CI&T (NYSE: CINT, “Company”), a global digital specialist,
today announces its results for the second quarter of 2023 (2Q23)
and the six months ended on June 30, 2023 (6M23) in accordance with
International Financial Reporting Standards (IFRS). For comparison
purposes, we refer to the results for the second quarter of 2022
(2Q22) and six months ended on June 30, 2022 (6M22).
Second Quarter of 2023 (2Q23) Operating and Financial
Highlights
- Net Revenue was R$571.8 million, an increase of 8.9% compared
to 2Q22 or a 9.2% growth at constant currency.
- The number of clients with annual revenue above R$1 million in
the last twelve months grew from 127 in 2Q22 to 183 in 2Q23.
- Net Profit was R$47.8 million compared to R$26.0 million in
2Q22, a 84.0% increase year over year.
- Adjusted EBITDA reached R$114.2 million, an increase of 13.8%
over 2Q22, equivalent to an Adjusted EBITDA margin of 20.0%.
- Adjusted Net Profit was R$63.1 million, 20.8% higher than 2Q22,
with an Adjusted Net Profit margin of 11.0%.
Six months ended June 30, 2023 (6M23) Operating and Financial
Highlights
- Net Revenue was R$1,181.8 million, an increase of 16.2%
compared to 6M22 or a 16.4% growth at constant currency.
- Net Profit was R$100.2 million compared to R$55.2 million in
6M22, an 81.5% increase year over year.
- Adjusted EBITDA reached R$230.7 million, a 24.8% growth
year-over-year, equivalent to an Adjusted EBITDA margin of
19.5%.
- Adjusted Net Profit was R$130.3 million, 42.0% higher than
6M22, with an Adjusted Net Profit margin of 11.0%.
- Cash generated from operating activities was R$117.6 million in
6M23, compared to a cash consumption of R$87.1 million in
6M22.
Cesar Gon, founder and CEO of CI&T, commented, "CI&T has
been fortunate to participate in the first chapter of the digital
revolution, as the creators of the LEAN DIGITAL book of knowledge
for digital transformation. Now, I feel blessed to guide CI&T
in co-authoring the next chapter of this revolution: a digital
world powered by Artificial Intelligence.
The challenge with these revolutionary moments is that they tend
to thrive in the fertile environment of startups and digital
natives, but it takes years to make a relevant impact in the
brownfield setting of large enterprises. These advancements need
time to become enterprise-ready. They must reach a level of
maturity to be translated into customer value within a framework of
reliability, security, and privacy.
So, this is our ambition, and this is CI&T's vision: to make
Hyper Digital enterprise-ready. Early results are promising, and we
are enthusiastic about the potential to significantly enhance
productivity, improve quality, and accelerate progress. The realm
of artificial intelligence presents a new array of exciting
opportunities."
Comments on the 2Q23 financial performance
The net revenue was R$571.8 million in 2Q23, an increase of 8.9%
compared to 2Q22, or a 9.2% net revenue growth at constant
currency. The geographic revenue distribution for the second
quarter of 2023 was 45% from North America, 40% from Latam, 10%
from Europe and 5% from Asia Pacific. Regarding industry verticals,
financial services and consumer goods remain our most relevant
markets, while technology and telecommunications have grown and
gained relevance in our portfolio of clients.
The cost of services provided in 2Q23 was R$374.2 million, a
9.6% increase compared to 2Q22, and the gross profit was R$197.6
million. The Adjusted Gross Profit in 2Q23 was R$211.4 million,
9.3% higher compared to 2Q22, and the Adjusted Gross Profit margin
was 37.0%, an increase of 0.2 percentage points over 2Q22.
In 2Q23, selling, general and administrative (SG&A), and
other operating expenses were R$120.0 million, 1.6% lower than in
2Q22, mainly attributed to non-recurring M&A expenses in 2022.
Depreciation and amortization expenses totaled R$23.1 million in
2Q23, a decrease of 4.7%, explained by the reduction of real estate
property leases. Amortization of intangible assets from acquired
companies was R$11.3 million in 2Q23, fairly stable year over
year.
In 2Q23, the Adjusted EBITDA was R$114.2 million, 13.8% higher
than in 2Q22. Adjusted EBITDA margin was 20% in the quarter, an
increase of 0.9 percentage point compared to 2Q22, mainly due to
lower SG&A expenses as a percentage of revenue.
In 2Q23, net financial expenses were R$18.5 million, 5.4% higher
than in 2Q22, mainly driven by higher debt position and interest
rates, combined with a negative foreign exchange (FX) variation in
the comparable period. In 2Q23, the reported net FX loss was R$6.2
million, while in 2Q22, it was a net FX gain of R$ 13.3
million.
In 2Q23, income tax expense was R$11.3 million, a reduction of
37.3% compared to 2Q22, mainly due to the amortization of goodwill
for tax purposes. The income tax paid (cash effect) was R$11.9
million, equivalent to a cash tax rate of 20.1%.
The net profit was R$47.8 million in 2Q23, 84% higher than in
2Q22. Adjusted Net Profit was R$63.1 million, an increase of 20.8%
compared to 2Q22. The Adjusted Net Profit margin increased by 1.0
percentage points, from 10.0% in 2Q22 to 11.0% in 2Q23, mainly as a
result of the dilution of SG&A expenses and lower income tax
expense.
Business Outlook
We expect our net revenue in the third quarter of 2023 to be at
least R$545 million at constant currency (R$525 million on a
reported basis), a 2% decline compared to 3Q22.
For the full year of 2023, we are updating our business outlook.
We expect our net revenue growth to be in the range of 4.0% to 8.0%
year-over-year, assuming a constant currency outlook (average FX
rate of 5.17 BRL/USD in 2022). 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. Such program is active and management expects to continue
executing the share repurchase.
Conference Call Information
Cesar Gon, Bruno Guicardi, Stanley Rodrigues, and Eduardo Galvão
will host a video conference call to discuss the 2Q23 financial and
operating results on August 18, 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/E1yCVDunv6w?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 6,200 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)
Quarter ended June 30,
Six months ended June
30,
2023
2022
2023
2022
Net Revenue
571,832
525,015
1,181,824
1,016,887
Costs of services provided
(374,196
)
(341,502
)
(782,057
)
(670,494
)
Gross Profit
197,636
183,513
399,767
346,393
Selling expenses
(46,284
)
(39,962
)
(91,838
)
(75,091
)
General and administrative expenses
(71,939
)
(78,390
)
(143,161
)
(143,311
)
Impairment loss on trade receivables and
contract assets
(132
)
356
(1,737
)
(710
)
Other income (expenses) net
(1,662
)
(3,969
)
(1,337
)
(4,484
)
Operating expenses net
(120,017
)
(121,965
)
(238,073
)
(223,596
)
Operating profit before financial
income and tax
77,619
61,548
161,694
122,797
Finance income
28,217
53,306
48,881
122,888
Finance cost
(46,699
)
(70,839
)
(87,332
)
(157,133
)
Net finance costs
(18,482
)
(17,533
)
(38,451
)
(34,245
)
Profit before Income tax
59,137
44,015
123,243
88,552
Current
(3,888
)
(17,115
)
(18,668
)
(22,523
)
Deferred
(7,410
)
(901
)
(4,353
)
(10,807
)
Total Income tax expense
(11,298
)
(18,016
)
(23,021
)
(33,330
)
Net profit for the period
47,839
25,999
100,222
55,222
Earnings per share
Earnings per share – basic (in R$)
0.36
0.20
0.75
0.42
Earnings per share – diluted (in R$)
0.35
0.20
0.73
0.42
Unaudited condensed consolidated
statement of financial position
(In thousands of Brazilian Reais)
Assets
June 30, 2023
December 31, 2022
Liabilities and equity
June 30, 2023
December 31, 2022
Cash and cash equivalents
149,232
185,727
Suppliers and other payables
19,244
33,376
Financial Investments
35,811
96,299
Loans and borrowings
200,285
231,296
Trade receivables
467,731
501,671
Lease liabilities
19,945
21,539
Contract assets
218,391
217,250
Salaries and welfare charges
198,639
260,156
Recoverable taxes
22,401
7,619
Accounts payable for business combination
acquired
40,583
71,650
Tax assets
8,267
2,959
Derivatives - hedge accounting
31,288
35,169
Derivatives - hedge accounting
29,090
19,637
Derivatives
-
4,109
Derivatives
15,024
11,194
Tax liabilities
6,630
3,890
Other assets
30,315
38,269
Other taxes payable
15,503
14,382
Total current assets
976,262
1,080,625
Contract liability
12,981
32,136
Other liabilities
38,672
47,501
Recoverable taxes
3,676
3,624
Total current liabilities
583,770
755,204
Deferred tax assets
28,187
35,138
Judicial deposits
9,995
9,819
Loans and borrowings
663,069
742,935
Restricted cash - Escrow account and
indemnity asset
30,842
31,552
Lease liabilities
32,317
41,269
Other assets
1,844
3,654
Provisions
12,079
12,347
Property, plant and equipment
46,373
55,266
Accounts payable for business combination
acquired
126,785
133,299
Intangible assets and goodwill
1,673,996
1,750,898
Other liabilities
3,187
3,530
Right-of-use assets
46,816
56,187
Total non-current liabilities
837,437
933,380
Total non-current assets
1,841,729
1,946,138
Equity
Share capital
37
37
Share premium
946,173
946,173
Capital reserves
218,382
203,218
Profit reserves
352,095
251,873
Treasury stocks
(18,476
)
-
Other comprehensive income
(101,427
)
(63,122
)
Total equity
1,396,784
1,338,179
Total assets
2,817,991
3,026,763
Total equity and liabilities
2,817,991
3,026,763
Unaudited condensed consolidated
statement of cash flows
(In thousands of Brazilian Reais)
June 30, 2023
June 30, 2022
Cash flows from operating
activities
Net profit for the period
100,222
55,222
Adjustments for:
Depreciation and amortization
48,109
43,596
Gain/loss on the sale of property, plant
and equipment, intangible assets and leases
195
2,025
Interest, monetary variation and exchange
rate changes
44,071
14,397
Interest and exchange variation on
accounts payable for business combinations
1,438
(6,420
)
Exchange variation on escrow account
related to Somo acquisition
-
2,668
Unrealized loss (gain) on financial
instruments
(13,922
)
314
Income tax expenses
23,021
33,330
Impairment losses on trade receivables and
contract assets
1,737
710
(Reversal of) provision for labor
risks
(268
)
385
Stock-based plan
15,113
1,133
Income on financial investments
(629
)
(651
)
Present/fair value adjustment - accounts
payable for business combination
4,509
5,123
Variation in operating assets and
liabilities
Trade receivables
7,337
(74,260
)
Contract assets
(8,603
)
(88,256
)
Recoverable taxes
(18,834
)
(8,498
)
Tax assets
935
(158
)
Judicial deposits
(175
)
(6,258
)
Suppliers and other payables
(13,663
)
(31,796
)
Salaries and welfare charges
(59,154
)
(27,461
)
Tax liabilities
1,931
8,958
Other taxes payable
-
986
Contract liabilities
(18,060
)
(3,058
)
Other receivables and payables, net
2,325
(9,140
)
Cash generated from (used in) operating
activities
117,635
(87,109
)
Income tax paid
(18,713
)
(21,074
)
Interest paid on loans and borrowings
(37,156
)
(38,379
)
Interest paid on lease
(2,153
)
(3,174
)
Income tax refund
2,495
-
Net cash from (used in) operating
activities
62,108
(149,736
)
Cash flows from investment
activities:
Acquisition of property, plant and
equipment and intangible assets
(8,265
)
(15,520
)
Acquisition of subsidiary net of cash
acquired - Box 1824
-
(19,040
)
Acquisition of subsidiary net of cash
acquired - Somo
-
(247,764
)
Escrow deposit (acquisition of Somo)
-
(23,061
)
Cash outflow on hedge accounting
settlement
-
16,134
Redemption of financial investments
56,996
514,394
Net cash from (used in) investment
activities
48,731
225,143
Cash flows from financing
activities:
Exercised stock options
532
8,785
Payment of lease liabilities
(12,290
)
(12,576
)
Proceeds from loans and borrowings
-
133,789
Settlement of derivatives
5,983
(656
)
Payment of loans and borrowings
(76,992
)
(244,384
)
Payment of investment obligations
(43,184
)
-
Repurchase of treasury shares
(18,476
)
-
Net cash used in financing
activities
(144,427
)
(115,042
)
Net decrease in cash and cash
equivalents
(33,588
)
(39,635
)
Cash and cash equivalents as of January
1st
185,727
135,727
Exchange variation effect on cash and cash
equivalents
(2,907
)
8,098
Cash and cash equivalents as of June
30
149,232
104,190
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)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
Net Revenue
571,832
525,015
8.9%
1,181,824
1,016,887
16.2%
Net Revenue at Constant Currency
571,563
523,568
9.2%
1,192,471
1,024,655
16.4%
Net Revenue by industry
(in BRL thousand)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
Financial Services
159,031
161,662
-1.6%
333,814
317,987
5.0%
Consumer goods
121,993
119,650
2.0%
238,149
224,019
6.3%
Technology and telecommunications
104,127
69,895
49.0%
229,187
137,951
66.1%
Retail and industrial goods
68,099
75,167
-9.4%
143,913
148,389
-3.0%
Life sciences
64,387
67,835
-5.1%
127,668
130,728
-2.3%
Others
54,195
30,806
75.9%
109,093
57,813
88.7%
Total
571,832
525,015
8.9%
1,181,824
1,016,887
16.2%
Net Revenue by geography
(in BRL thousand)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
North America
256,880
219,304
17.1%
539,344
423,244
27.4%
Europe
58,951
48,160
22.4%
113,600
85,749
32.5%
LATAM (Latin America)
228,058
242,574
-6.0%
468,674
477,280
-1.8%
APJ (Asia, Pacific and Japan)
27,943
14,977
86.6%
60,206
30,614
96.7%
Total
571,832
525,015
8.9%
1,181,824
1,016,887
16.2%
Reconciliation of various income
statement amounts from IFRS to non-IFRS measures for the three
months ended June 30, 2023 and 2022 and six months ended June 30,
2023 and 2022 :
Gross Profit
(in BRL thousand)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
Net Revenue
571,832
525,015
8.9%
1,181,824
1,016,887
16.2%
Cost of Services
(374,196)
(341,502)
9.6%
(782,057)
(670,494)
16.6%
Gross Profit
197,636
183,513
7.7%
399,767
346,393
15.4%
Adjustments
Depreciation and amortization (cost of
services provided)
8,722
10,295
-15.3%
18,132
19,614
-7.6%
Stock-based compensation
5,036
(361)
n.m
7,412
821
802.8%
Adjusted Gross Profit
211,394
193,447
9.3%
425,311
366,828
15.9%
Adjusted Gross Profit Margin
37.0%
36.8%
0.1p.p
36.0%
36.1%
-0.1p.p
Adjusted EBITDA
(in BRL thousand)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
Net profit for the period
47,839
25,999
84.0%
100,222
55,222
81.5%
Adjustments
Net financial cost
18,482
17,533
5.4%
38,451
34,245
12.3%
Income tax expense
11,298
18,016
-37.3%
23,021
33,330
-30.9%
Depreciation and amortization
23,056
24,205
-4.7%
48,109
43,596
10.4%
Stock-based compensation
9,719
(106)
n.m
15,112
1,133
1234.0%
Government grants
(137)
(115)
18.8%
(277)
(174)
59.6%
Acquisition-related expenses (1)
3,965
14,859
-73.3%
6,089
17,554
-65.3%
Adjusted EBITDA
114,222
100,391
13.8%
230,727
184,906
24.8%
Adjusted EBITDA Margin
20.0%
19.1%
0.9p.p
19.5%
18.2%
1.3p.p
(1)
Includes present value adjustment on
accounts payable for business combination, consulting expenses and
retention packages.
Net Profit
(in BRL thousand)
2Q23
2Q22
Var.
2Q23 x 2Q22
6M23
6M22
Var.
6M23 x 6M22
Net profit for the period
47,839
25,999
84.0%
100,222
55,222
81.5%
Adjustments
Acquisition-related expenses (1)
15,274
26,255
-41.8%
30,110
36,578
-17.7%
Adjusted Net Profit (2)
63,113
52,254
20.8%
130,332
91,800
42.0%
Adjusted Net Profit Margin (2)
11.0%
10.0%
1.1p.p
11.0%
9.0%
2p.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$1,195) thousand in 2Q23,
(R$89) thousand in 2Q22, (R$2,777) thousand in 6M23 and (R$3,754)
thousand in 6M22.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230817810196/en/
Investor Relations Contact: Eduardo
Galvão investors@ciandt.com Media Relations Contact: Zella
Panossian ciandt@illumepr.com
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