Q3 2022 Ci&T Inc Earnings Call
Technology is built by people or people, so for people, who desires and ambitions.
By our people who are talented.
Curious creatures and safer.
Are people, who use innovative strategy design and engineering to offer end to end solutions that help companies to quickly transform and scale their operations globally.
While we create technical solutions, all we really want and what motivates us is.
You make there tomorrow.
Make them tomorrow to make there tomorrow.
I N T, we breathe and build check to make that tomorrow.
[music].
Good morning, everyone welcome to guarantee earnings call for the third quarter of 2022.
Why did we go wrong head of Investor Relations at <unk>, and it's a pleasure to be here again to talk about our results with me on today's call.
Theyre gone founder and CEO , Bruce <unk> co founder and President for North America, and Europe , and some it would be to use our CFO .
This event is being recorded and all participants will be in a listen only mode. During the companys 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 email.
<unk> at <unk> Dot com.
This presentation is available on the company's Investor Relations website at investors <unk> <unk>.
<unk> Dot com.
A 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.
Our report on form 20-F, and other reports we may file from time to time with the SEC. This 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 to date.
MAGE.
During this presentation, we will comment on certain non <unk> measures to evaluate our business. Please refer to the reconciliation table non Ara, perhaps measures in the appendix for more details.
Our agenda for today includes a net data on recent events followed by some of our successful business caters to a few highlights. We will then talk about our people strategy and discuss our quarterly financial results. At this time I would like to invite hasnt gone to begin our presentation.
Please.
Thanks, Eduardo Good day, everyone and thank you for joining US today, it's always a pleasure to be with you inhibit the opportunity to talk about <unk>, our latest news and results.
Before we start I went to mention a milestone for <unk> last week, we completed one year of the IPO in the New York stock exchange launching what I believe will be the most exciting chapter of our journey.
With the cash proceeds of the IPO, we have expanded our operations globally to acquisitions opening new markets and verticals expanding our global talent base and building a sustainable platform to speed up our organic growth.
As you know those 12 moves where market by a non trivial macro environment.
We have been in business for 27 years.
And we have had the opportunity to face several of those cycles of abundance and downturn.
And how have we achieved 27 years of consecutive profitable growth.
In one word adaptability.
It's an essential part of our DNA.
And the core of our Unbilled renewal or organizational model.
Also what's behind the results we are presenting today.
I'm happy to be here for our fifth earnings call.
Last month, we proudly announced the acquisition of <unk>, a U S based company, providing digital transformation services to leading companies in the financial sector.
Headquartered in Irvine, California, Arizona has been helping companies roofing and reshape their operational for the digital age.
This acquisition has added more than 170 U S base due to the spectrum.
Two <unk>.
Including an executive roster of seasoned indifferent news a core team of business of strategists digital brand, new specialist and highly skilled developers.
This move further expands cit's operations in North America practically doubling our onshore team in the U S and bolstering the company's capabilities within the financial services industry I'm excited to welcome this talented team of <unk>.
<unk> to the <unk> family.
With inner saw we conclude our first wave of acquisitions and I would like to take this opportunity to add some color to our approach.
First and foremost, we see acquisitions as an opportunity to speed up our organic growth accelerating our presence and reputation in the specific geographies or verticals in that sense. We designed a programmatic M&A plan that we have been executing in a very disciplined manner.
In mid 2021, we acquired <unk> in Brazil, and since our IPO in November last year. We concluded four acquisitions sawmill in the UK box 18 to 34 in Brazil transpired in Australia, and you saw in the U S.
Each of them is founder led and has been evident culture fit with Sci and team. They are also growing and profitable companies supporting big clients is through talented teams that complement our capabilities in different regions and verticals, we have been very selective and a half.
Efforts are paying off with his move integrations.
These bolt on acquisitions are been integrated as new grille units.
Aaron team and immediately and low risk business integration to.
To contextualize some blocks 18, 24 interim inspire are already fully integrated from a business standpoint, and aerosol we'd be operating as a new growth units under the <unk> brand.
For the end of this year.
A dedicated squad has been coordinating the integration process in each region or Jai organizational model allow us combining a rapid business integration, while executing a careful back office systems and process consolidation.
With these moves we amplified our footprint for robust organic growth in our four operating regions Marfa America, Latin America, Europe , and Asia Pacific. So we conclude this first cycle of M&A by reinforcing that organic growth continues to.
B, our primary folks any strategy for value creation.
That said, let's take a look at our quarterly financial highlights we are glad to present another set of high revenue growth with solid profitability metrics. Our net revenue in the third quarter of 2022 grew 49% year over year of which 35.
Vantage points.
<unk> growth and 14 percentage points where acquisitions.
Eliminating FX fluctuation are a natural revenue constant currency grew 51% above our guidance of 46% for the quarter.
We reached 147 clients with annual revenue above 1 million Brazilian Reais from 76 in the third quarter of 2021, adding seven to one new clients in the last 12 months.
The adjusted EBITDA margin in the quarter was 19, 2% and continues improving sequentially as planned.
We ended the third quarter of 2022 with $6 9000, Ti and tears a net addition of one 5000 employees year over year.
I am never tired of mentioning how proud we are of our consecutive revenue growth tool out 25 quarters, even during challenging times with events such as the Covid pandemic outbreak and the war in the Eastern Europe .
This consistency demonstrated our ability to adapt according to market conditions and continue to generate value for our long term clients.
Stephanie we will dive into our financial results in more detail shortly but before that I want to express my gratitude to all <unk> peers that have been committed to making this happen. Thank you.
Now, let's see some examples of our engagements with clients worldwide.
Some of our business highlights for the quarter.
Okay.
Okay.
Yes.
Yes.
Okay.
This is a global digital ecosystem created by a b inbev with support from C. I N T.
<unk> began with the goal of developing a <unk> platform for small retailers, who were not reaching the same benefit from digital transformation as larger retailers with a product mindset. The project evolve to an ecosystem approach with different features to facilitate access to <unk> products worldwide and it was recently opened two other companies in the marketplace model.
To help customers drive these is designed to scale rapidly, reaching new countries with the ability to understand the needs of each region and adapt to them in less than three years. These already represents 55% of <unk> revenue and is available in 19 countries. We collaborated to create an innovative global solution that completely re imagined our client opportunities.
Bear a life science company with a more than 150 year history and core competencies in the areas of health care and agriculture reached out to see IMTT to orchestrate the data organization for its Latin American agribusiness sector.
This need came from the lack of data integration for deep analysis, which led the company to manual processes and lack of data driven decision, making using <unk> proprietary data journey approach there was able to enhance its data capabilities to generate insights and democratize the most.
Reliable data for the company in just 70 working day, the IMT delivered to bear a data platform that considers the first batch of analysis governance and accuracy and data management within the company in this platform bear skin Carryout descriptive analysis and also it can have predictive insights and trends.
Systematic fashion as initial results were made available the project decreased Amazon Web services development costs by 65% increase trust and data and enables hybrid intelligent facilitating machine learning and data driven culture.
Yes.
Yes.
Thank you.
Pixar is just over 10 years old itself as a business way back into the beginning it was just a little small start up when I joined there was probably about 30 employees.
<unk> is a publicly listed business with global aspirations and why more than 500 employees. So it's been quite a journey and now we are looking into new areas of growth for the business picks around transpire have come together, a few years ago and one of the big items that we've worked with transpire on is really our customer journeys.
<unk> has quite a varied customer segmentation that we have to deal with lots of different segments lots of different customers with lots of different needs and transpire have worked with us to really document and interviewed many of our customers I've played back those journeys to the picks at group and the <unk> obtained a relationship with pixel is fantastic is one.
Based on mutual respect, it's understanding what each party brings to the table and importantly, it's based around shared values.
With both committed toward transforming we understand that the status quo is not acceptable.
Jordan rating of that our relationship with Pixar is the support we get to actually bring about that transformation and deliver that outcome that sort of human centered approach that were looking for I'm really protective of my customers and semi I always feel confident and I think it's because I trusted transpire. So I think having that level of trust means that I always do.
Feel confident knowing that it transpire employees going out to speak with our customers.
What theyre going to bring back is going to be really accurate and informative and valuable. So I think for me. It ultimately comes down to that level of trust, particularly in my role and particularly when it comes to our customers I think that's one of the most critical factor.
Yeah.
Okay.
Panic supports 800000 customers across 120 countries.
And is supported by a global workforce of 2500 people.
The company was founded as a tax free shopping and payments, especially at <unk>.
Listing matching acquire it and ship it by providing digital payment services on a single platform that also declining processing digital wallets currency conversion and other services.
In the last couple of year planet has expanded its business through the acquisition of a number of hospitality and hotel base software businesses to create a truly integrated payment service.
With the support of the IMT Tenet is undertaking a huge program of work to integrate its different platforms.
The IMT, what given the challenge to not only create a new lead generating digital platform, but also undertaken in depth customer experience study to determine our longer term Google Tag manager strategy and roadmap. The project began in July 2022, with a simultaneous deliver.
<unk> of the customer facing MVP that would begin to generate leads for the business and the jobs to be done led strategy into customer need desired outcomes and optimal journey. This culminated in a detailed into your digital roadmap.
The first iteration of the platform went live in November .
And is the foundation that will be built on over the coming months. It consists of a single proposition website for the company.
Consolidated all serviced office into an organized and digestible format.
That will allow the company to upsell cross sell and attract new customers, whose needs will be served with one of the first truly integrated payments platforms.
Okay.
Okay.
Okay.
Sure.
Yes.
And Teresa is the United States based strategy and technology firm that helps leaders in financial services rethink and reshape their operations for the digital age.
<unk> acquired the company in October to expand its presence within North Americas banking financial services and insurance verticals.
<unk> has deep expertise in these fields and our footprint of more than 170 digital specialists in the U S.
Which perfectly fits our global growth ambitions.
<unk>.
For the 16th consecutive year C. I N T has been named a great place to work in Brazil in October we reached the fourth in the ranking our highest position ever we consider this recognition.
And certifications and other countries as genuine feedback from our people about what it is like to work here and as a confirmation that we are on the right track.
Web summit brings together the people and companies redefining the global Tech industry.
Based in Houston in 2020, we were in the events contributing with asking you about the changes <unk> made in breaking status claims.
Gruneich Ekati with one of the speaking shedding light on making products that Steve.
As Panna will discuss how digitalization enables you to scale up your operations.
But post scalar how companies connect to individual relationships with consumers and have also tailored put up and experiencing.
Participation in this event allows <unk> to be at the forefront of global discussions contributing to building thought leadership.
Yes.
Okay.
Okay.
Okay.
Okay.
Uh huh.
What is the company could create business impact faster through software development excellence.
Research shows that most existing software engineers worldwide are estimated to be working outside the technology industry and discount is rapidly increasing.
However, even though almost every industry has it departments as critical areas for growth most need help to have high performance teams that really impact the business.
We launched the tech booster powerhouse to strengthen our clients' capabilities to execute top notch software development that is directly connected to the value creation of the business.
The powerhouse is a global network of technologists focused on improving team performance through digital accelerators methods and practices at the forefront of digital development.
Sure.
[music].
Sure.
Yes.
Yeah.
[music].
Okay.
Yes.
Hello, Ala and did I might I'm, just guess the founder and CEO of Transpire, We started our company in Melbourne, Australia and today, we have a national footprint with around 100 digital consultants, who share in our mission, which is to waive humanity into technology I'm. So excited we are joining this.
<unk> family, it's clear that our cultures are aligned and so is our passion to leave a positive impact on the world through technology, Hi, Felipe Rubin <unk>, Vice President for Asia Pacific I'm Super excited to have transpired joining us. Thank you.
Between the two companies history and experience there is justice perfect feet of our culture capabilities and growth ambitions by combining our strength. Thank you will be providing our end to end services capabilities as well as our well known global employer value proposition to the Australia market also by bringing global innovation.
With scalability and by leveraging trust bias newsprint and experience, we will be providing additional capabilities to our clients in Asia, while also helping them activate additional value to their customers.
Hum.
It's the beginning of a new era.
New habits.
New technologies.
New connections.
Yes.
Everything.
Again.
Changes that force us to transform.
None of that.
The up to date.
Hey.
A critical question to consider.
How to thrive in a digital transformation.
[music].
The IMT presents with new global equates to walk with its clients.
Digital speed and efficiency.
Speed and scale in full payments for businesses to adapt to ever evolving scenario.
Developer velocity.
Yeah.
Application performance.
Yeah.
Strategic sourcing.
Okay.
And measurable outcomes.
[music] discover the next steps the company after digital transformation with <unk>.
Thank you.
Yes.
Okay.
We started the black and dates to PRASM in 2000 and plan to increase the representation was black people retention cheap back then our community was only about 10% of the company's employees.
So in Brazil, just community represents more than 50% of it.
And Brian to attract young professionals cleaning them prove boot camps and re awards experiences.
Fostering their inclusion in capabilities to face your project St. Jude also we hired an experienced professionals that showcase the importance of soft black representation.
<unk> levels.
As a company.
It had little brand awareness cohorts Thats committed.
The broad them help with us to learn and engage with interfaces and strategies and policies.
<unk> organic a program window, a founding member of EMEA.
Anthony the secondhand Murphy.
Okay.
One visible renewing a contract amendment.
He advises me will be a key regulatory semgroup look FHA.
So it could easily <unk> foundry, but anyway nathan's happening D&O.
In partnership with presentations, whose sole purpose is to serve the community to take an ecosystem approach, whilst the new terms of private work it to guarantee that inclusion types and cheap working alongside leaders and change about diversity equity and loss as a result of that initial effort we hired a third.
Seven black professionals and two years after the PRASM eight 9% of those people <unk> places finding just works required that our black competitiveness growth and inspire new problems in the years that follow it now but people make up about 12% of since he has worked for us globally.
Since 2012 that Tam has fostered innovation and technology for the developer community for those passionate about deep tech. The event is the right spot look what happened in the 10th edition.
Okay.
Although the company thrive.
I think vintage yoga for source <unk> farthing Shira Numerica haven't formally diagnosed the source.
I just thought it sounds like there are no questions.
Do you have to save our common example that I was looking at the first we want to remove all of them, but I think Tim what does that just kind of a vehicle for a biotech centrify as naphtha considerably. So if I hit that we still have a very nice unless you add up all of our facilities. The first briefly if I strip all of that I think that as I mentioned is when they saw balloons I'd add for.
<unk> <unk> at <unk> mine as well as West Coast that is my harambe faster Cuomo, Latvia upward bias to that the Florida.
London is all in our hand is under advance all our foster yellow day, instantaneous and you're comfortable with a homeowner digesting it wasn't that dollar handed us hopefully for let's say a fifth.
So as I say CFO vital Kevin with retrofits fragrances.
Yes.
Yes.
Yes.
Okay.
Okay.
Thanks.
Yes.
Lots of cool stuff right. So now invite Bruno to talk about our global talent and strategy.
Thank you, Sir and good morning, everyone great to be here again.
Our global talent base continues expanding and we ended the quarter with almost 6900 tiers of 28% growth year over year.
I'm very proud to tell you that last month <unk> was ranked fourth in a great place towards Brazil within the large company category and first among tech surface companies as presenting interview.
This is our 16th consecutive year being awarded this recognition in Brazil, and we also have been recognized as a great place to work in all countries we operate.
Thats, a remarkable achievement demonstrates our ability to keep attracting and retaining the best talent in the industry and providing them with an engaging and diverse environment, where they can be themselves and reach their full potential.
Okay.
As we expand our operations globally, we have strengthened our talent base and strategic regions to guarantee global coverage to our global clients recently, we increased our tenant base in Australia with the acquisition of transpire and expanded organically in Colombia in the UK.
Brazil used to represent 93% of our head count a year ago and now represents 87.
And this trend of comment based diversification should continue going forward.
For example, a degradation of Ingersoll will practically double our own sites in U S, which is our fastest growing market.
Finally, we continue to enhance our remote work and work from anywhere programs integrating them into our daily operations and benefiting from what we think it's a huge opportunity to tap into new markets for talent.
Now I invite <unk> to give you more details about our financial performance.
Thank you Bruno and good morning, everyone excited to walk you through our quarterly financial results. Our net revenue in the third quarter 2022 was 559 million Reais, a 49% growth year over year the acquisitions concluded in 2020.
Two contributed to 14 percentage point of revenue growth in the quarter.
When eliminating the FX variation, our net revenue at constant currency grew 51% compared to the third quarter of 2021.
This performance is above our guidance of 46% of revenue growth at constant currency for the quarter. Our strong revenue growth reflects our land and expand strategy combining expansion within existing clients and the addition of new clients every quarter.
Our programmatic M&A strategy also contributed to speed up our revenue growth.
Throughout the nine months of 2022, we continue to diversify our client base with the addition of 53, new logos with revenue above 1 million reais to our portfolio.
The number of clients with revenue of about 20 million Reais increased from 16% in 2021 to 'twenty two clients year to date, while the number of clients with more than five and 10 Mineralize also increased consistently.
Our net revenue retention rate over the past five years has been around 120%, which demonstrates that new logos should also expand and flourish overtime guaranteeing our sustainable growth towards 2023 and the following years.
<unk> recorded revenue growth in the quarter with all regions and within all industry verticals that it operates year over year.
North America remains our fastest growing market organically and it should be more representative as of the fourth quarter 'twenty two.
We will incorporate the results of and there. So the same is valid for Asia Pacific region with the consolidation of the transpire results.
As Susan mentioned, our M&A strategy has been to expand our geographic footprint, creating a global platform for organic growth.
<unk> the performance of our main industry verticals in the nine months of 2022 compared to the same period of last year revenue from financial services grew 38% food and beverage increased 27% TMT grew 19, 9% and farming cosmetics incur.
50% our.
Our client portfolio is pretty well balanced in terms of regions and industry verticals as you can see in the chart.
Moving on our adjusted EBITDA in the third quarter was $107 3 million Reais and increase of 34% year over year.
Adjusted EBITDA margin was 19, 2% in the quarter a reduction of two one percentage points compared to the third quarter, Tony one mainly as a result of two factors lower margins from recently acquired companies and an increase in G&A expenses in light of our <unk>.
Sequentially, the adjusted EBITDA margin improved to 19, 2% in the third quarter 'twenty two from 19, 1% in the second quarter 'twenty, two and 17, 5% in the first quarter 'twenty two as a result of gradual price readjustments on our contracts.
Which is a seasonal effect.
In the third quarter 'twenty two adjusted net profit was $69 5 million reais, 157% higher than third quarter 2001. The adjusted net profit margin was 12, 4% an increase of five.
Five two percentage points and it was mainly due to two factors lower net financial expenses as a result of positive foreign exchange variations in the third quarter journey to partially compensated by higher interest rates on loans.
And a reduction in income tax expenses because of our corporate reorganization concluded at the end of last year in connection with our IPO wrapping up as Susan mentioned, our priority continues to be fostering our organic growth, including leveraging the recently acquired <unk>.
Companies and now I invite back Cesar to comment on our business outlook.
Please.
Thank you Stanley.
Based on current market conditions, we expect our metro revenue in the fourth quarter of 2022 to be at least $605 million Brazilian reais, a 41% growth year over year on a constant currency basis.
For the full year of 2022, we are increasing our ultra luxe and expects net revenue growth of at least 58% year over year on a constant currency basis and reported revenue growth of at least 51% which includes a negative.
FX impact of approximately seven percentage points.
And we are maintaining our adjusted EBITDA margin guidance of at least 19%.
For the full year of 2022.
Thank you all for your addressed in <unk> T and for attending our call today.
We now conclude our presentation and may move to the Q&A session. Thank you.
Okay.
Yes.
Okay.
Alright.
We'll now begin the question and answer session I will announce each participants name.
Once youre here name. Please on mute your line and ask a question then when you are done please mute your line.
First question came come from Puneet Jain from Jpmorgan. Please.
Please go ahead.
Hey, Thanks for taking my question and nice quarter.
I wanted to ask about client priorities, if you've seen any changes there over the last three months are you seeing any delays in new project starts.
Clients preference.
Cost savings being so what digital transformation at all have you seen any changes in the way clients awarded new contracts or the type of projects that they award.
Thank you.
Didn't get this one I believe.
We still see it.
Total pipeline from our clients, but there is some trends related demand as you mentioned I think.
Does this basically.
We can see.
Two perspective.
First is the speed.
Customers are selecting initiatives based on the time to return so shorter cycles between investment and getting evidence of the results and our second second trend is efficient.
Thanks.
As an important is sergio.
Our macro environment and our metrics demonstrate that.
A high performance team can deliver 10 times more than a low performers. So theres a lot of opportunities to increase throughput.
Without necessarily increasing investment so.
I believe there's two trends the speed and the sales of time to return charter cycles for CECO greater results for the digital initiatives and efficiency.
There is discussion about how we can do more with the.
The investment that we're doing around digital.
Got it no that makes sense.
And then if you can talk about.
Directionally if you can talk about the expectations for 2023 growth lots of concerns around macro there.
Not just for you, but generally for the sector.
So how should we think about like as we build our model your Q4 guidance is.
How should we think about 'twenty, two 'twenty three trends growth trends on constant currency organic basis.
Sure.
We are still working on our 2020 budget and we will disclose disclose our full year guidance.
On our next earnings release.
What I can anticipate after this solid 2022, we expect another solid year, even considering the macro environment I think we have by now great visibility from our long term clients and is as broad and as Tony mentioned that we have a consistent and that to revenue orientation.
Ray in the past and we foresee that we will continue.
This year we.
The 53, new long term clients in the last nine.
Nine months, so new platforms for growth and also I think we create a robust footprint for growth with the recent acquisitions in different regions. So now we have.
But our footprint for Australia for UK <unk> for U S. We saw so we are still working on this but we are confident in our ability to deliver solid growth next year.
As demonstrated by our track record.
Got it. Thank you all the best Thank you.
Thank you Paul our next question comes from Tyler to fall from Bank of America go ahead.
Thank you. Thank you for taking the question just jumping off of.
Earlier question are there specific geographies or verticals that are seeing particular signs of strength or weakness.
And the conversations we're having with clients around that I mean, when looking at each vertical.
Looks like that's pretty strong growth sequentially.
Particularly within TMT. So is there anything specific to call out there and maybe just comparing that to financial services, which looks like it was relatively flat quarter on quarter.
Thank you Tyler can you start this one too we don't see any any specific to your friends, who have been growing consistently in all verticals and geographies.
I believe there is.
As big trends on specific verticals again highlight financial services is too strong of a fee base, mainly based on customer experience of war.
From the competition among the traditional players.
The feedbacks, we see new trends coming from crypto and block chain use case.
Around trading custody of digital assets international payments peer to peer transaction in Ftes and so on we see open banking not only the regulatory demands, but also new services like personal finance payments insurance and other services if we.
So far our retail we see massive investments around e-commerce, omnichannel and marketplace strategies to a big trend in this sector, but now I think combining with maybe more advanced.
Program is around data with advanced analytics machine learning approach, providing I would say.
A valuable and actionable recommendations for for retail companies and also trained.
Combining sales journey in store and online logistics around same day delivery and just kind of payments a lot of new stuff.
As it comes on the payment and so on.
If we go far consumer goods I think data is the main use case, especially using predictive analytics and big data to understand consumer behaviors.
Foster digital sales or accelerated product development and mobility, a lot of innovation around mobility connecting.
Wearables and a lot of use cases around that too so.
I think I think this is because it's across the board of course.
Ammunition ever single broader now has to close discussion about the value is what it's going to be created the speed you can demonstrate the results and efficient.
How productive that teams are and how effective.
Hello This is Dennis.
Okay.
Okay great.
Appreciate that and then just kind of on the on the other side on the supply side.
Maybe if you could speak to any of those specific supply side dynamics that you're seeing whether that attrition utilization.
You're seeing any wage inflation pressures still.
Subsided and just kind of update how that flows into margin that'd be helpful. Thank you.
<unk> kind of got distracted and I can take that one.
We are seeing.
Sure.
That competition subsiding, a little bit with the reason.
Slow down.
With the startup world.
And so it's.
Fishing is trending down.
You were down one march to 15% compared to 16% last quarter.
No.
Last 12 month basis.
And we're expecting that it will continue to go down going forward.
That's good news as to is to earn two.
Hot market right. So I think we're good.
Back to levels pre pandemic.
Not necessarily.
Kind of easy market is still very competitive.
But it's certainly.
<unk> is a bit from what we were only 912 months ago.
Okay, great. Thank you I appreciate all the color.
Thank you Tyler.
Question comes from Diego Arago from Goldman Sachs', Jim go ahead.
Yes. Good morning, everyone. Thanks for taking my question first congratulations little quarter very nice print I guess my first question is just a follow up on the previous one about your pipeline of projects you mentioned a good number of new client additions this quarter, but are you seeing existing clients postponing projects.
Or even like increasing the time length of digital transformation project given current macroeconomic environment. Thank you.
Thank you Diego, let's see human well.
Yes, I think I mentioned that I think there is a more meticulous process. The client signs. They are looking at careful what to do and what what start doing what stopped doing it.
And basically I think.
Regarding this time to return I think this is the main.
Point of decision are renewed vascular and initiatives that we see we can get returns concrete to returns you short cycles I think this resonate a lot with CIA valid brockhaus, combining strategy design and full stack software engineering to deliver short term results too.
Evidence that that's initiatives that set of hypothesis.
Correct.
Right place to invest so.
Loan loss.
Sales cycle for sure for everyone across the board because of this particular analysis of what we should do or not do it.
This.
Economic and macro environment.
Thanks.
This makes a lot of sense and I guess my second question is about M&A.
You did a couple of transactions since the IPO last year. So I was wondering if you would consider doing for deal.
Deals in 2023 are actually.
The coming year would be more focused on properly integrating.
These companies and extracting let's say.
Potential synergies you're seeing from those businesses. Thank you.
Amazing question Diego.
Basically I think we are ending with inner saw we are entering this I would say first wave of M&A using the proceeds of the IPO as I mentioned and basically that we created an amazing footprint.
Especially in the regions.
Asia Pacific with acquisition Transpire in Australia, and also in Europe with the acquisition of Soma in UK, and a new word or expertise capabilities with Ingersoll.
In the USA financial services I think this is an amazing footprint for future growth to now as you mentioned our priority is to leverage this platform.
Two for organic growth I think organic growth is our main value creation strategy and M&A as just a way to speed.
Our our presence, especially in new verticals and geographies. So you should expect now a lot of folks on leveraging those platforms and we are very confident.
These moves were spectacular at two hours our footprint.
So clear Suzanne thank you.
My pleasure.
Thanks Diego our next question comes from Ashwin from CD Ashwin.
Yeah.
Yeah.
Thank you.
My question is with regards to.
And then okay.
And more about.
How much M&A you could be doing it at once what's your bandwidth to handle multiple M&A.
And at the same time in terms of integration and so on so forth.
And I guess the follow up to that is would we expect.
Low down in M&A.
If you have so much on your paycheck.
Yes, I can start and then stomach.
And timing.
I think we.
We have a.
I think an amazing strategy for leveraging the companies we acquired I think probably Youll remember Sankey has does integrate new organizational model based on growth in units independent growth Europe buy and how we had 31 gross units around the world and every company we acquired.
Third we integrate as a new growth engine that gives us a lot of stability in this process of integrating because we kept the customer being supported by the same team by the same leaders.
Inc.
Incrementally, adding cit's global muscles to each one of these operation I think this is in the business perspective does allow is very low risk integration of course, what we select careful.
Targets companies with a very solid customer base with very.
I would say no.
<unk> culture leadership type and so on so I think.
This is just basically criteria that allow us to execute better.
Nation in a very is move way and of course, there is a more careful.
Our process regarding back offs system and process integration of its <unk>.
<unk> in a different timeline so.
Having said that I think as I mentioned, we are concluding an amazing first wave of M&A I think M&A will be a long term.
Our strategy for speed up our organic growth, but now we are totally focused on leveraging those new platforms I'd always Stanley if you.
When two shiny and add some colors.
Yes.
What I would add to that is that.
In parallel.
Going back to the question.
How we can proceed Belo integration.
Basically when we started for example in Australia first defense executives.
Executives on a greenfield mode, let's say to understand the market.
And later down the road, we made acquisition and <unk>.
From there we have both teams already.
And trust by teams working together in that geography, the same thing happens in some more fast fashion. We went first Greenfield mode and then we have those executives together with Somos and so so.
The parallelism.
Because we have teams different geographies independently working in that growth unit approach as I mentioned and then of course those things go connect back to the back office, which is a different streamline and we've been proceeding.
The many integrations in Belo as well, but of course, we have the preparation, but a lot going on.
And that allow us to do that many acquisitions also in the system and back office.
The expected.
Mainly that's the approach.
Understood. Thank you thank you for that.
The other question I have is with regards to just talking about the specific acquisitions and so then it was good to see the.
Videos on transpire, and and and so on with.
Emphasis on culture.
The the question.
Question is.
If you could provide a little bit more granularity on.
Where the clients are did attitude profitability the added to billing rate things like that for them and for the interest, though and I would imagine into soil being U S is higher billing rates.
How should one think about the contribution of those financially.
And I'm, sorry, if you've covered it in different parts I might've missed it.
It could go into that.
Sure.
<unk>.
I will start.
One two I think this company is three.
Three acquisition.
Especially transpire so.
So these are companies that were basically with offshore teams. So you can expect high higher.
Price.
And also higher costs. So this.
And this company is normally operate.
In a range of the mid teens in terms of EBITDA below <unk> EBITDA that is in the range of 20% so.
We expect that a low 123 years, we can add the near sharp component our global.
Technology perspective.
Covering clients portfolio and bring their EBITDA to the levels of <unk>. So.
This is part of the value creation, we see for each one of these acquired companies of course, there's a lot of opportunities on cross Sandy on scale.
Does engagements and leverage and adding new capabilities platforms I think Dennis.
7000 company can provide.
True to our customer.
Scott do you want to add.
More colors on those specifics.
What I would add that that's.
The main objective when we go with this M&A strategy is to add that to expand.
Expand faster our capacity.
For organic growth and of course, as we expand into many different geographies, but we will have a different blend of onshore near shore and that will.
We will be evolving.
For all the time so.
We should expect that.
Change in profile.
And the blend let's say.
And in both ways because at the same time that we acquired operations that they are heavily based on onshoring. We also want to add new capacity to them.
<unk> operation in <unk>.
Both wars will will happen.
So, let's say together in parallel.
Thank you.
Thank you Ashwin.
We have a question from EMEA, you'll hear from.
So as I mentioned Gina from Morgan Stanley can you. Please elaborate on the discussions you are now having for 2023 budget for growth, even if not a specific guide made so a big picture trends some of your peers in the industry have noted below 20% growth next year could this be the case for Yankee, especially with what is.
Happening on the Cisco front post election.
I can get this one as I mentioned, we are working on our 2023 budget.
Full disclosure our guidance in our next call.
We have we are really coughing.
Confident that after this solid 2022.
We will really cause even considering the macro environment and again, we have good visibility from our long term clients.
We have.
Good number of new clients I think we mentioned 53 new clients.
<unk> been in the last nine months.
And this footprint.
New M&A.
The M&A, new geographies and verticals, we can explore so.
Basically we are confident on our ability.
Of course, there is a lot of them.
Patient in OE strategy go to market strategy, I mentioned, a lot of emphasis on speed efficiency.
Salaries.
Theres always opportunities when there is.
A change in the macro environment and it depends on our ability to adapt the way you are approaching each one of your clients kind of relationship established and you can leverage opportunities.
<unk>.
Even on a more let's say quality.
Market environment. So we are still working on that but we are confident.
<unk>.
Providing.
Another solid very solid year.
Thank you Seth.
So that concludes our Q&A session.
You all for attending our event today I'll now invite <unk> to proceed with his closing remarks.
Thanks, Thank you Eduardo Stella Bruno for joining me.
Today.
You all for participating in another call again.
I want to thank all <unk> tiers for the amazing pack, we are delivering as a team.
And clients investors and partners for their continued support and of course a.
A great FIFA World Cup for everyone stay well and looking forward to seeing you all in a couple of months.
<unk>.
Yeah.
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Yes.
Thanks.
Yes.
Yeah.
Yes.
Yeah.
Sure.
Okay.
Yes.
Okay.
Thank you.
Yes.
Yes.
Yes.
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Sure.
Okay.
Yes.
[music].
Yes.
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Yes.
[music].
Great.