CI&T - Earnings Call - Q2 2025

Transcript

Speaker 11

Welcome to CI&T earnings call for the second quarter of 2025. I am Eduardo Galvão, Director of Investor Relations at CI&T. Presenting our results with me today are Cesar Gon, our 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 Q&A session. If you'd like to submit a question, please send it via email to [email protected]. 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.

They are subject to known and unknown risks and uncertainties, which could cause actual results to differ from those expressed on this call. We caution you not to place undue reliance on these forward-looking statements, as they're valid only as of the date when made. During this presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS measures in the earnings release for more details. At this time, I'll pass it on to Cesar Gon to begin our presentation.

Speaker 3

Thank you, Galvão, and good afternoon, everyone. Today, companies demand more than innovation; they want measurable business impact. AI may be overhyped to some, underhyped to others, but one thing is clear: technology investments must deliver strategic returns. That's where CI&T stands out. We adapt constantly to meet our clients' needs, powered by two engines: our expert teams and our specialized AI platform, CI&T Flow. Together, they orchestrate mission-critical projects in real time, delivering fast execution, higher quality, and a strong return on investment. We call this tech-integrated business solutions, seamlessly combining business transformation with technology and AI. It gives leaders the clarity and predictability they need, and it's deepening our partnership, especially with our largest clients. We believe the future belongs to companies that unite business and technology into one integrated strategy.

The strength of this approach is reflected in our results, which I'm pleased to share with you now. Now, let's reveal our second quarter 2025 financial highlights. Our strategy of embedding deeply with large clients and delivering clear value has allowed us to maintain our momentum and deliver strong performance. Our revenue reached $117.2 million, which represents an organic growth of 12.3% at constant currency compared to the same period last year. On the profitability front, our adjusted EBITDA margin was 18.4%. As expected, this represents a sequential improvement from the first quarter, underscoring our commitment to operational excellence and disciplined cost management. Furthermore, our adjusted profit margin stood at a healthy 10.4%. This solid financial foundation allowed us to continue investing in the key pillars of our growth, particularly in our AI-first offerings, which are reshaping what's possible for our clients.

Speaker 0

Your cars are smart, your processes still stuck in first gear. CI&T Flow hits the gas. From design to delivery, we automate the digital journey: marketing, sales, after-sales, all accelerated. Built to move at the speed of your ambition. It feels like magic, but really, it's just damn good math. Now, take a look at what we are building with CI&T Flow.

Speaker 6

For three years, Ford has trusted us to accelerate its digital transformation across South America. From modernizing platforms, expanding capabilities, and delivering with GenAI strategies, including an early rollout of the parts warehouse platform in Argentina and the migration of more than 75 applications to Google Cloud, with intelligence under the hood and AI driving efficiency, we are moving faster and smarter.

Speaker 10

BB Seguros is changing customer experience with VR gamification. In partnership with us and Eagle Agency, BB Seguros launched PlayNap for Tesau, a virtual reality game that makes insurance an immersive, intuitive experience. Built with accessibility in mind, the experience is available on VR headsets and smartphones, making learning about insurance in real life simple, engaging, and memorable. In a world of daily potential risks, playing it smart is the best kind of insurance.

Speaker 1

Natura is enhancing digital access by using AI to create more inclusive experiences for people with disabilities. The project improves accessibility for 1.8 million Natura and Avon consultants by collecting feedback and adapting interfaces to different navigation needs. Over 60 professionals worked with CI&T Flow to identify and resolve invisible barriers in real time. Natura and CI&T, creating digital experiences that care.

Speaker 12

As payments go digital, 1.2 billion people with disabilities risk being left behind. 87% of those with learning disabilities rely on unsafe workarounds, like linker-sharing pins just to pay. The system just isn't built for them. That's why we partnered with Project Nemo, a not-for-profit focused on financial inclusion, to create a solution.

Speaker 8

Brilliant! Quite fun.

Speaker 2

Yeah, I love it.

Speaker 4

I love this.

Speaker 12

In six weeks, we designed Project Nemo, an art of the possible app prototype that helps adults with learning disabilities manage their finances independently, with trusted support when needed.

Speaker 2

That should be everywhere, as the general population, isn't it?

Speaker 3

Accessibility is not a disabled word. Everybody doesn't want things done simply.

Speaker 12

With CI&T and Project Nemo, inclusive banking is here. It's just the beginning.

Speaker 10

We are proud to announce that we've joined AWS's GenAI Partner Innovation Alliance, becoming one of just 15 partners worldwide and only the second in Latin America to be selected. With a shared commitment to driving impact through generative AI, this exclusive alliance brings us closer to AWS's most advanced GenAI leaders, tools, and opportunities. The journey continues, now with even more intelligence behind it.

Speaker 0

Sitting on a fortress of financial data, but speed? Nowhere to be found. That's why there's CI&T Flow. We streamline insights and unlock real-time decisions. AI to modernize your banking applications? Faster. No more waiting on yesterday's numbers. It feels like magic, but really, it's just damn good math. Now, take a look at what we are building with CI&T Flow.

Speaker 10

We took center stage at Febraban Tech 2025, Brazil's largest financial technology event, leading eight panels. We brought together leaders from banks and tech to the stage, and also launched a consumer trends study developed in partnership with DOXA 1824, exploring how new behaviors are reshaping the financial sector.

Speaker 9

Levante porque a CI&T traz vários aceleradores, como a plataforma CI&T Flow, é uma plataforma de IA generativa bastante avançada e que te permite entender como você pode impactar a sua operação. Então, esse acelerador é hiper importante. Fora a conexão com o mercado, tendências e como você também consegue acelerar a adoção de IA generativa na sua operação.

Speaker 10

At our booth, built with AWS, Intel, and Databricks, visitors experienced hands-on how AI is transforming financial services. Let's keep navigating the future of smart finance.

Speaker 3

These are just a few examples of our strategy in action. I'll now turn it over to Bruno to discuss our offerings and talented strategy that brings these results to life.

Speaker 0

Thank you, Cesar. It's a pleasure to be here to talk about our AI initiatives. Our ability to achieve true enterprise-wide adoption has been a key differentiator for CI&T. Through a structured approach, we have successfully scaled AI across our entire organization. This positions us ahead of the market, allowing us to guide our clients with proven experience, not just theory. Our AI-powered platform, CI&T Flow, has been central to this success and has become a significant factor in our go-to-market strategy, proving instrumental in both landing new clients and expanding our relationships with existing ones. We channel this expertise into three core offerings: unlocking measurable business impact with hyper-efficient teams, driving AI legacy modernization, and empowering clients with a safe and compliant AI-first transformation. Now, let me show you a concrete example of hyper-efficiency in practice.

Our hyper-efficiency offering answers our clients' critical challenges: how to innovate faster, adapt to change, and drive growth. Our approach is not about a tool, but a powerful combination of three core elements. First, our adaptive teams, which bring the right expertise and a collaborative mindset. Second, our processes, which are designed from start to finish with AI in the center. Third, our AI-powered technology, orchestrated by our CI&T Flow platform. The results of this integrated approach are tangible and significant. As you can see, we are delivering efficiency gains of over 50% across the entire digital creation cycle for major clients in industries like insurance, retail, and consumer goods. This is achieved through a powerful partnership between our people and AI. We augment our expert teams with AI agents, allowing them to focus on high-value strategic work while the AI accelerates complex tasks.

Ultimately, this is about more than just speed; it's about delivering a superior value proposition, enabling our clients to achieve their business goals with greater quality and predictability. We entered the second quarter with over 7,600 CI&Ters, a growth of more than 22% year over year. This deliberate expansion ensures we have the capacity and skills to meet the increased demand for our AI-first solutions. Stability is just as important as growth, and our voluntary attrition rate remains at a healthy 10.6%. This industry-leading retention directly reflects our culture, which fosters growth, learning, and impact. Together, this growth and stability create a powerful people platform that enables us to deliver on our promises and drive sustainable growth for the company. Now, I'll pass it on to Stanley to comment on our financial performance.

Speaker 3

Thank you, Bruno, and good afternoon, everyone. I'm happy to walk you through the results of another strong quarter for CI&T. In the second quarter of 2025, our revenue was $117.2 million, an increase of 8% from the same period last year. When adjusting for currency fluctuations, our organic revenue growth at constant currency was 12.3% year over year. This marks our third consecutive quarter of double-digit organic growth at constant currency. This consistent and predictable performance underscores the resilience of our business model and reinforces our confidence in achieving our full-year guidance. Our consistent growth is supported by a resilient and diversified business model anchored in our two most representative regions: North America and Latin America. In the second quarter, revenue from Latin America increased by 26% year over year, and we see continued momentum there in both landing new logos and expanding our existing partnerships.

North America grew by a solid 7%, showing consistent performance on top of a relevant base from 2024. In addition, revenue from our top 10 clients grew by 12% compared to the same period last year. This growth demonstrates our ability to expand within our largest accounts by consistently delivering efficiency and tangible business results. This chart clearly shows our landing expanded strategy in action. We expanded our high-potential cohort of clients in the $5 to $10 million range, from 11 clients in 2024 to 15 over the last 12 months. This growth is a key leading indicator building the pipeline for our next generation of strategic accounts, fostering sustainable growth. For the second quarter of 2025, adjusted EBITDA was $21.5 million, making a 3.1% year-over-year growth. This corresponds to an adjusted EBITDA margin of 18.4%.

In the first half of 2025, our adjusted EBITDA grew 8.5%, and the adjusted EBITDA margin was 30 basis points higher compared to the same period last year. Cash generated from operating activities for the first half of 2025 amounted to $33.7 million, achieving an 82% cash conversion from adjusted EBITDA to operating cash. Our strong financial position provides the flexibility to pursue opportunities that enhance our competitive standing and create long-term value for our stakeholders. In this context, we have a share buyback program in place, and we remain active. Finally, adjusted profit recorded $12.2 million in the second quarter of 2025, compared to $12.5 million in the same period previous year. This led to an adjusted net income margin of 10.4%. In the first half of 2025, the adjusted profit was $21.8 million, a 4.3% increase over the first half of 2024.

Our adjusted diluted earnings per share was $0.09 in the second quarter of 2025, a 3.6% increase compared to the second quarter of 2024. Now, I invite Cesar to comment on our business outlook. Thank you, Stanley. Based on our consistent performance over the past quarters and the strong commercial momentum we are carrying into the second half of the year, we are confident in our outlook. In the third quarter of 2025, we expect net revenue to be at least $124.4 million. This represents a strong sequential step-up and a year-over-year growth of at least 10.5% at constant currency. For the full year of 2025, we are narrowing our range and raising the lower bound of our revenue guidance, now expecting organic revenue growth at constant currency between 10.5% and 15%. This means our midpoint has also increased to 12.75%.

Assuming the FX rate of 5.50 reais to the dollar for the remainder of the year, we expect our revenue growth at constant currency to be around 210 basis points above our reported revenue growth. In addition, we are maintaining our adjusted EBITDA margin guidance in the range of 18% to 20%. This increased confidence is the direct result of our strategy in action: a robust commercial pipeline, continued expansion with our largest clients, and AI-first offerings that deliver tangible value, accelerating our growth. To conclude, I want to express my deep appreciation to our CI&Ters around the world. Your commitment to innovation and to delivering value to our clients is what makes these results possible. This concludes our presentation. We will now begin the Q&A session. Thank you.

Speaker 11

All right, we'll now begin the Q&A session. I'll announce each participant's name. Once you hear your name, please unmute your line and ask your question. When you're done, please mute your line. The first question comes from Pune Jain from JP Morgan. Hi, Pune.

Speaker 2

Hi, thanks for taking my question. Can you talk about adoption of CI&T Flow among your clients and internal stakeholders? Of the $120 million or so of quarterly revenue, how much of those projects or revenue include some portion of Flow-driven services?

Speaker 11

Thank you, Pune. I can guide this one. Basically, our adoption, the adoption of CI&T teams regarding CI&T Flow is reaching 90% of our teams. We can, as a proxy, say that 90% of our revenue now has some influence of AI and CI&T Flow. This is not directly related to use cases, business use case relating to generative AI, but saying that now basically everything we do, 90%, is somehow boosted by artificial intelligence and Flow.

Speaker 2

No, that's great to hear. It seems like it's definitely higher than a lot of your peers. Another question, are you seeing any differences in AI adoption across different verticals? It seems like financial services was very strong in the quarter, retail not quite as much. What would you attribute these differences in growth rates across verticals to?

Speaker 11

I think financial services clearly ahead in terms of investments related to AI first because the level of return on investment just with efficiency is amazing. Also, especially in Brazil, we see the beginning of a new customer experience based on chatbots combined with WhatsApp becoming the new trend. Consumers are migrating from traditional channels, digital channels like apps and websites, to interact with the products and services through WhatsApp and AI. This is a huge trend and generates a lot of demand related to creating this new layer of customer experience based on AI. I see a lot of moves in retail regarding AI, both in efficiency and also in creating this new layer of customer experience. I think in retail and even in consumer goods, there is a foundation to be created yet.

Companies still have to migrate a lot of, to modernize a lot of legacy systems, to create the data layers, create a level of, let's say, robustness in their architecture before they can leverage real benefits from AI. This is also the source of a lot of demand, what we call kind of horizontal demand related to AI that is basically using AI for accelerated application modernization, cloud migration, several data engagements, preparing the foundation for a future AI-driven world. We see, of course, maybe 30% to 40% of our demand is vertical demand. Improving customer experience journeys, boosting chatbots, as I mentioned, some more consulting AI-first transformation programs where the focus is AI adoption, and also a growing number of use cases related to personalizations based on AI. A lot of things happening in this space. I think financial services has an edge for sure.

Speaker 2

Okay, thank you.

Speaker 11

Thank you, Pune. Our next question comes from Victor Tomita from Goldman Sachs. Victor, go ahead.

Speaker 9

Thank you. Thanks for taking our questions, and hello again, everyone. My question, a couple of questions from my side. The first one is on the guidance that you increased. Was that in part due to the year being halfway done? You're having more visibility, which allows you to be less conservative, or is demand from customers shaping up generally better than expected, being surprised positively? Also, thinking across regions on that line, my second question would be if you see now some regions where you are now more optimistic or less optimistic than before in terms of demand compared to earlier in the year? Thank you very much.

Speaker 11

Sure. Great to see you here, Victor. I think in terms of our guidance, this new outlook is supported by two factors. The first is our consistent performance in the first half of the year, so we deliver ahead of our initial expectations. The second is the current solid commercial pipeline for Latin America and North America. To give you a data point, pipeline now is 25% higher than in the same period last year with a healthy conversion rate. We did a very strong and consistent Q1 and Q2, and we have a very strong pipeline that increased our confidence in our forecasts and guidance. The second question regarding regions, we continue to bet a lot on North America and Latin. That is basically 90% of our revenue. We see stability from Q3 and Q4 for the Europe and APAC regions.

Maybe a small increase in the last quarter for these emerging regions and a good prospect for 2026.

Speaker 9

Thank you very much.

Speaker 11

Thank you for your question.

Speaker 3

Thank you, Victor.

Speaker 11

Our next question comes from Gustavo Farias from UBS. Hi, Gustavo.

Speaker 9

Hi, everyone. Thanks for taking my questions. I'd like to start off by asking about the revenue growth. If you could break it down between the components of new engagements, both new clients and the ramp-up of current clients, and also the price, what comes from the price component. The second one, we've seen some sequential improvement in Latin, which was very positive in our view. I'd like to compare it to your view from last quarter. There has been some volatility in IT budgets. I just wanted to know your view on that, if it has improved or how you see the overall landscape in the industry. Thank you.

Speaker 11

Thanks, Gustavo. The first question regarding our growth is 90% expansion inside our current portfolio, and 10% is contribution from recently acquired clients. This is basically, in general, our landing expense ratio, and we are keeping the same pace this year. Regarding regions, and particularly you mentioned Latin America, I think that we grew 26% year over year this quarter in reported revenue. I think it's driven by, I would say, a surprisingly fast AI adoption in Brazil, both among customers, consumers, and enterprise. I see, especially in financial services, a pace that is unique, even comparing to more developed markets like the U.S. I think this is probably part of the explanation why we have such a traction in Brazil and in financial services.

Speaker 9

Yeah, very clear. Thank you.

Speaker 11

Thank you, Gustavo.

Speaker 9

Thank you, Gustavo. Our next question comes from Brian Bergen from TD Cowen. Hi, Brian.

Speaker 5

Hey, guys, can you hear me?

Speaker 9

Yes.

Speaker 5

All right, great. My two questions. First, just on EBITDA, we'll talk margins first here. Can you talk about the EBITDA margin drivers on a year-over-year basis in the second quarter and the path to hitting the guide in fiscal 2025? It seems like FX headwinds may be a bit at play, but I'm just curious where you feel most comfortable in that 18% to 20%. My follow-up, can you just discuss, you know, you've had good hiring the first half. Can you talk about hiring intentions in the second half and how you expect to exit the year?

Speaker 9

Thank you for the question. With regard to your first question, I can handle that one. EBITDA, we haven't delivered. We improved sequentially, delivering 18.4% of EBITDA, adjusted EBITDA in the second quarter. Basically, we have a seasonality built in our business throughout the quarters, right? In the first quarter, we have a salary increase, and typically, we throughout the year pass on prices and improve margins. Also, in the first half, we've been investing in hiring, preparing ourselves for the second half demand that is ahead of us. Of course, those resources, those people, when they mature and they become billable in the second half, this will also improve gross margin and EBITDA. Another driver is efficiency gains from AI that we are experimenting at the G&A level, together with a very disciplined cost management there, and the scalability that it provides.

We continue to balance these strategic investments in hiring, training, and in our AI platform to support our growth. Typically, looking ahead, we expect our margins to continue improving in the second half with the combination of all those factors. We are very confident in our ability to deliver this full-year adjusted EBITDA margin guidance of 18% to 20%.

Speaker 11

Just to complement on the staff growth, Brian, most of that staff growth is actually coming from our trainee program. We hired like 500 people in the beginning of the year that will, as Stanley mentioned, start billing in the second half of the year. That's the most part of that, the higher rate of people growth than revenue growth that you see there. That will kind of balance out in the second half. That's why we're very excited about this special edition of the trainee program because this will be the first generation that we're kind of enabling these people to only work with AI, right? There's no adaptation or kind of learning curve there. It will be the first native AI developers that CI&T ranks. We're super excited to put that in action.

Speaker 9

That's clear. Thank you.

Speaker 11

Thank you, Brian. Our next question comes from Luke Morrison from Canaccord. Hi, Luke.

Speaker 9

Hey, guys, good to see you. I got a couple here for you. Great to see your largest client continuing to grow really strongly, a real testament to the strength of that relationship. Could you maybe just share, like, what's working particularly well with that customer? If possible, clarify, like, what does constant currency look like with that client today? Across the rest of your top 10 clients today, are you seeing similar momentum and/or potential? Would it be possible if you could also just frame constant currency growth within that group?

Speaker 11

Sure. Hey, Luke, great to see you here. I think we see a very solid and consistent growth in our largest clients. We had sequential growth in eight out of 10 of our top clients. Of course, top one was a very good performance. It's a very large financial organization, so we expand across several business units. We credit that to our ability to demonstrate the kind of differential productivity and effectiveness of CI&T Flow in our AI approach. Driving efficiency and also leveraging AI adoption across the board is probably the main reason why we are expanding in such an amazing way. We see the same happening in different areas of our largest clients.

Everyone now is looking for both, combining to find a way to be more effective, more concrete regarding the benefits of adopting AI, but also starting to prepare the foundational legacy systems, data lakes, and so on to really drive value in the next phase of generative AI and the evolution of the capabilities of these large language models. In terms of constant currency, I don't know if Stanley will go along.

Speaker 9

What I can bring here, Luke, is for the top client, in terms of constant currency, we grew year over year, 92%. The top 10 clients, I don't have the constant currency data here. It's close to 12% growth year over year, right? If we get, of course, as we have 10 top 10 clients, they vary from one year to another year. If we take the current existing top 10 clients, that cohort grew 23% year over year, right? It's another data point. The existing top 10 clients, they grew 23% year over year. That's a reported currency. I don't have a constant currency for that as well.

Speaker 5

Excellent. Very, very good color. Thank you. Maybe just to follow up, how would you say, you know, is there any difference between your U.S. client base and how that's trending relative to Brazil today? Are you seeing any differences in spending patterns or project types, maturity in terms of adopting AI? Are there any signs of macro caution or tariff-driven instability in either market that you're seeing with the recent geopolitical stuff going on?

Speaker 11

Sure. I can start here, and Bruno, feel free to add on. I see, especially financial services in Brazil, where we have a very competitive environment, investing a lot, and with a very high sense of urgency regarding artificial intelligence. I see solid moves in the U.S., but maybe not as we are seeing in Brazil. We have, of course, for the U.S., we have a larger exposure to consumer goods that has a different dynamic. It's also leveraging the benefits of AI and this new age of disruption, but in a different fashion than a pure tech business like financial services.

Speaker 3

If I may add, look, if you divide the opportunity in two sides, Luke, one is internal, right? The efficiency play, right? The GenAI can bring. I think there's very little difference, regional or even vertical, right? Everybody's kind of trying to seize that opportunity. All verticals, all regions, people are investing to kind of try to seize the opportunity of increasing productivity, right? I think what is different here, and I think the big picture, if you look at the big picture, we're going to see massive investments in GenAI when there's consumer pressure. That's when there's consumers asking for this new, different way to interact with brands and organizations. To be absolutely frank, we haven't seen that yet.

We didn't reach critical mass yet for the consumer to actually, to consumers to be, you know, provoking, challenging their banks, their telco companies, the companies that they interact with, asking for that different experience. That will come. That will certainly come. That's down the road. It's just a matter of, you know, consumers getting used to it. To Cesar's point, we already seen this started in Latin America, right? When that started, then the genie is out of the box, and then there's no putting back. The level of investment, we expect it to increase exponentially because then it's not to capture, you know, a couple percentage points in margins. It's actually to survive, to kind of fight for consumer attention and relevance. The investment will speed up and will increase significantly. That will come.

It's hard to predict when, if it's in six months or 18 months, but it will come.

Speaker 5

Excellent. Very, very helpful color. Maybe just to the last part of that question, the tariff-driven instability, are you seeing anything there?

Speaker 11

No, not particularly. I think we are, again, financial, not directly, right? Our clients are kind of protected from that. We will have a big exposure, as you know, financial services and consumer goods. Even consumer goods, the majority of that consumer goods portfolio is actually food and beverage, which is kind of a more local supply chain. Very little exposure there in the portfolio clients for the tariffs. If it's, you know, no one is 100% protected, but that's where we are right now.

Speaker 5

Excellent. Okay, thank you, guys.

Speaker 11

Thank you.

Speaker 5

Thanks, Luke. Our next question comes from Maria Clara from Itaú. Hi, Clara.

Speaker 7

Hey, everyone. Thanks for taking my question. The first one is related to the revenue buildup of CI&T. We hear from some channel checks that the evolution of AI is probably having a deflationary impact in top-line growth trends of this industry going forward. I just wanted to check if you agree with this information and if you could share with us how you think about the evolution of volume and price going forward in the following quarters. The second question is related to utilization rates. You have been accelerating the hirings. I just wanted to know how you think about the potential improvement ahead. Thank you.

Speaker 11

Sure. Thank you for your questions. I can get the first one, and Bruno can handle the second. Regarding, we don't see, this is such a fragmented market. IT services is very, it's hugely fragmented across the world. We don't see a shortage of demand. What we see now is a lot of difference in performance among the players, and this is a huge opportunity. We believe we are in the frontier of productivity and effectiveness of using AI to streamline the whole production of digital solutions. We are taking advantage of this edge to replace poor-performance competitors. We basically are seeing a lot of opportunities to expand our client wallet by replacing no AI or poor-performance competitors and also increase our land capabilities with the new set of offerings we are designing around the new possibilities regarding artificial intelligence.

Regarding pricing models, I think the rise of AI in the IT services industries inevitably will open space for more flexible, value-based pricing models, maybe more closely tied to the business outcomes. We also see the need to gradually monetize the intellectual property embedded in those new agent architectures. When we look at our cohort of large enterprises, we anticipate a gradual shift from traditional time-mature or fixed-price projects to these new models over the next few years. It's an amazing and perfect moment to proactively test and refine this approach with our clients, and we are already doing so in several fronts, in a, I would say, in a very controlled way. We have some encouraged early results. It's going to happen gradually along a set of years.

I see as a mid-term opportunity to translate superior performance into margins while maybe mainly strengthening our clients' partnerships by giving them more options in terms of pricing models. I think this is good news for the whole industry and the companies with more ability to execute, with more strong confidence on their execution capabilities, you capture more value for sure. That's the way I see pricing models evolving in the IT services industry and how I see CI&T benefiting from it.

Speaker 0

If I can add to the volume discussion, Maria Clara, and thanks for the question. That's the $1 trillion question. The volume, back to my previous point, I think people are looking at this from the current lenses, which is kind of just the efficiency lenses and the internal use of GenAI. I think, again, when we move to the consumer-facing interfaces and the experiences of how GenAI will be embedded in, it completely, you know, rechanges the shape of digital experiences, right? With agents, with, you know, completely different experiences, replacing all the mobile apps and websites and the transactions that we know today, this will all have to be rebuilt and rewritten, right? This is a tsunami of volume that is ahead of us, right? Not to mention, also there's the, yes, productivity will go up by a lot.

This will also tilt the scale between packaged solutions and custom-built software, right? A lot of those build versus buy decisions that we see today will completely change in three to five years, right? It will tilt towards, you know, building your own software because it will be cheaper and faster than depending on a provider that has a packaged solution, right? That is also will kind of tilt the balance towards volume, towards, you know, services. I think those things are underestimated because they're not being seen today, but they're massive and they're coming, and we're very excited that they will come.

Speaker 11

Bruno, do you want to comment on the utilization rate? Utilization rate continues to be very high, around 85% to 89%. Our kind of delivery machine continues to be a shiny and well-oiled one. We're very proud that we have a so solid and very well-established delivery processes. It's not coincidentally that 90% of our growth comes from the portfolio because you keep happy clients that keep buying more and increasing wallet share. That's a recipe, and we continue to execute on that.

Speaker 7

Thank you for the answers.

Speaker 11

Thank you.

Speaker 9

Thanks, Clara. We have a follow-up from Brian Bergen from TD Cowen regarding client behavior around GenAI and agentic work. Clearly, you're gaining traction with CI&T Flow. Have you had any trends where clients thought they could do it themselves and then have circled back to CI&T because it was too complex and they needed help? If so, how broad-based has it been? If that has occurred, was there any different behavior where it may have been more design, agency-type activity versus pure software development type activity?

Speaker 11

I'm going to start this one. Thank you, Brian, for your question. I think there are a lot of clients that are afraid of the complexity of the capabilities they need to develop if they want to have a full stack competence around AI. There are some clients that are strategically, they see themselves as future tech-based companies. They have a long-term ambition to have a larger set of tech and AI capabilities internally. We have a value prop for both archetypes. We can really partner with part of our clients and extend their capabilities with CI&T full stack AI and tech capabilities.

We have some clients where we are helping them to internalize the new set of AI capabilities and methodologies and CI&T Flow also as part of a way to speed up adoption of AI and creating hands-on experience for the technical teams and non-technical teams, or as we say, for the coders and non-coders. Now I think every single professional needs to be reskilled with the AI possibilities to expand their problem-solving capabilities. Flow is not only designed for coders. Of course, there are a lot of things there regarding improving the building, the technical building of digital solutions. There are a lot of things happening in the space of creating the right environment for non-coders, for professionals from HR, from marketing, from finance, from any area of support area of a company to increase their AI abilities and leverage value, creating new agents, AI agents, and workflows around AI.

Huge opportunity. We are preparing for any kind of demand our clients have. I see a mix of companies counting more on outsourcing and strong partnerships with companies like CI&T. Companies decide that in the long term, they will need to internalize part of this or a good chunk of this expertise. We are there to help them too.

Speaker 9

All right, that concludes our Q&A session. Cesar, back to you to proceed with your closing remarks. Thank you all.

Speaker 11

Sure. Thanks, Gavan, Bruno, Stanley. Thank you all for joining us today. I'd like to extend my sincere appreciation for all CI&Ters around the world. We are almost 8,000 CI&Ters now, and I'm always amazed by you with your dedication. Again, amazing results this quarter, and let's keep pushing. A special thank you as well to our clients for choosing CI&T as a partner for co-creating this exciting new area of AI-driven innovation. Stay well. See you soon.