Q4 2022 Ci&T Inc Earnings Call
Speaker 1: Technology is more than a device, system or industry. Technology is built by people or people. It's built for people with desires, enemies and ambitions. By our people, who are? Or instead, just curious.
Speaker 1: creative, and the diverse. Our people 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 to make that tomorrow.
Speaker 1: CINT with brief and built-tack to make their tomorrow.
Speaker 2: Good morning everyone. Welcome to CINT earnings call for the fourth quarter of 2022. I am Eduardo Galvan, Investment Relations Director at CINT and it's a pleasure to be here again to talk about our results. With me on today's call are Cather Gawn, Founder and CEO of CINT
Speaker 2: Bruno Picardi, co-founder and president for North America in Europe , and Stanley Rodrigues are CFO .
Speaker 2: This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a question and answer session for analysts and investors only. If you'd like to submit a question, please send it via email to investors at cint.com.
Speaker 2: The presentation is available on the company's investor relations website at investors.cint.com. A replay will be available shortly after the event is concluded.
Speaker 2: Some of the matters we will 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.
Speaker 2: and discuss in the risk factor section of our annual report on Form 20-S and other reports we may file from time to time with the FCC.
Speaker 2: These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they're valid only as of the date when made.
Speaker 2: During this presentation, we will comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS financial measures in the appendix for more details. Thank you.
Speaker 2: Our agenda for today includes an update on our financial highlights, followed by some of our successful business cases. We'll then talk about our People and ESG Strategy and deep dive on our quarterly financial results.
Speaker 2: After the presentation, there will be a Q&A session.
Speaker 2: Now, I invite Sather gone to begin our presentation.
Speaker 3: Thanks, Eduardo. Good day, everyone. It's a pleasure to be here with you today. As we reflect on 2022, I want to take a few moments to talk about our vision for the future.
Speaker 3: Innovation is the ability to create unprecedented and effective solutions to solve complex human problems.
Speaker 3: The best opportunities arise from the intersection between two secular forces.
Speaker 3: changes in values and behaviors of society, and the exponential advancements of technological possibilities.
Speaker 3: Each new tech paradigm always demands a radical shift in the practice, process, and methods for connecting the dots of digital strategy, customer-centric design, and full-stack software engineers. Before the advent of these new ways of work...
Speaker 3: it's impossible to capture any scale the value of the latest technologies.
Speaker 3: CINT's core competency is method-driven innovation for large and fast-growing corporations.
Speaker 3: By reshaping the way we connect new technologies, management systems, and leadership models, CIT create these sustainable impact in the corporate world.
Speaker 3: It's undisputed now that a powerful set of emerging technologies such as Artificial Intelligence, IoT, Blockchain and 5G are reaching maturity and critical mass to move consumers and enterprise.
Speaker 3: Notably, the whole industry should thank the team of OpenAI for bringing generative AI to the forefront of public and corporate consciousness.
Speaker 3: It creates ideal momentum to speed up the adoption of AI and accelerate the flywheel of digital as a secular trend.
Speaker 3: in such a rapidly changing landscape.
Speaker 3: CNG has an essential role in helping our clients to capture digital opportunities efficiently.
Speaker 3: We call it digital efficiency and 2020 is the perfect time for companies to turn years of foundational investment into scalable business ventures.
Speaker 3: At CIT we are obsessed with efficiency for clients and for ourselves.
Speaker 3: We have always been in the cutting edge of digital innovation with our method driven approach.
Speaker 3: It's an infinite game and we are designed to continue leading the way in the years to come.
Speaker 3: Now let me comment on some of our financial highlights.
Speaker 3: 2022 was a non-trivial year and I'm pleased with our accomplishments.
Speaker 3: are not revenue-rich at 2.219 billion reais in 2022. An increase of 51% year-over-year or a 50-80% growth at constant currency.
Speaker 3: CIT high-growth space has been a combination of the expansion of our engagements with existing clients demonstrated by a robust net revenue retention rate of 126% in 2022, the addition of 84 new clients to our portfolio.
Speaker 3: reaching 170 declines with annual revenue above 1 million reais and our programmatic M&A strategy.
Speaker 3: The adjusted EBITDA margin for the full year was 19.1%, a solid profitability mark considering the consolidation of the acquired companies.
Speaker 3: We ended 2022 with more than 6.9 thousand CITers, a net addition of 1.3 thousand employers during the year.
Speaker 3: Again, I want to take this opportunity to express my gratitude to all CITers across the globe who have been very dedicated to making this happen.
Speaker 3: Stanley will deep dive into our financial results shortly.
Speaker 3: Since its foundation in 1995, CIT has recorded consecutive profitable revenue growth over 2080 years.
Speaker 3: We faced several challenging times throughout this period, and we have not only grown, but always emerged stronger.
Speaker 3: In the last four years, from 2019 to 2022, our K-year was a solid 48%.
Speaker 3: As we face on certain times, I'm confident that CINTs even better prepared now to navigate the ongoing challenges.
Speaker 3: Today, CIT is more diversified in terms of the markets we serve.
Speaker 3: Europe represents almost 10% of our revenue, compared to 2% in 2020. The US and Europe are the regions that are growing faster organically.
Speaker 3: More than 55% of our revenue today comes from mature economies, trending to 60% by the end of 2023.
Speaker 3: Our top 10 clients revenue share evolved from 67% in 2020 to under 50% in 2022, trending to 40% by the end of this year.
Speaker 3: This diversification results from the disciplined and recurring addition of new clients to foster our sustainable growth.
Speaker 3: In a nutshell, we are confident we will continue our profitable growth journey by generating impactful results for our long term clients.
Speaker 3: Now, let's go through some updates and concrete examples of how we are creating value across the globe.
Speaker 4: Dreamlab is a specialist crowdsourcing app that harnesses your smartphone's processing power to create a secure virtual supercomputer, are made of thousands of smartphones to accelerate scientific research. Developed by Vodafone Foundation and CINT, this groundbreaking and award-winning app has 2 million other problems.
Speaker 4: major global hazard adversely affecting millions of people and causing billions of dollars in damage every year. Professor Ralph Toomey, co-director of the Grantham Institute of Climate Change and the Environment from Imperial College London said. A desktop computer running 24 hours a day would take decades to process the data, but a network of 100,000 smartphones could do the job in just a couple of months.
Speaker 4: By simulating extreme weather events to understand their effects on communities, we can help people to better prepare and adapt to some of the worst effects of climate change. Dream Lab is free and ready to download now, giving you the chance to be a part of the world's biggest virtual supercomputer and participate in this important research.
Anima joined CINT to integrate and unify its learning management system, supporting the demand of more than 389,000 students. Anima and CINT also designed a new reference architecture to replace the original legacy system, using the latest technologies that could offer continuous delivery.
They reduced integration time by 95% and enabled app modernization. The role of AWS in the project was to provide data transactions using Apache Kafka, an open-source platform for data processing. Anime education and CIT band together, strengthening the learning ecosystem in order to prepare the company.
for a key moment in its business.
Panasonic is well known as an electronics manufacturer and Panasonic Connect is a developer of software suites that enable manufacturing automation that Panasonic uses and licenses to other manufacturers. CINT helps Panasonic Connect and its partners develop modern asset management solutions.
with Panasonic connect and navigate through its desire to maintain current functionality, security, and compliance while beginning the work of modernization. C-A-N-T understood the hybrid environments in which most companies work, and the solution single-code base address those environments. Keeping the focus on user outcomes, utilizing analytics to determine impacts, and seeing application modernization as part of a more significant overall digital transformation.
CINT was able to deploy cloud-based software to a current customer within four months.
validating the technology, staying in close touch to get feedback and iterating along the way. The results of the architecture that CINT developed with Panasonic Connect are delivering impact and value beyond the initial scope of the engagement.
Welcome to our news latest update.
We have gathered the most recent information and insights from our leadership team to share with you.
Cint will return to South by Southwest for the fourth time on March 14th. For a full day of interactive programming to nurture relationships and boost brand awareness, Cint will host panels with brands like Sunlife, Audi, YouTube, and more. Cint will feature important leaders of Cint.
On January 15-17, CINT sponsored NRF Retail's big show in New York City. Melissa Min Kool, director of retail strategy at CINT, joined Petco's chief administrative officer, John Zavada, for a conversation highlighting the findings from CINT's annual connected retail report.
CINT also had a booth presence and a prospect dinner in collaboration with Crown Peak.
On January 6th, CIT in Box 1824, launch trends for the future report.
A study on the main drivers and trends in the digital, economic, labor and sustainability fields for the next five years. The research connected the themes of innovation in digital efficiency, healthiness for business and avenues for growth.
CINT receives the Best Supplier Award in the Innovation category from Cielo, a leader in electronic payments in Brazil and Latin America. Cielo recognized the company for being a valued partner and for its commitment to delivering high-quality digital initiatives at speed and scale.
The second season was launched in February . The opening episode of season 2 was understanding the complexities of AI to create business value. Upcoming episodes will feature conversations on team-based organizations and data. This is our CINT Latest News.
ciand T announced the launch of work readythis comprehensive guide covers the principles, the guide how our people work, the workplaces of the future and the skills required to make work happen, with research, market insights and the perspectives of CI and TA leaders. Work ready provides a unique.
CI&T's Empathy Lab Workshop was awarded silver in the category Systems, Social Design, Recognizing Initiatives that Optimize System Performance by Focusing on Human Elements. The Empathy Lab Workshop is a digital series of exercises designed to build empathy for people with disabilities. It is a highly interactive experience where you can learn more about the world around you.
The NextGen People with Disabilities Edition is our training and hiring program for interns and assistants with some kind of disability. More than 2,000 people registered, seeking training opportunities. Taking place in Brazil, CINT offered over 500 free scholarships and hired 10% of the program alumni.
136 C.I. in tiers facilitated the program, investing a cumulative 12,000 hours in practical training for participants. The program has been changing my life in many, many different ways. That's something I've always wanted to do and now this is possible. Today, the people are hired already by more than 20 people.
implementation. Implementations that meet the search for digital efficiency, such as generative AI tools, are constantly experienced at CINT. We're seeing an explosion in applications across text and image and video, audio, data, and code. It's a step change powering the efficiency opportunities in digital software development.
Today, every industry sector should examine the potential application of generative AI across their user journeys.
In the automotive space, we are working on an initiative to use generative AI to create vehicle assets, images, descriptions, meta information. In the asset management space, we are using large language models to ingest...
disparate bodies of financial information and research and then transform that into accessible information, products and services that they can use for their clients and also sell back into their clients. In the pharma sector, we're working on a proof of concept to create, curate scientific content.
from different sources and then produce summarized information about the latest research, drug information and usage and then provide that to the MSL or the Medical Science Liaison to use in conversations with physicians.
I hope you enjoyed our client stories, news, and highlight selection.
Now I invite Bruno to address our Talent Management and ESG strategies.
Thank you, Southern. And good morning, everyone. It's a pleasure to be here again to talk about our people and our operations.
We ended 2022 with an outstanding mark of over 6900 CITers and that addition of 1.3 thousand people.
Since 2019, we have pretty much tripled our global team.
Our strategy to attract and hire the most talented people is based on processes and practices we have been evolving for decades. More recently, we are penetrating new talent markets based on the work from anywhere approach, which has proved to be a successful model in our industry. The working environment that we created at CIT.
based on a culture of trust, allows us to retain our people for longer. Our attrition rate at the end of 2022 was 14% compared to 16% in 2021 and continues trending down on a monthly basis.
The leadership attrition remains below 5%, guaranteeing consistency and quality in our delivery.
In 2022, we strengthen our global presence with bright people from acquisitions in four different geographies.
adding complementary expertise in industry verticals and technologies.
We are proud to have such a diverse and global team of almost 7,000 people. Creating a company that stands out not only based on its growth and financial performance, but mainly based on its human values and its contribution to improve the lives of the people we touch.
Today we publish our second ESG report detailing our initiatives, actions, and goals in the environmental, social, and governance front. ESG is a key pillar at CIT and being able to share our progress with our stakeholders is a matter of proud for all of us.
Our ESG strategy is driven by a shared vision to create equitable advancement opportunities for everyone, provide educational and workforce experience for underrepresented groups, and reduce our environmental impact to create a more sustainable world. Our ESG journey was initiated back in 2009 when we created a sustainability area. Since then, we have evolved our governance and created several programs and action groups.
decentralizing decision-making and providing power to the edge. Since July 2021, CIT has been a signatory to the UN Global Compact, reinforcing our commitment to sustainable development. And in 2022, we conduct our first materiality analysis, which allowed us to clearly articulate our ESG strategy.
based on our stakeholders' valuable contributions. I invite you all to download and read our ESG report available in our investors relations website.
Let me provide with some data that gives us the confidence we are on the right track. In 2022, 43% of the people we hired were from underrepresented groups. This is an upward trend and shows our commitment to ensuring that CIT represents the communities where we operate. In 2022, 43% of the people we hired were from underrepresented groups.
On this International Women's Day, we're happy to share that women in top leadership positions increased from 23% in 2021 to 25.7% last year and our goal is to reach 30% by the end of 2025. We also impacted more than 22,000 people with our social initiatives during the year. It is a fantastic achievement and aligned with our vision of creating a more equitable world.
For 2023, we are committed to expanding our greenhouse gas emissions inventory to our operations in the US and the UK. Now, I invite Stanley to comment on our financial results.
Thank you Bruno and good morning everyone. I'm glad to be here with you to talk about our financial results.
Starting with our performance in the fourth quarter of 2022, our net revenue was 612 million reais, an increase of 34% year-over-year. Eliminating the effects variation, our net revenue grew 42% compared to the fourth quarter of 2021. Our geo-state design in the fourth quarter was 127.5%
1.6 percentage points from 19.2% in the third quarter 2022 to 20.8% in the fourth quarter 2022 due to better utilization rate and lower SG&A expenses as a percentage of revenue.
The adjusted net profit was 54.5 million reais in the fourth quarter 2022, 4.3% higher than the same quarter in 2021. The adjusted net profit margin reduced from 11.4% in the Q4-21 to 8.9% in the Q4-22.
mainly due to a negative foreign exchange variation of 25 million REIs in the comparable period that impacted our financial expenses.
Now let's deep dive in our annual results.
For the full year of 2022, our net revenue was 2.19 billion reais, a 51.5% growth compared to 2021, of which 36% was organic growth and 15% was the contribution from the companies acquired in 2022.
The negative foreign currency translation impact was 6.4%, so the net revenue growth at constant currency was 58%.
The 2022 net revenue is 3.2 times the net revenue of 2019, recording a CAGR of 48% in the period.
Let me break down the components of our high growth profile. Our net revenue retention rate was 126% in 2022, demonstrating our ability to continuously release strengthening our relationship with our existing clients through value creation.
In addition, we added 84 new logos with revenue above 1 million REI to our portfolio during 2022, of which about half are organic net additions.
This cohort of clients will contribute to accelerate our revenue growth in the coming years as these engagements ramp up over time.
analyzing the numbers of our multimillion accounts, you can see that our growth engine based on our land and expan strategy has been robust.
The number of clients generating more than 20 million REIs annually doubled from 2020 to 2022. And an analogous growth is also valid for our accounts generating more than 5 to more than 10 million REIs.
The addition of new clients combined with our strategic M&A approach contributed to diversify our revenue base.
Caesar already mentioned how we evolve our revenue breakdown over time in terms of geography and top client share. I would like to emphasize that we are growing faster organically in the US and Europe and recent acquisitions should speed up our growth within those regions.
Thus, by the end of 2023, we expect about 60% of our revenues coming from mature economies, including the US and Europe , while our top 10 client share should evolve to 40%. Now talking about our profitability metrics.
Our adjusted EBITDA was 417.5 mineralized, an increase of 28.8% compared to 2021. The adjusted EBITDA margin was 19.1% in the year, a solid result already including the impact of lower margins from the acquired companies.
and the increase in G&A expenses driven by the strengthening of our back office teams associated with our IPO. Most of these general and administrative are fixed expenses and should be diluted over time. In addition, in the fourth quarter of 2022, the Brexit gradual increases include our
we reduced our real-state proper release based on the flexible working environment that we have been operating, such as the hybrid mode and the work from anywhere approach.
Thus, we expect lower leases expenses going forward. In the fourth quarter, 22, we already noted a reduction in our SG&A expenses as a percentage of revenue compared to the third quarter, 22. And we are fully committed to optimize our cost structure to benefit from operating leverage opportunities and
was 9.8 percent.
The incremental debt position at the end of the year was mainly to finance the enter solid position.
As we mentioned in our previous earnings call, last year we concluded our first wave of M&A and we are now dedicated to the integration of the acquired companies. In 2022, we generated 112.4 million re-izing cash from operating activities and out of taxes.
If we analyze our organic operating cash generation, excluding acquisition-related cash outflows, the cash generated from operating activities net of taxes would have been 172.1 million reais in 2022.
We ended the year with 282 mineralizing cash and a sound financial position to foster our growth.
Now, I invite back Cesar to comment on our business outlook. Cesar, please. Thank you, Stanley. As I mentioned, we are bullish regarding a growing number of technology advancements.
and the imperative for companies to continue to increase their investment in digital initiatives. Nevertheless, the global economic situation remains with a high level of uncertainty.
As our clients define their budget for 2023, we see consistent in keeping the current digital investments in programs.
but we noted a more conservative attitude regarding opening new initiatives. We also see less tolerance for low-performance and a focus on efficiency, increasing the room for CINT value prop of additional efficiency and more opportunities to replace low-performance competitors, including more willingness to near-shoring services.
So reflecting this macro scenario in our projections, we expect our net revenue for the first quarter of 2023 to be at least 590 million REI's, a 20% growth year over year.
And we are also projecting sequential growth throughout the year. So for the full year of 2023, we expect FX neutral net revenue growth in the range of 13 to 17% year over year.
We expect our adjusted EBITDA margin to be at least 19% for the full year of 2023, maintaining our current margin level. Our 2023 outlook is based on the current market conditions and reflects the uncertainties we see in the demand environment.
Finally, I sincerely thank our stakeholders, clients and investors, partners and CIO and peers for our continued support and commitment to our long-term shared vision and goals. Thank you all for attaining our call today. We now conclude our presentation and may begin the Q&A session.
Thank you.
Thank you, Cezanne. Thank you all for joining us today. We'll now begin the Q&A session.
I'll announce each participant name. Once you hear it, please unmute your line and ask your question. Then when you're done, please mute your line. First question comes from Ashrin from CD. Thank you all for the opportunity and the presentation. My question is.
you know, it could provide various incremental revenue metrics for for 23 in terms of how the revenue projection breaks down organic versus inorganic and given that you are now more diversified how do you see
you know, growth across your various regions, if you can start with that.
Sure, thank you, Aushin. Good to see you. I think let me start by giving you the components, our 15%
of projected growth for year over year for 2023, is estimated now to be 90% for again growth and 6% of points coming from M&A.
Regarding, we are forecasting an incremental sequential quarter increase along the year and what in terms of geographies I think we are what we are seeing since last year and it will continue this year is more traction.
on the USA and Europe .
and I think it's based on marketing conditions but also I think there is the specific fact that we acquired amazing companies in this geography so we have plenty of opportunities for upselling, cross-selling, use it organically expanding
There's new acquired plod of forms for growth. So basically we are expecting a sequential expansion along the year. Okay. And the follow up is.
Taking a look at the underlying macro assumptions as well as you look at your own conversations with your clients How would you characterize the visibility that you that you currently have many other Companies that we have spoken with have kind of mentioned that you know, maybe things
slowed down dramatically in the December timeframe. January was very quiet, but in February , things have maybe started normalizing. Some say things have started picking up. Are you seeing actual visibility that things are picking up as we go out, as budgets get set, and so on and so forth? Any color that you can put.
I think first I would start saying that we are bullish regarding uh
the growing number of technology advancements, a lot of trends in consumer behaviors, and we still see imperative.
for companies to continue increasing their bets, their investment in digital. I think this is the, is reinforce our vision of.
long term vision off, visualized a secular opportunity. Nevertheless, I think December and early January , we could note that this global economic situation
adds a lot of uncertainty during the budget process of our clients. And as they defined a budget for 2023, we could saw first, co-systems they are keeping their current digital investment and programs, but we also noted, I would say a more conservative.
added to regarding open new initiatives. And then as the year move on, I think I see the half full glass now.
Because what I see that is resonated with CIT developer op is much less tolerance for low performance.
and folks and efficiency. This increase the rule for CIT develop of digital efficiency.
And a lot of what is regarding replacing low performance competitors, including more willingness to nearshore services in the developed economies. I think this is good perspectives for the way we are positioning and the way we are.
fostering efficiency among our clients. Thank you for those details.
Thank you. Thank you, Ashwin. Next question comes from Tyler DuPone from Bank of America. Tyler, please go ahead.
Thank you very much for the question. Just to dive a little bit deeper into Ashwin's visibility question, particularly, are you seeing any change in client contracts or change in what clients are looking for with those contracts? For example, have you seen any elongations or client delays in newer existing projects? Any clarity there would be helpful. Thanks.
Thank you, Tyler. I've got this one too. What I see is a change in the nature of the use case.
I think there's a great prevalence of focus on proven use case. We call it Horizon 1 and Horizon 2 initiatives. Over more experimental initiatives we name Horizon 3.
more, I would say, long term, that's...
on digital and technology. So if you go for vertical, you're going to see financial service banking and insurance companies focus on concrete things like customer experience, online banking, open finance that is trending now. Of course you have more horizon to initiatives like blockchain trading.
fraud detection and so on. And if you go forward to the video you're going to see omnichannel, e-commerce, marketplaces.
and of course if it arises to AI customer service augmented reality you're going to see less of this and more concrete.
I would say use case that are red proven in the vertical and the same for consumer goods and so on. So I think the I think the main change would not is a more pragmatic.
approach on digital that again resonates with CIT really proper really
combining strategies and engineering very short cycles to see results, concrete results, and then expand from real evidence of success. Great, I appreciate that, thanks. And just regarding as a follow up to the go to market strategy, I'm just curious if you can speak to
So revenue contribution makes between winning new locus and upselling slash cross selling within the existing client base and just the um How willing clients are to take on those those upselling slash cross selling opportunities given the current you know current market environment Tyler 22 was was was a little brassy year
of expansion in our portfolio. Our net revenue rotation reached 126% along the year and we could add 84 new clients, long-term clients with revenue above 1 million REI. So it was a good combination of land expand.
And the way we are seeing 203 is, I would say, the same mix that's probably the growth of our results will basically 85 to 90% based on expansion on current relationship with the current clients.
and 15% to 10% max comes from new logo. Even though we always emphasize that is important, the discipline of every single quarter, you add new logos to the game, because this will not be relevant in terms of revenue in the short term, but will be.
very important for in the year two year three for sustainable long term growth. So of course, these are certain times is
There's a special moment where you need to reinforce.
commercial business development visibly enough not only supporting the current portfolio and expansion on them but also keeping the the traction of adding new logos to our to our portfolioours.
That's very helpful. Thanks, Peter. Thank you. Thank you. Next question comes from Pune Jane from JP Morgan. Pune, go ahead. Hey, thanks for taking my question.
So you had like a very strong new client addition and expansion in existing clients during this quarter. In fact, both metrics were better than what they were in third quarter. How do we view those metrics against like a backdrop of deteriorating macro environment?
throughout last quarter, but drove those clients to sign the CINT considering that that is going to be a big part of sequential growth beyond Q1.
Sure, as I mentioned, thank you for a question. Great to see you, Pune. As I mentioned, I think there's this change in the nature of the use case. And also there's for us, normally, I think in the last few years, if you look at the kind of engagements and the way we, at that moment, had been identified as not. My first question is the mornings from a
for CIT was normally half of our new engagement started with strategy, digital strategy. And then we follow with design and the full stack software engineer, I think, and probably 25 to 30% was regarding replacing performance, really really turnarounds of engagements that was not.
moving in a good way in our clients perspective. But now we see probably 70% of what we are doing is regarding digital efficiency, and meaning replacing or adding CIT approach, method driven innovation approach.
engagements that are already running and now we are really transferred to CIT portfolio. I would say that this is probably the main difference. There's less new initiatives in this beginning of the year and more
focus on engagements where efficiency or digital efficiency and turnarounds are the main point of the engagement. And can you also share various puts and takes for margins this year? Like what do you expect for
wage inflation, supply pressure, pricing, utilization rates, and what should we expect for hiring over the near term.
I think Steli can get this one right.
Yes, well we see with regard to insulation, Pune, lower pressure compared to the previous year. So we see things settling down in that field. Maybe as you..
You may recall in our operation we have this seasonality in terms of margins because in the first quarter we have the salary adjustments in Brazil and throughout the year we improve margins again when we have the price adjustments.
You know also that in Brazil we have the built-in price adjustments, a clause in the contract. So, and we see as we never get in this type of digital engagement that we have high flexibility in terms of...
for that, of course, we have all the efficiency conversations going on, and this is also an opportunity for us to adjust and our proposal of value prop in each of our clients. So we see a good perspective for the year in that matter. For more information, or to download Be More
And what should we expect for hiring like your net headcount was above flatish on sequential basis from 324Q. What should we expect for hiring trends over the near term?
And what should we expect for hiring like your net headcount was above flat-ish on sequential basis from 3Q to 4Q. What should we expect for hiring trends over the near term? Take care.
Similar to the seasonality, Q1 is usually slower. We see that speeding up sequentially over the next quarters. So probably you're going to see more additions in Q2, Q3, and Q4 than we're going to see in Q1.
The market of course has kind of a with the economic downturn has been easier to hire of course.
across the board, in all geographies that we operate. So that's the new reality there. So still competitive, that's easy, that's easier. Yeah, appreciate that. So thank you. Thanks for the question, Planner.
in all geographies that we operate. So that's the new reality there. Still competitive, but that's easy, just easier. Yeah, appreciate the answer. Thank you. Thank you for the question, Puneer. Thank you, Puneer.
We have a question here via email from Sazza Medina from Morgan Stanley . Amid macro uncertainty, are you seeing any signs of demand stabilization improvement or is it too early to tell? And then we have a follow up here on, can you comment on the effect losses during the fourth quarter? I can start with the second part of the question.
a functional currency in REI's, we have to record through the PNL all the fluctuations, the accounts receivables in dollars. The counterpart, the accounts payable in the US operation, as we have the functional currency in dollars, we don't pass that into the PNL.
It's a non-cache event. So that's the main actor behind that variation in the Q4.
The first part of the question, maybe. We can comment on that already. Okay, second hand, thank you Medina. Great to see you. Well, in terms of, I think the budget process was...
very effective to give us visibility on the current engagement that allows us to project a solid year based on on on
the certainty that we will continue a lot of big.
very critical digital engagements with our clients. What we have less visibility as regarding the launch of new initiatives, I think December and January was it was very cloudy. Now we see discussions happening
So more, let's say, evolution in our pipeline for new stuff and that gives us some positive perspective regarding the year. But I think it's too early to say that the speed of the demand will get.
reach a high level of traction, I would say. That's why we are guiding 50% that is a conservative, but I think based on the current market condition and what we have been discussing with our open press to worse.
Okay, we have a few questions here from the buy side, so I'm going to go through them. I want to touch on the talent side and get your view on what's the current level of the attrition rate and how is that performing over time?
I can take that one, Goho. Thank you for the question. Attrition, given the slow down in the overall market, attrition of course is going down. It's trending 14% in Q4 against 16%.
before that in the last 12 month base. And we continue to see it trending down, right? So if we look at the first month of the 2023, it continues to go down, which is good. The most important one, I think, to just reinforce for us, it's actually turned over on the leadership. Excellent, and that's a well under control.
diversification strategy. So we're coming from a 92 percent concentration of our labor force in Brazil in the end of 2021 to an 85 percent in the end of 2022. So we continue to diversify. We fund strategy and will work anywhere.
all over Latin America and also Canada and many different regions in Europe as well.
So that's kind of giving us an opportunity to kind of tap into an even bigger talent pool and continue to support our clients globally. Thank you Bruno. So the final question here is actually a combination of two topics.
Could you please provide more call on the potential disruption of generative AI in your industry and how are you guys preparing for that? The follow-up and how are you thinking about M&A in 2023? Can you talk about your objectives here and comment on the recent acquisitions you've done in recent quarters?
That's a lot of questions there. I can take the generative AI one. So we see generative AI as like a big tsunami of new disruptive change that will affect many industries, including ours. So we are actually already working with some clients as you saw in the video.
and make sense of medical information and research to help doctors and to help our clients in pharma, for example, educate their salespeople to help those conversations. We see many use cases, you know, in retail and financial services as well. So, and of course, there's the impact that we'll have in our own industry in software development and that's...
So we're eating our own caviar to later help our clients, you know, to serve that caviar for our clients. So we've been experimenting with many tools, not only chat-gbt, but also, you know, copilot from GitHub and tab 9. And our developers are getting ahead, you know, really trying to use those tools to kind of get more productive.
eliminate a repetitive task. Not only is software development all over the streamline, even in design, like a creation of visual elements, or using text to image type of fatules, even research. So we just completed a project for client where we synthesized 5,000.
user journey kind of interviews in a matter of days just using generative AI. So it's all across the board, we'll create exponential gains in terms of productivity. Things will be able to be done much faster and much more powerful. So we're very excited with what can bring to us and to our clients. And we're ahead of the game and we'll continue to be ahead of the pack there and helping our clients navigate this.
get into the integration of those recent acquired companies. We are reinforcing this imperative of this long-term organic growth, which is we've been growing and flow the history on top of that.
We also are aiming and focusing this year on a solid cash generation and get prepared for the next wave of MNAs. But for this moment we are focusing on the integration and reinforcing this sustainability in long term organic growth principle.
Let me chime in and add some comments on Stanley. I think we mentioned with Intersol we concluded an amazing cycle and create a robust platform for growth. Another update that is important I think is that
Somo box 1824 transpiring inner cell are already fully integrated.
from the business standpoint, operating as growth units, CINT growth units under the CINT brand. Of course, except box 1824, which will preserve its identity.
and as Tanya mentioned, back-off functions are being integrated in a much more careful manner. And of course we see tremendous value on M&A. We are in a very fragging market, a lot of opportunities of geographers, competence, verticals, expertise that we can...
speed up to MNA, but we as a still in nation, 20 degree, you should see less activity in this matter, but moving ahead, you should see MNA as part of our long term strategy. All right, so that concludes our Q&A session.
our team and I'm proud to work with all the CITers across the globe. We are confident that
Our foundations are solid and we will continue our journey of growth and value creation for all our stakeholders. Thank you once again for your support. Stay well and we look forward to seeing you in the next quarter. Bye.