CI&T (NYSE: CINT, “Company”), a global digital specialist
and fast-growing technology company, today announces its results
for the third quarter of 2023 (3Q23) and the nine months ended on
September 30, 2023 (9M23) in accordance with International
Financial Reporting Standards (IFRS). For comparison purposes, we
refer to the results for the third quarter of 2022 (3Q22) and nine
months ended on September 30, 2022 (9M22).
Third Quarter of 2023 (3Q23) Operating and Financial
Highlights
- Net Revenue was R$529.1 million compared to R$559.0 million in
3Q22.
- Net Profit was R$36.2 million compared to R$40.6 million in
3Q22.
- Adjusted EBITDA was R$97.7 million compared to R$105.2 million
in 3Q22. The Adjusted EBITDA margin was 18.5%.
- Adjusted Net Profit was R$45.5 million versus R$67.4 million in
3Q22.
- The number of clients with annual revenue above R$1 million in
the last twelve months rose to 187 from 147 in 3Q22.
- CI&T Board of Directors approved a new share repurchase
program.
Nine months ended September 30, 2023 (9M23) Operating and
Financial Highlights
- Net Revenue was R$1,710.9 million, an increase of 8.6% compared
to 9M22 or a 9.9% growth at constant currency.
- Net Profit increased by 42.3% to R$136.4 million from R$95.8
million in 9M22.
- Adjusted EBITDA rose to R$328.5 million from R$290.1 million in
9M22, 13.2% higher. The Adjusted EBITDA margin was 19.2%.
- Adjusted Net Profit increased 10.5% to R$175.9 million from
R$159.2 million in 9M22. The Adjusted Net Profit margin was
10.3%.
- Cash generated from operating activities rose to R$254.5
million in 9M23 from R$28.6 million in 9M22.
- CI&T ended 3Q23 with 6,114 CI&Ters.
Cesar Gon, founder and CEO of CI&T, commented, "In 2023, we
navigated with a cautious approach, achieving sustainable
profitability and robust cash generation. Looking ahead, we are at
the forefront of an exciting new technological revolution driven by
AI. This new chapter in digital disruption signifies an imminent
redesign of competitive dynamics across all sectors and aspects of
modern life. In paving the way for this future, we have effectively
partnered with our clients, prepared our teams, and enhanced our AI
capabilities to realize the vision of 'CI&T Powered by AI.'
Building on this momentum, we aim to resume more aggressive growth
in 2024 and beyond."
Comments on the 3Q23 financial performance
The net revenue was R$529.1 million in 3Q23, a decline of 5.4%
compared to 3Q22, or a reduction of 1.7% at constant currency. In
the third quarter of 2023, 44% of the revenue came from Latam, 42%
from North America, 10% from Europe and 4% from Asia Pacific.
The cost of services provided in 3Q23 was R$356.8 million, 1.9%
lower than in 3Q22, and the gross profit was R$172.3 million. The
Adjusted Gross Profit in 3Q23 was R$184.4 million, with an Adjusted
Gross Profit margin of 34.8%.
In 3Q23, selling, general and administrative (SG&A), and
other operating expenses were R$101.8 million, 22.3% lower than in
3Q22. This reduction can be primarily attributed to the
non-recurring M&A expenses incurred in 2022 and our efforts to
optimize operational expenses in 2023.
Depreciation and amortization expenses totaled R$22.9 million in
3Q23, a decrease of 2.9% compared to 3Q22, explained by the
reduction of real estate property leases. Amortization of
intangible assets from acquired companies was R$10.7 million in
3Q23, a 4.6% increase compared to 3Q22.
In 3Q23, the Adjusted EBITDA was R$97.8 million, a reduction of
7.1% compared to 3Q22, mainly due to the decline in the gross
profit margin, partially offset by the improvement in SG&A
expenses. Adjusted EBITDA margin was 18.5% in the quarter.
In 3Q23, net financial expenses were R$20.3 million, R$12.8
million higher than in 3Q22, mainly driven by lower foreign
exchange (FX) gains in the comparable period and a derivative gain
from an interest rate swap that benefited our results in 3Q22.
In 3Q23, income tax expense was R$13.2 million, 20.4% lower than
in 3Q22, mainly due to the amortization of goodwill for tax
purposes from the Ntersol acquisition. The income tax paid (cash
effect) was R$6.8 million, equivalent to a cash tax rate of
13.8%.
The net profit was R$36.2 million in 3Q23, 11% lower than 3Q22.
Adjusted Net Profit was R$45.5 million, a decrease of 32.4%
compared to 3Q22, mainly due to higher net financial expenses, as
aforementioned. Consequently, the Adjusted Net Profit margin was
8.6%.
Business Outlook We expect our net revenue in the fourth
quarter of 2023 to be in the range of R$519 million to R$ 540
million on a reported basis (average FX rate of 4.95 BRL/USD in
4Q23).
For the full year of 2023, we expect our net revenue growth to
be in the range of 4.0% to 5.0% 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 November 16, 2023, the Board
of Directors approved a new share repurchase program, pursuant to
which CI&T may repurchase up to 2.5 million of its outstanding
class A common shares until December 31, 2024.
Conference Call Information Cesar Gon, Bruno Guicardi,
Stanley Rodrigues, and Eduardo Galvão will host a video conference
call to discuss the 3Q23 financial and operating results on
November 17, at 8:00 a.m. Eastern Time / 10:00 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://www.youtube.com/watch?v=yEW4TBCbR1Q.
About CI&T CI&T (NYSE:CINT) is a global hyper
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 6,100
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 and fair value adjustment on accounts payable for
business acquired , 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 and fair value adjustment on accounts
payable for business acquired , 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
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Net Revenue
529,083
559,018
1,710,907
1,575,905
Costs of services provided
(356,779
)
(363,617
)
(1,138,836
)
(1,034,111
)
Gross Profit
172,304
195,401
572,071
541,794
Selling expenses
(40,405
)
(43,337
)
(132,243
)
(118,428
)
General and administrative expenses
(64,807
)
(84,804
)
(207,968
)
(228,115
)
Impairment loss on trade receivables and
contract assets
(836
)
325
(2,573
)
(385
)
Other income (expenses) net
3,363
(3,008
)
2,025
(7,492
)
Operating expenses net
(102,685
)
(130,824
)
(340,759
)
(354,420
)
Operating profit before financial
income and tax
69,619
64,577
231,312
187,374
Finance income
13,506
32,750
62,387
155,638
Finance cost
(33,799
)
(40,182
)
(121,130
)
(197,315
)
Net finance costs
(20,293
)
(7,432
)
(58,743
)
(41,677
)
Profit before Income tax
49,326
57,145
172,569
145,697
Current
(14,285
)
(22,273
)
(32,953
)
(44,796
)
Deferred
1,120
5,736
(3,233
)
(5,071
)
Total Income tax expense
(13,165
)
(16,537
)
(36,186
)
(49,867
)
Net profit for the period
36,161
40,608
136,383
95,830
Earnings per share
Earnings per share – basic (in R$)
0.27
0.30
1.02
0.72
Earnings per share – diluted (in R$)
0.26
0.30
0.99
0.72
Weighted average number of basic
shares
132,943,114
133,332,778
133,515,441
133,006,973
Weighted average number of diluted
shares
137,184,056
133,332,778
137,756,383
133,006,973
Unaudited condensed consolidated
statement of financial position (In thousands of Brazilian
Reais)
Assets
September 30,
2023
December 31,
2022
Liabilities and equity
September 30,
2023
December 31,
2022
Cash and cash equivalents
194,295
185,727
Suppliers and other payables
16,958
33,376
Financial Investments
39,192
96,299
Loans and borrowings
224,579
231,296
Trade receivables
422,218
501,671
Lease liabilities
18,921
21,539
Contract assets
239,796
217,250
Salaries and welfare charges
216,606
260,156
Recoverable taxes
19,739
7,619
Accounts payable for business acquired
41,301
71,650
Tax assets
6,319
2,959
Non-derivatives - hedge accounting
34,721
35,169
Non-derivatives - hedge accounting
26,525
19,637
Derivatives
-
4,109
Derivatives
11,017
11,194
Tax liabilities
6,796
3,890
Other assets
38,259
38,269
Other taxes payable
14,880
14,382
Total current assets
997,360
1,080,625
Contract liability
12,954
32,136
Other liabilities
34,551
47,501
Recoverable taxes
3,703
3,624
Total current liabilities
622,267
755,204
Deferred tax assets
29,633
35,138
Judicial deposits
9,995
9,819
Loans and borrowings
620,589
742,935
Restricted cash - Escrow account and
indemnity asset
31,013
31,552
Lease liabilities
29,834
41,269
Other assets
2,202
3,654
Provisions
12,061
12,347
Property, plant and equipment
41,674
55,266
Accounts payable for business acquired
124,168
133,299
Intangible assets and goodwill
1,690,801
1,750,898
Other liabilities
8,595
3,530
Right-of-use assets
43,236
56,187
Total non-current liabilities
795,247
933,380
Total non-current assets
1,852,257
1,946,138
Equity
Share capital
37
37
Share premium
946,173
946,173
Treasury share reserve
(37,827
)
-
Capital reserves
225,436
203,218
Profit reserves
388,256
251,873
Other comprehensive income
(89,972
)
(63,122
)
Total equity
1,432,103
1,338,179
Total assets
2,849,617
3,026,763
Total equity and liabilities
2,849,617
3,026,763
Unaudited condensed consolidated
statement of cash flows (In thousands of Brazilian
Reais)
September 30, 2023
September 30, 2022
Cash flows from operating
activities
Net profit for the period
136,383
95,830
Adjustments for:
Depreciation and amortization
70,980
67,154
Loss on the sale of property, plant and
equipment, intangible assets and leases
875
2,137
Interest, monetary variation and exchange
rate changes
65,796
30,437
Unrealized gain on financial
instruments
(13,257
)
(5,709
)
Income tax expenses
36,186
49,867
Impairment losses on trade receivables and
contract assets
2,573
385
(Reversal of) provision for labor
risks
(286
)
386
Stock-based plan
21,740
1,894
Present/fair value/price adjustment -
accounts payable for business combination
2,783
7,240
Others
(559
)
(1,824
)
Variation in operating assets and
liabilities
Trade receivables
61,268
(107,311
)
Contract assets
(26,934
)
(85,091
)
Recoverable taxes
(23,279
)
(2,297
)
Tax assets
935
930
Suppliers and other payables
(16,185
)
(34,281
)
Salaries and welfare charges
(42,070
)
7,448
Tax liabilities
-
1,568
Other taxes payable
1,274
4,509
Contract liabilities
(18,484
)
(4,893
)
Other receivables and payables, net
(5,235
)
217
Cash generated from operating
activities
254,505
28,596
Income tax paid
(25,516
)
(33,467
)
Interest paid on loans and borrowings
(52,356
)
(51,152
)
Interest paid on lease
(3,070
)
(4,796
)
Income tax refund
4,198
-
Net cash from (used in) operating
activities
177,761
(60,819
)
Cash flows from investment
activities:
Acquisition of property, plant and
equipment and intangible assets
(14,738
)
(20,163
)
Acquisition of subsidiary net of cash
acquired (Somo, Box and Transpire)
-
(321,799
)
Escrow deposit (acquisition of Somo)
-
(23,061
)
Cash outflow on hedge accounting
settlement
-
20,981
Redemption of financial investments
54,214
582,367
Net cash from (used in) investment
activities
39,476
238,325
Cash flows from financing
activities:
Exercised stock options
578
10,447
Payment of lease liabilities
(18,465
)
(19,828
)
Proceeds from loans and borrowings
47,950
186,239
Settlement of derivatives
9,325
390
Payment of loans and borrowings
(163,457
)
(279,940
)
Payment of investment obligations
(47,461
)
(62,338
)
Repurchase of treasury shares
(37,827
)
-
Net cash used in financing
activities
(209,357
)
(165,030
)
Net increase in cash and cash
equivalents
7,880
12,476
Cash and cash equivalents as of January
1st
185,727
135,727
Exchange variation effect on cash and cash
equivalents
688
3,647
Cash and cash equivalents as of
September 30
194,295
151,850
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)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
Net Revenue
529,083
559,018
-5.4
%
1,710,907
1,575,905
8.6
%
Net Revenue at Constant Currency
548,946
558,525
-1.7
%
1,739,972
1,583,792
9.9
%
Net Revenue by industry
(in BRL thousand)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
Financial Services
158,592
161,185
-1.6
%
492,406
479,172
2.8
%
Consumer goods
105,562
127,097
-16.9
%
343,712
351,116
-2.1
%
Technology and telecommunications
84,147
78,146
7.7
%
313,334
216,097
45.0
%
Retail and industrial goods
64,438
79,226
-18.7
%
208,351
227,615
-8.5
%
Life sciences
57,372
72,063
-20.4
%
185,040
202,791
-8.8
%
Others
58,972
41,301
42.8
%
168,064
99,114
69.6
%
Total
529,083
559,018
-5.4
%
1,710,907
1,575,905
8.6
%
Net Revenue by geography
(in BRL thousand)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
North America
222,860
232,697
-4.2
%
762,204
655,941
16.2
%
Europe
54,045
57,061
-5.3
%
167,645
142,810
17.4
%
LATAM (Latin America)
229,804
247,200
-7.0
%
698,478
724,480
-3.6
%
APJ (Asia, Pacific and Japan)
22,374
22,060
1.4
%
82,580
52,674
56.8
%
Total
529,083
559,018
-5.4
%
1,710,907
1,575,905
8.6
%
Reconciliation of various income
statement amounts from IFRS to non-IFRS measures for the three
months ended September 30, 2023 and 2022 and nine months ended
September 30, 2023 and 2022:
Gross Profit
(in BRL thousand)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
Net Revenue
529,083
559,018
-5.4
%
1,710,907
1,575,905
8.6
%
Cost of Services
(356,779
)
(363,617
)
-1.9
%
(1,138,836
)
(1,034,111
)
10.1
%
Gross Profit
172,304
195,401
-11.8
%
572,071
541,794
5.6
%
Adjustments
Depreciation and amortization (cost of
services provided)
9,116
10,688
-14.7
%
27,248
30,302
-10.1
%
Stock-based compensation
2,949
369
n.m
10,361
1,190
770.7
%
Adjusted Gross Profit
184,369
206,458
-10.7
%
609,680
573,286
6.3
%
Adjusted Gross Profit Margin
34.8
%
36.9
%
-2.1p.p
35.6
%
36.4
%
-0.7p.p
Adjusted EBITDA
(in BRL thousand)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
Net profit for the period
36,161
40,608
-11.0
%
136,383
95,830
42.3
%
Adjustments
Net financial cost
20,293
7,432
173.0
%
58,743
41,677
40.9
%
Income tax expense
13,165
16,537
-20.4
%
36,186
49,867
-27.4
%
Depreciation and amortization
22,871
23,558
-2.9
%
70,980
67,154
5.7
%
Stock-based compensation
6,627
761
771.3
%
21,740
1,894
1047.6
%
Government grants
(29
)
(204
)
-85.6
%
(306
)
(378
)
-18.9
%
Acquisition-related expenses (1)
(1,341
)
16,497
-108.1
%
4,748
34,051
-86.1
%
Adjusted EBITDA
97,747
105,188
-7.1
%
328,474
290,095
13.2
%
Adjusted EBITDA Margin
18.5
%
18.8
%
-0.3p.p
19.2
%
18.4
%
0.8p.p
(1)
Includes present value and fair value adjustment on accounts
payable for business acquired, consulting expenses, and retention
packages.
Net Profit
(in BRL thousand)
3Q23
3Q22
Var.
3Q23 x 3Q22
9M23
9M22
Var.
9M23 x 9M22
Net profit for the period
36,161
40,608
-11.0
%
136,383
95,830
42.3
%
Adjustments
Acquisition-related expenses (1)
9,376
26,743
-64.9
%
39,486
63,321
-37.6
%
Adjusted Net Profit (2)
45,537
67,351
-32.4
%
175,869
159,151
10.5
%
Adjusted Net Profit Margin (2)
8.6
%
12.0
%
-3.4p.p
10.3
%
10.1
%
0.2p.p
(1)
Includes amortization of intangible assets
from acquired companies, present value and fair value adjustment on
accounts payable for business acquired, consulting expenses and
retention packages.
(2)
Adjustments' amounts are gross of tax. Tax
effects on non-IFRS adjustments totaled R$856 thousand in 3Q23,
(R$1,877) thousand in 3Q22, R$23 thousand in 9M23 and (R$2,605)
thousand in 9M22.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231116509834/en/
Investor Relations Contact: Eduardo Galvão
investors@ciandt.com
Media Relations Contact: Zella Panossian
ciandt@illumepr.com
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