Q4 2024 CI&T Inc Earnings Call
<unk> fourth quarter and full year of 2024, I am Eduardo Gold zone director of Investor Relations at CMT.
Bruce: Joining me today are SaaS undergone our founder and CEO Bruce <unk> Foundation.
Time visibility and increased manufacturing line efficiency, allowing even more time for strategic actions.
We're excited to continue our journey, helping my belief to drive growth and lead the future of snacking.
Bruce: Okay.
Speaker Change: 85% increase in product additions. This is the impact of project V trees.
Speaker Change: Mature one of the leaders in Latin America's beauty and cosmetic sectors is transforming the order capture experience for over 1 million sales consultants from the tour and Avon.
Speaker Change: <unk> is a personalized platform powered by AWS is robust infrastructure and C. I N T digital expertise, resulting in an increase in card additions and over 13 million monthly searches with its smart search feature as we expand globally. The train is set to enhance consultants.
<unk> worldwide.
Speaker Change: C I N T AWS and mature together in the journey of shaping the future of beauty through technology.
Speaker Change: Okay.
Speaker Change: The company Mitsui Sumitomo part of the largest insurance group in Asia faced a crucial challenge.
Speaker Change: Hi licensing costs for an essential tool in orchestrating mass insurance quotation.
Speaker Change: The need to remain competitive and updated calculation rules required an efficient and cost effective solution.
Speaker Change: We were called upon to address this scenario and develop a solution that reduced costs optimize performance and simplified maintenance for this vital operations the benefits of the new solution were remarkable.
Speaker Change: The company saw a drastic reduction in annual licensing costs, which decreased from approximately $1 million per year to a one time investment of about $500000 for the project with Ci and Pete in addition to a meager monthly cloud cost the modernization envisioned by.
Speaker Change: Sui Sumitomo and executed in partnership with Ci and tea resulted in significant annual savings and improved efficiency in the quotation process, reducing calculation time by 54% by eliminating high cost and technological modernization.
Okay.
Speaker Change: Hum.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Where did you finish the operations is the largest vehicle leasing company in the U K.
Speaker Change: It operates so much ability scheme, where people receiving a qualifying <unk> announce confusion affordable and accessible vehicles.
Speaker Change: And a central role in connecting the 800000 disabled customers to work healthcare education, and independents, providing standout value.
Speaker Change: Each year more than 250000 vehicles come to and defend lease and are sold into the UK dealer market by NFL direct motor ability operations remarketing brand on its e-commerce platform.
Speaker Change: Recognizing the need for a transformative upgrades NFL direct collaborated with <unk> T and marketing agency brain Dana to rebuild NFL direct legacy website.
Speaker Change: Our goal was clear make purchasing easier and more intuitive subpoenas from the outset, our relationship with CIBC has been an absolute game changer. They.
Speaker Change: They have helped us deliver a new platform that allows you to spot Hot just one SEC.
Speaker Change: Their expertise and insights has allowed us to deliver technological solutions that deliver real value to our customers and the E Commerce space.
Speaker Change: That helps us rebrand, our web fonts and delivering new fresh looking favorable great user experience, but also has allowed us to deliver effective vehicles. We did bid on vehicles, which has been a dedicated or allocated to customers. The.
Speaker Change: The work we've done together has been absolutely phenomenal and they really have helped us.
Speaker Change: Like ourselves to the next level and I couldn't be more highly of them.
Speaker Change: Costa coffee, a leading name in the U K coffee landscape joined forces with <unk> to redefine its store management approach and elevate the customer experience in January 2024.
Speaker Change: A dynamic Jamie began a cin and costa coffee, United with a shared mission to cross the groundbreaking tools to empower store managers with actionable insights.
Speaker Change: Our goal was clear to develop a user friendly interface that would engage the users streamline operations and boost sales and customer satisfaction with a commitment to simplicity and a user centric approach the IMT and Costa coffee introduced the store campus. This innovative performance tool aggregates vital stored data.
Speaker Change: Tpi's ranging from sales figures to customer feedback into a single intuitive interface.
Speaker Change: The result store managers gain a crystal clear real time overview of our business, allowing them to make informed decisions drop.
The store complex, it's more than just the truth.
Cultural shift by focusing on personalized recommendation it allows managers to increase efficiency and drive sales while significantly reducing the time spent accessing data.
Speaker Change: It is net promoter scores or failed.
Speaker Change: Store managers can now benchmark that performance again similar stores in that region fostering a culture of continuous improvement.
Speaker Change: And just from the six months the store campus was co created designed and deployed cost 1500 stores around the U K with overwhelmingly positive feedback from store managers today, nearly 70% of Costa coffee employees engage with the App weekly spending an average of two minutes.
Speaker Change: Okay.
[noise] together, <unk> and Costa coffee brewed a recipe for success.
Speaker Change: Thanks.
Speaker Change: Great.
Speaker Change: [music].
Speaker Change: We are proud to be recognized as a leader in the forest away from modern application development services.
Speaker Change: But what truly sets <unk> apart in the mass market place.
Speaker Change: Is that a unique approach to driving cultural behavioral change.
Speaker Change: We are focused on scaling agility. We also emphasize adaptability, we help our clients embraced uncertainty and adapt quickly and the rapidly changing marketplace are side by side approach empowers clients, increasing their skills and knowledge through cross pollinated.
Finally, we foster an AI first culture within the organization.
Speaker Change: This recognition reaffirms our commitment to co create transformative solutions, helping our clients navigate their modernization journey.
Speaker Change: Okay.
Speaker Change: Global retail sales set to reach 24 trillion $900 billion this year, including five trillion $300 billion in E. Commerce. The industry is ripe for transformation based on that interim 2025 wasn't just a conference it was a glimpse into retail.
Speaker Change: Future and we were at the forefront.
Speaker Change: Big ideas session featuring insights from Melissa our global director of retail strategy and Scott Devlin the vitamin Shoppe.
Speaker Change: Oh showcased how AI is reinventing products search and personalization with the prediction that 20% of U S and EMEA retailers will launch customer facing AI. This year were in line with the industry's pulse, let's navigate retail innovation together as we empower our clients to confidently thrive.
In the AI era.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Ginny I pulse is our quarterly thought provoking paper that offers a glimpse into the future with real insights from leading brands already living in the era of AI since its beginning the publication has shown the transformation and enterprise through the rise of generative AI and modern business applications.
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Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Over 70000 attendees participated in the web summit 2024, where we shared insights on AI transformation Bruno our co founder and President gave a keynote on preparing for the AI tsunami with.
Speaker Change: Insights for companies on how to start and thrive with AI strategies and key lessons from our journey to 80% Gen AI adoption.
Speaker Change: To start where you can create in fact.
Speaker Change: Beth.
Speaker Change: Where you can create in fact.
Speaker Change: The more safely at the corporate innovation summit Pollock CEO of box 18, 24, and our EVP Solange led discussions on overcoming innovation hurdles.
This is our commitment health businesses to navigate this new era.
Yes.
Speaker Change: Following the success of the Brazilian edition of <unk> Nextgen internship program. We are excited to announce that applications are now open for the Colombian addition, let's continue developing the first generation of AI Native coders.
Speaker Change: Yes.
Speaker Change: Sure.
I hope these stores illustrates the impact we create for our clients.
Now I would like to revise Bruno to share insights on our global delivery model, the evolution of <unk> and our <unk> strategy.
Bruno: Thank you Heather good evening, everyone. It's a pleasure to be here. Once again, we finished the year with over 6900, selling tiers reflects a 13% year over year growth.
Bruno: We have been utilizing AI to enhance our onboarding and training processes, which has been key in maintaining a strong utilization rate throughout the year in.
Bruno: In 'twenty 'twenty four we focused on promoting from within.
Bruno: And a dynamic culture of opportunity.
Growing our teams to grow and embrace new challenges as a result, our voluntary attrition rate.
Bruno: At 10, 7%, while the leadership attrition rate remains very healthy at three five.
Bruno: As we enter 2025, we are excited to welcome 450, new trainees reinforcing our commitment to strengthening our team and cultivate the next generation of technology leaders. This program and reaches our organizational culture and prepares the AI professionals of the presence.
We have had over 10000 obligations and we will develop the first generation of AI Native coders.
The group will also join us in Colombia in the second half of this year.
Bruno: <unk> learning and growth opportunities for young talents in the region.
Bruno: Now, let me comment on one of our AI powered offerings, which has been a key driver of our recent revenue growth in 2000.
Bruno: For the role of AI application organization has evolved from being a nice to have for an essential tool for success.
Bruno: Legacy platforms slowed down our agility and our.
Bruno: Hurdles to innovation and our clients are turning to AI to overcome those challenges.
AI brings great value to modernization efforts greatly reducing risk and errors, while we're increasing the efficiency and speed in the process.
Bruno: Our clients are seeing exponential reductions and modernization timelines, enabling them to accelerate time to value and stay ahead of their competition.
We are at the forefront of this transformation with our <unk> platform, which modernizes legacy systems and unlocks innovation.
Bruno: Through generative AI 70 flow is driving significant efficiencies and speed gains.
Bruno: Platform minimizes risks by automating error prone time intensive tasks and assures reliability when migrating old systems to modern application architectures.
Bruno: Our AI powered modernization solutions are contributing to stronger sales pipelines and revenue growth as more clients recognize the need to replace our data systems that are killing efficiency now.
Bruno: Now, let me hand, it over to Sallie to comment on our financial results.
Sallie: Thank you Bruno and good afternoon, everyone I'm pleased to share our financial performance for the fourth quarter and full year 'twenty to 'twenty four.
Sallie: In the fourth quarter of Tianjin, which for our net revenue achieved a record $656 5 million, reflecting a 25, 6% increase compared to the fourth quarter of <unk> three.
Sallie: On a constant currency basis, our net revenue grew a robust 14, 7% year over year. This is strong double digit organic revenue growth exceeds industry averages underscoring our competitive position and operational effectiveness.
Sallie: For the full year 2024 hour net revenue totaled 2.368 billion reais, marking a 6% increase year on year net revenue at constant currency increased by one 3% compared to 2023.
Sallie: In 2024 net revenue from North America grew by seven 5% compared to 23, driven by the successful expansion of large clients that we on boarded in recent years.
In Latin America revenue increased by six 2% year over year, largely supported by clients in the financial services vertical.
Sallie: When analyzing our revenue by industry vertical we saw particularly robust growth in the retail and industrial goods sectors, which recorded unimpressive, 70% year over year increase.
Sallie: Revenue from the consumer goods sector rose by 14, 9% compared to 2023 <unk>.
Sallie: Additionally, revenue from financial services increased by five 7% in 2004, primarily driven by our clients in Latin America.
For the full year, our top client and top 10 clients accounted for 8% and 41% of our net revenue respectively.
Sallie: At <unk>, we aim to be the partner of choice for our clients is scaling our engagements as they mature to expand wallet share and foster long term partnerships in 2024, our focus has been on organic revenue growth in optimizing our client base.
Sallie: By targeting large accounts with significant technology investments.
Sallie: Our top 10 clients each generating a minimum of $10 million in revenue experienced a year over year revenue growth of nine 7% in 2024.
Sallie: This increase underscores the efficiency and value we provide to our largest clients.
Sallie: We are particularly excited about the onboarding of new large clients with long term commitments in the digital space are a strong pipeline and conversion rates are firm that we are on the right path.
Sallie: Moving onto our financial metrics in the fourth quarter of 2024, our adjusted EBITDA reached 128 million Reais, reflecting a 23, 7% increase year over year with an adjusted EBITDA margin of 19, 5%.
Sallie: For the full year adjusted EBITDA totaled 442 million Reais, a two 4% increase compared to 2023, resulting in an adjusted EBITDA margin of 18, 7%.
Sallie: We have been diligent in managing cost and expenses, allowing us to a haste our sales initiatives, while effectively diluting general and administrative expenses.
Sallie: As a result, we have consistently delivered strong profitability metrics in recent years.
Sallie: In the fourth quarter of 2024, our adjusted net profit reached $78 million, reflecting a 41, 3% increase compared to the same feud in to exchange three yes.
Sallie: Adjusted net profit margin improved from 10, 6% to 11, 9% in the fourth quarter of <unk> 24.
Sallie: For the entire year, our adjusted net profit was $241 8 million Reais and eight 9% increase from 'twenty to 'twenty three with the net profit margin, reaching 10, 2%. This improvement was primarily driven by a reduction in net financial.
Sallie: Expenses, given the lower net debt position and a lower income tax rate.
In 'twenty to 'twenty four we generated 467 million reais from our operating activities, a 12, 7% increase from the previous year, primarily due to improved working capital management.
Sallie: This translates to a cash conversion to adjusted EBITDA ratio of 105% underscoring our strong capacity to generate cash from organic operations.
Sallie: Our free cash flow defined as net cash from operating activities less Capex reached 317 million Reais and change to inch four up 16, 9% compared to 2023, representing a free cash flow conversion to adjusted net income ratio.
Sallie: Of 131%.
Sallie: This robust cash generation enables us to pursue strategic priorities is to accelerate our growth.
Sallie: Before I pass it over to <unk> to discuss our business outlook I want to provide an update on our commitment. We made earlier this year in the first quarter 2004.
Sallie: Starting with our 2024 annual report on form 20-F, we will be transitioning our presentation currency from Brazilian Reais to U S. Dollars. This change aims to better align our financial reporting with the global nature of our business operations.
Sallie: And support our growth strategy as we continue to expand our presence in key markets.
Sallie: Back to you.
Stanley: Thank you Stanley.
Stanley: Before I dive into our business outlook, let me first provide a recap of our growth trajectory in 2024, we set out to achieve consistent sequential growth overcoming the challenges of 2023.
Stanley: Our unique AI approach in Ci and <unk> Flo were key drivers accelerating our recovery and position us for sustainable expansion as we close the year. We are proud to have delivered on this commitment and signing a strong exit rate for continued growth Duane clarifies.
Stanley: And beyond.
Stanley: Now, let me comment on our business outlook for the first quarter of 205, we expect net revenue of at least $110 5 million, reflecting a 12, 6% year over year growth at constant currency.
This outlook will response to four 5% growth in U S dollars and 23, 7% in Brazilian Reais as we expect Q1 two.
To Mark the peak of FX impact towards 235 based on the volatility curve of 'twenty 'twenty four for the full year of 235, we project organic net revenue growth at constant currency in the range of 90% to 15% year over year the mid point.
So introduce range of 12% translates to an eight 4% increase.
Stanley: In U S dollars and a 16, 8% growth in Brazilian Reais. In addition, we estimate our adjust EBITDA margin for Duane gratified to be in the range of 18% to 20%.
To conclude I want to express my deep appreciation for our team's dedication and resilience that way you have embraced our AI first store information over the past two years is truly extraordinary.
Stanley: Together, we will continue to navigate change and driving <unk> shape your future defined by innovation collaboration and impact this bring us to the end of our presentation. We may now begin the Q&A session.
Thank you.
Yes.
Stanley: Thank you.
Stanley: Okay.
Stanley: Alright, we will now begin the Q&A session I will announce each part dispense name once youre here are named please on mute your line and ask a question.
Stanley: And then when you are done please mute your line.
Speaker Change: The first question comes from Puneet Jain from Jpmorgan.
Please go ahead.
Hey, Thanks for taking my question and good quarter.
Speaker Change: Let me ask Caesars like there had been like a lot of concerns around the geopolitical macro news over the last few months.
Speaker Change: Seeing any pause or any caution in your client spending over the last few months and.
Speaker Change: And if yes, then are there any differences in the.
Speaker Change: Your outlook across U S versus other regions like Brazil and Europe.
Speaker Change: Thank you.
Speaker Change: Uh huh.
Of course.
Speaker Change: And thank you for for.
Speaker Change: Question.
Speaker Change: Overall, we continue to see Oh, let's say stable demand.
Speaker Change: Through our cohort that is particularly the large very large organizations. Despite this ongoing macro uncertainty.
Speaker Change: Given the recent discussions around tariffs so.
Speaker Change: And stability is good for us because it's a favorable environment for our strategy of replacing underperformed competitors with our AI driven solutions, So and one point that I continue to see is a shift toward AI driven solutions.
Speaker Change: We are forcing our focus on it and to give you a data point right now we have.
Speaker Change: A stronger pipeline compared to the same period of last year, roughly 30% higher.
Speaker Change: So we.
Speaker Change: This is for me is a promising leading indicator or to enter new products. So we continue to recover shoes.
In our cohort appliance, we see stability.
Speaker Change: So no incremental delays of pause.
Speaker Change: <unk> pipeline not yet.
Speaker Change: Excellent.
Speaker Change: And then can you review your use of cash like it's been awhile since you pursue you completed an M&A.
As had been very acquisitive, adding assets in data AI one of the strategic areas that you mentioned can you share like what should we expect for use of cash in 2025.
Speaker Change: Yes, I can start that and then stomach and complements.
Speaker Change: First I think we made a strategic decision to folks.
Speaker Change: Last year 234 on transforming into an AI first company and I think this the.
Speaker Change: This folks has been a key driver of our organic growth by the way organic growth has always been our primary.
Speaker Change: Celebration engine and we will continue to be so, but moving forward we may resume M&A.
Speaker Change: As a way to speed up our organic growth or folks.
Speaker Change: It would be targets.
Speaker Change: US to expense, particularly in the U S.
Speaker Change: Leveraging our near shore capabilities in Brazil, and Colombia.
Speaker Change: Adding new high potential clients.
Speaker Change: To our portfolio.
Speaker Change: Regarding.
Speaker Change: Capital allocation is Tony you want to complement yes.
Speaker Change: Puneet.
Annie: Additionally to Annie <unk>.
M&A that may happen in the near future.
Annie: We are continuing our investments towards the R&D, meaning our AI platform floor, which is as I mentioned has been delivering outstanding results. So driving efficiency leveraging our growth. So of course, we will continue investing in that.
Also given the high cash generation, we project for this year. We also see that a good way to provide return to shareholders via share buybacks, so preventing <unk>.
Annie: Dilution from stock options compensation or even increasing earnings per share for example, we also.
Annie: Our prioritizing paying down debt, reducing interest payments I would say those are the main.
Annie: Items.
Speaker Change: Okay. Thank you good luck.
Thank you pointed to the next question comes from Vitor Tomita from Goldman Sachs.
Speaker Change: Your line is open.
Vitor Tomita: Hello, and thanks for taking our questions.
Speaker Change: So I have.
Speaker Change: Two questions from my side. The first one is that a bit of a follow up on the question by <unk> on on cash deployment.
Also there.
Largest quite a bit your sales capabilities in 2024.
Speaker Change: Our dedicated sales teams should we with <unk>.
Should we see the level of selling expenses and sales investment in Q4 as a good guide for 2025 or so you'll see Rancho invest further in customer acquisition sure.
Speaker Change: To further boost growth as well and our second question would be related to capacity.
Speaker Change: Utilization, if you could give us a bit more color on how that is trending at the moment I recall from the opening statements that Joe mentioned, it was strong going well, but if you could give us a bit more color on that it would be great. Thank you.
Speaker Change: Thank you operator, I always start with the first question and then Bruno can handle the second one yes you arrived.
Speaker Change: The last couple of years, we have been.
Speaker Change: Enhancing and expanding our sales structure and our sales approach across all four regions. We operate we will continue this process its paying off and I think we have a much more.
Speaker Change: Bye.
Speaker Change: Pipeline commercial pipeline and visibility due to of course, our our effort in differentiation around AI and flow, but also <unk>.
Speaker Change: <unk> and intense.
Speaker Change: Sales effort so.
Speaker Change: In General terms, we will continue to see increasing investment around sales.
And of course take advantage of the efficiencies we are gaining with.
Speaker Change: And also diluting our G&A expense as we should we expect.
Speaker Change: We're looking to handle the second part of.
Speaker Change: Your question was around <unk>.
Speaker Change: Yes, yes.
Speaker Change: We estimate utilization rates to keep at a very strong level as we finished.
Speaker Change: Q4.
Speaker Change: So we see good levels of true visionary between $85 to 89%.
Speaker Change: There is a natural solution there are seasonal oscillation over the quarters, but that's what we estimate to be in.
Speaker Change: In 2025 his thoughts.
I don't.
Speaker Change: I don't see any difference there coming from 234.
Speaker Change: Very clear thank you very much.
Speaker Change: Thank you. Our next question comes from Thiago <unk> from Mcdowell, Chad will go ahead.
Speaker Change: Hi, everyone. Thanks, a lot for updates to ask questions I have I have two questions.
Speaker Change: Well and not related to the guidance right. So.
Speaker Change: Just let us get a little bit more sense of the puts and takes in the full year guidance.
Q1.
You guided for a dollar of spy elite.
Speaker Change: It is something just wanted to understand if you have the same assumptions for the dollar which has been very volatile right range is period over the past few months.
And also trying to understand a little bit if you are.
You're considering in terms of activity in the United States more specifically right given one of the questions that is absolutely here. So any anything any color would be interesting and also one very last point itself.
Speaker Change: It could give us color on the organic growth are involved on that guidance that could be interesting as well. Thank you.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: I was going to start earlier can complement.
Speaker Change: So they are good at.
Speaker Change: Now you can start okay.
Speaker Change: Well. Thank you. Thank you Thiago for the questions with regard to FX as Cesar mentioned in the voiceover we understand that we had at the peak of that scenario of devaluation of Reais. So for 2025, we are considering that stabilization.
Speaker Change: And of course.
Given that we have.
Our business continued to have a mix of the.
Speaker Change: Different currencies underneath right. So we have a reais.
Speaker Change: We have.
In U S dollars any hard currency in the.
Speaker Change: Top line, while we have a different mix and the cost so those are not changing.
Speaker Change: And that's why we were always guiding using constant currency, which better translate to the actual.
In increments on the business so.
Speaker Change: With regard to the guidance, we are providing 12% constant currency for the full year is fully organic growth right.
Speaker Change: If you wanted to.
Speaker Change: There.
Speaker Change: Sure in terms of returns we are guiding very strong growth in our two main regions North America, and Latin America, mainly.
Speaker Change: U S and Brazil.
Speaker Change: And.
Speaker Change: More stable.
Speaker Change: Outlook for Europe.
Speaker Change: Mainly doing two cautions regarding geopolitical and macro.
Speaker Change: And a good good expansion.
Speaker Change: So, but mainly our two main regions that larger original will be driving.
Speaker Change: Our growth.
Speaker Change: Sounds good. Thank you very much for the answers guys.
Speaker Change: Thanks Jaguar.
Speaker Change: Our next question comes from Bryan Bergin from TD Cowen.
Speaker Change: Ryan. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hey, guys. Good afternoon. Thank you.
Speaker Change: First question on the outlook for 2025.
Speaker Change: Really kind of the shape of the year. So when we say very guiding for first quarter nearly at the midpoint of that constant currency Grange for the full year 12 Clos.
Speaker Change: I am curious as you go through to Q2 <unk> as we think about cadence of 25 is there anything that is an important consideration and at the same time too. When you think about your 2025 guide visibility do you have a sense of what's contractually committed versus what you have to still go get in pipeline.
Brian: Okay. Thanks, Brian.
Speaker Change: Basically.
Speaker Change: We are consistent with our historical growth Adrian.
Speaker Change: So and seasonality we are projecting a solid Q1.
Speaker Change: Uh huh.
Speaker Change: We've had good year over year constant currency growth.
Speaker Change: At 12, 6% and we are.
Speaker Change: We are forecasting continue our ratio expansion from Q2 onward.
Speaker Change: Very good.
Speaker Change: With base.
Speaker Change: Regarding our visibility.
Speaker Change: We have a good visibility.
Speaker Change: We are working with.
Speaker Change: The reasonable range in our full year guidance.
So.
Speaker Change: We considered that.
Speaker Change: We are very conservative.
Good way also counting on a very strong commercial pipeline.
Speaker Change: Okay.
Speaker Change: As I mentioned before so good visibility, but some cautions regarding.
Speaker Change: Maybe any intensified productivity, so tougher range of our guidance.
Speaker Change: It's driven by our solid commercial pipeline why are the low range reflects caution in case of diversified macro volatility.
Speaker Change: Okay, Okay very good.
Speaker Change: Second.
Question is on Jennie I impact in client engagement, So where you are further along in the usage of <unk> and <unk> solutions in newer delivery, how is that impacting the commercial or the contracting terms in those engagements is it different than what <unk> seen historically, maybe just give us some color there.
Brian: Sure Brian.
Speaker Change: I think.
As expected.
Speaker Change: Progress is progressively begun embedded in all aspects of digital project development model.
Speaker Change: Whatever foreign fisheries for customer experience or even before data and decision, making so what are we seeing an hour.
Speaker Change: And our demand is I would say half of our demand is applying AI for.
Speaker Change: Speed up legacy legacy application modernization cloud migration several data engagements like preparing the foundation to our future AI driven.
Speaker Change: World and the second part of the second half of the demand is about improving customer experience journeys for consumers now with the new possibilities around AI designing and build new digital products.
Speaker Change: Also a growing number.
Speaker Change: A few use cases using gen AI.
Speaker Change: Folks on hyper personalization like like the ones we showcased during during your presentation. So.
Speaker Change: And we classify after demand based on AI reclassify this horizontal demand and have we classify as virtual demands and ambulances will remain along the year.
Speaker Change: Alright, Thank you guys.
Brian: Thanks, Brian.
Anna: Our next question comes from Anna <unk> from Morgan Stanley Hi, Ernesto.
Hi, Thank you for taking our question.
Brian: One on our end we saw some.
Brian: Slight sequential weakness in North America, and a little bit more in Europe could you. Please walk us through what you saw in each of those markets relative to the third quarter.
Brian: Yes.
Brian: And think of that one.
Brian: In your best as Steven mentioned.
Brian: Four we are seeing.
I think being shaped by.
Brian: The current geopolitical and economic environment in Europe.
Brian: That's been doing since 2004.
But north America is where our peripheral makers just.
Brian: Regular <unk>.
Brian: The analogy.
Brian: Volatility, but it's small.
Brian: We don't consider that a critical going forward to 2025.
Brian: Mentioned.
Brian: We're going to get a strong roof.
Brian: It's coming from that region.
Brian: Our biggest region at this point.
Speaker Change: Clear thank you.
Brian: Thanks <unk>.
Speaker Change: Our next question comes from Gustavo <unk> from UBS Stifle go ahead.
Gustavo: Hi, guys can you hear me.
Speaker Change: Yes, yes.
Gustavo: Good night.
Speaker Change: Thanks for taking my questions I have two on my end the first one regarding specifically awesome new legislation in Brazil.
Gustavo: And Latam.
If you could comment on the effect.
Gustavo: Okay.
Gustavo: The return off payroll taxes.
And how you are seeing.
The.
The reactions from clients if they if you are able being able to pass through to prices.
Gustavo: And what I.
Speaker Change: To what extent this is embedded in your guidance for 2025.
Gustavo: And my second question.
Speaker Change: Regarding.
What says or.
Speaker Change: Mentioned about AI related projects.
Speaker Change: Efficiency related versus more client facing faced these projects slide let's call it.
Speaker Change: What kind of scenario of those profile of projects.
Speaker Change: <unk> related projects are you considering.
Speaker Change: For 2025, how youre seeing this evolving going forward.
Speaker Change: Thank you.
Speaker Change: Well I may take the first question Gustavo. Thank you. Thank you for the question with regard to payroll taxation in Brazil.
Speaker Change: It started in 2025 and this is a.
Speaker Change: A program that will progress increasing the tax through through 'twenty four four years, who up through 2028 right. So this gradual approach allowed us to prepare proactively and engage in discussions with our clients in a diverse.
Speaker Change: We are fully committed in minimizing this impact through productivity gains and cost saving measures and we are.
Speaker Change: Really on track.
Speaker Change: To deliver our EBITDA margin that we guided that is 18 to 20 percentage in 'twenty train five meaning that with your point, we are fully considering those aspects already in our guidance well, meaning that.
Speaker Change: We saw all the as those initiatives I mentioned, we're already dealing with this change in.
Speaker Change: Brazil with no impact.
Speaker Change: I can take the second one on the profile of the demand.
Speaker Change: Thanks for the question because.
Speaker Change: That's I think it's a big opportunity for us theory so.
Speaker Change: One could think that they know that there is a small amount of infrastructure that needs to be done to prepare for this new world of AI right. So in terms of data and applications.
Speaker Change: The reality is that there is just a massive amount of backlog there.
Speaker Change: Our clients to have.
Speaker Change: And data and application seeding the very old infrastructure that needs to be modernized in order for them so actually.
Speaker Change: Real accelerates the words, Jimmy I future so.
Speaker Change: That profile I think we will.
Speaker Change: <unk> will give us a little a couple of years of demand in terms of just the preparation infrastructure needed to be put in place for that future. So.
Speaker Change: I don't see that profile changing very fast.
Speaker Change: Going forward.
Speaker Change: To make it simple.
Speaker Change: Alright, Thanks, Rick.
Speaker Change: Answers and congrats on the results.
Speaker Change: Thank you.
Speaker Change: Thank you Gustavo.
So that concludes our Q&A session I'll now invite SaaS to proceed with his closing remarks.
SaaS: Thanks, Andrew Bruno Stanley. Thank you all for joining us.
Speaker Change: I'd like to extend my gratitude.
Speaker Change: <unk> two <unk> tiers across the globe for their hard work.
Speaker Change: Even with this quarter and a special thank.
Two.
Our clients for choosing <unk> as a partner to Cook rating this exciting new chapter.
Speaker Change: Derivative innovation stay well see you soon.
Speaker Change: Okay.