+ + Hello, and good morning, everyone. Welcome to CI&T Second Quarter of 2022 Earnings Call. I'm Eduardo Galvao, Head of Investor Relations at CI&T, and it's a pleasure to be here again to talk about our results. With me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Co-Founder and President for North America and Europe;and Stanley Rodrigues, our CFO. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a question-and-answer session for analysts and investors only. If you'd like to submit a question, please send it via e-mail to investors at ciandt.com. The Q2 presentation is available on the company's Investor Relations website at investors.ciandt.com. The replay will be available shortly after the event is concluded. Some of the matters we'll discuss on this call, including our expected business outlook are forward-looking statements, and as such, are subject to known and unknown risks and uncertainties including, but not limited to those factors described in our earnings release and discussed in the Risk Factors section of our annual report on Form 20-F and other reports we may file from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they are valid only as of the date when made. During this presentation, we will comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables on non-IFRS measures in the appendix for more details. Our agenda for today includes an update on recent events, followed by some of our successful business cases and a few highlights. We'll then talk about our people and discuss our quarterly financial results. At this time, I'm pleased to invite Cesar Gon to begin our presentation. Cesar, please?

Thanks, Eduardo. Good day, everyone, and thank you for joining us today. During those last months, I could finally physically attend investors conference and meetings and it was good to meet many of you in person. We are excited to report a solid second quarter demonstrating the resilience and consistency of our engagements with our long-tenured clients. We also continue to be disciplined in onboarding new clients every quarter to guarantee sustainable long-term growth. The demand for our services remain strong in all geographies and industry verticals we operate. And we continue to expand and diversify our inspiring network of tech talent worldwide. And I'm glad to announce another move in our programmatic M&A strategy. This week, we announced the acquisition of Transpire in Australia, a funded-led award-winning technology consultancy company to accelerate our growth in the Asia Pacific region. We are excited about the arrival of Transpire to the CI&T family and with all future possibilities it will spark. Since 2009, Transpire has been the trusted technology partner of some of Australia's most innovative organizations, including Vodafone, Virgin Australia, among several large companies. Headquartered in Melbourne with team members across Australia, Transpire delivers digital experience across several verticals with a solid design-led mobile-first cloud native approach. As part of this strategic acquisition, Transpire will add around 100 digital specialists to CI&T, further expanding CI&T's operations in the region. Transpire recorded AUD 15.5 million in net revenue in its fiscal year, which ended in June 2022. The purchase price for this acquisition is USD 23.4 million. Previously, in late May, we announced the acquisition of Box 1824, a future focused strategic consulting firm headquartered in Sao Paulo with around 40 specialized senior strategy professionals, helping Brazilian and global companies to design and implement their future. With their ability of detecting,…

Hello, everyone. I am Gabriel Marostegam, Head of Data at CI&T, and a member of Data Analytics Powerhouse leadership team. We built the data analytics powerhouse on the principle of thinking globally and act locally with goal of rapidly expanding our capabilities and results. Since the beginning, we have experimenting with the power of the cloud in communities, using their contributions and more disciplinarity to create space for innovation. Today, we have over 600 people working in small groups around the world to share knowledge, create accelerators with safe solutions and prepare for the future. Our data journey offer, which aims to help our clients solve their data capabilities gap, cope with cultural challenge and accelerate their data maturity is proving successful. This equity source is advanced with data platforms, hybrid intelligence, and flying the power of human analysis through AI solutions and daily strategies driven by business impact. Recently, our initiatives called cognitive lag in partnerships with University of convenience achieved the best paper powered at the 24th International Conference on Enterprise Information Systems. In this way, we are accelerating our capabilities, impacting the market and generating business routes for our clients. This is how we help make their tomorrow. Video Presentation We are super excited to have Box 1824 as part of the CI&T family. With this acquisition, we are bearing together to very solid reputations of envisioning and accelerating the future in the digital space. We believe the corporate world faced two major disruption fronts, technological possibilities and behavioral changes. CI&T has a very well-known reputation in this first part, with Box now, we are profoundly strengthening our capabilities to create value for our clients.

Hi. I'm Paula Englert. I'm CEO at Box 1824. We are a strategic consulting firms that connect brands and people to the future. From almost two decades now, we have been bridging this gap between the future and the present, helping global companies to better structure their business and their innovation process. Joining the CI&T family enables both to offer our clients a complete journey from envisioning the future to transform into this these visions in business opportunities. Video Presentation Now I invite Bruno to talk about our global talent strategy.

Thank you, Cesar. Good morning, everyone. It's nice to be here once again. Our team keeps expanding globally. We ended the second quarter of 2022 with more than 6,700 CI&Tiers, which represents a net addition of 2,700 employees in the last 12 months or a 68% growth year-over-year. And we're proud to be recognized as one of the best companies to promote diversity, equality and inclusion within our teams, by my diversity Institute, LGBTQI plus business and right forum in the Human Rights Campaign Foundation. As we continue to grow and expand, we have a great opportunity to tap into the potential presented by the megatrends of remote work and work for anywhere. We're leveraging the processes and practices we have honed for decades, working in a distributed way to further integrate remote work into our operations and diversify even more our talent pool. We're gradually penetrating new labor markets and are really excited by these initial results. At the same time, we're pioneering innovative ways of team interaction in new forms of infrastructure to continue improving employee engagement in this new environment. Also, acquisitions have been helping in that diversification as well. Throughout this year, the acquisition of Somo has strengthened our footprint in Europe and got us [ph] a new delivery center in Colombia. Now of the addition of Transpire, we will enhance our position in Australia and the Asia Pacific region. Now I invite Stanley to dive into our quarterly financial results.

Thank you, Bruno, and good morning, everyone. I'm glad to kick off our financial section with solid numbers in our top line. Our net revenue in the second quarter 2022 was BRL 525 million, a 66% growth year-over-year. The acquisitions concluded in 2022 contributed to 13 percentage points of revenue growth in the quarter. Around 50% of our revenue comes from U.S. dollar and British pound denominated revenues. And as the Brazilian real appreciated against these currencies during the quarter when eliminating the FX variation, our net revenue in constant currency would have been BRL 550 million, a 73% increase compared to the second quarter of last year. We continue to diversify our client base with the addition of 17 new clients in the second quarter. This year, we already added 33 new clients to our portfolio that will foster our sustainable growth over the coming years. As Cesar mentioned, our strong revenue growth derives from our expansion within existing clients, the addition of new clients every quarter and our programmatic M&A strategy. Analyzing our revenue breakdown, you can see in the left-hand chart that we are expanding our global presence. North America continues to be the largest growing market organically for CI&T and we strengthened our presence in Europe with the acquisition of Somo early this year. Our net revenue by industry verticals remains diversified. It's worth noting that around 84% of our revenue comes from brick-and-mortar companies and only 16% from startups and digital native companies. In terms of revenue by industry verticals, Financial Services grew 50% year-over-year, Food and Beverage increased 17% and TMT grew 120% in the first half 2022 compared to the same period of last year. Finally, we reduced our top one client share from 24% in first half '21 to 16% in first…

Thank you, Stanley. We remain very confident about the opportunities that lie ahead. Based on current market conditions, we expect our net revenue in the third quarter of 2022 to be at least BRL 540 million, a 46% growth year-over-year in a constant currency basis. For the full year of 2022, we are updating our outlook mainly to reflect FX variation in the period. So we expect a net revenue growth of at least 55% year-over-year on a constant currency basis and revenue growth on a reported basis of at least 49% which includes a negative FX translation impact of approximately 6 percentage points. In addition, we estimate our adjusted EBITDA margin to be at least 19% for the full year of 2022, assuming an average exchange rate of BRL 5.1 to the U.S. dollar for the full year. That's what we have for now. Thank you all for your trust in CI&T and for attending our call today. We now conclude our presentation and we move to the Q&A session.

[Operator Instructions] The first question comes from Ashwin [Shirvaikar] from Citi. Ashwin, please.

Thank you, Eduardo, and good to see you all. My question is with regards to FX, since we I don't think we had the FX impact disclosure for past periods. But could you walk through how FX volatility affects your EBITDA is my first question. And then the second part of it is, you're mentioning that the updated outlook is mainly to reflect FX, are there also other factors with regards to the cyclical concerns from clients or slower ramps, things like that, that we are beginning to hear perhaps from other companies?

Thank you. Stanley let me start with the second part, and then I'll hand it to you to the first one. Great to see you Ashwin. I think regarding the new outlook, I think, as you mentioned, the main factor is we adjust for mostly effects, 6% or points on this variation. But we also have - as you saw, we are still onboarding new clients in a very solid base, basically in two quarters, we did the same as the full last year, but the ramp-up for the digital native cohort is lower. So we – that’s the – represents probably the last the majority of the 4% of points. And regarding past FX impact, I will hand over it to Stanley, please.

Hi, Ashwin. Thank you for the question. In pragmatic way to see how FX affects our EBITDA, you can consider that for each $0.40 [ph] in the FX rate, you can foresee a 1% impact or above or down. That's most programmatic. And this comes from the mix of currencies that we have in top line, any costs. As you may know, 70% of our costs, they are based in Brazilian reals, while around 50% of our revenues comes from hard currencies. So we have a FX leverage that they are - this leverage is affected by this $0.40 per 1 percentage point ratio, let's say.

Okay, okay. Understood. And then the other question was, I noticed that you're now adjusting out amortization of acquired intangibles. Is that that indicative of a very strong M&A pipeline that you feel the need to do that? You've obviously done many tuck-in type acquisitions since the IPO itself? If you could…

Yeah. About the adjustment itself, we felt that we were - we would have to be in line with what the industry is doing. Since the amortization, they have a quite significant impact in our SG&A. So it would be better for everybody to understand - better understand and faster to understand our operation, and that's the main reason for the adjust. with regard to the pipeline, we remain active, as we've been mentioning, we have a programmatic approach to M&A and we have this as an important tool to speed up our organic growth, as we incorporate a very focused and programmatic acquisitions.

Thank you,

Thank you, Ashwin. Our next question comes from Diego [Aragão] from Goldman Sachs. Diego, please. Diego Aragão: M&A: So I have a couple of questions in here. The first is, how is your current pipeline of M&A at this point? And what should we expect in the next, let's say, 12 months? And also, how do you expect to fund these transactions and future transactions, right? Specifically, given the market uncertainties, you know, either like on the equity side, on debt side. So I just want to understand a little bit of your deals in there. And lastly, if you can just help us to understand the cross-sell opportunity, specifically going forward Somo interest buyer. That's the first question. Thank you.

Sure. Thank you, Diego. Great to see you again. I think we have been following this in a very consistent way, our programmatic approach for M&A, looking for expanding our geography which - and also virtual expertise. And this last move, with Transpire is in the same f pack, right,? We now have a good platform for expanding in Australia, one of the largest and good market for digital services, in the same size of Brazil. So it's an amazing opportunity for speed up our growth, not only in Australia, but in the Asia Pacific region. Regarding - yeah, I think you are right. We continue to foresee and see a very strong pipeline for M&A. Now that may fall, of course, as Stan mentioned, M&A for us is a way to speed up our organic growth. So now we are focused on, especially on - in our pipeline, you can see a lot of opportunities in the USA. And in, I would say, Continental Europe, now U.K., Europe, where we still have a lot of, I would say, the markets that we are not addressing in Europe. So you should expect to see more moves, especially in these two geographies. And we are always hoping for opportunity to strengthen our competence, our skill set, as we did with Box that I think is an amazing complementary expansion of our strategy, set of competition offering. Regarding funding, I think Stanley could handle that. Please, Stanley.

Okay. Well, thanks, Diego, for the question. We may take some debt because we have plenty of space to use that. If we cross with any good opportunity that we couldn't miss, but in a very conservative way. Of course, we have - we are looking closer to the market, waiting for the market conditions for any, let's say, any movement in the market, additionally, to offset any debt that we acquired now. So we in a very conservative, as always, we were observing market and observing the opportunities and considering those tools, let's say. Diego Aragão: Understood. Thank you. Thank you, both. I guess my second question is more related to the overall business dynamic for your services. Now that we are facing, let's say, a more challenging market macroeconomic [ph] environment for few months, are you seeing any indication that demand is slowing or that clients are somewhat postponing their projects? Thank you.

Thank you for your question, Diego. I think, as I mentioned, I think for Britain [ph] we're large global companies that are continuing to invest consistently on digital and technology. What do we see, especially in this, I would say, short term in the one or two quarters ahead as - a slowdown in the digital natives cohort. I think it's related to the scarcity of funding and of course, this macro environment. So that's why we emphasize that 84% of our business is based on this brick-and-mortar set of clients. And this cohort is - continue to expand in a very consistent way. And yeah, I think that's your question. Diego Aragão: Yes, that's perfect.

But I think I would add, Diego that, we still see that digital is really consider not only important, but urgent, even in this uncertain times, companies are really improved their bats on the agility of digital initiatives, a way to not only increase opportunities, revenue and client engagements, but also a way to gain efficiency in their operations. So it's - that's the amazing like a few part of industry that is very resilient to different market in macro conditions. Diego Aragão: Make sense? Thank you.

Thanks, Diego. Our next question comes from Tyler DuPont from Bank of America. Tyler, please go ahead.

Good morning. Thank you for talking the questions. I want to start specifically on margins. And how we should think about that moving forward? Can you maybe just speak a bit to the strength of your pricing model and perhaps the leverage you have at your disposal to either increase pricing or just to manage costs more generally?

Tyler, thank you for the question. Pricing is always depending on the mix of teams and the technology that we deploy and we have plenty of space there. As you may know, we are always working with the top line of our clients and even the market conditions also help us, we are very well positioned in the top tier of value - in the value chain for our clients. So we always have opportunities to use new technologies and blend those technology into our mix and to always preserve margins. We also have the freshly new clients entering the portfolio, that again, they play a major role in that mix. So it's always a portfolio management in terms of the pricing with all the existing clients, the growth levers that we have within the clients and also the new clients coming in.

Perfect. Thank you. Appreciate that. And then also, I know you don't tend to provide tip [ph] numbers, rounding attrition and utilization. But maybe if you could just speak more generally to how it's trending versus previous quarters and your like internal expectations and if there's anything specific to call out there?

I think Bruno could you handle that?

I'm sorry, could you come again, Tyler/

The question was with regard to attrition?

Attrition is action [ph] rate. Attrition [ph] continue at very low levels comparatively to the industry. Our overall attrition is around 16% and our - another attrition number that we follow even more closely is actually the leadership attrition, which is actually the big bottleneck for growth for us. And actually what that's most important in terms of quality of our services and and consistency of our services, and that's even lower, its around 6%, so its very comfortable levels. And what we see in the industry is, I think it continues to be a very hot market, but strong probably you know, the less hot that's been in the last 12 to 18 months. So it's good news for us.

I appreciate the color. Thank you.

We have a question here, thank you, Tyler. We now have a question here via email from Puneet from JPMorgan.

Can you break down components of EBITDA margin deterioration from 22 [ph] to 19% guided into FX, SG&A investments in new M&A impact, are you seeing any adverse impact from macro uncertainty on client spending or have their spending priorities changed at all over the last 3 months?

Okay. Well, I'll start with the first part and Cesar, you handle the second, please. With regard to the EBITDA breakdown, FX plays as a major role. As I mentioned, we have this leverage reals dollar and as you saw, we had an affectation in gross margin with regard to this leverage. So but M&A also is relevant as we have increased our expenditures with the activity. And of course, SG&A investments as we became public, we had to invest in our back office structure. So we have a consultancy. We have stronger teams. We have a higher D&O insurance. So the whole package, I would say, starting with FX that plays a major impact. But in that order.

Just to add here. In terms of those impacts, we have those investments in SG&A that we expect them to be diluted over time. So they are mainly fixed expense when I think about back office operations. So that should contribute to our operating leverage for next years. And M&A impact, I mean, as usually, that the companies we acquire have lower margins, is natural to have an impact on that side, but that's something that we also expect to improve those margins going forward to bring that to CI&T level, so that overall, we can also increase EBITDA margin for the consolidated company.

Thank you. Let me add regarding the client behavior or spending pattern. We see our clients looking for really initiatives that will generate results in, I would say, more short cycles, and that resonates a lot with CI&T value proposition of combining strategy, design and engineer in a way that we can really foster results in very short times, typically, nine days. I think that's why we see this environment as an amazing opportunity to continue to grow higher than the industry much higher than industry and it's an opportunity to increase our market share. And I think we are very well positioned to continue to do so.

Thank you, We have a follow-up question from Diego from Goldman Sachs. Diego. Please. Diego, any follow-up on our side, maybe or just – hand raise. Let me move on here for some questions we got via email. The first one is regarding the integration of the acquired companies. Can you please provide color on the status of the integration process of your recent acquisitions?

Sure. I can take this one. Dextra has been - the integration of Dextra has been completed by December last year. So we're considering the business as usual, completely integrated. The business has been reorganized around four group units, its completely similarly integrated at this point. Somo we started the integration in this first half of 2022, we expect to be fully integrated in 2023, but it's integration is going really well. I think we're collaborating already around some level of accounts, and that's part of actually I think the question Diego asked, right? So what do we expect from also- in terms of cross sale from those acquisitions is actually, those global accounts that Transpire or Somo have in CI&T so we use those new geographies trying to support our global clients, those geographies and variable accounts to be supported and the geographies that we already have presence for. So that's a kind of a clear opportunity there for cross sale. That's lot of what we're doing now with Somo and we do with Transpire going forward.

Bruno, let me take these questions to mention that we see really our platform, our entrepreneurial platform, the way CI&T is organized around 26 growth units. It's helped me a lot not only in our aggressive organic growth, but also allow us to provide a very strong value proposition for founder-led companies, our target companies. And also, it's been an amazing way to integrate these new companies to CI&T global platform and leverage the synergies and the market capabilities. It's - we are counting on this entrepreneur organization model to continue to combine an aggressive organic strategy with our programmatic M&A strategy.

We have a follow-up question from Ashwin from Citi. Ashwin, go ahead.

Yes, thank you. A follow-up is on M&A. And you mentioned, of course, a few times the programmatic approach. Are you back testing the results of past M&A, I mean, for example, relative to your initial expectation, how is Bextra doing, how is Somo doing if you could comment a little bit on that what is that what gives you confidence to keep doing programmatic M&A?

Great. Thank you, Ashwin. I think the main - the main initial purpose is priorities, keep the growing. We are acquiring high-growth companies. And the first indicator as this company onboard CI&T platform, they continue to grow in the way they were doing before. And then over time, we have two priorities. One is cross-sales opportunities that in both ways, adding CI&T global capabilities near shore [ph] capabilities to their operations that also drives margin improvements and also leverage their global clients in different geographies or business units. So I would say that Dextra was an amazing, as Bruno mentioned, amazing store line – Bruno mentioned from August last year to November it was fully integrated and the four new growth units continue to grow at the same pace as CI&T. I think Somo follow the same pattern. Box is a different animal, is a strategy boutique that we are now integrating with the whole CI&T end-to-end portfolio, initial good signs, but it's too early to have a concrete learning from this. And Transpire will be our next move. By the way, Transpire is not included in our guidance. We will do that as soon as we close the operation, we have the closing date of the operation.

Just to clarify, when is the closing date?

We expect in this third quarter, that's our expectation right now.

Okay. Thank you.

All right. Thank you, Ashwin. We have also a follow-up from Tyler DuPont from Bank of America. Tyler?

Great, thank you. I’ll be quick. Just to follow on that M&A front, and in particularly, the growth rate in Europe, it looks like a significant portion of that comes from the Somo acquisition, if not mistaken. Can you just clarify how much of the European growth is attributable to recent acquisitions versus just additional organic?

Well, the - if I got it right, the question is how much of the growth is attributed to the acquisition itself. Is that correct, Tyler?

Correct, yeah.

The growth in Europe, specifically in Europe.

But really, our operation in Europe was very small. And now the platform is basically Somo clients expanding in new clients we acquire. And we combine with CI&T and a new growth. So you want to add more…

I would say 80%, right, would come from the acquisition part.

Mostly. Another way to look at that, Tyler, our revenue in Europe book pre-acquisition was about 3% of total sales. So now it's 9%. This is mainly due to the acquisition.

Okay, perfect. Well, thank you again.

Thanks, Tyler. So that concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar Gon to proceed with his final remarks. Cesar?

Thank you, Eduardo, Stanley and Bruno, for joining me today. Thank you all for participating in our call. Again, I want to thank you all CI&Tiers years for their amazing fact we are delivering as a team and clients, investors and partners for their continued support. Stay well. I'm looking forward to seeing you in a couple of months. Bye.

Thank you.

Thank you all.+