CI&T Inc(CINT) - 2022 Q2 - Quarterly Report

2Q22 Earnings Release Second Quarter and Six-Month Operating and Financial Highlights CI&T achieved strong financial and operational results in the second quarter and six months ended June 30, 2022, with significant growth in net revenue, adjusted EBITDA, and customer and employee numbers 2Q22 Operating and Financial Highlights: | Metric | 2Q22 (Million Brazilian Reais) | YoY Growth | | :--- | :--- | :--- | | Net Revenue | 525.0 | 67% | | Net Revenue Growth at Constant Currency | - | 73% | | Number of Clients (Annual Revenue > R$1 Million) | 127 | Up from 110 in 1Q22 | | Net Profit | 26.0 | -42% | | Adjusted EBITDA | 100.4 | 36% | | Adjusted EBITDA Margin | 19.1% | - | | Adjusted Net Profit | 52.3 | 16% | | Adjusted Net Profit Margin | 10% | - | | CI&T Employees | 6,768 | 68% (Net increase of 2,734) | 6M22 Operating and Financial Highlights: | Metric | 6M22 (Million Brazilian Reais) | YoY Growth | | :--- | :--- | :--- | | Net Revenue | 1,016.9 | 66% | | Net Revenue Growth at Constant Currency | - | 74% | | Net Profit | 55.2 | -35% | | Adjusted EBITDA | 186.5 | 31% | | Adjusted EBITDA Margin | 18.3% | - | | Adjusted Net Profit | 93.3 | 10% | CEO Comments CI&T's Founder and CEO, Cesar Gon, expressed satisfaction with the company's Q2 2022 performance, highlighting robust profitability, sustainable growth, and recognition as a leader in modern application development services - CEO Cesar Gon expressed satisfaction with 2Q22 results, noting robust profitability and sustainable growth[10] - Growth drivers include expanded collaboration with existing clients, new client acquisition, and programmatic M&A strategy[10] - CI&T was recognized by Forrester as a leader in modern application development services, reflecting its capabilities in digital transformation and efficiency improvement[10] Comments on 2Q22 and 6M22 Financial Performance This section details CI&T's financial performance for the second quarter and first half of 2022, analyzing year-over-year changes and key drivers across net revenue, costs, gross profit, SG&A, adjusted EBITDA, net financial expenses, depreciation, amortization, and net profit Net Revenue This section analyzes the company's net revenue performance for Q2 and H1 2022, highlighting growth drivers, market contributions, and the impact of foreign exchange fluctuations Net Revenue (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 525,015 | 315,324 | 66.5% | 1,016,887 | 611,616 | 66.3% | | Net Revenue at Constant Currency | 549,961 | 317,995 | 72.9% | 1,065,309 | 611,905 | 74.1% | - 2Q22 net revenue was R$525.0 million, a 66.5% year-over-year increase, with acquisitions of Somo and Box 1824 contributing 13 percentage points to revenue growth[13] - The US market was CI&T's largest organic growth market, while European growth was primarily driven by the Somo acquisition, and the top ten clients' revenue share decreased from 73% in 2Q21 to 52% in 2Q22, indicating client base diversification[13] - Brazilian Real appreciation against the US Dollar and British Pound impacted revenue conversion for North American and European operations, with 2Q22 net revenue growing 73% at constant currency[14] Revenue Breakdown by Industry and Geography This section provides a detailed breakdown of net revenue by industry vertical and geographical region, illustrating key growth areas and market contributions Net Revenue by Industry (Thousand Brazilian Reais): | Industry | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Financial Services | 161,466 | 111,268 | 45.1% | 315,064 | 210,089 | 50.0% | | Food and Beverage | 107,988 | 88,112 | 22.6% | 202,056 | 172,169 | 17.4% | | Technology, Media and Telecommunications | 69,690 | 30,142 | 131.2% | 137,443 | 62,491 | 119.9% | | Pharma and Cosmetics | 70,568 | 45,798 | 54.1% | 133,990 | 87,604 | 52.9% | | Retail and Manufacturing | 31,624 | 18,232 | 73.4% | 67,053 | 34,210 | 96.0% | | Education and Services | 16,965 | 11,446 | 48.2% | 36,653 | 23,638 | 55.1% | | Logistics and Transportation | 17,596 | 4,923 | 257.4% | 34,632 | 10,155 | 241.0% | | Other | 49,118 | 5,403 | 809.2% | 89,996 | 11,260 | 699.3% | | Total | 525,015 | 315,324 | 66.5% | 1,016,887 | 611,616 | 66.3% | - Financial Services and Food and Beverage remain key markets, while Technology, Media and Telecommunications (TMT) and Retail and Manufacturing sectors show significant growth and increasing importance in the client portfolio[15] Net Revenue by Geography (Thousand Brazilian Reais): | Geography | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | North America and Europe (NAE) | 267,464 | 159,187 | 68.0% | 508,993 | 312,810 | 62.7% | | North America | 219,304 | 152,574 | 43.7% | 423,244 | 301,584 | 40.3% | | Europe | 48,160 | 6,613 | 628.3% | 85,749 | 11,226 | 663.8% | | Latin America (LATAM) | 242,574 | 146,641 | 65.4% | 477,280 | 277,818 | 71.8% | | Asia, Pacific and Japan (APJ) | 14,977 | 9,496 | 57.7% | 30,614 | 20,988 | 45.9% | Cost of Services Provided and Adjusted Gross Profit This section examines the cost of services and adjusted gross profit, analyzing their changes and the factors influencing gross margin performance Gross Profit (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 525,015 | 315,324 | 66.5% | 1,016,887 | 611,616 | 66.3% | | Cost of Services | (341,502) | (205,768) | 66.0% | (670,494) | (394,140) | 70.1% | | Gross Profit | 183,513 | 109,556 | 67.5% | 346,393 | 217,476 | 59.3% | | Adjusted Gross Profit | 193,447 | 116,287 | 66.4% | 366,828 | 230,484 | 59.2% | | Adjusted Gross Margin | 36.8% | 36.9% | 0p.p | 36.1% | 37.7% | -1.6p.p | - 2Q22 cost of services was R$341.5 million, a 66.0% year-over-year increase, with adjusted gross profit at R$193.5 million, up 66.4%, and an adjusted gross margin of 36.8%[21] - 2Q22 gross margin remained largely stable year-over-year, while the 6M22 gross margin decreased by 1.6 percentage points, primarily due to foreign exchange fluctuations and the lower margins of recently acquired companies[22] SG&A and Other Expenses This section details the changes in selling, general, and administrative expenses and other operating costs, identifying the primary drivers behind their increase SG&A Expenses (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | (39,962) | (18,801) | 112.6% | (75,091) | (37,780) | 98.8% | | General and Administrative Expenses | (78,390) | (28,328) | 176.7% | (143,311) | (54,054) | 165.1% | | Total SG&A Expenses | (118,352) | (47,129) | 151.1% | (218,402) | (91,834) | 137.8% | | Other Income (Expenses) Net | (3,969) | (184) | n.m | (4,484) | 1,406 | - | | Impairment Losses on Trade Receivables and Contract Assets | 356 | 2,891 | -87.7% | (710) | (367) | 93.5% | | Total SG&A and Other Operating Expenses | (121,965) | (44,422) | 174.6% | (223,596) | (90,795) | 146.3% | - 2Q22 selling, general, and administrative (SG&A) expenses increased by 151.1% year-over-year, mainly driven by team expansion recruitment and retention, acquisition-related costs (including intangible asset amortization), and strengthening of back-office teams post-IPO[24] Adjusted EBITDA This section analyzes the adjusted EBITDA and its margin, explaining the factors contributing to its year-over-year and sequential changes Adjusted EBITDA (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Profit | 25,999 | 44,722 | -41.9% | 55,222 | 84,337 | -34.5% | | Adjustments: | | | | | | | | Net Financial Costs | 17,533 | 1,989 | 781.5% | 34,245 | 3,686 | 829.1% | | Income Tax Expense | 18,016 | 18,423 | -2.2% | 33,330 | 38,658 | -13.8% | | Depreciation and Amortization | 24,205 | 8,224 | 194.3% | 43,596 | 16,019 | 172.2% | | Share-based Compensation | (106) | 328 | - | 1,133 | 501 | 126.1% | | Consulting Fees | 6,395 | 237 | n.m | 9,090 | 462 | n.m | | Government Grants | (115) | (9) | n.m | (174) | (1,414) | -87.7% | | Write-off | - | - | 0.0% | 1,548 | - | 0.0% | | Acquisition-related Expenses | 8,464 | - | 0.0% | 8,464 | - | 0.0% | | Adjusted EBITDA | 100,391 | 73,915 | 35.8% | 186,454 | 142,249 | 31.1% | | Adjusted EBITDA Margin | 19.1% | 23.4% | -4.3p.p | 18.3% | 23.3% | -4.9p.p | - 2Q22 adjusted EBITDA was R$100.4 million, a 35.8% year-over-year increase, with an adjusted EBITDA margin of 19.1%, down 4.3 percentage points year-over-year, primarily due to increased SG&A expenses[27] - Adjusted EBITDA margin improved sequentially from 17.5% in 1Q22 to 19.1% in 2Q22, benefiting from seasonal factors such as gradual contract price adjustments and higher utilization rates[27] Net Financial Expenses This section discusses the significant increase in net financial expenses, primarily attributed to debt incurred for a major acquisition - 2Q22 net financial expenses were R$17.5 million, compared to R$2.0 million in 2Q21, mainly due to debt incurred to finance the R$650 million Dextra acquisition in July 2021[28] Depreciation and Amortization This section highlights the increase in depreciation and amortization expenses, largely driven by the amortization of intangible assets from recent acquisitions - 2Q22 depreciation and amortization expenses totaled R$24.2 million, an increase of R$15.9 million from 2Q21, primarily due to R$11.3 million in intangible asset amortization from acquired companies[28] Income Tax Expense This section outlines the income tax expense for the quarter and six-month period, noting a slight decrease and the effective cash tax rate - 2Q22 income tax expense was R$18.0 million, a 2.2% year-over-year decrease, while 6M22 income tax expense was R$33.3 million, down 13.8%, with a cash tax rate of 17%[29] Net Profit This section presents the net profit and adjusted net profit, along with their respective margins, and explains the factors contributing to their changes Net Profit (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 2Q22 vs 2Q21 Change | 6M22 | 6M21 | 6M22 vs 6M21 Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Profit | 25,999 | 44,722 | -41.9% | 55,222 | 84,337 | -34.5% | | Adjusted Net Profit | 52,253 | 44,959 | 16.2% | 93,347 | 84,799 | 10.1% | | Adjusted Net Profit Margin | 10.0% | 14.3% | -4.3p.p | 9.2% | 13.9% | -4.7p.p | - 2Q22 net profit was R$26.0 million, a 41.9% year-over-year decrease, while adjusted net profit was R$52.3 million, a 16.0% increase, with an adjusted net profit margin of 10.0%[31] - The decrease in adjusted net profit margin was primarily due to increased SG&A and financial expenses[31] Business Outlook CI&T updated its 2022 business outlook, projecting at least R$540 million in net revenue for Q3, a 46% year-over-year increase at constant currency, and full-year net revenue growth of at least 55% at constant currency with an adjusted EBITDA margin of at least 19% - Expected 2022 third-quarter net revenue of at least R$540 million, representing 46% year-over-year growth at constant currency and 44% on a reported basis[32] - Updated 2022 full-year outlook projects net revenue growth of at least 55% at constant currency and at least 49% on a reported basis (including approximately 6 percentage points of negative foreign exchange impact)[33] - Expected 2022 full-year adjusted EBITDA margin of at least 19%, assuming an average exchange rate of R$5.10 to US$1.00 for the full year[34] Company Information and Non-IFRS Measures This section provides CI&T's company profile, accounting basis, functional currency, detailed explanations of non-IFRS financial measures and their calculation, and a cautionary statement regarding forward-looking statements Conference Call Information This section provides details regarding the conference call held by CI&T's management to discuss the Q2 and H1 2022 financial and operating results - CI&T management held a video conference call on August 18, 2022, to discuss 2Q22 and 6M22 financial and operating results[36] About CI&T This section provides an overview of CI&T as a global digital specialist, highlighting its services, experience, and global presence - CI&T is a global digital specialist providing end-to-end digital transformation services to over 100 large enterprises and fast-growing clients[37] - The company has 27 years of experience accelerating business impact through complete and scalable digital solutions, with operations in 9 countries and over 6,700 professionals globally[37] Basis of Accounting and Functional Currency This section clarifies CI&T's accounting and reporting currency, along with the functional currencies used by its various subsidiaries - CI&T uses the Brazilian Real as its accounting and reporting currency, preparing financial statements in accordance with International Financial Reporting Standards (IFRS)[38] - The company's subsidiaries have various functional currencies, including Brazilian Real, US Dollar, Japanese Yen, Euro, Australian Dollar, British Pound, and Colombian Peso[120] Non-IFRS Financial Measures This section explains the non-IFRS financial measures used by the company to assess business performance, emphasizing their supplementary nature and the limitations of forward-looking non-IFRS reconciliations - The company regularly monitors non-IFRS financial metrics, including adjusted gross profit, adjusted gross 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, to evaluate business performance[39] - These non-IFRS metrics are supplementary and should not replace IFRS results, and their calculation methods may differ from those used by other companies[39] - The company does not provide quantitative reconciliations of forward-looking non-IFRS metrics to the most directly comparable IFRS metrics, as it cannot reasonably predict the ultimate outcome of certain material items such as share-based compensation, acquisition expenses, and tax impacts of non-IFRS adjustments[40] Cautionary Statement on Forward-Looking Statements This section warns that the press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations - This press release contains "forward-looking statements" subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[46] - Risk factors include, but are not limited to, the COVID-19 pandemic, the war in Ukraine, competitive impacts, ability to maintain client relationships, successful integration of Dextra, Somo, and Box 1824, and the ability to execute growth strategies[46] Contacts This section provides contact information for investor relations and media inquiries - Investor Relations contact: Eduardo Galvão (investors@ciandt.com); Media Relations contact: Zella Panossian (ciandt@illumepr)[47] Unaudited Condensed Consolidated Interim Financial Information for the Three and Six-Month Periods Ended June 30, 2022 and 2021 This section presents CI&T's unaudited condensed consolidated interim financial information for the three and six-month periods ended June 30, 2022 and 2021 Unaudited Condensed Consolidated Financial Statements This section presents CI&T's unaudited condensed consolidated financial statements, including the statements of profit or loss, financial position, other comprehensive income, changes in equity, and cash flows, for the three and six-month periods ended June 30, 2022, and comparative periods Statements of Profit or Loss This section provides the unaudited condensed consolidated statements of profit or loss, detailing revenues, costs, and expenses for the reported periods Unaudited Condensed Consolidated Statements of Profit or Loss (Thousand Brazilian Reais): | Metric | 2Q22 | 2Q21 | 6M22 | 6M21 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 525,015 | 315,324 | 1,016,887 | 611,616 | | Cost of Services | (341,502) | (205,768) | (670,494) | (394,140) | | Gross Profit | 183,513 | 109,556 | 346,393 | 217,476 | | Selling Expenses | (39,962) | (18,801) | (75,091) | (37,780) | | General and Administrative Expenses | (78,390) | (28,328) | (143,311) | (54,054) | | Operating Profit (before tax and financial income) | 61,548 | 65,134 | 122,797 | 126,681 | | Net Financial Costs | (17,533) | (1,989) | (34,245) | (3,686) | | Profit before Income Tax | 44,015 | 63,145 | 88,552 | 122,995 | | Income Tax Expense | (18,016) | (18,423) | (33,330) | (38,658) | | Net Profit for the Period | 25,999 | 44,722 | 55,222 | 84,337 | | Earnings Per Share – Basic (R$) | 0.20 | 0.37 | 0.42 | 0.70 | | Earnings Per Share – Diluted (R$) | 0.20 | 0.37 | 0.42 | 0.69 | Statements of Financial Position This section presents the unaudited condensed consolidated statements of financial position, outlining assets, liabilities, and equity as of the reported dates Unaudited Condensed Consolidated Statements of Financial Position (Thousand Brazilian Reais): | Assets | June 30, 2022 | December 31, 2021 | Liabilities and Equity | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Current Assets: | | | Current Liabilities: | | | | Cash and Cash Equivalents | 104,190 | 135,727 | Suppliers and Other Payables | 24,655 | 33,566 | | Financial Investments | 253,304 | 798,786 | Loans and Borrowings | 183,465 | 164,403 | | Trade Receivables | 416,728 | 340,519 | Lease Liabilities | 27,548 | 21,214 | | Contract Assets | 231,695 | 134,388 | Salaries and Welfare Charges | 214,367 | 234,173 | | Non-Current Assets: | | | Non-Current Liabilities: | | | | Deferred Tax Assets | 22,954 | 31,989 | Loans and Borrowings | 489,777 | 624,306 | | Property, Plant and Equipment | 60,962 | 57,721 | Lease Liabilities | 55,688 | 60,674 | | Intangible Assets and Goodwill | 1,078,187 | 738,803 | Provisions | 14,586 | 633 | | Right-of-Use Assets | 73,998 | 73,827 | | | | | Total Assets | 2,365,002 | 2,362,344 | Total Equity and Liabilities | 2,365,002 | 2,362,344 | Statements of Other Comprehensive Income This section provides the unaudited condensed consolidated statements of other comprehensive income, detailing items that are not recognized in profit or loss Unaudited Condensed Consolidated Statements of Other Comprehensive Income (Thousand Brazilian Reais): | Metric | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Net Profit for the Period | 55,222 | 25,999 | 84,337 | 44,722 | | Other Comprehensive Income (OCI): | | | | | | Exchange differences on translation of foreign operations | (69,688) | 23,687 | 8,651 | (6,155) | | Cash flow hedges – effective portion of changes in fair value | (39,735) | (4,011) | - | - | | Total Comprehensive (Loss) Income for the Period | (54,201) | 45,675 | 92,988 | 38,567 | Statements of Changes in Equity This section presents the unaudited condensed consolidated statements of changes in equity, showing movements in share capital, reserves, and retained earnings Unaudited Condensed Consolidated Statements of Changes in Equity (Thousand Brazilian Reais): | Metric | Share Capital | Share Premium | Capital Reserve | Profit Reserve | Retained Earnings | Other Comprehensive Income | Total Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2021 | 36 | 915,947 | 10,105 | 125,957 | - | 37,250 | 1,089,295 | | Net Profit for the Period | - | - | - | - | 55,222 | - | 55,222 | | Business Combination (Somo) | - | 14,037 | - | - | - | - | 14,037 | | Business Combination (Box) | - | - | 4,124 | - | - | - | 4,124 | | Exercise of Stock Options | 1 | - | 8,893 | - | - | - | 8,894 | | Share-based Compensation | - | - | 674 | - | - | - | 674 | | Exchange differences on translation of foreign operations | - | - | - | - | - | (69,688) | (69,688) | | Cash Flow Hedges | - | - | - | - | - | (39,735) | (39,735) | | Balance at June 30, 2022 | 37 | 929,984 | 23,796 | 125,957 | 55,222 | (72,173) | 1,062,823 | Statements of Cash Flows This section provides the unaudited condensed consolidated statements of cash flows, categorizing cash movements into operating, investing, and financing activities Unaudited Condensed Consolidated Statements of Cash Flows (Thousand Brazilian Reais): | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Cash Flows from Operating Activities: | | | | Net Profit for the Period | 55,222 | 84,337 | | Net Cash (Used in)/Generated from Operating Activities | (87,109) | 23,506 | | Income Tax Paid | (21,074) | (23,321) | | Interest Paid on Loans and Borrowings | (38,379) | (1,966) | | Interest Paid on Leases | (3,174) | (2,607) | | Net Cash Used in Operating Activities | (149,736) | (4,388) | | Cash Flows from Investing Activities: | | | | Acquisition of Property, Plant and Equipment and Intangible Assets | (15,520) | (17,164) | | Acquisition of Subsidiaries (net of cash) – Box 1824 | (19,040) | - | | Acquisition of Subsidiaries (net of cash) – Somo | (247,764) | - | | Redemption of Financial Investments | 514,394 | - | | Net Cash Flows from Investing Activities | 225,143 | (17,164) | | Cash Flows from Financing Activities: | | | | Proceeds from Loans and Borrowings | 133,789 | 88,496 | | Payment of Lease Liabilities | (12,576) | (7,854) | | Payment of Loans and Borrowings | (244,384) | (68,265) | | Net Cash Flows from Financing Activities | (115,042) | (58,431) | | Net Decrease in Cash and Cash Equivalents | (39,635) | (79,983) | | Cash and Cash Equivalents at Beginning of Period | 135,727 | 162,827 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | 8,098 | 5,713 | | Cash and Cash Equivalents at End of Period | 104,190 | 80,805 | Notes to the Unaudited Condensed Consolidated Interim Financial Statements This section provides detailed notes to CI&T's unaudited condensed consolidated interim financial statements, covering reporting entity, business combinations, accounting policies, functional currency, use of judgments and estimates, and various financial statement line items Reporting Entity This section describes CI&T Inc. as a Cayman Islands-registered public company, its primary business activities, and key corporate events including its IPO and reorganization - CI&T Inc. is a public company registered in the Cayman Islands in June 2021, primarily investing in subsidiaries in Brazil and other countries[69] - The company's subsidiaries specialize in custom software development, offering solutions in machine learning, artificial intelligence, analytics, cloud, and mobile technologies[69] - On November 10, 2021, the company completed its Initial Public Offering (IPO), issuing 15,000,000 Class A common shares and raising net proceeds of R$860.993 million (US$156.667 million)[71] - The company underwent a corporate reorganization on October 4, 2021, making CI&T Inc. the controlling entity of CI&T Software S.A., with earnings per share calculated retrospectively to January 1, 2020[72][73][74] Business Combination This section details the company's significant business acquisitions, including Dextra, Somo, and Box 1824, outlining their acquisition dates, consideration, and the resulting goodwill Dextra Acquisition This section provides details on the acquisition of Dextra Investimentos S.A., including the total consideration and the primary drivers for the recognized goodwill - On August 10, 2021, CI&T Brazil completed the acquisition of 100% of Dextra Investimentos S.A. and its subsidiaries for a total consideration of R$800 million[76][77] Dextra Acquisition Consideration (Thousand Brazilian Reais): | Item | Amount | | :--- | :--- | | Cash | 700,938 | | Accounts Payable for Business Combination | 82,635 | | Total Consideration | 783,573 | - The acquisition generated goodwill of R$595.721 million, primarily attributed to Dextra employees' skills and technical talent, along with anticipated synergies from integration[84] Somo Acquisition This section details the acquisition of Somo Global Ltd, including the acquisition date, consideration components, and the resulting goodwill - On January 27, 2022, the company completed the acquisition of 100% of Somo Global Ltd and its subsidiaries, a UK-based digital product agency[86] Somo Acquisition Consideration (Thousand Brazilian Reais): | Item | Amount | | :--- | :--- | | Cash | 340,777 | | Escrow Account | 23,061 | | Holdback Amount | 7,206 | | Earn-out Payment | 59,868 | | Issuance of Class A Common Shares | 14,037 | | Total Consideration | 447,414 | - The acquisition generated goodwill of R$317.179 million, primarily attributed to Somo employees' skills and technical talent, along with anticipated synergies from integration[100] Box 1824 Acquisition This section outlines the acquisition of Box 1824 Planejamento e Marketing Ltda, including the acquisition date, consideration, and the preliminary goodwill recognized - On June 1, 2022, the company completed the acquisition of 100% of BOX 1824 PLANEJAMENTO E MARKETING LTDA, a strategic consulting company[102] Box 1824 Acquisition Consideration (Thousand Brazilian Reais): | Item | Amount | | :--- | :--- | | Cash | 20,768 | | Holdback Amount | 8,871 | | Equity Payment – Immediately Vested | 4,124 | | Other | 974 | | Total Consideration | 34,737 | - Preliminary goodwill amounted to R$26.229 million, primarily attributed to Box 1824 employees' skills and technical talent, along with anticipated synergies from integration[112][113] Basis of Accounting This section states that the interim financial statements are prepared in accordance with IAS 34 and should be read in conjunction with the annual consolidated financial statements - The unaudited condensed consolidated interim financial statements are prepared in accordance with IAS 34 (Interim Financial Reporting) and should be read in conjunction with the Group's annual consolidated financial statements as of December 31, 2021[117] Functional and Presentation Currency This section specifies the presentation currency of the financial statements and lists the various functional currencies used by the company's subsidiaries - Financial statements are presented in Brazilian Reais (R$), which is the company's functional currency, with all balances rounded to the nearest thousand[119] - The company's subsidiaries use various functional currencies, including Brazilian Real, US Dollar, Japanese Yen, Euro, Australian Dollar, British Pound, and Colombian Peso[120] Use of Judgments and Estimates This section acknowledges that management makes judgments and estimates in preparing financial statements, and actual results may differ from these estimates - Management exercises judgments and estimates in preparing financial statements, and actual results may differ from these estimates[121] - Key judgments include lease terms and revenue recognition methods, while key estimation uncertainties involve fair value measurement of subsidiary acquisitions and impairment testing assumptions for intangible assets and goodwill[122][123][124][125] Cash and Cash Equivalents and Financial Investments This section details the composition of cash and cash equivalents and financial investments, including their types, interest rates, and changes over the period Cash and Cash Equivalents (Thousand Brazilian Reais): | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 62,902 | 69,720 | | Short-term Financial Investments | 41,288 | 66,007 | | Total | 104,190 | 135,727 | - Short-term financial investments primarily consist of fixed-income securities with interest rates ranging from 90% to 103.5% of CDI, offering daily liquidity and no significant risk[130] Changes in Financial Investments (Thousand Brazilian Reais): | Item | Amount | | :--- | :--- | | Balance at January 1, 2022 | 798,786 | | Effect of Exchange Rate Changes | (15,604) | | Financial Investment Income | 651 | | Redemption of Financial Investments | (514,395) | | Realization of Hedge Accounting | (16,134) | | Balance at June 30, 2022 | 253,304 | - As of June 30, 2022, financial investments totaled R$253.304 million (US$48.359 million), primarily allocated to US Dollar-denominated interest-bearing accounts and time deposits with interest rates between 0.12% and 0.65%[137] Trade Receivables This section provides a breakdown of trade receivables by market, an aging analysis, and changes in impairment losses for the period Trade Receivables (Thousand Brazilian Reais): | Market | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | US Market | 255,484 | 226,154 | | Brazilian Market | 112,931 | 101,122 | | Other Markets | 48,627 | 14,302 | | Less: Expected Credit Losses | (314) | (1,059) | | Trade Receivables, Net | 416,728 | 340,519 | Aging Analysis of Trade Receivables (Thousand Brazilian Reais): | Aging | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Not Past Due | 358,359 | 319,450 | | Past Due 1-60 Days | 50,033 | 20,020 | | Past Due 61-360 Days | 8,090 | 1,564 | | Past Due Over 360 Days | 560 | 544 | | Total | 417,042 | 341,578 | Changes in Impairment Losses on Trade Receivables (Thousand Brazilian Reais): | Item | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Balance at January 1, 2022 | (1,059) | (692) | | Provision | (449) | (4,705) | | Reversal | 348 | 4,398 | | Write-off | 655 | - | | Exchange Rate Changes | 191 | 33 | | Balance at June 30, 2022 | (314) | (966) | Other Assets This section outlines the composition of other assets, distinguishing between current and non-current portions, and identifies the main components of prepaid expenses Other Assets (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Prepaid Expenses | 35,480 | 29,743 | | Lease Deposits | 1,970 | 2,471 | | Advances to Suppliers | 141 | 162 | | Other | 2,951 | 592 | | Total | 40,542 | 32,968 | | Current | 36,592 | 29,994 | | Non-Current | 3,950 | 2,974 | - Prepaid expenses primarily include prepaid insurance (Directors and Officers liability), consulting fees, and software support prepayments[140] Property, Plant and Equipment This section details the composition of property, plant, and equipment, including their depreciation methods and total cost and accumulated depreciation Property, Plant and Equipment (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | IT Equipment | 41,238 | 35,230 | | Furniture and Fixtures | 5,860 | 6,283 | | Leasehold Improvements | 13,843 | 16,051 | | Construction in Progress | 21 | 157 | | Total | 60,962 | 57,721 | - Leasehold improvements are depreciated on a straight-line basis over the term of the lease agreements[141] - As of June 30, 2022, the total cost of property, plant, and equipment was R$113.055 million, with accumulated depreciation of R$52.093 million[144] Intangible Assets and Goodwill This section provides a breakdown of intangible assets and goodwill, identifying their primary sources and confirming that no impairment indicators were found Intangible Assets and Goodwill (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Web Software | 2,704 | 2,399 | | Internally Developed Software | 3,169 | 3,911 | | Software Under Development | 842 | 391 | | Client Relationships | 131,471 | 84,195 | | Non-Compete Agreements | 12,381 | 13,897 | | Brands | 19,008 | 14,541 | | Subtotal | 169,575 | 119,334 | | Goodwill | 908,612 | 619,469 | | Total | 1,078,187 | 738,803 | - Client relationships, non-compete agreements, and brands primarily originated from the acquisitions of Dextra, Somo, and Box 1824[146] - Goodwill primarily resulted from the acquisitions of CI&T IN Software Ltda., CI&T Japan Inc., Comrade Inc., Dextra Technologies S.A., Somo, and Box 1824[147] - As of June 30, 2022, management found no factors that would significantly alter the assumptions of the annual impairment analysis, thus no impairment indicators for intangible assets and goodwill were identified[150] Leases This section details the company's right-of-use assets and lease liabilities, including their composition and the consideration of extension options in lease measurements Right-of-Use Assets (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Properties | 65,696 | 69,441 | | Vehicles | 8,231 | 4,173 | | IT Equipment | 71 | 213 | | Total | 73,998 | 73,827 | - Some of the Group's lease contracts include indefinite extension options, and reasonably certain extension options have been considered in the measurement of lease amounts[151] Lease Liabilities (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Properties | 74,446 | 77,366 | | Vehicles | 8,704 | 4,285 | | IT Equipment | 86 | 237 | | Total | 83,236 | 81,888 | | Current | 27,548 | 21,214 | | Non-Current | 55,688 | 60,674 | Loans and Borrowings This section provides a detailed breakdown of the company's loans and borrowings by lender, currency, interest rate, and maturity, along with their term structure and covenant requirements Loans and Borrowings (Thousand Brazilian Reais): | Lender | Currency | Average Annual Interest Rate (%) | Maturity Year | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Itaú | USD | 4.82% | 2022 | 315 | 2,349 | | Banco do Brasil | USD | 3.68% | 2022 | 48,748 | 56,551 | | Citibank | USD | 4.06% / 2.47% | 2023 | 24,413 | 28,328 | | Bradesco | BRL | CDI + 1.10% | 2023 | 6,677 | 11,684 | | Citibank | USD | 3.80% | 2023 | 9,988 | - | | Bradesco | USD | 3.98% | 2023 | 14,865 | - | | Bradesco | BRL | CDI + 1.75% | 2026 | 309,295 | 306,417 | | Citibank | USD | Libor 3 months + 2.07% | 2026 | 143,126 | 168,169 | | Santander - CI&T Inc. | USD | 5.02% | 2026 | 115,815 | - | | Total | | | | 673,242 | 788,709 | Maturity Structure of Loans and Borrowings (Thousand Brazilian Reais): | Maturity Year | Amount | | :--- | :--- | | 2023 | 56,925 | | 2024 | 115,938 | | 2025 | 171,955 | | 2026 | 144,959 | | Non-Current Liabilities | 489,777 | - Loans and borrowings are subject to covenant clauses requiring the company to maintain certain ratios, such as net debt/EBITDA, which could lead to early debt maturity if not met[161] Salaries and Welfare Charges This section details the components of salaries and welfare charges, including salaries, accrued vacation, bonuses, and taxes, along with the changes in bonus accruals Salaries and Welfare Charges (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Salaries | 30,306 | 31,342 | | Accrued Vacation and Charges | 102,710 | 83,750 | | Accrued (13th Month) Salaries | 2,015 | - | | Bonuses | 34,816 | 72,810 | | Withholding Income Tax | 17,614 | 20,604 | | Payroll Taxes (Social Contributions) | 19,004 | 18,124 | | Other | 7,902 | 7,543 | | Total | 214,367 | 234,173 | Changes in Bonus Accruals (Thousand Brazilian Reais): | Item | Balance at January 1, 2022 | Additions | Additions from Business Combinations | Payments | Effect of Exchange Rate Changes | Balance at June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Bonuses | 72,810 | 36,014 | 675 | (71,407) | (3,276) | 34,816 | Accounts Payable for Business Combination This section provides a breakdown of accounts payable for business combinations, including acquisition costs, holdback amounts, and earn-out payments, along with their changes over the period Accounts Payable for Business Combination (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Dextra Acquisition Cost | 51,961 | 48,817 | | Dextra Holdback Amount | 32,157 | 30,000 | | Somo Earn-out Payment | 56,066 | - | | Somo Escrow Account | 20,392 | - | | Box 1824 Holdback Amount | 8,871 | - | | Total | 181,186 | 85,726 | | Current | 113,559 | 48,923 | | Non-Current | 67,627 | 36,803 | Changes in Accounts Payable for Business Combination (Thousand Brazilian Reais): | Item | Balance at January 1, 2022 | Monetary Adjustment | Price Adjustment | 2022 Acquisitions | Exchange Rate Changes | FVA | Payments | Balance at June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Accounts Payable for Business Combination | 85,726 | 4,612 | 1,997 | 102,445 | (11,032) | 3,126 | (5,688) | 181,186 | Provisions This section details the changes in provisions, including tax and labor-related provisions, and identifies the main types of labor lawsuits and judicial deposits Changes in Provisions (Thousand Brazilian Reais): | Item | Balance at January 1, 2021 | Provision | Balance at December 31, 2021 | Provision | Provision from Business Combination | Reversal | Expenses | Payments | Balance at June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Tax | 11 | 120 | 131 | 76 | - | (3) | - | - | 204 | | Labor | 150 | 352 | 502 | 582 | 13,583 | (270) | (11) | (4) | 14,382 | | Total Provisions | 161 | 472 | 633 | 658 | 13,583 | (273) | (11) | (4) | 14,586 | - Major labor lawsuits involve compliance with minimum quotas for disabled employees and insufficient control over working hours[172] - As of June 30, 2022, the Group's total judicial deposits amounted to R$9.337 million, with R$9.191 million related to tax lawsuits[173] Employee Benefits This section describes the employee benefits provided by the company, including health, dental, life insurance, and private pension plans, noting the absence of additional post-employment obligations - The Group provides employees with benefits such as medical, dental, and life insurance, and offers private pension plan options, with the company matching employee contributions in certain regions (e.g., US, UK, Canada)[177][178] - The Group has no additional post-employment obligations or other long-term benefits[179] Stock Option Plan and Share Based Compensation This section details the company's equity-settled and cash-settled share-based compensation plans, including the number of options, exercise prices, and the expenses recognized in the profit or loss statement - The Group operates both equity-settled and cash-settled share-based compensation plans, granting stock purchase rights to executives, employees, and suppliers[182][196] Equity-Settled Plans (2020/2021): | Item | 1st & 2nd Program | 3rd Program | 4th Program | | :--- | :--- | :--- | :--- | | Grant Date | 2020/04/01 | 2021/04/01 | 2021/04/01 | | Vesting Period | 6.8 years | 5.8 years | 5.8 years | | Number of Unexercised Options at June 30, 2022 | 3,155,587 | 629,546 | 156,299 | | Number of Exercisable Options at June 30, 2022 | 1,902,444 | - | - | | Exercise Price (Reais) | 9.58 | 19.84 | 19.84 | | Option Value (Reais) | 0.48 | 1.81 | 1.85 | Equity-Settled Plans (2022): | Item | 2022 Plan - Equity-Settled | | :--- | :--- | | Grant Date | 2022/04/01 | | Vesting Period | 6.8 years | | Number of Unexercised Options at June 30, 2022 | 290,099 | | Exercise Price (US Dollars) | 16.95 | | Option Value (US Dollars) | 3.37 | Expenses Recognized in Profit or Loss (Thousand Brazilian Reais): | Item | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Equity-Settled Plans | 610 | 176 | | Cash-Settled Plans | 459 | 114 | | Shares Granted to Executives | 64 | 211 | | Total Expenses Recognized in Profit or Loss | 1,133 | 501 | Equity This section details the components of equity, including share capital, share premium, capital reserves, retained earnings, and other comprehensive income, along with the voting rights of different share classes Share Capital (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Number of Common Shares | 133,178,767 | 132,197,896 | | Par Value | 0.00027 | 0.00027 | | Total Share Capital | 37 | 36 | - Class A and Class B common shares have equal rights, but Class B common shares carry 10 votes per share, while Class A common shares carry 1 vote per share[209] - Share premium amounts to R$915.947 million (US$166.666 million), and capital reserves include equity payments related to corporate reorganization, share-based compensation, and the Box 1824 business combination[210][211][212] Retained Earnings (Thousand Brazilian Reais): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Retained Earnings Reserve | 125,957 | 125,957 | | Retained Earnings – Net Profit for the Period | 55,222 | - | | Total Retained Earnings | 181,179 | 125,957 | - Other comprehensive income includes cumulative exchange adjustments for foreign currency investments and cash flow hedges[215][216] Net Revenue This section provides a detailed breakdown of net revenue by service type and industry vertical, explaining the revenue recognition policy and presenting contract assets Net Revenue by Nature of Services (Thousand Brazilian Reais): | Service Type | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Software Development Revenue | 975,793 | 505,132 | 588,118 | 303,677 | | Software Maintenance Revenue | 26,957 | 13,577 | 13,527 | 6,890 | | Consulting Revenue | 10,198 | 5,025 | 7,717 | 3,669 | | Software License Resale Revenue | 525 | 275 | 1,029 | 487 | | Other Revenue | 3,414 | 1,006 | 1,225 | 601 | | Total Net Revenue | 1,016,887 | 525,015 | 611,616 | 315,324 | Net Revenue by Industry Vertical (Thousand Brazilian Reais): | Industry | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Financial Services | 315,064 | 161,466 | 210,089 | 111,268 | | Food and Beverage | 202,056 | 107,988 | 172,169 | 88,112 | | Technology, Media and Telecommunications | 137,443 | 69,690 | 62,491 | 30,142 | | Pharma and Cosmetics | 133,990 | 70,568 | 87,604 | 45,798 | | Retail and Manufacturing | 67,053 | 31,624 | 34,210 | 18,232 | | Education and Services | 36,653 | 16,965 | 23,638 | 11,446 | | Logistics and Transportation | 34,632 | 17,596 | 10,155 | 4,923 | | Other | 89,996 | 49,118 | 11,260 | 5,403 | | Total Net Revenue | 1,016,887 | 525,015 | 611,616 | 315,324 | - Revenue is measured based on the consideration specified in contracts with customers and recognized when control is transferred to the customer; service revenue (software development, maintenance, consulting) is recognized over time, measured by progress based on hours incurred[219] Contract Assets (Thousand Brazilian Reais): | Market | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Local Market | 127,797 | 80,107 | | Overseas Market | 105,276 | 55,194 | | Less: Expected Credit Losses | (1,378) | (913) | | Total | 231,695 | 134,388 | Expenses by Nature This section provides a detailed breakdown of expenses by nature, including employee costs, third-party services, depreciation, amortization, and acquisition-related expenses Expenses by Nature (Thousand Brazilian Reais): | Expense Type | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Employee Expenses | (746,236) | (380,666) | (422,324) | (222,351) | | Third-Party Services and Other Inputs | (51,323) | (27,259) | (28,892) | (13,183) | | Depreciation and Amortization | (43,596) | (24,205) | (16,019) | (8,224) | | Insurance | (7,687) | (3,579) | (472) | (224) | | Short-Term Leases | (3,335) | (1,617) | (3,426) | (1,628) | | Travel Expenses | (5,119) | (3,742) | (569) | (318) | | Training | (2,929) | (1,652) | (1,811) | (1,022) | | Share-based Compensation | (1,133) | 106 | (501) | (328) | | Expected Credit Losses | (710) | 356 | (367) | 2,890 | | Consulting Fees | (9,090) | (6,395) | (462) | (237) | | Other Post-Acquisition Expenses | (8,464) | (8,464) | - | - | | Other Costs and Expenses | (14,468) | (6,350) | (10,092) | (5,565) | | Total | (894,090) | (463,467) | (484,935) | (250,190) | - Depreciation and amortization include R$19.614 million in cost of services and R$19.024 million in intangible asset amortization expenses[223] - Consulting fees totaled R$9.09 million, primarily related to acquisitions, while other post-acquisition expenses include fair value adjustments to accounts payable for business combinations (R$5.123 million) and other business combination obligations (R$3.341 million)[223] Net Finance Costs This section details the components of net finance costs, including financial income and costs, and explains the primary drivers behind changes in foreign exchange and interest expenses Net Finance Costs (Thousand Brazilian Reais): | Item | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Financial Income: | | | | | | Financial Investment Income | 3,555 | 2,170 | 724 | 306 | | Foreign Exchange Gains | 107,358 | 45,323 | 11,999 | 3,716 | | Gains on Derivatives | 10,865 | 5,063 | 12,228 | 11,953 | | Financial Costs: | | | | | | Foreign Exchange Losses | (92,709) | (32,019) | (17,495) | (15,921) | | Losses on Derivatives | (10,670) | (9,865) | (7,571) | (505) | | Interest and Charges on Loans and Leases | (37,055) | (18,918) | (3,672) | (1,738) | | Net Financial Result | (34,245) | (17,533) | (3,686) | (1,989) | - Foreign exchange gains primarily arise from the translation of foreign currency assets and liabilities, as well as transactions and financial operations, while foreign exchange losses mainly result from the translation of transactions and financial operations and changes in functional currency[224] - The main change in interest and charges on loans and leases is related to the Dextra acquisition loan, amounting to R$32.145 million[224] Income Tax and Social Contribution This section explains how income tax expense is determined and states the consolidated effective tax rates for the reported periods - Income tax expense is determined based on management's best estimate of the weighted average annual income tax rate, adjusted for the tax effects of certain items fully recognized in the interim period[225] - For the six-month period ended June 30, 2022, the Group's consolidated effective tax rate from continuing operations was 38%, compared to 37% for the same period in 2021[226] Earnings Per Share This section presents the basic and diluted earnings per share, along with the weighted average number of shares used in their calculation Earnings Per Share (Thousand Brazilian Reais): | Metric | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | Profit Attributable to Holders of Common Shares | 55,222 | 25,999 | 84,337 | 44,722 | | Weighted Average Number of Shares for Basic EPS | 132,841,306 | 133,040,816 | 119,960,383 | 119,960,383 | | Basic Earnings Per Share (R$) | 0.42 | 0.20 | 0.70 | 0.37 | | Weighted Average Number of Shares for Diluted EPS | 132,841,306 | 133,040,816 | 122,153,579 | 119,960,383 | | Diluted Earnings Per Share (R$) | 0.42 | 0.20 | 0.69 | 0.37 | Financial Instruments and Risk Management This section describes the company's use of financial instruments, fair value estimation methods, and strategies for managing market, credit, and liquidity risks - The Group operates with derivative and non-derivative financial instruments, monitoring consistency between contractual terms and current market terms, and does not engage in speculative derivative investments[231] - Fair value estimates for financial instruments use market data and specific valuation methods, including discounted cash flow models and the Black-Scholes model[234] Carrying Amounts and Fair Values of Financial Assets and Liabilities (Thousand Brazilian Reais) - June 30, 2022: | Item | Amortized Cost | Measured at FVTPL | Measured at FVOCI | Total | | :--- | :--- | :--- | :--- | :--- | | Financial Assets: | | | | | | Cash and Cash Equivalents | 104,190 | - | - | 104,190 | | Financial Investments | 253,304 | - | - | 253,304 | | Trade Receivables | 416,728 | - | - | 416,728 | | Contract Assets | 231,695 | - | - | 231,695 | | Derivatives | - | 7,736 | - | 7,736 | | Financial Liabilities: | | | | | | Suppliers and Other Payables | 24,655 | - | - | 24,655 | | Loans and Borrowings | 673,242 | - | - | 673,242 | | Lease Liabilities | 83,236 | - | - | 83,236 | | Accounts Payable for Business Combination | 181,186 | - | - | 181,186 | | Derivatives | - | 7,033 | - | 7,033 | - The Group faces market risks (inflation, interest rates, exchange rates), credit risk, and liquidity risk, which are managed through hedge accounting, natural hedging, and credit line management[238][240][268][273] Related Parties This section discloses transactions and compensation with related parties, specifically key management personnel - As of June 30, 2022, the Group paid R$6.788 million in direct compensation to key management personnel, with R$10 thousand in share-based compensation expenses recognized in the profit or loss statement[290][291] - The Group has no additional post-employment obligations or other long-term benefits for senior management members[292] Operating Segments This section identifies the Group's single operating and reportable segment, provides revenue breakdown by geography, and details non-current assets by geographical location - The Group's Chief Operating Decision Maker (CODM) is the Board of Directors, which views the entire Group as a single operating and reportable segment, monitoring operations, allocating resources, and assessing performance on this basis[293][294][295] Net Revenue by Geography (Thousand Brazilian Reais): | Geography | 6M22 | 2Q22 | 6M21 | 2Q21 | | :--- | :--- | :--- | :--- | :--- | | North America and Europe (NAE) | 508,993 | 267,464 | 312,810 | 159,187 | | Latin America (LATAM) | 477,280 | 242,574 | 277,818 | 146,641 | | Asia, Pacific and Japan (APJ) | 30,614 | 14,977 | 20,988 | 9,496 | | Total | 1,016,887 | 525,015 | 611,616 | 315,324 | - Net revenue from a single client accounted for 16% of the company's total net revenue (compared to 24% as of June 30, 2021)[296] Non-Current Assets Geographical Information (Thousand Brazilian Reais): | Geography | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Brazil | 863,778 | 837,865 | | United States | 391,766 | 38,417 | | Japan | 441 | 176 | | China | 1,653 | 2,239 | | Canada | 356 | 284 | | Portugal | 494 | 387 | | Other Countries | 5,508 | 82 | | Total | 1,263,996 | 879,450 | Subsequent Events This section reports significant events that occurred after the reporting period, including the establishment of a new subsidiary and a planned acquisition - On July 11, 2022, the company established a new indirect operating subsidiary, CI&T Colombia S.A.S[298] - On August 16, 2022, the company announced the signing of an agreement to acquire Transpire Technology Pty Ltd, an Australian technology consulting firm, to enhance growth in the Asia-Pacific region, with the transaction expected to close in the third quarter of 2022[299] Signatures This section contains the formal signatures for the financial report Signature of Chief Financial Officer This report has been formally signed by CI&T Inc.'s Chief Financial Officer, Stanley Rodrigues, on August 17, 2022, confirming compliance with the Securities Exchange Act of 1934 - CI&T Inc.'s Chief Financial Officer, Stanley Rodrigues, signed this report on August 17, 2022[303]