Cesar Gon Founder & CEO | --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 541.8 1.2 36.4% 41.7 1.9 30.3 573.3 95.8 49.9 67.2 34.1 290.1 18.4% 63.3 10.1% In calculating Adjusted Gross Profit, we exclude cost components that are not related 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 e ...

Financial Data and Key Metrics - Adjusted EBITDA margin reached 18.5% in Q3 2023, reflecting a lean organizational structure and operational optimization during a period of lower growth [5] - Cash from operating activities in the nine months of 2023 was BRL254 million, strengthening the financial position and providing flexibility for strategic investments [5] - Net revenue in Q3 2023 was BRL529 million, compared to BRL559 million in Q2 2022, with the variation mainly due to budget replanning from the top client and part of the acquired portfolio [10][24] - Adjusted net profit in the nine months of 2023 increased by 10.5% to BRL176 million from BRL159 million in the same period of 2022 [36] - Free cash flow, excluding CapEx, increased to BRL163 million in the nine months of 2023, significantly above the cash consumption of BRL81 million in the same period of 2022 [15] Business Line Data and Key Metrics - Over 20 of the largest clients are engaged with CI&T/FLOW, with more than 2,000 active users from CI&T and co-built clients utilizing the beta version [4] - The financial services segment contributed 29% to total revenue in the nine months of 2023, followed by consumer goods at 20% and technology/telecommunications at 18% [11][33] - The company successfully onboarded 40 new clients generating revenue exceeding BRL1 million in the last 12 months, serving as a catalyst for future growth [34] Market Data and Key Metrics - North America is the largest market, accounting for 44% of total revenue in the nine months of 2023, followed by Latin America at 41%, Europe at 10%, and Asia-Pacific at 5% [11][32] - Revenue share from the top client improved to 10% in 2023 from 16% in 2022, and the top 10 clients' revenue share improved to 42% from 52%, reflecting revenue stream diversification [12] Company Strategy and Industry Competition - The company is focusing on AI capabilities, particularly through CI&T/FLOW, to drive efficiency and customer experience, positioning itself for future growth [38][73] - The company is adopting a cautious approach in 2023, preparing for more aggressive growth in the coming years, with a focus on maintaining profitability and cash generation [14][38] - CI&T/FLOW is expected to contribute to winning new clients and expanding relationships with existing ones, with 20 of the largest clients already using the platform [82][87] Management Commentary on Operating Environment and Future Outlook - Management noted a cautious spending environment among clients due to macroeconomic factors but highlighted the push for digital transformation and AI-driven demand [40][41] - For Q4 2023, the company expects net revenue to be in the range of BRL519 million to BRL540 million, indicating stable sequential revenue [56] - The company is narrowing its 2023 FX neutral net revenue growth guidance to 4%-5% and maintaining an adjusted EBITDA margin expectation of at least 19% [38] Other Important Information - The company achieved a Golden Seal of Quality from the Brazilian GHG Protocol for its greenhouse gas emissions reporting, reflecting its commitment to environmental responsibility [7] - The leadership turnover rate remained at 4%, supporting high-quality service delivery and the development of a new generation of leaders [6] - The company has integrated sustainability into its operations through initiatives like the ESG powerhouse and collaborative projects with business units [8] Q&A Session Summary Question: Impact of top client's budget replanning - The decline in revenue from the top client was due to unexpected budget replanning, but the situation is now stable, with the client remaining a strategic partner [58] Question: Demand environment and outlook for 2024 - The demand environment is influenced by macroeconomic caution and AI-driven transformation, with new demand indicating growth across the board [40][41] - The company expects stable and strong Q4 performance, marking the start of sequential growth through 2024 [41] Question: International expansion and regional demand trends - Demand trends are similar across regions, with some sectors like tech being softer, while financial services and consumer goods remain strong [46] Question: Margin sustainability and pricing trends - Margins are expected to regain historical levels in the coming quarters, with cost management and AI-driven efficiency contributing to sustainability [63] Question: Utilization rate and acquisition integration - Utilization rates have remained high, and the company is forecasting continued high rates as growth resumes [108] - The integration of 2022 acquisitions is progressing well, with some acquired companies showing strong growth in client engagements [104] Question: Contribution of CI&T/FLOW to client acquisition and expansion - CI&T/FLOW is expected to drive efficiency and productivity, replacing competitors and creating opportunities for new AI-driven business use cases [73][94] Question: Capital allocation priorities - Capital is being allocated to debt service, R&D in AI, and share repurchases, with a focus on returning value to shareholders and preparing for future M&A [95][100]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report Of Foreign Private Issuer Pursuant To Rule 13a-16 Or 15d-16 Of The Securities Exchange Act Of 1934 CI&T Inc (Exact Name of Registrant as Specified in its Charter) Estrada Guiseppina Vianelli De Napoli, 1455 – C, Globaltech 13.100-000 - Brazil Campinas-State of São Paulo 13086-902 - Brazil +55 19 21024500 (Address of principal executive office)) Indicate by check mark whether the registrant files or will file annual reports under ...

Financial Data and Key Metrics Changes - The net revenue for Q2 2023 was BRL 507.1 million, a 9% increase compared to Q2 2022, with a 16% growth for the first half of 2023 totaling BRL 1,181.8 million [20][21] - Adjusted EBITDA for Q2 2023 was BRL 114.2 million, a 14% increase from BRL 100.4 million in Q2 2022, with an adjusted EBITDA margin of 20% [51][14] - Adjusted net profit for Q2 2023 was BRL 63.1 million, a 21% increase year-over-year, with an adjusted net profit margin rising to 11% from 10% in Q2 2022 [14][25] Business Line Data and Key Metrics Changes - Financial Services revenue increased by 5%, Consumer Goods by 6%, while Technology and Telecommunications saw a significant 66% growth, driven by acquisitions [21] - The adjusted EBITDA margin improved to 19.5% for the first half of 2023, attributed to operational optimization [24] Market Data and Key Metrics Changes - North America contributed 46% of total revenue in the first half of 2023, LATAM 40%, Europe 10%, and Asia Pacific 5% [48] - The number of clients with revenue exceeding BRL 20 million increased from 21 to 26, and those above BRL 10 million rose from 12 to 22 [50] Company Strategy and Development Direction - The company is focusing on artificial intelligence as a transformative technology, launching the CI&T/FLOW platform to enhance productivity and client engagement [13][4] - The strategy includes scaling AI capabilities across all clients and developing over 100 new AI agents [13] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the global economic environment but remains optimistic about capturing new demand driven by AI and hyper-productivity initiatives [54][27] - For Q3 2023, the company expects revenue to be at least BRL 545 million, reflecting a 2% decline year-over-year, with annual FX-neutral net revenue growth projected between 4% to 8% [27] Other Important Information - The company has maintained a lean organizational structure, with a focus on efficiency and high utilization rates [31][43] - Attrition rates improved to 10.5%, with leadership attrition at a low of 2.6%, indicating a strong work environment [44] Q&A Session Summary Question: When do demand trends begin to improve? - Management indicated that sequential growth is expected in Q4 2023, primarily driven by new bookings related to AI strategies [30] Question: Insights on new projects and AI engagements? - Management highlighted a growing number of use cases in various verticals, focusing on improving customer and employee experiences through generative AI [32] Question: What factors are influencing the demand outlook for the second half of the year? - The company noted that demand is impacted by budget planning from top clients, but anticipates recovery in 2024 [62][64] Question: Insights on LATAM performance and its impact on guidance? - Management clarified that LATAM is recovering faster than other regions, with the top client’s impact being a significant factor [94] Question: Expectations for M&A activity? - The company plans to resume M&A activities next year, focusing on organic growth while considering strategic acquisitions [97]

Financial Performance Highlights - CI&T achieved a Net Revenue Growth of 9% in 2Q23 compared to 2Q22, both on a reported and constant currency basis[18] - The Adjusted EBITDA Margin was 20% in 2Q23, compared to 191% in 2Q22[51] - Adjusted Net Profit Margin increased to 11% in 2Q23, up from 10% in 2Q22[36] - For 6M23, Net Revenue reached R$1,1818 million[57] - Adjusted EBITDA for 6M23 was R$2307 million, resulting in a 195% margin[77, 90] - Adjusted Net Profit for 6M23 was R$1303 million[79] Client and Revenue Metrics - The Average Net Revenue Retention Rate over the last 5 years is 123%[8] - The Net Revenue Retention Rate in 2022 was 126%[76] - North America accounts for 46% of the total Net Revenue[73] - LATAM accounts for 40% of the total Net Revenue[73] - The Technology and Telecommunications industry contributes 19% to the Net Revenue[73]

[2Q23 Earnings Release](index=3&type=section&id=2Q23%20Earnings%20Release) [Operating and Financial Highlights](index=3&type=section&id=Operating%20and%20Financial%20Highlights) CI&T achieved strong Q2 and H1 2023 growth, with net revenue and profit significantly increasing, alongside improved client metrics and cash flow Q2 2023 Financial Highlights (vs. Q2 2022) | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue (BRL) | 571.8M | 525.0M | +8.9% | | Net Profit (BRL) | 47.8M | 26.0M | +84.0% | | Adjusted EBITDA (BRL) | 114.2M | 100.4M | +13.8% | | Adjusted Net Profit (BRL) | 63.1M | 52.3M | +20.8% | | Adjusted EBITDA Margin (%) | 20.0% | 19.1% | +0.9 p.p. | | Clients > BRL 1M Revenue (LTM) | 183 | 127 | +44.1% | 6M 2023 Financial Highlights (vs. 6M 2022) | Metric | 6M 2023 | 6M 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue (BRL) | 1,181.8M | 1,016.9M | +16.2% | | Net Profit (BRL) | 100.2M | 55.2M | +81.5% | | Adjusted EBITDA (BRL) | 230.7M | 184.9M | +24.8% | | Adjusted Net Profit (BRL) | 130.3M | 91.8M | +42.0% | | Operating Cash Flow (BRL) | 117.6M | (87.1M) | N/A | [Business Overview and Management Commentary](index=3&type=section&id=Business%20Overview%20and%20Management%20Commentary) Management emphasizes pioneering enterprise AI for digital transformation, supported by diversified revenue across geographies and key industry verticals - The company's strategic vision is to pioneer the enterprise adoption of Artificial Intelligence, aiming to enhance productivity, quality, and progress in a reliable and secure framework[7](index=7&type=chunk)[8](index=8&type=chunk)[31](index=31&type=chunk) Q2 2023 Revenue Breakdown | Breakdown | Percentage (%) | | :--- | :--- | | **By Geography** | | | North America | 45% | | Latam | 40% | | Europe | 10% | | Asia Pacific | 5% | | **By Industry** | | | Financial Services & Consumer Goods | Most relevant | | Technology & Telecommunications | Grew in relevance | [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) Q2 2023 profitability improved, with higher Adjusted EBITDA and Net Profit margins driven by SG&A efficiency and reduced income tax expense - Adjusted EBITDA margin increased by **0.9 percentage points** to **20.0%** in Q2 2023, primarily due to lower SG&A expenses as a percentage of revenue[9](index=9&type=chunk) - Adjusted Net Profit margin grew by **1.0 percentage point** to **11.0%** in Q2 2023, mainly due to SG&A dilution and lower income tax expenses[11](index=11&type=chunk) - Income tax expense in Q2 2023 decreased by **37.3%** compared to Q2 2022, largely because of the amortization of goodwill for tax purposes[127](index=127&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) The company updated its 2023 full-year guidance, projecting net revenue growth and an Adjusted EBITDA margin of at least 19%, with Q3 revenue forecasts 2023 Full-Year Guidance | Metric | Guidance | | :--- | :--- | | Net Revenue Growth (Constant Currency) | 4.0% to 8.0% YoY | | Adjusted EBITDA Margin | At least 19% | - For Q3 2023, net revenue is expected to be at least **BRL 545 million** at constant currency, which translates to **BRL 525 million** on a reported basis, a **2% decline** compared to Q3 2022[120](index=120&type=chunk) [Share Repurchase Program](index=4&type=section&id=Share%20Repurchase%20Program) The Board authorized a share repurchase program for up to 1.5 million shares, with 640,148 shares repurchased by June 30, 2023 - A share repurchase program for up to **1.5 million** class A common shares was approved on May 17, 2023, and management expects to continue its execution[100](index=100&type=chunk) - As of June 30, 2023, the company held **640,148 shares** of its own shares, acquired for **BRL 18,476 thousand**, under the repurchase program[171](index=171&type=chunk) [Non-IFRS Financial Measures and Reconciliations](index=4&type=section&id=Non-IFRS%20Financial%20Measures%20and%20Reconciliations) Non-IFRS measures like Adjusted EBITDA and Net Profit are used to assess operational performance by excluding specific non-recurring items - Non-IFRS measures like Adjusted Gross Profit, Adjusted EBITDA, and Adjusted Net Profit are used to provide a better understanding of operational performance by excluding items like acquisition expenses, stock-based compensation, and certain depreciation/amortization[37](index=37&type=chunk)[39](index=39&type=chunk)[101](index=101&type=chunk) Reconciliation of Net Profit to Adjusted EBITDA (in BRL thousand) | Description | Q2 2023 (BRL thousand) | Q2 2022 (BRL thousand) | 6M 2023 (BRL thousand) | 6M 2022 (BRL thousand) | | :--- | :--- | :--- | :--- | :--- | | **Net profit for the period** | **47,839** | **25,999** | **100,222** | **55,222** | | Net financial cost | 18,482 | 17,533 | 38,451 | 34,245 | | Income tax expense | 11,298 | 18,016 | 23,021 | 33,330 | | Depreciation and amortization | 23,056 | 24,205 | 48,109 | 43,596 | | Stock-based compensation | 9,719 | (106) | 15,112 | 1,133 | | Acquisition-related expenses | 3,965 | 14,859 | 6,089 | 17,554 | | **Adjusted EBITDA** | **114,222** | **100,391** | **230,727** | **184,906** | Reconciliation of Net Profit to Adjusted Net Profit (in BRL thousand) | Description | Q2 2023 (BRL thousand) | Q2 2022 (BRL thousand) | 6M 2023 (BRL thousand) | 6M 2022 (BRL thousand) | | :--- | :--- | :--- | :--- | :--- | | **Net profit for the period** | **47,839** | **25,999** | **100,222** | **55,222** | | Acquisition-related expenses | 15,274 | 26,255 | 30,110 | 36,578 | | **Adjusted Net Profit** | **63,113** | **52,254** | **130,332** | **91,800** | [Unaudited Condensed Consolidated Interim Financial Information](index=11&type=section&id=Unaudited%20condensed%20consolidated%20interim%20financial%20information) [Consolidated Financial Statements](index=13&type=section&id=Consolidated%20Financial%20Statements) Unaudited 6M 2023 financial statements show stable assets, increased net profit, and a significant positive shift in operating cash flow [Statement of Financial Position](index=13&type=section&id=Statement%20of%20Financial%20Position) Total assets slightly decreased to BRL 2.82 billion, while equity increased to BRL 1.40 billion and liabilities decreased Key Balance Sheet Items (in BRL thousand) | Account | June 30, 2023 (BRL thousand) | Dec 31, 2022 (BRL thousand) | | :--- | :--- | :--- | | **Total Assets** | **2,817,991** | **3,026,763** | | Cash and cash equivalents | 149,232 | 185,727 | | Intangible assets and goodwill | 1,673,996 | 1,750,898 | | **Total Liabilities** | **1,421,207** | **1,688,584** | | Loans and borrowings | 863,354 | 974,231 | | **Total Equity** | **1,396,784** | **1,338,179** | [Statement of Profit or Loss](index=14&type=section&id=Statement%20of%20Profit%20or%20Loss) 6M 2023 net profit reached BRL 100.2 million on BRL 1.18 billion revenue, driven by growth and expense control Income Statement Summary (in BRL thousand) | Metric | 6M 2023 (BRL thousand) | 6M 2022 (BRL thousand) | | :--- | :--- | :--- | | Net Revenue | 1,181,824 | 1,016,887 | | Gross Profit | 399,767 | 346,393 | | Operating Profit | 161,694 | 122,797 | | **Net Profit for the period** | **100,222** | **55,222** | | Basic EPS (in BRL) | 0.75 | 0.42 | [Statement of Cash Flows](index=17&type=section&id=Statement%20of%20Cash%20Flows) 6M 2023 operating cash flow significantly improved to BRL 62.1 million, driven by profit and working capital management Cash Flow Summary (in BRL thousand) | Cash Flow Activity | 6M 2023 (BRL thousand) | 6M 2022 (BRL thousand) | | :--- | :--- | :--- | | Net cash from (used in) operating activities | 62,108 | (149,736) | | Net cash from investment activities | 48,731 | 225,143 | | Net cash used in financing activities | (144,427) | (115,042) | | **Net decrease in cash and cash equivalents** | **(33,588)** | **(39,635)** | [Notes to the Financial Statements](index=19&type=section&id=Notes%20to%20the%20Financial%20Statements) Notes detail revenue by service, industry, and geography, alongside financial risk management strategies and loan covenant compliance [Net Revenue (Note 19)](index=33&type=section&id=Net%20Revenue%20(Note%2019)) Software development drives 95% of 6M 2023 revenue, with financial services and North America as leading segments Net Revenue by Type - 6M 2023 (in BRL thousand) | Service Type | Revenue (BRL thousand) | % of Total | | :--- | :--- | :--- | | Software development | 1,124,217 | 95.1% | | Software maintenance | 32,815 | 2.8% | | Consulting | 20,736 | 1.8% | | Other | 4,056 | 0.3% | | **Total** | **1,181,824** | **100%** | Net Revenue by Industry Vertical - 6M 2023 (in BRL thousand) | Industry | Revenue (BRL thousand) | % of Total | | :--- | :--- | :--- | | Financial services | 333,814 | 28.2% | | Consumer goods | 238,149 | 20.2% | | Technology and telecommunications | 229,187 | 19.4% | | Retail and industrial goods | 143,913 | 12.2% | | Life sciences | 127,668 | 10.8% | | Others | 109,093 | 9.2% | | **Total** | **1,181,824** | **100%** | - The top client represented **11%** of total net revenues as of June 30, 2023, a decrease from **16%** in the same period of 2022, indicating reduced client concentration[173](index=173&type=chunk) [Intangible Assets and Goodwill (Note 10)](index=24&type=section&id=Intangible%20Assets%20and%20Goodwill%20(Note%2010)) Intangible assets and goodwill totaled BRL 1.67 billion, with no impairment indicators identified for the period Intangible Assets and Goodwill (in BRL thousand) | Asset | June 30, 2023 (BRL thousand) | Dec 31, 2022 (BRL thousand) | | :--- | :--- | :--- | | Customer relationship | 257,875 | 288,943 | | Goodwill | 1,387,979 | 1,432,894 | | Other Intangibles | 28,143 | 29,062 | | **Total** | **1,673,996** | **1,750,898** | - Management concluded that no impairment indicator for intangible assets and goodwill was identified for the six-month period ended June 30, 2023[145](index=145&type=chunk) [Financial Instruments and Risk Management (Note 24)](index=38&type=section&id=Financial%20Instruments%20and%20Risk%20Management%20(Note%2024)) The company manages market, credit, and liquidity risks through hedging strategies, counterparty analysis, and cash flow projections - The Group uses non-derivative financial instruments (USD-denominated debt) as a cash flow hedge against the foreign exchange risk of its highly probable future export revenues in U.S. dollars[218](index=218&type=chunk) - The Group is transitioning from LIBOR to alternative rates like SOFR for its financial instruments and has implemented appropriate fallback clauses[188](index=188&type=chunk)[214](index=214&type=chunk) - Credit risk is managed by holding cash and financial investments with bank counterparties rated from **BB- to A+** by Standard & Poor's[231](index=231&type=chunk)

CI&T Inc (NYSE:CINT) Q1 2023 Earnings Conference Call May 19, 2023 8:00 AM ET Company Participants Eduardo Galvao - Investor Relations Director Cesar Gon - Founder and Chief Executive Officer Bruno Guicardi - Founder and President for North America and Europe Stanley Rodrigues - Chief Financial Officer Conference Call Participants Tyler DuPont - Bank of America Ashwin Shirvaikar - Citi Eduardo Galvao Good morning, and welcome to CI&T Earnings Call for the First Quarter of 2023. I am Eduardo Galvao, Investor ...

Cesar Gon Founder & CEO Eduardo Galvão IR Director investors.ciandt.com 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 diff ...

[1Q23 Earnings Release](index=3&type=section&id=1Q23_Earnings_Release) [Operating and Financial Highlights](index=3&type=section&id=Operating_and_Financial_Highlights) CI&T reported strong Q1 2023 results, with significant year-over-year growth in net revenue, net profit, and adjusted EBITDA 1Q23 Key Financial and Operating Metrics (BRL million, vs. 1Q22) | Metric | 1Q23 | 1Q22 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | BRL 610.0 million | BRL 491.9 million | +24.0% | | Net Profit | BRL 52.4 million | BRL 29.2 million | +79.2% | | Adjusted EBITDA | BRL 116.5 million | BRL 84.5 million | +37.9% | | Adjusted EBITDA Margin | 19.1% | 17.2% | +1.9 p.p. | | Adjusted Net Profit | BRL 67.2 million | BRL 39.5 million | +70.0% | | Cash from Operations | BRL 116.5 million | -BRL 47.0 million | N/A | | Clients > BRL 1M Revenue (LTM) | 180 | 110 | +63.6% | [Comments on Financial Performance](index=3&type=section&id=Comments_on_Financial_Performance) Q1 2023 revenue growth was driven by regional expansion, maintaining gross profit margin and improving SG&A efficiency - Net revenue grew **24.0%** YoY (**24.3%** at constant currency), with growth observed in all operating regions[270](index=270&type=chunk) - Adjusted Gross Profit Margin was **35.1%**, in line with the **35.2%** margin in 1Q22[13](index=13&type=chunk)[26](index=26&type=chunk) - SG&A and other operating expenses as a percentage of revenue decreased to **19.1%** in 1Q23 from **20.4%** in 1Q22, indicating improved operational efficiency[280](index=280&type=chunk) - Net financial expenses rose **19.5%** YoY to **BRL 20.0 million**, primarily due to higher debt, increased interest rates, and a negative foreign exchange variation[271](index=271&type=chunk) - Adjusted Net Profit margin expanded by **3 percentage points** to **11.0%**, benefiting from SG&A dilution and lower income tax[14](index=14&type=chunk) [Business Outlook](index=4&type=section&id=Business_Outlook) CI&T forecasts Q2 2023 net revenue of at least BRL 570 million, maintaining full-year revenue growth and EBITDA margin guidance 2023 Business Outlook | Period | Metric | Guidance | | :--- | :--- | :--- | | **Q2 2023** | Net Revenue | At least BRL 570 million | | **Full Year 2023** | Net Revenue Growth (Constant Currency) | 13% to 17% YoY | | **Full Year 2023** | Adjusted EBITDA Margin | At least 19% | [Non-IFRS Financial Measures and Reconciliations](index=4&type=section&id=Non-IFRS_Financial_Measures_and_Reconciliations) The company uses non-IFRS measures like Adjusted Gross Profit, EBITDA, and Net Profit to clarify operational performance - CI&T uses non-IFRS measures like Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Profit, and Net Revenue at Constant Currency to enhance investor understanding of its financial performance, excluding items not directly related to service management[48](index=48&type=chunk) Reconciliation of Gross Profit to Adjusted Gross Profit (in BRL thousand) | Description | 1Q23 | 1Q22 | | :--- | :--- | :--- | | **Gross Profit (IFRS)** | **202,130** | **162,880** | | Depreciation and amortization | 9,410 | 9,318 | | Stock-based compensation | 2,376 | 1,182 | | **Adjusted Gross Profit** | **213,916** | **173,380** | | *Adjusted Gross Profit Margin* | *35.1%* | *35.2%* | Reconciliation of Net Profit to Adjusted EBITDA (in BRL thousand) | Description | 1Q23 | 1Q22 | | :--- | :--- | :--- | | **Net profit for the period (IFRS)** | **52,382** | **29,223** | | Net financial cost | 19,968 | 16,712 | | Income tax expense | 11,723 | 15,314 | | Depreciation and amortization | 25,053 | 19,390 | | Stock-based compensation | 5,393 | 1,239 | | Government grants | (140) | (58) | | Acquisition-related expenses | 2,124 | 2,695 | | **Adjusted EBITDA** | **116,504** | **84,515** | | *Adjusted EBITDA Margin* | *19.1%* | *17.2%* | Reconciliation of Net Profit to Adjusted Net Profit (in BRL thousand) | Description | 1Q23 | 1Q22 | | :--- | :--- | :--- | | **Net profit for the period (IFRS)** | **52,382** | **29,223** | | Acquisition-related expenses | 14,836 | 10,323 | | **Adjusted Net Profit** | **67,218** | **39,546** | | *Adjusted Net Profit Margin* | *11.0%* | *8.0%* | [Unaudited Condensed Consolidated Interim Financial Statements](index=6&type=section&id=Unaudited_Condensed_Consolidated_Interim_Financial_Statements) [Statement of Financial Position](index=7&type=section&id=Statement_of_Financial_Position) CI&T's total assets were BRL 3.018 billion as of March 31, 2023, with liabilities at BRL 1.631 billion and equity at BRL 1.387 billion Condensed Statement of Financial Position (in BRL thousands) | Account | March 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **3,018,407** | **3,026,763** | | Cash and cash equivalents | 251,550 | 185,727 | | Intangible assets and goodwill | 1,719,226 | 1,750,898 | | **Total Liabilities** | **1,631,338** | **1,688,584** | | Loans and borrowings | 948,324 | 974,231 | | Accounts payable for business combination | 204,686 | 204,949 | | **Total Equity** | **1,387,069** | **1,338,179** | [Statement of Profit or Loss](index=6&type=section&id=Statement_of_Profit_or_Loss) CI&T reported Q1 2023 net revenue of BRL 610.0 million (up 24.0%) and net profit of BRL 52.4 million (up 79.2%) Condensed Statement of Profit or Loss (in BRL thousands) | Account | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Net Revenue | 609,991 | 491,872 | | Gross Profit | 202,130 | 162,880 | | Operating profit | 84,073 | 61,249 | | Profit before Income tax | 64,105 | 44,537 | | **Net profit for the period** | **52,382** | **29,223** | | **Earnings per share – basic (in BRL)** | **0.39** | **0.22** | [Statement of Cash Flows](index=8&type=section&id=Statement_of_Cash_Flows) In Q1 2023, CI&T generated BRL 93.1 million net cash from operating activities, a strong turnaround from prior year Condensed Statement of Cash Flows (in BRL thousands) | Activity | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Net cash from (used in) operating activities | 93,072 | (72,719) | | Net cash from (used in) investment activities | (2,773) | 92,830 | | Net cash used in financing activities | (23,269) | (39,843) | | **Net increase/(decrease) in cash** | **67,030** | **(19,732)** | | **Cash and cash equivalents at end of period** | **251,550** | **131,827** | [Notes to the Financial Statements](index=19&type=section&id=Notes_to_the_Financial_Statements) The notes detail accounting policies, business combinations, intangible assets, revenue, expenses, and risk management [Note 1 & 2: Reporting Entity and Business Combination](index=19&type=section&id=Note_1_and_2_Reporting_Entity_and_Business_Combination) CI&T Inc. is a holding company developing software solutions, completing several acquisitions in 2022 including Somo and Ntersol - The company is a holding entity for subsidiaries that develop customizable software solutions, including AI, analytics, and cloud technologies[302](index=302&type=chunk) - In **2022**, the company acquired Somo, Box **1824**, Transpire, and Ntersol. The total consideration transferred for these acquisitions was **BRL 447.4 million**, **BRL 34.2 million**, **BRL 77.3 million**, and **BRL 664.7 million**, respectively[35](index=35&type=chunk)[303](index=303&type=chunk) [Note 11: Intangible Assets and Goodwill](index=26&type=section&id=Note_11_Intangible_Assets_and_Goodwill) Intangible assets and goodwill totaled BRL 1.719 billion as of March 31, 2023, mainly comprising goodwill and customer relationships Intangible Assets and Goodwill Breakdown (in BRL thousands) | Asset | March 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Customer relationship | 274,890 | 288,943 | | Brands | 5,849 | 7,464 | | Software & Other | 21,488 | 21,567 | | **Goodwill** | **1,416,999** | **1,432,894** | | **Total** | **1,719,226** | **1,750,898** | Goodwill by Acquisition (in BRL thousands) | Acquisition | March 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Dextra | 595,721 | 595,721 | | Ntersol | 456,887 | 469,235 | | Somo | 260,715 | 260,466 | | Transpire | 61,187 | 63,702 | | Other | 42,489 | 47,470 | | **Total Goodwill** | **1,416,999** | **1,432,894** | [Note 13: Loans and Borrowings](index=29&type=section&id=Note_13_Loans_and_Borrowings) Total loans and borrowings were BRL 948.3 million as of March 31, 2023, with compliance to financial covenants maintained - Total loans and borrowings were **BRL 948.3 million**, with **BRL 233.6 million** classified as current and **BRL 714.7 million** as non-current[116](index=116&type=chunk)[355](index=355&type=chunk) - The debt contracts include covenants, such as maintaining a specific Net Debt to EBITDA ratio, which could trigger early maturity if breached[140](index=140&type=chunk)[264](index=264&type=chunk) - The company was in compliance with all loan covenants as of March **31**, **2023**[357](index=357&type=chunk) [Note 18: Stock-based Compensation](index=33&type=section&id=Note_18_Stock-based_Compensation) The Group maintains equity and cash-settled stock-based compensation plans, with Q1 2023 expenses at BRL 5.4 million - The company has multiple stock-based payment arrangements, including Stock Option Plans (SOP), Incentive Stock Options (ISO), and Restricted Stock Units (RSU) for its employees[147](index=147&type=chunk)[124](index=124&type=chunk) - Total stock-based compensation expense recognized in profit or loss for Q1 **2023** was **BRL 5.39 million**, compared to **BRL 1.24 million** in Q1 **2022**[130](index=130&type=chunk) - As of March **31**, **2023**, there were **4,131,273** outstanding stock options and **1,437,030** outstanding RSUs[130](index=130&type=chunk) [Note 20: Net Revenue](index=37&type=section&id=Note_20_Net_Revenue) Q1 2023 net revenue was BRL 610.0 million, mainly from software development, with Technology and Telecommunications leading growth Net Revenue by Type (in BRL thousands) | Revenue Type | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Software development | 580,876 | 470,662 | | Software maintenance | 17,020 | 13,380 | | Consulting | 10,599 | 5,173 | | Other | 1,506 | 2,657 | | **Total net revenue** | **609,991** | **491,872** | Net Revenue by Industry Vertical (in BRL thousands) | Industry Vertical | March 31, 2023 | March 31, 2022 | Change YoY | | :--- | :--- | :--- | :--- | | Financial services | 174,783 | 156,326 | +11.8% | | Technology and telecommunications | 125,060 | 68,056 | +83.8% | | Consumer goods | 116,156 | 104,369 | +11.3% | | 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 net revenue** | **609,991** | **491,872** | **+24.0%** | - Revenue from a single customer represented **11.1%** of total net revenues as of March **31**, **2023**, down from **15.4%** in the prior year period[254](index=254&type=chunk) [Note 21: Expenses by Nature](index=39&type=section&id=Note_21_Expenses_by_Nature) Total costs and expenses for Q1 2023 were BRL 525.9 million, with employee expenses as the largest component Expenses by Nature (in BRL thousands) | Expense Category | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Employee expenses | (443,313) | (365,596) | | Third-party services and other inputs | (34,070) | (24,226) | | Depreciation and amortization | (25,053) | (19,390) | | Stock-based compensation | (5,393) | (1,239) | | Other costs and expenses | (17,789) | (18,072) | | **Total** | **(525,918)** | **(430,623)** | [Note 24: Earnings Per Share](index=41&type=section&id=Note_24_Earnings_Per_Share) For Q1 2023, basic EPS was BRL 0.39 and diluted EPS was BRL 0.38, based on net profit of BRL 52.4 million Earnings Per Share Calculation | Metric | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Net Profit (in BRL thousands) | 52,382 | 29,223 | | Weighted average basic shares | 133,834,456 | 132,639,430 | | **Basic EPS (in BRL)** | **0.39** | **0.22** | | Weighted average diluted shares | 137,279,821 | 132,963,392 | | **Diluted EPS (in BRL)** | **0.38** | **0.22** | [Note 25: Financial Instruments and Risk Management](index=42&type=section&id=Note_25_Financial_Instruments_and_Risk_Management) The Group manages market, credit, and liquidity risks, utilizing hedges and swaps for foreign currency and interest rate exposures - The Group is exposed to foreign exchange risk as revenue is mainly denominated in foreign currency while expenses are mainly in Brazilian Reais (BRL)[194](index=194&type=chunk)[215](index=215&type=chunk) - To mitigate currency risk, the company uses cash flow hedge accounting, designating non-derivative financial instruments (long-term debt in USD) to hedge highly probable future export revenues[179](index=179&type=chunk)[215](index=215&type=chunk) - The company is exposed to interest rate risk from changes in CDI, LIBOR, and SOFR on its financial assets and liabilities. It uses interest rate swaps to hedge this exposure[201](index=201&type=chunk)[221](index=221&type=chunk)[229](index=229&type=chunk) - Credit risk is managed by analyzing the financial condition of counterparties and setting credit limits. The maximum credit risk exposure from financial assets was **BRL 1.068 billion** as of March **31**, **2023**[241](index=241&type=chunk)[243](index=243&type=chunk) - Liquidity risk is managed through cash flow projections and maintaining credit lines to ensure funds are available to meet obligations[208](index=208&type=chunk)[245](index=245&type=chunk) [Share Repurchase Program](index=55&type=section&id=Share_Repurchase_Program) CI&T's Board approved a share repurchase program for up to 1.5 million Class A common shares over a 12-month term - The Board of Directors approved a share repurchase program for up to **1.5 million** Class A common shares[238](index=238&type=chunk)[258](index=258&type=chunk) - The program has a term of **12 months** and was established to meet obligations from stock-based compensation plans and M&A deals[273](index=273&type=chunk)[260](index=260&type=chunk) - Repurchases may occur through open market purchases, privately negotiated transactions, or other means, and the program can be suspended or discontinued at any time[262](index=262&type=chunk)

Table of Contents ITEM 16. RESERVED 113 A. Audit Committee Financial Expert 113 113 113 114 114 114 114 114 114 115 115 115 115 | --- | |---------------------------------------------------------------------------| | | | B. Code of Ethics | | C. Principal Accountant Fees and Services | | D. Exemptions from the listing standards for audit committees | | E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers | | F. Change in registrant's certifying accountant | | G. Corporate governance | | ...