Q3 2024 CI&T Inc Earnings Call
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[music] in a world that's always on transformation.
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<unk> as you go to tech transformation specialists, helping you navigate opportunities and co create solutions at every step of your technology journey.
We get things done quickly efficiently and at scale by.
By combining the best human expertise with the power of our very own AI platform C. I N T flow our mission to design and develop tech solutions that drive growth and boost your business value.
When it comes to navigating change we turned challenges into possibilities.
Leading the way to a brighter future.
We're right by your side innovating together and pushing you forward that's what we do.
Our deep know how covers the entire tech development cycle.
From strategy to AI customer experience software development cloud and data services.
Navigate technology change with C. I N T to reach new Heights.
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Navigate change with C I N T.
[music].
Speaker Change: Good morning, welcome to <unk> earnings call for the third quarter of 2024, I am Eduardo Gogo Investor Relations Director FCA N T. Joining me on today's call are SaaS undergone founder and CEO Bruno decided you founder and <unk>.
Speaker Change: Residents for North America, and Europe, and steadily Hood reviews, our CFO.
Speaker Change: This event is being recorded and all participants will be in a listen only mode. During the company's presentation.
Speaker Change: After that there will be a Q&A session, if you'd like to submit a question. Please send it via E mail to investors at <unk> Dot com.
Speaker Change: <unk> is available on the company's Investor Relations website, and the replay will be available shortly after the event is concluded.
Speaker Change: Some of the matters, we'll discuss on this call, including our expected business outlook are forward looking statements 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.
Speaker Change: Forward looking statements as they are valid only as of the date when made.
Speaker Change: During this presentation, we will comment on certain non <unk> financial measures to evaluate our business. Please refer to the reconciliation tables of non <unk> measures in the earnings release for more details.
Speaker Change: Our agenda for today includes an overview of our quarterly highlights followed by some of our business cases will then talk about our people and our financial results at this time I'll pass it onto says they're going to begin our presentation further please.
Speaker Change: Thanks, Eduardo today I want to take a moment to talk about two things that is at the very heart of our success and growth our company culture.
Eduardo Gogo: At this time of great change and excitement with the AI disruption I mean things define my travels to connect with our teams around the world.
Eduardo Gogo: It now has people in 25 countries and in each of these.
Eduardo Gogo: Few of the key elements that unites and set us apart are deeply rooted culture.
Eduardo Gogo: Corporate culture does not happen by chance is the result of years of intentional choices behaviors and leadership our company culture is built on six tenants that guides everything we do let.
Eduardo Gogo: Let me briefly give you some context on them.
Eduardo Gogo: It starts with our clients.
Eduardo Gogo: The reason we exist they face complex challenges and we bring our expertise our stack a specialist to solve them with agility and innovation.
Eduardo Gogo: To achieve this we fostered an environment of trust Butte, amongst smart hardworking and resilient people, which enables deep collaboration and team work.
Eduardo Gogo: This teamwork is driven by an obsession with excellence and continuous improvement delivering superior results for everyone. We serve.
Eduardo Gogo: To remain relevant to our clients and sustain these results over the long run in our infinite game, we must continuously learn adapt and reinvent ourselves.
Eduardo Gogo: Finally, we live by the belief that the more diverse we are the stronger we become as a collective and more fulfilled we are as individuals.
As we embrace exciting transformations, including our AI reinvention, our coach or remains the bedrock of our strategic vision and operational excellence and a key element to attracting and empowering top talent.
Eduardo Gogo: Now moving to our financial highlights Santee continues to excel in an ever evolving digital landscape.
Eduardo Gogo: Third quarter of 224, we achieved a record net revenue of $622 2 million rise marketing, a 17, 6% increase compared to the third quarter of 2023 with constant currency net revenue growth of 90% year over year.
Eduardo Gogo: Growth was especially strong among our top 10 clients with net revenue up 25, 3% year over year.
Eduardo Gogo: Tangible productivity gains from <unk>, Flo platform resonate well with our clients, giving us the opportunity to continue expanding our share with them.
Eduardo Gogo: We continue to refine the process.
Eduardo Gogo: <unk> of our AI growth machine, our expert sales team boosting agility and effectiveness and meeting client needs. This enable us to onboard a large clients with substantial tech investments reinforce our long term land and expand growth strategy.
Eduardo Gogo: We concluded the quarter with a solid adjusted EBITDA margin of 19, 5%.
Additionally, our cash generation from operating activities, Richard 295 million Reais in the first nine months of 2024, underscoring our strong financial position.
Eduardo Gogo: We continue to attract and develop talent in the regions, where we operate this quarter. We on boarded 520, new <unk> tiers across the globe, notably we have streamlined our direct acquisition process with AI enhancing our ability to support our high growth ambitions.
Eduardo Gogo: In summary, we are excited with the perspective is for 2025 as we embrace AI as a transformative force and optimize our sales machine.
Eduardo Gogo: Now, let's explore some compelling stores of our clients leveraging AI in diverse contexts.
Eduardo Gogo: Yes.
Eduardo Gogo: Okay.
Eduardo Gogo: Yes.
Eduardo Gogo: Thank you.
Eduardo Gogo: Earlier in 2024.
Hi, Auntie was re awarded Aldi of Americas Digital agency of record continuing.
Eduardo Gogo: Continuing the partnership between the companies for another three years.
Eduardo Gogo: Yes.
Eduardo Gogo: Yes.
Eduardo Gogo: Latin America Giant bank was looking for a way to streamline their project management moving away from manual time consuming processes are.
Eduardo Gogo: Our solution, we partnered with them to use backlog refiner and agent within flow our AI powered solution that automates their backlog creation and refinement process now about 1000 active users utilize the system and approximately 100 communities within the bank use the system monthly with slow it down we saw remarkable.
Eduardo Gogo: Movements increased efficiency with 4000 stories generated monthly and a significant boost in team productivity with 30% of improvement in stories quality.
Eduardo Gogo: That's the power of human Nai and working hand in hand, transforming giants like autonomy.
Eduardo Gogo: This is our partnership with B, a S F where innovation meets beauty.
Eduardo Gogo: Yes.
Eduardo Gogo: Today, we're excited to introduce our revolutionary application the AI lab mixer guided by the friendly robot named mixing.
Eduardo Gogo: This interactive tool is designed to empower professionals in research and development to create innovative cosmetic products and skincare hair care and Sun care.
Eduardo Gogo: Using generative artificial intelligence mixing collects user data and preferences processing. This information against industry trends Mbas F. Innovative ingredient. The result, customized product concepts that meet market demands and reflect the a S. S expertise this generative AI application as revolutionary enabling.
Eduardo Gogo: Personalization like never before.
Eduardo Gogo: <unk> F F navigating the immersive experiences changes.
Eduardo Gogo: At the heart of the financial market.
Eduardo Gogo: <unk>, the Brazilian stock exchange operators, an essential market infrastructure and is committed to educating its users.
Eduardo Gogo: The challenge was clear how can we innovate and financial education, and make investments accessible while maintaining compliance and security.
Eduardo Gogo: <unk> with its expertise in technology and innovation with the partner chosen to tackle this challenge working closely with B three to implement a generative AI solution for the financial education chat.
Eduardo Gogo: The task was not trivial the team needed to navigate a sea of regulations and ensure data security, while developing an interactive and engaging educational tool.
Eduardo Gogo: <unk> stood out by forming a highly qualified multidisciplinary team that worked with agility and transparency.
Eduardo Gogo: The solution was an educational chat powered by gene AI, which responded to user queries and educated them about the capital market and investors, helping them to learn and choose the best investment options.
Eduardo Gogo: The educational chat became a revolutionary tool offering users valuable information and promoting financial education efficiently and securely.
Eduardo Gogo: Jen AI enabled personalized and adaptive interaction raising the bar for the user experience.
Speaker Change: Et cetera, the incubation of BT group creates an incubator products platforms and businesses and emerging categories, including drones health Tech EV charging active intelligence and Fintech.
Speaker Change: <unk> BT group's unique assets.
Speaker Change: Using a startup mindset to re imagine the traditional etcetera solve real world problems to transform businesses and People's lives with a relentless focus on the customer and a product mindset.
Speaker Change: <unk> sits at the heart of the etc business, helping celebrate diverse perspectives outside the box and entrepreneurial thinking.
With those they collaborate with they need partners that can match their vision and their pace, etc runs as a set of startups within a corporation. So working with the team which understood. The business. These products first mentality underpinned by zero to one thinking was key to a successful collaboration.
Speaker Change: They found that you can see IMT with our unmatched end to end capabilities and strategic right shoring approach <unk> was the ideal fit together, we embarked on a journey focusing on key etc projects.
Speaker Change: One of the most ambitious projects with this collaboration with project management.
Speaker Change: <unk> and et cetera set up in 2023 aimed at building an extension of its such as team underpinned by a common culture located in Lisbon.
Speaker Change: Go create a strong and United hybrid team that can rapidly scale to deliver initiatives across et cetera as key verticals.
Speaker Change: At cetera, and C. I N T established guiding principles across all of their projects. These principles focussed on an agile lean and product led approach customer centric innovation and continuous improvement all underpinned by share values and culture.
Speaker Change: The results were astounding in just one year etcetera, and see IMT have collaborated across six product areas scales to 13 squads and maintained 100% on time and project delivery.
Speaker Change: And if you like.
Speaker Change: To the extent, the incubation and say Hey, Greg.
Speaker Change: <unk> have been instrumental in supporting us and aligning our products and our strategic path to take turns those so ensure.
Speaker Change: <unk> Delta scale from day one.
Speaker Change: While helping us deliver the pace of the startup.
Speaker Change: Actually it was working and strong focus on culture are at the core of ASIC space.
Speaker Change: The secret to their success with a shared vision a strong culture of accountability, a relentless focus on doing what's right for the customer and a deep understanding of each other's businesses. The values in common culture created by et cetera, and <unk> <unk> onwards, it's at the heart of everything they do which is when the power of collaborations.
Speaker Change: <unk> can truly be realized.
Speaker Change: [music].
Speaker Change: We team up with Amazon Web services AWS to make our clients reached the Sky recently, we achieved three significant designation the AWS migration competency, which enables businesses to achieve their cloud migration objectives, effectively the AWS well architected authorized partner and the AWS service.
Speaker Change: Delivery designation for <unk> <unk>.
Speaker Change: Partnering with us our clients gain access to our framework and financial incentives from AWS to reduce migration cost and.
Speaker Change: In August we also launched a center of excellence for AWS, a dedicated team to unlock the potential of generative AI with Amazon bedrock, and AWS, new competencies and designation.
Speaker Change: CMT is a grid enormous partners this new expense due to their customer obsession and delivers value to our systems.
Speaker Change: <unk> migrations and application modernization using G&A savings do we for a great future.
Speaker Change: Today, we're excited to share the success of our C. I N T. Nexgen AI addition, internship program.
Speaker Change: At <unk>, we believe in nurturing the next generation of tech leaders by providing them a platform to learn innovate and excel. Our internship program is more than just learning. It's an immersive experience. Our program combines theory with hands on practice focusing on using artificial intelligence through our <unk>.
Speaker Change: Prior Terry platform.
I N T flow with an overwhelming response, we received more than 10000 applications. This year, reflecting our programs growing interest and trust, we look forward to nurturing more talent and continuing to make a significant impact in the tech industry.
Speaker Change: Sure.
Speaker Change: <unk>.
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Speaker Change: [music].
Speaker Change: In San Francisco, we engaged in discussions with industry leaders about AI as current impact on businesses and the opportunities. It presents the event featured a keynote speech by Geoffrey Moore, the author of crossing the chasm. Additionally, we hosted a panel moderated by Bob Walheim, which included represented.
Speaker Change: <unk> from prominent brands the event marked a significant moment in engaging a community of leaders in AI transformation.
Speaker Change: In September we hosted our ESG day, the morning of learning connection and installation focusing on the role of technology and promoting sustainability and social cohesion specialists from client partner.
Speaker Change: And other stakeholders came together to discuss present cases, and foster a culture of innovation rooted in social and environmental responsibility.
Speaker Change: <unk> mid teens.
Speaker Change: One is as safe as Nathan Nando <unk> shopper, so EES a definitive <unk> zynga saw the super important that Washington REIT.
Speaker Change: Third the logic of the EUR SKU advantage of Orange, and we monitor those and should position us to get box will support the rod Laver.
Speaker Change: The ESG day brought us close to our purpose of using <unk> as a force for good.
Speaker Change: Join us.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Welcome to <unk> <unk> future ready summit held with the iconic New York Stock Exchange. This event brought together leading tech experts to share insights on advancing AI first business strategies for modernizing customer experiences to harnessing data driven growth our keynote by Lisa Cohn and panels featuring <unk>.
Speaker Change: <unk> from Microsoft vector three consulting and more explored the future of innovation, we dumped into the real world impact of journey II with discussions led by experts from CIM AWS and Ken view. Thank you for joining us for the future ready summit together, we're navigating change and driving value.
Speaker Change: Okay.
Speaker Change: We've been around Gartner events in Brazil, and the United States in the past few months in San Paolo The Gartner CIO and executive summit is the region's most important gathering for senior leadership, we sponsored the event to show our AI journey in Orlando.
Speaker Change: Ando Gustavo showcased how generative AI applications drive efficiency at scale with practical examples that can transform our clients' innovation journey in each event, one message impacted hundreds of people.
Speaker Change: <unk> is the right partner for your AI transformation.
Speaker Change: [music].
Speaker Change: I Hope you enjoyed it now I would like to invite Bruno to talk about our global delivery model <unk> evolution and our talent strategy.
Thank you <unk> and good morning, everyone. It's a pleasure to be here again.
Speaker Change: We ended the third quarter of 2024, with 600, 700, selling tiers, reflecting 10, 5% year over year growth.
Speaker Change: An eight 3% growth compared to the second quarter of 2024.
We're glad to resume our head count growth as we expand our reserves and for our clients.
Speaker Change: This quarter, specifically, we are onboarding more than 500, showing two years globally.
Speaker Change: During the first half of this year, we prepared ourselves for a higher growth base.
Speaker Change: And strengthen our town and attraction machine.
Speaker Change: In addition, we are accelerating the onboarding and training process, using AI, which helped to maintain a healthy utilization rate during the quarter.
Speaker Change: Also our voluntary attrition rate remains at a healthy 10, 5%.
Speaker Change: As soon as I explained earlier, we firmly believe that our culture is our.
Speaker Change: Biggest differentiator that drives our long term resilience excellence and sustainable growth.
Speaker Change: Talking a bit more about our people.
Speaker Change: I'm delighted to share some exciting updates about our 17 Nextgen our trainee program that holds a special place in our hearts.
Speaker Change: We're passionately committed to developing the next generation of tech leaders by providing them a platform to learn innovate NFL.
Speaker Change: This program stands out for its unique approach it goes beyond conventional learning.
Speaker Change: Offering an immersive experience where theory integrates with hands on practice.
Speaker Change: Also our proprietary platform 70 flow plays a central role in leveraging artificial intelligence to enrich and accelerate the learning journey.
Speaker Change: We have partnered with leading universities in Brazil, and Colombia, and we are invigorated by the overwhelming response to our program receiving over 10000 applications. We plan to onboard 500 are the most talented people in the first quarter of 2025.
Speaker Change: Attracting highly talented young professionals has been a cornerstone of our operating model.
We foster the development of our people and promote from within.
Speaker Change: This approach not only strengthens our culture, but also ensures that we continue to grow and innovate.
Speaker Change: Now moving onto our delivery model.
Last year, we launched 70 flow or into an AI powered platform with a bold vision to transform software development for <unk> and our clients. This decisive moment market our commitment to our future powered by artificial intelligence.
Speaker Change: Today I'm thrilled to share some tangible results we have achieved.
Speaker Change: I'm pleased to report that over 75% of our teams have integrated flow into their daily activities and over 3000 of them are flow certified.
Speaker Change: We are truly proud of this achievement given that Gen. AI, it's not just a matter of technology. It requires a different way of working in a mindset shift which makes the adoption journey quite challenging.
We're also very proud that more than 100 clients have embraced flow since the platform launch they are.
Speaker Change: Experiencing immediate value creation through significant improvements in velocity and productivity doing more with less which is a great way to create momentum and foster a more extensive adoption and transformation.
Speaker Change: This is an exciting time for us and the world of digital and software engineering, we are front runners in a massive transformation that is just starting and we are determined to continue ahead.
Speaker Change: Now invite Stanley to present, our financial performance for the quarter.
Stanley: Thank you Bruno and good morning, everyone I'm pleased to share our financial performance for the third quarter of 2024.
Stanley: Our net revenue reached a record $622 2 million reais, marking a 17, 6% increase compared to $529 1 million Reais in the same period of last year.
On a constant currency basis. This represents a solid 9% growth. In addition, we are glad to report a 10% revenue growth on a sequential basis, reflecting our sustained momentum throughout 2024, as we have been guiding the market.
Stanley: Our top 10 clients have shown particularly strong performance with net revenue growth rising by 25, 3% year over year. This impressive figure underscores our unwavering commitment to delivering exceptional value and building long term relationships with our.
Stanley: Our key clients or our financial results this quarter reflect not only our robust client relationships, but also our strategic focus on expanding our market presence and delivering innovative solutions.
Stanley: We have achieved net revenue growth across all regions on a year over year basis, demonstrating our balanced global presence for the nine months of 2024, our geographic distribution of net revenue is as follows 44% from north.
Stanley: America, 41% from Latin America, 11% from Europe, and 4% from Asia Pacific.
Stanley: In the third quarter net revenue from Latin America grew by an impressive 11% on a sequential basis driven by our strategic initiatives with top clients in the region North America continues to be our fastest growing market showcasing our ability to drive value.
Stanley: In diverse markets.
Stanley: Throughout 2024, we have consistently experienced growth across our primary verticals in third quarter 10-Q, four revenue from financial services consumer goods and retail and industrial goods verticals grew by double digits year over year, notably.
Stanley: Revenue from retail and industrial goods sectors actually doubled compared to the third quarter 'twenty three fueled by new clients. We acquired in the last 18 months, who are growing at a rapid pace.
This growth includes significant contributions from our automotive players and food retail companies.
Stanley: Over the last 12 months ending in the third quarter of 'twenty 'twenty four we had eight clients generating over $10 million in revenue and 17 clients within the $5 million to $10 million range.
Stanley: One of our top priorities is to increase our wallet share among our largest clients. We are committed to fostering strong long lasting relationships with them and broadening the range of services, we provide visa aligns with our land and expand strategy, which focuses on.
Stanley: On retaining existing clients, while expanding our presence within their organizations.
Speaker Change: Moreover, we are excited about the addition of new clients, we have recently engaged including large and well known to have prices presenting significant technology investments opportunities as Cesar mentioned, our AI growth machine a specialized sales team has been.
Speaker Change: Refining our offerings in hastening, our effectiveness and speed to meet client needs.
Speaker Change: Our adjusted would be there for the third quarter of 'twenty 'twenty four reached 121 million Reais, representing a 24, 2% increase compared to 98 million Reais in the same period of last year.
Speaker Change: The adjusted EBITDA margin improved to 19, 5% in the third quarter of 2024 up by one percentage point from the third quarter of change change III.
Speaker Change: We have been dedicated to maintaining healthy margins through a diligent cost management approach. In addition, we have strategically invested in our sales team to drive sustainable revenue growth.
Speaker Change: Adjusted net profit was $56 5 million Reais and increase of 32, 9% compared to the third quarter of 2023 <unk>.
Speaker Change: The adjusted net profit margin increased from 8% in the third quarter of trains train III to nine 1% in the third quarter of 2024.
Speaker Change: This improvement was mainly due to the increase of the adjusted gross profit partially compensated by higher income tax expenses in the quarter.
Speaker Change: In the nine months of 'twenty 'twenty four we generated 295 million reais from our operating activities, a 15, 9% increase compared to the previous year. This represents a cash conversion to adjusted EBITDA of 94%.
Speaker Change: Demonstrating our healthy capacity to generate cash from our operation now I invite Cesar back to comment on our business outlook.
Thank you rich Daly for the fourth quarter of 'twenty 'twenty four we expect our net revenue to be in the range of 620 million rise to 655 meter rise on a reported basis at the midpoint of this range.
Cesar: Our net revenue guidance represents a 22% year over year growth.
Cesar: For the full year of 2024, we are updating our guidance range and raising the midpoint. We now expect net revenue growth at constant currency to be between 0.5% and 2% year over year.
Cesar: On a reported basis net revenue growth at the midpoint of the range for 'twenty 'twenty four is expected to be approximately four percentage points higher than growth at constant currency, assuming an exchange rate of five point 55, Brazilian reais to the U S dollar in the fourth quarter.
Cesar: Yeah.
Cesar: Additionally, we are raising the midpoint of our guidance for the adjusted EBITDA margin, which we now estimate to be in the range of 18% to 19%.
Cesar: In 2024th first quarter, we set the ground work for a year of solid sequential growth.
Cesar: Signaling a robust V shaped rebound drove 200 increase atypical year and aligned with our historical track record.
Cesar: The solid exit rate in the fourth quarter of 2024 position us favorably for a sustainable growth trajectory heading into 2025 and beyond as we conclude I extend heartfelt gratitude to our clients and stakeholders and my exceptional team for their support and dedication.
Cesar: That drive us forward.
Cesar: Let's continue to collaborate innovate and transform we now conclude our presentation and open the floor to your questions.
Great.
Cesar: Yes.
Cesar: Thank you.
Speaker Change: Alright, we will now begin the question and answer session I will announce each participant name. Once you hear your name. Please mute your line and ask a question then when you are done please mute your line.
Speaker Change: The first question comes from Leonardo almost from UBS Fitbit know warhead.
Speaker Change: Hi, everyone. Good morning, congratulations on the great results and perspectives going forward very happy to see it two questions on my side first on unemployed growth.
Speaker Change: If you could talk a little bit about.
The good problem you have space. So it got a lot of demand.
Speaker Change: And you may need to hire a lot of people can you talk a little bit about that and how their utilization rates.
Speaker Change: Are doing and the second question was we notice that income tax was a little higher than we expected.
Speaker Change: Can you talk a little bit about the expectation of tax rate going forward. Thank you.
Speaker Change: I can take that.
Speaker Change: First one on the head count.
Speaker Change: Emil.
Speaker Change: The head count has been growing in line with.
Speaker Change: With revenue growth right. So we don't think it's that.
Speaker Change: So big problem right now the market still.
Speaker Change: Stable so it's not a that's not as hard as it was.
Speaker Change: The year on the pandemic years.
Speaker Change: And we were able to grow even during the pandemic yours or.
At this point has been it's been an easy brown results not too hard.
Speaker Change: And we've been competing in this market for 29 years.
Speaker Change: Never been easy, it's never easy, but it's easier.
Speaker Change: And then I guess, a 'twenty one 'twenty two.
Stanley when you wanted to.
Speaker Change: Let me get this about that right.
Speaker Change: Thanks for the question well about the effective tax rate is the better way to see that is to see in the nine months of 2024 and you can see we have the 38, 7% in effective tax rate compared to the nine months in 2023, which was.
Speaker Change: 36, 5%.
Speaker Change: This increase pretty much we have included there.
Some business.
Speaker Change: Business restructuring.
Speaker Change: They are one off.
Speaker Change: Senses in this year affecting the tax rate and also some loss making from <unk>.
Speaker Change: Emerging regions that we have within the year.
Speaker Change: Another way to see that is to see the cash tax rate.
Speaker Change: The cash tax rate for the nine months is.
10% this year compared to 14, 8%.
Speaker Change: The nine months of 2023, which are both exceptional effective.
Speaker Change: Cash tax rate lets say.
Speaker Change: With regard to going forward.
Speaker Change: With respect to behave in that way so.
Speaker Change: In the commodity of ways the best way.
Speaker Change: C.
Speaker Change: To translate our effective tax.
Speaker Change: Tax rate.
Speaker Change: Brian.
Speaker Change: The amortization rate.
Speaker Change: Mentioned that it's been it's still very healthy all around between 85% and 90% so even with the growth we've been able to kind of onboard people faster than in the past just with the use of AI.
Speaker Change: AI based learning tools and Onboarding processes. So that's cool.
Speaker Change: Very high.
Speaker Change: Very good good news have a good day all thank you.
Speaker Change: Thank you Lyle.
Speaker Change: Our next question comes from Vitor Tomita from Goldman Sachs.
Speaker Change: Go ahead.
Speaker Change: Good morning, everyone and thanks for taking our platform.
Speaker Change: So we have two questions from our side. The first one is if you could give us a bit more color on which factors were most in part that's part of the margin improvement in deepwater and part of the guidance raise you.
Speaker Change: Cited cost management approaches, but also factors such as capacity utilization improves the FX.
Speaker Change: And the other drivers might have surprised you and how effective they were in the support to your margins.
Speaker Change: Our second question would be.
Speaker Change: North America and U S business.
Have you seen the commercial environment and the mood amongst clients in the U S. <unk> and now <unk> do you believe there might have been some.
Speaker Change: Depressed demand for our new initiatives, there that Mike E locks now or anything like that thank you.
Speaker Change: Well I can get I can start with you about margins.
Speaker Change: And thank you for the question.
Speaker Change: We continue to focus on productivity gains from our diligent and diligent cost management approach.
Speaker Change: For the near future most of the SG&A fixed expenses, we should provide bridging leverage on top of that as we resume growth.
On the other side, we project investments in hiring training fostering our growth trajectory.
Speaker Change: And off course.
Speaker Change: Our initiatives.
In summary, we are on track to deliver the.
Speaker Change: The EBITDA that we are guiding between 18 to 19 in fact, we raised the midpoint as a consequence of the the.
Speaker Change: And the reason as I mentioned here.
Speaker Change: You also mentioned the ones we have been.
Speaker Change: Announcing right so.
Speaker Change: Yes.
You can do there.
Speaker Change: Second foreign to them.
Speaker Change: Richie you Victor.
Speaker Change: What we see.
As is.
Speaker Change: The.
Speaker Change: The demand environment slide is likely better.
Speaker Change: Of course, we still see.
Speaker Change: <unk> macro uncertainty.
Speaker Change: But it's clear that the budgets are a rewards stable, especially for large companies. So.
This translate to less volatility and more visibility.
Speaker Change: That is good for our strategy of replacing underperforming competitors.
Speaker Change: What we also see.
Speaker Change: By now it's too early I think.
Speaker Change: We are able to see what's happening.
Speaker Change: After the election.
Result, but.
Speaker Change: Q3 was a quarter with our highest booking in the year.
And we end Q3 with a very strong pipeline really are rich our record pipeline, especially due to the U S. So.
Speaker Change: A good indication, but we need to to continue.
Speaker Change: Looking to see.
Speaker Change: If we will have.
Speaker Change: Any any rule.
Speaker Change: Good or bad impact, but things are moving I think.
Speaker Change: And a good way.
Speaker Change: Very clear thank you both very much.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Jabra Cabooses Romito PPA Thiago Your line is open.
Speaker Change: Hi, everyone.
Thanks, a lot for our guests to make the questions and congratulations for the results.
Speaker Change: I have two on my side as well.
Speaker Change: I think the first one.
Hi, Noah.
U S E learning a lot about eight James take AI I've seen very early on this theme with the <unk>.
Speaker Change: And the Houston.
Speaker Change: You showed a lot also on the <unk>.
Speaker Change: For the Q&A session. So just wanted to hear a little bit from you. My first question is how AI is actually driving results.
Speaker Change: Acceleration is it.
Speaker Change: When can you actually.
Even possible quantify our sea legs.
Speaker Change: It is helping our cost already and maybe sharing a little bit of.
Speaker Change: Out of curiosity.
Speaker Change: Cases that youre seeing a jensen if the theme of the James <unk>.
Speaker Change: AI is getting more traction as we see the likes of Salesforce and service.
Speaker Change: Okay.
Speaker Change: And.
Speaker Change: And then the other the other question is about the it budgets in Brazil actually I remember very clear.
Speaker Change: Conversation about.
Speaker Change: Reservation last quarter.
Speaker Change: Update us on that and going forward into into 2025 your expectations with the exploration slide.
Speaker Change: Q4, which is very strong and actually remain.
Speaker Change: In the beginning of next year or two throughout 2035.
Speaker Change: Sure <unk>.
Speaker Change: Our first question.
Speaker Change: We basically grabbed our solid revenue growth.
Speaker Change: Not to a better macro environment, but to two key factors. One is the way, we inherited our offerings and competitiveness.
Speaker Change: <unk> of <unk>.
Speaker Change: <unk> fluent.
Speaker Change: I think we moved fast and positioning <unk> in a very strong way and our ability to demonstrate the kind of tangible results.
Speaker Change: Can get.
Speaker Change: Given I think now.
Speaker Change: Our team with flow can easily show.
Speaker Change: At least 50%.
Speaker Change: B faster than them.
Speaker Change: A normal flow tubing.
Speaker Change: Depends on their contract that goes for 200, 200% faster so it resonates very well with our top clients probably to solve our top 10 clients grew 25% year over year basically we are expanding.
Speaker Change: Our as we showcase our hour.
Speaker Change: Patients are productivity, we call hybrid productivity.
Speaker Change: You have more space.
To expand our share with them.
Speaker Change: I think we play 2020.
Speaker Change: Four.
Speaker Change: The end of 2003, and probably will be the main.
Speaker Change:
Speaker Change: Initiative.
Speaker Change: 2025.
Speaker Change: Focus.
Speaker Change: Civ flow and efficiency as I remain drive forgetting.
New clients and expand in our portfolio, but what we see now is the beginning.
Speaker Change: Yes.
Speaker Change: Man I think now we had a good number of exploratory business use cases are wrong derivative AI as the maturity of the models evolve.
Speaker Change: You saw that.
Speaker Change: We showcased basket.
A few minutes ago, so a lot of things folks on hyper personalization using AI, but it's two exploratory it's across all verticals.
Speaker Change: And I believe.
Speaker Change: We could foresee.
Speaker Change: Reasonable demand around business use case based on customer experience and personalization using AI next year, but probably here's the men only.
Speaker Change: So.
Speaker Change: 26 owned.
Speaker Change: Then the maturity of the <unk>.
Speaker Change: Infrastructure environment.
Speaker Change: I think there is a lot of.
Speaker Change: Of.
Speaker Change: Let's say infrastructure modernization is still in place legacy.
Speaker Change: We have a lot of the result of demand like legacy application modernization cloud migration a lot of data engagements, so preparing different nation for our future.
Speaker Change: AI driven.
Speaker Change: World. So there is still some lessons from her work from the first chapter of the digital Revolution before companies can explore the potential of AI and also there is this amazing curve of the capabilities of the models that are.
Speaker Change: Tonnage and we will we will converge to <unk>.
Speaker Change: Huge renovation of.
Speaker Change: Customer experience and decision making.
Speaker Change: Single Corporation. So this is my brief scenario.
Speaker Change: On the second question regarding Brazil.
Speaker Change: Thiago.
Speaker Change: Stability and visibility.
Speaker Change: <unk> budgets.
Speaker Change: Too early we are seeing.
Speaker Change: By now we are a red.
Speaker Change: Discussing with our clients.
Speaker Change: And are working to understand their plans for the next year.
Speaker Change: Course, adjusting our forecast accordingly.
Speaker Change: I think in the next three to four weeks, we will have a good visibility.
Speaker Change: The way our customers are planning the investments for 2025, but what I see as good signs.
Speaker Change: Stability rone.
Speaker Change: Back in digital budgets.
Speaker Change: Great Super helpful. Thanks, a lot for the insight.
Speaker Change: My pleasure.
Speaker Change: Thank you to juggle and just to highlight that revenue from Latam also grew 11% on a sequential basis was also demonstrated in an important improvement.
Speaker Change: This quarter in the second half of this year.
Speaker Change: So the next question comes from.
Speaker Change: With me on the line.
Speaker Change: Bryan Bergin from TD Cowen Brian. Please go ahead.
Speaker Change: Hi, Good morning. Thank you. So I wanted to ask about some top clients is your top 10 looks to have shown very strong performance can you speak about the sustainability of that performance that you've forecasted here, particularly for for Q&A any early 'twenty five considerations in those top 10.
Speaker Change: Sure.
Speaker Change: Hey, Brian. Thank you for your question.
Speaker Change: We are seeing a lot of space to continue our our value prop of efficient replacing underperforming vendors.
Speaker Change: <unk>.
Speaker Change: We take advantage of a very fragmented market. So this allow us to continue to grow.
Speaker Change: By replacing.
Speaker Change: Are getting more share even with all the let's say a macro tailwind so but if we have some macro data when there is a chance.
Speaker Change: To have that in the quarters to follow I think we could see this trend of growing in our major clients continue and we have also seen we awarded.
Speaker Change: Very good set of new large clients, especially in the automotive.
Speaker Change: Industry.
Speaker Change: For the retailers. So we expect this.
Speaker Change: This cohort we will also be part of.
Speaker Change: To complement our growth and become really big.
Speaker Change: Clients Force Yankee So is <unk>.
Speaker Change: Going to be a combination of expanding in our long term clients and fostering continued to grow in this new set of.
Speaker Change: Of of clients, we are acquiring them.
Speaker Change: Last quarter of 2023 in the first quarter of this year basically.
Speaker Change: Okay. Okay. That's good to hear and then on flow. It's good to see the traction with the solution now in banking I believe it was 80% or so of revenue as you analyze the client engagements where they use of slow is more mature is there any variability in the profit profile of those relationships versus accounts that are not leveraging as well. So you gave good data points.
Speaker Change: On the increased speed in the delivery there just anything to call out as it relates to the financial impact and the profitability that might be different.
Speaker Change: Sure.
Speaker Change: It is really early to say, but we see some.
<unk>.
Speaker Change: <unk>.
Speaker Change: For margin improvement.
Speaker Change: We can really reduce some some low quality costs within the Congress using Bruno mentioned one of the cost is onboarding when we streamline on boarding.
Speaker Change: We are using AI with the context of the engagement.
Speaker Change: Fast training.
Speaker Change: The new.
Speaker Change: Team members we gain.
Speaker Change: Margins and Theres a lot of other opportunities around that we see our initial correlation less price pressure you can see more price elasticity, where we are using AI more heavily.
Speaker Change: And so but I think it's early to project.
Speaker Change: Some real impact, but we are we are.
Speaker Change: Really looking being a patient that in fostering.
Speaker Change: As to.
Not only get.
Speaker Change: Grow growth by.
Speaker Change: Our <unk> initiative.
Speaker Change: Also getting some efficiency gains.
Speaker Change: If I could try another.
Speaker Change: For 2020 for Brian we were deliberately pass in all of those productivity benefits to clients. So we can kind of grow with the <unk>.
Speaker Change: Ralph will deliberate kind of a.
Speaker Change: Kind of prioritize growth.
Speaker Change: And if it can be 30% to 50% more productive than the underperformers than we will capture that wallet share within those accounts.
Speaker Change: This strategy by design so of course, we're doing some experiments.
Speaker Change: So actually we try to capture a little bit about that value creation to ourselves.
Speaker Change: That will certainly intensified in 2025, but 23 before it was this was by design.
Speaker Change: Okay makes sense. Thank you.
Speaker Change: Thank you Ryan.
Speaker Change: Our next question comes from Joseph <unk> from Canaccord, Joe Your line is open.
Speaker Change: Hi, guys. Good morning, and congratulations on the good results here anything I know I know you called out.
Speaker Change: On a pretty broad vertical strength.
Speaker Change: I just wanted to drill down a little bit more into financial services.
Speaker Change: And it's an important vertical for Iot services.
Speaker Change: May be seeing there here late in 2020 for looking into 2025.
Speaker Change: Obviously, you've got some large lots haven't Brazilian financial services clients any outlook on North America for financial services.
Speaker Change: I have a quick follow up.
Speaker Change: We can take this one.
Speaker Change: To start with.
Speaker Change: Yeah, I think for North America, we do have already a footprint not exactly in banking.
Speaker Change: Lot of our Fintech Ams asset management.
Speaker Change: We have a very relevant and with some medium size small banks. So we're working on are we up to the large banks.
We see a large opportunity going forward, which is the legacy modernization with the with <unk>.
Speaker Change: User journey there.
Speaker Change: I think we make.
Speaker Change: Something happened on the legacy modernization, that's been sitting there for decades to modernize very old infrastructure.
Speaker Change: That is I think that can be a really promising play.
Speaker Change: For the upcoming years for US, we think that industry. So we're investing a lot.
Speaker Change: Go to market with that.
Speaker Change: Offering to that specific industry.
Speaker Change: Industry vertical.
Thanks for the question Joe.
Speaker Change: Let me complement with the Brazil, or Latin America scenario.
Speaker Change: What we see is a very competitive environment really do the competitive the competition are molded.
Speaker Change: The digital natives.
Speaker Change: Financial service companies and the increments is increasing and that means everyone needs to accelerate their digital.
Speaker Change: In Asia. So we see a lot of room for continued to grow in this space in Brazil and other.
Speaker Change: Parts of the region because of the competition.
Speaker Change: Especially among digital native and coupons.
Speaker Change: I see the next.
Three or four years, we will be very intensive, especially when probably financials that will be the first.
Speaker Change: Real reinvention.
Hyper personalization and customer experience based on AI.
Speaker Change: In bathroom that and it will drive a lot of demand.
Speaker Change: From.
Both sides from the increments and for all the Fintech World.
Speaker Change: Great Thanks for that.
Excuse me thanks for that color Bruno is our and then.
Speaker Change: Maybe.
Speaker Change: It seems like you're outperforming peers in growth right now a little bit and there may be a few factors for that.
Speaker Change: Maybe you know smaller size, maybe it's slow and how how quickly you've implemented it across.
Speaker Change: Employee base and the customer base.
Speaker Change: It could just be a few large customers growing more quickly I was wondering if you could maybe rank what you think are kind of.
Speaker Change: The most important drivers.
Speaker Change: Outperformance at a broad level.
Speaker Change: Sure.
Speaker Change: We credit our hour.
Speaker Change: Fast growth.
Speaker Change: Two basically two factors.
Speaker Change: The way we will move.
Speaker Change: The flaw in the way, we enhance our offerings.
Based on AI and Tid flow I think we were having.
Speaker Change: 75% of the teams already interestingly using Ais.
Speaker Change: New widened when the year is a big win for us.
Speaker Change: And position is really in the edge of this disruption and the second we mentioned in our last four we really enhance our sales structure.
Speaker Change: We call. This initiative of the AI growth machine I think this is also part of having.
Speaker Change: The ability to two.
Speaker Change: Address the opportunities in the market more aggressively.
Speaker Change: We have maybe a compelling offering.
Speaker Change: Then the order competitors, so basically positioning.
Speaker Change: AI.
Speaker Change: Boosting of our offering and the second factor I think is our new enhanced its sales structure.
Speaker Change: Thanks, guys are.
Speaker Change: My pleasure.
Speaker Change: Thank you Joe.
Speaker Change: Our next question comes from Nashville, Gonzales from Morgan Stanley. Please.
Speaker Change: Please go ahead.
Speaker Change: Hi, Thank you for taking our question it's too. The first one is can you comment a bit on the sustainability of demand trends.
Speaker Change: And also what drove the increase to your revenue guidance.
Speaker Change: It was stronger than expected. So I was wondering if it was a stronger ramp up of projects or maybe there's some conservatism baked into your full year guidance and also if you could briefly comment what kind of players argue replay, replacing within your client is it tire and the digital transformation players or maybe more trips.
Speaker Change: On it services. Thank you.
Speaker Change: Thanks.
Speaker Change: I will start with the second question.
Speaker Change: I think.
Speaker Change: 70% of our renewal daily competitors are not to her peers are traditional.
Services or consulting companies.
Speaker Change: And I think now around 30% is really our.
Speaker Change: Other digital specialists or native players.
Speaker Change: So.
Speaker Change: We see attendance as as the protagonist digital specialists evolve we see more probably in the future we will see more competition direct competition among the peers, but the reality is the majority of.
Our competitors are traditional horizontal.
Speaker Change: Our it services players.
Speaker Change: The second part.
Speaker Change: Yes, we are guiding Basil.
Speaker Change: Current condition, what we see of course every guidance has a conservative by nature.
Speaker Change: And we I mention we have.
Speaker Change: Q3 was our.
Speaker Change: Yeah.
Speaker Change: Our highest.
Speaker Change: Booking while they're in the year and <unk>.
Speaker Change: <unk>.
Speaker Change: Our a record pipeline for our future.
Speaker Change: Opportunity so it depends.
Speaker Change: <unk>.
We will continue with growing success rate, we believe yes.
Speaker Change: And.
We believe also.
Speaker Change: <unk>.
That the environment will continue at least stable so we see.
Speaker Change: Good outlook, but it's too early to too.
Speaker Change: To really guide 2025.
Speaker Change: This is our <unk>.
Speaker Change: They work in.
Speaker Change: Next three to four weeks.
Speaker Change: And after that we won't have a I think a clear vision on.
Speaker Change: What's ahead too and of course, our complete guidance for 2025, we will present.
Speaker Change: In detail in our next call.
Speaker Change: Really clear thank you. Thank.
Thank you.
Speaker Change: Thank you Ernesto.
Speaker Change: That concludes our Q&A session. Thank you all for attending our event today, our Maui five says they're going to proceed with his closing remarks.
Eduardo Gogo: Thanks, Eduardo grew newest Stanley.
With this we have now completed a dozen earnings calls.
Eduardo Gogo: So just enough to call it a collection of earnings calls.
Eduardo Gogo: Thank you all for joining our call I'd like to extend my gratitude once again for RCI and tiers across the globe for your hard work.
Eduardo Gogo: And the huge achievement this quarter and a special thank you to you as well to our clients for choosing <unk> as their partner for Coke rating. This exciting new chapter of AI, driven innovation stay well see you soon.
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Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Hum.
Yes.
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Hum.
Speaker Change: Okay.
Yes.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sure.
Okay.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: [music] screens.
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Speaker Change: [music].
Speaker Change: Okay.
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Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Uh huh.
Yes.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
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Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hi.
Speaker Change: Yes.
Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
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Speaker Change: Okay.
Yes.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Yes.
[music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Okay.
Speaker Change: Yes.
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Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yeah.
Yeah.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Thank you.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hum.
Sure.
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Speaker Change: Okay.
Hum.
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Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
[music].
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[music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Sure.
Okay.
Speaker Change: Yeah.
Speaker Change: Right.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
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Yes.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change: Yes.
Yes.
Speaker Change: Uh huh.
Yes.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change:
Speaker Change: Uh huh.
Okay.
Yes.
Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Sure.
Speaker Change: Sure.
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Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].