Good morning. Welcome to CI&T Earnings Call for the Fourth Quarter of 2023. I am Eduardo Galvao, Head of Investor Relations at CI&T and it’s a pleasure to be here to talk about our operating and financial results. With me on today’s call are Cesar Gon, Founder and CEO; Bruno Guicardi, 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. If you’d like to submit a question, please send it via e-mail to investors@ciandt.com. The presentation is available on the company’s Investor Relations website and 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, which could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on these 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 non-IFRS measures disclaimer for more details. Today, we announced that we will restate our financial statements for the year ended December 31, 2022 as we identified certain non-cash accounting errors related to deferred income tax liabilities associated with the tax benefit on goodwill. The corrective adjustments are non-cash in nature will not increase the amount of income tax to be paid in the future and are not expected to impact net revenue or profit before income tax. While we expect that our results will be consistent with these preliminary and unaudited estimates, our actual results may differ materially from those preliminary estimates. Our agenda for today includes an update on our quarterly highlights, followed by some of our business cases. We will then talk about our people and our quarterly financial results. Now, I invite Cesar Gon to begin our presentation. Cesar, please.

Thank you, Eduardo and good day everyone. It’s great to be here again to talk about their results for 2023 and our business outlook for 2024. Past year presented us with a series of short-term challenges due to the economic landscape, combined with the extraordinary opportunity to position CI&T as the co-author of the next chapter in the digital revolution, powered by artificial intelligence. As we navigate toward this challenging year, we focused on the reinvention of CI&T by partnering with our clients and launching CI&T/Flow, our AI platform for hybrid digital. As the Founder and CEO, my mission is to accelerate our path to value creation with a strong commitment to the long-term. This vision is reflected in our team’s exceptional dedication, creativity and resilience, showcasing our strength and adaptability more than ever. Now looking forward, technological advancements have opened up the realm of new possibilities for business to enhance productivity and establish a competitive edge in an increasingly disruptive landscape. My experience with large companies has shown me that the speed of change is directly linked to the speed of learning both at the personal and corporate levels. To drive innovation, companies must focus on understanding the intersection of new technological possibilities and evolving consumer behaviors. The real disruption comes from leveraging both forces at the same time as seen with the current adoption of AI technology. To accelerate change, companies must prioritize learning about AI capabilities and consumer behaviors in the AI powered world. The key challenges lies in increasing the speed of corporate learning. That’s the inspiration of this AI art word based on Raphael’s masterpiece, the School of Athens, symbolizing the spirit of the renaissance and the pursuit of knowledge. By the way, I invite you to take a look at my coloring the future…

Thank you, Cesar and good morning everyone. I’m delighted to join you once more. Today, we’ve released our second ESG report, which outlines our initiatives, actions and objectives in the environmental, social and governance realms. ESG stands as a foundational pillar at CI&T and the ability to articulate our thoughts and endeavors and share them with all our stakeholders is a source of pride and fulfillment for us. At CI&T, we truly believe that our ESG approach reflects our core values and our belief in the interconnected growth of our business, our people and society as a whole. Our ESG strategy is underpinned by a collective vision of fostering equitable advancement opportunities for all, providing education and professional pathways for underrepresented groups and mitigating our environmental footprint to foster a more sustainable world. I encourage you to download and read our ESG report, which is now available on Investor Relations’ website. In 2023, our initiatives continue to demonstrate steady progress. As we can see in this slide, we made important advancements in all three pillars, integrating these principles more deeply into our business strategies. Let me briefly describe our last year’s accomplishments. In the environmental pillar, we’re excited to share that we measure 100% of our carbon footprint globally and most importantly, we neutralize 100% of the carbon emissions generated by our operations worldwide through nature-based carbon removal projects. That’s applicable for Scopes 1, 2 and 3 a great achievement indeed. Additionally, we’ve just launched our environmental policy, outlining the principles we’re committed to following to further reduce our impact in key areas such as climate, waste and water management, energy usage and our interactions with clients and suppliers. We’re delighted to announce that we submitted this commitment to the Science-Based Targets Initiative. As a people business, we recognize that…

Thank you, Bruno, and good morning, everyone. I’m pleased to once again present our financial results to all of you. In the fourth quarter of 2023, our net revenue stood at R$522.6 million a decrease of 14.6% year-over-year, primarily attributed to lower revenue from our top clients and a decline in revenue from select clients within our acquisition portfolio. For the full year of 2023, our net revenue totaled R$2.233 billion representing an increase of 2.1% year-on-year or 4.1% at constant currency within our guidance range. We are pleased to report our continued focus on reducing client concentration and diversifying our revenue mix. One key reason for this strategic shift is our success in gaining wallet share within our largest clients. Looking at the revenue distribution by geography, North America remains our largest market, accounting for 44% of our total revenue in 2023. Material economies currently adds up to almost 60% of our total revenue, providing resilience to our business. LATAM represents 41% of our revenue and continues to be an important region for growth. In terms of year-over-year revenue growth. We saw positive trends in multiple regions, North America experienced a 5.9% increase. Europe grew by 9.1% and Asia Pacific surged by 28.6%, while revenue from LATAM declined by 5.2%, it remains a key area to leveraging opportunities for growth. Our revenue needs by industry verticals showcase our commitment to diversification. While revenue from financial services remained stable, we saw a reduction in revenue contribution from consumer goods due to lower revenue from our top clients. Conversely revenue from technology and telecommunications grew by 17.4% year-over-year, driven by the expanded client base resulting from our recent acquisitions. In 2023, we significantly improved the distribution of revenue from our key clients, reducing revenue concentration. The revenue share from our top…

Thank you, Stanley. We expect our net revenue in the first quarter of 2024 to be at least $520 million rise on a reported basis. Assuming an average FX rate of R$5 reals per U.S. dollars in the first quarter of 2024. For the full year of 2024, we expect our net revenue growth at constant currency to be in the range of minus 2.5% to 2.5% year-over-year. In addition, we estimate our adjusted EBITDA margin to be in the range of 17% to 19%. Thank you all for attending our call today. We now conclude our presentation and begin the Q&A session.

[Operator Instructions] The first question comes from Edoardo Rulli from UBS. Edoardo, please go ahead.

Hi everyone. Thanks for taking my question. Well, I would like to better understand what are you taking into consideration for the revenue and margin guidance, please.

Thank you, Edoardo. I can get this one. In terms of revenue for our guidance, I think we are considering that we are coming out of a very unusual year. So, there is still uncertain in the macro and corporate spending environment. And so we are planning on a stable Q1 followed by incremental growth, not only in the following quarters of the year, but also in the following years, so resuming our standard growth trajectory. Primary drivers, I think I see two main drivers. First is, we have some of our large clients gain traction. So, to give you a data point, our top line clients are expanding mid to high-single digit grow along the year. And we have also set of new clients that landed. We landed in the second half of last year that are now ramping up, like Domino’s Pizza, as you saw in our highlights. And also I would mention too, let’s say the risk factors in our projections. The first is our top one, 2023 top one client is now stable, that was one of the challenges of last year. And if you see our last 12 months, I think we have gradually replaced a number of systemic deals, especially from the acquired portfolio with a good number, a good number of large clients. So, these are basically the primary drivers for our revenue guidance. Those of margin, I think we are expecting and projecting costing flag inflation combined with a lower price elasticity. And as we did last year, we are keeping our price cost discipline. So as you can see, now we are above average 2023 numbers of EBITDA and cash flow generation. And of course, we continue to invest in our teams in a way to prepare for resuming growth and the AI, CI&T/FLOW transformation.

Okay. Thank you very much. Very clear.

Thank you, Edoardo.

Thank you, Edoardo. Our next question comes from Gabriela Moraes from Itaú BBA. Gabriela. Please go ahead.

Hello everyone. Thank you for taking my questions. We have two on our side. The first one is regarding the financial statements restatement. Do you expect potential for the restatement going forward, or all the adjustments should be made at once? And the second one is also a follow-up regarding the guidance. How do you see the recovering the IT service market throughout the year? Like should we expect a better market in the second half of the year, and also if you have some color regarding what you expect in terms of market environment for 2025 as well? Thank you a lot, guys.

Well, I can get the first one. Thank you for the question Gabriela. Well, with regard with the – to the restatements, we estimate that we will release the full earnings release in one week or so. And no later than the 28th of March, we will release the 20th. So, we will furnish this the restatements for the quarters within a additional 6K in the same dates, the same 28th date. And of course, the full year restatements you will see in the 20th for 2022 rates.

Just to add to that, Gabriela, it’s important to mention that we expect all the adjustments necessary within this financial statements that we will report with the 20-F, so we do not project any further restatement going forward. So, it’s already all contemplated in the announcement we provided this morning.

Let me address the second part of the second question. Thank you, Gabriela. In terms of the demand environment, I think we perceive a better environment when we compared to last year, the beginning of last year. Of course with cautious optimism, we see clearly a better commercial activity and pipeline compared to last year, also enhanced visibility for the first half of the year. And we still see some level of uncertain for the second level of the year. However I think if you – my perspective is that the conservative investment in digital in the recent years are now become kind of evident in the competitive landscape and if you add artificial intelligence in this equation, it’s kind of inevitable that companies in general will have to accelerate their digital strategies. So, especially in the second half of the year and in 2025. So, this is my perspective in terms of...

Thank you a lot guys. This is very, very clear. Thank you.

My pleasure Gabriela.

Thank you, Gabriella. Our next question comes from Joe Vafi from Canaccord. Joe, please go ahead.

Good morning, gentlemen and thank you for taking my questions. First one is I think, I heard, Cesar, that you said that your largest company or your largest clients going to be stable here in 2024. I was just wondering, what is the outlook for your maybe your two through five customers? And then secondly, is it may be a little early, but is it possible to quantify how many perhaps points of revenue may be coming in 2024 from AI related projects? Thank you very much.

Thank you, Joe. Regarding your first question, I think our top one client is forecasted and is – we see as a stable along the year. And we are seeing obviously higher growth in our top 10 clients. We are forecasting mid to high-single digit growth in our top 10 clients, so including the stable top one last year. So and the second question regarding our – I think the way we are approaching AI is in such a comprehensive way that – of course, we have the AI specific projects. But in general, we are turning every single engagement in an AI engagement with CI&T/FLOW. So – and also along the year we expect our 100% of our offerings will be somehow powered by AI, especially from the officials perspective. So, it’s really I think by now we have 35 of our larger clients already engaged with us, with CI&T/FLOW and also we are of course work hand-in-hand with these clients discussing their AI strategy and the roadmap around this disruption. So, I think it’s hard to predict, but I would say that probably by Q4 of this year, we probably will have 80% to 90% of all engagement of CI&T, somehow impacted or related somehow to AI. It’s basically because our CI&T/FLOW strategy, that is our end-to-end platform for producing digital solutions.

Great. Thank you, Cesar.

My pleasure.

Thank you, Joe. So, we have one question here via e-mail. Could you please provide more context on the cash generation for the year and what should we expect going forward in that regard?

Well, I can take that one as well. Well, thank you for the question. Historically, we have – we are running a business that generates a solid operating cash flow. 2023, it’s another year in this track record, a year without M&A and a year with lower growth. And as a consequence lower working capital demand, yes. For the future, we should expect that we are in the range of 50% to 70% cash conversion from EBITDA as we have been performing historically, right. And mainly because we expect the resuming our growth trajectory. So, that will demand more cash in comparison to 2023. Seasonally, cash generation is stronger in the second half. So, you would expect in the first half of the year a lower cash generation and towards the end of the year, second half greater amount of cash generation.

Thank you, Stanley. So, that concludes our Q&A session. Thank you all for attending our event today. I will now invite Cesar Gon to proceed with his closing remarks, Cesar?

Thank you all for participating in our call. Thank you my friends, Eduardo [ph], Stanley and Bruno joining me in this call once again. I need to thank all CI&Ters around the world for their hard work and achievement and also to support in this amazing project of building CI&T. So, stay well and I see you soon.