tax liabilities
8,246
3,890
Other assets
31,856
38,269
Other taxes payable
13,040
14,382
Total current assets
1,111,449
1,080,625
Contract liability
20,491
32,136
Other liabilities
50,745
47,501
Recoverable taxes
3,644
3,624
Total current liabilities
731,877
755,204
Deferred tax assets
37,848
35,138
Judicial deposits
9,710
9,819
Loans and borrowings
714,741
742,935
Restricted cash - Escrow account and
indemnity asset
30,459
31,552
Lease liabilities
37,036
41,269
Other assets
3,637
3,654
Provisions
12,074
12,347
Property, plant and equipment
52,032
55,266
Accounts payable for business
combination
132,681
133,299
Intangible assets and goodwill
1,719,226
1,750,898
Other liabilities
2,929
3,530
Right-of-use assets
50,402
56,187
Total non-current liabilities
899,461
933,380
Total non-current assets
1,906,958
1,946,138
Equity
Share capital
37
37
Share premium
946,173
946,173
Capital reserves
209,093
203,218
Profit reserves
304,255
251,873
Other comprehensive income
(72,489
)
(63,122
)
Total equity
1,387,069
1,338,179
Total assets
3,018,407
3,026,763
Total equity and liabilities
3,018,407
3,026,763
Unaudited condensed consolidated
statement of cash flows
(In thousands of Brazilian Reais)
March 31, 2023
March 31, 2022
Cash flows from operating
activities
Net profit for the period
52,382
29,223
Adjustments for:
Depreciation and amortization
25,053
19,390
Gain/loss on the sale of property, plant
and equipment and intangible assets
(95
)
1,926
Interest, monetary variation and exchange
rate changes
22,085
4,488
Interest and exchange variation on
accounts payable for business combinations
1,445
(11,628
)
Exchange variation on escrow account
related to Somo acquisition
67
3,123
Interest on lease
1,179
2,146
Unrealized gain on financial
instruments
(4,544
)
(4,487
)
Income tax expenses
11,723
15,314
Reversal of impairment losses on trade
receivables
(89
)
(1,194
)
Impairment losses on contract assets
1,694
1,064
Provision for labor risks
(273
)
571
Stock-based plan
5,393
1,239
Income on financial investments
(193
)
-
Present value adjustment - accounts
payable for business combination
1,589
-
Others
41
-
Variation in operating assets and
liabilities
Trade receivables
49,460
21,293
Contract assets
(18,900
)
(78,979
)
Recoverable taxes
245
(3,330
)
Tax assets
(11,281
)
(15,242
)
Judicial deposits
110
(3,022
)
Suppliers and other payables
(11,672
)
(31,279
)
Salaries and welfare charges
(7,628
)
15,553
Tax liabilities
-
(901
)
Other taxes payable
633
(682
)
Contract liabilities
(12,657
)
(2,021
)
Other receivables and payables, net
10,795
(9,529
)
Cash generated from (used in) operating
activities
116,562
(46,964
)
Income tax paid
(6,808
)
(4,818
)
Interest paid on loans and borrowings
(15,534
)
(19,458
)
Interest paid on lease
(1,148
)
(1,479
)
Net cash from (used in) operating
activities
93,072
(72,719
)
Cash flows from investment
activities:
Acquisition of property, plant and
equipment and intangible assets
(4,247
)
(8,295
)
Acquisition of subsidiary net of cash
acquired - Somo
-
(265,137
)
Cash outflow on hedge accounting
settlement
-
16,134
Redemption of financial investments
1,474
350,128
Net cash from (used in) investment
activities
(2,773
)
92,830
Cash flows from financing
activities:
Exercised stock options
478
5,128
Payment of lease liabilities
(5,919
)
(6,084
)
Settlement of derivatives
2,839
(381
)
Payment of loans and borrowings
(19,432
)
(38,506
)
Payment of investment obligations -
Somo
(1,235
)
-
Net cash used in financing
activities
(23,269
)
(39,843
)
Net increase/(decrease) in cash and
cash equivalents
67,030
(19,732
)
Cash and cash equivalents as of January
1st
185,727
135,727
Exchange variation effect on cash and cash
equivalents
(1,207
)
15,832
Cash and cash equivalents as of March
31
251,550
131,827
Reconciliation of Non-IFRS financial
measures to comparable IFRS financial measures
Reconciliation of revenue growth as
reported on an IFRS basis to revenue growth on a constant currency
basis:
Net Revenue
(in BRL thousand)
1Q23
1Q22
Var. 1Q23 x
1Q22
Net Revenue
609,991
491,872
24.0
%
Net Revenue at Constant Currency
621,193
499,617
24.3
%
As of this quarter, we present an enhanced classification of our
revenue by industry verticals, encompassing more comprehensive and
representative industry categories that better align with our
evolving business trends.
Net Revenue by industry
(in BRL thousand)
1Q23
1Q22
Var. 1Q23 x
1Q22
Financial Services
174,783
156,326
11.8
%
Consumer goods
116,156
104,369
11.3
%
Technology and telecommunications
125,060
68,056
83.8
%
Retail and industrial goods
75,814
73,222
3.5
%
Life sciences
63,281
62,893
0.6
%
Others
54,897
27,006
103.3
%
Total
609,992
491,872
24.0
%
Net Revenue by geography
(in BRL thousand)
1Q23
1Q22
Var. 1Q23 x
1Q22
North America
263,386
203,940
29.1
%
Europe
73,726
37,589
96.1
%
LATAM (Latin America)
240,616
234,706
2.5
%
APJ (Asia, Pacific and Japan)
32,263
15,637
106.3
%
Total
609,991
491,872
24.0
%
Reconciliation of various income
statement amounts from IFRS to non-IFRS measures for the three
months ended March 31, 2023 and 2022:
Gross Profit
(in BRL thousand)
1Q23
1Q22
Var.
1Q23 x 1Q22
Net Revenue
609,991
491,872
24.0
%
Cost of Services
(407,861
)
(328,992
)
24.0
%
Gross Profit
202,130
162,880
24.1
%
Adjustments
Depreciation and amortization (cost of
services provided)
9,410
9,318
1.0
%
Stock-based compensation
2,376
1,182
101.0
%
Adjusted Gross Profit
213,916
173,380
23.4
%
Adjusted Gross Profit Margin
35.1
%
35.2
%
-0.2p.p
Adjusted EBITDA
(in BRL thousand)
1Q23
1Q22
Var. 1Q23 x
1Q22
Net profit for the period
52,382
29,223
79.2
%
Adjustments
Net financial cost
19,968
16,712
19.5
%
Income tax expense
11,723
15,314
-23.4
%
Depreciation and amortization
25,053
19,390
29.2
%
Stock-based compensation
5,393
1,239
335.3
%
Government grants
(140
)
(58
)
140.5
%
Acquisition-related expenses (1)
2,124
2,695
-21.2
%
Adjusted EBITDA
116,504
84,515
37.9
%
Adjusted EBITDA Margin
19.1
%
17.2
%
1.9p.p
(1)
Includes present value adjustment on
accounts payable for business combination, consulting expenses and
retention packages.
Net Profit
(in BRL thousand)
1Q23
1Q22
Var. 1Q23 x
1Q22
Net profit for the period
52,382
29,223
79.2
%
Adjustments
Acquisition-related expenses (1)
14,836
10,323
43.7
%
Adjusted Net Profit (2)
67,218
39,546
70.0
%
Adjusted Net Profit Margin (2)
11.0
%
8.0
%
3p.p
(1)
Includes amortization of intangible assets
from acquired companies, present value adjustment on accounts
payable for business combination, consulting expenses and retention
packages.
(2)
Adjustments' amounts are gross of tax. Tax
effects on non-IFRS adjustments totaled (R$67) in 1Q23 and (R$24)
in 1Q22.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230518005795/en/
Investor Relations Contact: Eduardo Galvão
investors@ciandt.com
Media Relations Contact: Zella Panossian
ciandt@illumepr
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