Cash generated from operating activities
rose 158% to R$414 million in 2023
CI&T (NYSE: CINT, “Company”), a global digital specialist
and fast-growing technology company, today announces its results
for the fourth quarter of 2023 (4Q23) and the full-year ended on
December 31, 2023 (2023) in accordance with International Financial
Reporting Standards (IFRS). The consolidated statement of profit or
loss, financial position, and cash flow presented in this report
already contemplate the restated numbers for 2022. Please refer to
the announcement on March 7, 2023 for more details (Restatement of
Previously Issued Financial Statements). The full audited financial
statements for 2023 and 2022 will be filed in our Annual Report on
Form 20-F for 2023.
Fourth Quarter of 2023 (4Q23) Operating and Financial
Highlights
- Net Revenue was R$ 522.6 million compared to R$ 611.8 million
in 4Q22.
- Net Profit was R$ 22.9 million, compared to a net profit of R$
22.4 million in 4Q22.
- Adjusted Net Profit was R$ 48.9 million, an increase of 13.2%
compared to R$ 43.2 million in 4Q22.
- Adjusted EBITDA was R$103.6 million compared to R$127.4 million
in 4Q22. The Adjusted EBITDA margin was 19.8%.
- CI&T ended 4Q23 with 6,111 employees, fairly stable
compared to 3Q23.
Full-year ended on December 31, 2023 (2023) Operating and
Financial Highlights
- Net Revenue was R$2,233.5 million, an increase of 2.1% compared
to R$2,187.7 million in 2022. Net Revenue growth at constant
currency was 4.1%.
- Net Profit increased 38.5% to R$132.6 million from R$95.7
million in 2022.
- Adjusted Net Profit increased by 14.4% to R$193.9 million from
R$169.5 million in 2022. The Adjusted Net Profit margin was
8.7%.
- Adjusted EBITDA rose to R$432.1 million from R$417.5 million in
2022, 3.5% higher. The Adjusted EBITDA margin was 19.3%.
- Cash generated from operating activities rose 157.9% in 2023 to
R$414.3 million in 2023 from R$160.7 million in 2022.
Cesar Gon, founder and CEO of CI&T, commented, "CI&T has
a notable track record of consistent revenue growth, profitability,
and robust cash generation over the years, supporting our clients
on the verge of new technologies. From 2019 to 2023, our revenue
CAGR was 35%, of which 60% originated from mature economies
nowadays, especially in the US. Notably, we've seen a significant
improvement in diversifying our client base, with revenue from our
top ten clients improving from 67% in 2020 to under 40% in 2023.
Now, powered by the AI revolution, we're entering a new cycle of
growth by driving innovation and delivering impactful results to
our clients."
Comments on the 4Q23 financial performance
In 4Q23, net revenue was R$522.6 million, compared to R$611.8
million in 4Q22, a reduction of 14.6%. In 4Q23, the number of
clients with revenues above R$10 million in the last twelve months
increased to 50, from 38 in 4Q22.
In 4Q23, the Adjusted EBITDA was R$103.6 million, compared to
R$127.4 million in 4Q22, an 18.7% reduction, primarily attributed
to the decrease in the gross profit margin, partially mitigated by
the reduction in SG&A expenses, as a result of lower personnel
expenses in 2023. The Adjusted EBITDA margin was 19.8% in the
quarter.
Income tax expense was R$13.8 million in 4Q23, compared to
R$32.2 million in 4Q22. Income tax paid (cash impact) was R$1.9
million in 4Q23 and R$14.8 million in 4Q22. The income tax
reduction from the amortization of goodwill for tax purposes was
R$10.5 million in 4Q23 and R$10.1 million in 4Q22, reducing the
income tax paid in cash.
Thus, in 4Q23, we reported a net profit of R$22.9 million,
compared to a net profit of R$22.4 million in 4Q22. Adjusted Net
Profit was R$48.9 million, an increase of 13.2% compared to R$43.2
million in 4Q22, mainly due to lower income tax and financial
expenses. Consequently, the Adjusted Net Profit margin was 9.4%, an
improvement of 2.3 percentage points year-over-year.
Comments on the 2023 financial performance
In 2023, net revenue was R$2,233.5 million, 2.1% higher than in
2022. Net Revenue growth at constant currency was 4.1%. The revenue
distribution by geography was 44% from North America, 41% from
Latam, 10% from Europe, and 5% from Asia Pacific.
In 2023, the Adjusted EBITDA was R$432.1 million, 3.5% higher
than in 2022, mainly attributed to the successful implementation of
our management's cost and expense optimization plan, evidenced by
the reduction in SG&A expenses in 2023. The Adjusted EBITDA
margin was 19.3% in the year, 0.2 percentage points higher than in
2022.
Income tax expense was R$76.7 million in 2023, compared to
R$104.6 million in 2022, a reduction of 26.6%. Income tax paid
(cash impact) was R$27.4 million in 2023 (cash tax rate of 13.1%)
and R$48.3 million in 2022 (cash tax rate of 24.1%). The income tax
reduction from the amortization of goodwill for tax purposes was
R$41.4 million in 2023 and R$40.5 million in 2022, reducing the
income tax paid in cash.
The net profit increased 38.5%, from R$95.7 million in 2022 to
R$132.6 million in 2023. Adjusted Net Profit was R$193.9 million,
14.4% higher than in 2022, mainly due to lower SG&A expenses
and income taxes paid. As a result, the Adjusted Net Profit margin
was 8.7%.
Cash generated from operating activities was R$414.3 million in
2023, compared to R$160.7 million in 2022, an increase of 157.9%.
Free cash flow (net cash from operating activities less Capex) was
R$271.1 million in 2023. CI&T ended 2023 with a cash position
of R$214.8 million, including financial investments. Total loans
and borrowings (current and non-current) were R$727.5 million in
2023, compared to R$989.8 million in 2022, a reduction of R$262.3
million, due to the robust amount of cash generated in 2023.
Business Outlook
We expect our net revenue in the first quarter of 2024 to be at
least R$520 million on a reported basis, assuming an average FX
rate of 5.00 BRL/USD in 1Q24.
For the full year of 2024, we expect our net revenue growth at
constant currency to be in the range of -2.5% to +2.5%
year-over-year. In addition, we estimate our Adjusted EBITDA margin
to be in the range of 17% to 19%.
These expectations are forward-looking statements, and actual
results may differ materially. See "Cautionary Statement on
Forward-Looking Statements" below.
About CI&T
CI&T (NYSE: CINT) is a global hyper-digital specialist, a
partner in AI-powered digital transformation and efficiency for
100+ large enterprises and fast-growing clients. As digital
natives, CI&T brings a 29-year track record of accelerating
business impact through complete and scalable digital solutions.
With a global presence in nine countries with a nearshore delivery
model, CI&T provides strategy, data science, design, and
engineering, unlocking top-line growth, improving customer
experience and driving operational efficiency. Recognized by
Forrester as a Leader in Modern Application Development Services,
CI&T is the Employer of Choice for more than 6,100+
professionals.
Basis of accounting and functional currency
CI&T maintains its books and records in Brazilian reais,
which is the presentation currency of its audited consolidated
financial statements, and the functional currency of our operations
in Brazil. CI&T prepares its audited consolidated financial
statements in accordance with IFRS, as issued by the IASB.
Non-IFRS Financial Measures
We regularly monitor certain financial and operating metrics to
evaluate our business, measure our performance, identify trends
affecting our business, formulate financial projections, and make
strategic decisions. These non-IFRS financial measures include
Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net
Profit Margin, Net Revenue at Constant Currency, and Net Revenue
Growth at Constant Currency. They should be considered in addition
to results prepared in accordance with IFRS, but not as substitutes
for IFRS results. In addition, our calculation of these non-IFRS
financial measures may differ from those used by other companies,
and therefore, comparability may be limited. These non-IFRS
financial measures are provided as additional information to
enhance investors’ understanding of our operations’ historical and
current financial performance.
CI&T is not providing a quantitative reconciliation of
forward-looking non-IFRS Net Revenue Growth at Constant Currency
and Adjusted EBITDA to the most directly comparable IFRS measure
because it cannot reasonably predict the outcome of certain
significant items without unreasonable efforts. These items
include, but are not limited to, stock-based compensation expenses,
acquisition-related expenses, the tax effect of non-IFRS measures,
foreign currency exchange gains/losses, and other items. These
items are uncertain, depend on various factors, and could have a
material impact on our IFRS-reported results for the guidance
period.
We calculate Net Revenue at Constant Currency and Net Revenue
Growth at Constant Currency by translating Net Revenue from
entities reporting in foreign currencies into Brazilian reais using
the comparable foreign currency exchange rates from the prior
period to show changes in our revenue without giving effect to
period-to-period currency fluctuations.
In calculating Adjusted Gross Profit, we exclude cost components
unrelated to the direct management of our services. For the periods
presented, the adjustments applied were: (i) depreciation and
amortization related to costs of services provided and (ii)
stock-based compensation expenses.
In calculating Adjusted EBITDA, we exclude components unrelated
to the direct management of our services. We calculate Adjusted
EBITDA for the periods presented as Net Profit, plus net finance
costs, income tax expense, depreciation and amortization, plus: (i)
stock-based compensation expenses; (ii) government grants related
to tax reimbursement in our Chinese subsidiary; (iii)
acquisition-related expenses, including the present value and fair
value adjustment to accounts payable for business acquired,
consulting expenses, and retention packages; and (iv) business
restructuring expenses, associated with senior employees'
separation from acquired companies.
In calculating Adjusted Net Profit, we exclude components
unrelated to the direct management of our services. For the periods
presented, the adjustments applied were acquisition-related
expenses, including amortization of intangible assets from acquired
companies, present value and fair value adjustments to accounts
payable for business acquired, consulting expenses, retention
packages, and the tax effects of non-IFRS adjustments.
Cautionary Statement on Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact that may be deemed
forward-looking statements, include, but are not limited to: the
statements under Business Outlook, including expectations relating
to revenues and other financial or business metrics; statements
regarding relationships with clients; and any other statements of
expectations or beliefs. The words “believe,” “will,” “may,” “may
have,” “would,” “estimate,” “continues,” “anticipates,” “intends,”
“plans,” “expects,” “budget,” "scheduled,” “forecasts” and similar
words are intended to identify estimates and forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements
represent our management's beliefs and assumptions only as of the
date of this press release. You should read this press release with
the understanding that our actual future results may be materially
different from our expectations. These statements are subject to
known and unknown risks, uncertainties, and other factors that may
cause our actual results, levels of activity, performance, or
achievements to be materially different from those expressed or
implied by such statements in this press release. Such risk factors
include, but are not limited to, those relating to: the ongoing war
in Ukraine and the economic sanctions imposed by Western economies
on Russia, as well as the conflict between Israel and Hamas, and
their impact on our business and industry; the impact of
competition on our business; uncertainty regarding the demand for
and market utilization of our services; our ability to maintain or
acquire new client relationships; general business and economic
conditions; our ability to successfully integrate the
recent-acquired business; the impact of pandemics, epidemics and
disease outbreak; and our ability to successfully implement our
growth strategy and strategic plans. Additional information about
these and other risks and uncertainties is contained in the Risk
Factors section of CI&T's annual report on Form 20-F.
Additional information will be made available in our Annual Reports
on Form 20-F, and other filings and reports that we may file from
time to time with the SEC. Except as required by law, we assume no
obligation to and do not intend to update these forward-looking
statements or to update the reasons why actual results could differ
materially from those anticipated in these forward-looking
statements, even if new information becomes available in the
future.
Consolidated statement of profit or
loss
(In thousands of Brazilian Reais)
Quarter ended December
31,
Full year ended December
31,
2023
2022
2023
2022
Restated
Net revenue
522,560
611,805
2,233,466
2,187,710
Costs of services provided
(348,906
)
(391,108
)
(1,487,742
)
(1,425,219
)
Gross profit
173,654
220,697
745,724
762,491
Selling expenses
(41,400
)
(45,443
)
(173,643
)
(163,871
)
General and administrative expenses
(82,531
)
(87,800
)
(290,499
)
(315,915
)
Impairment loss on trade receivables and
contract assets
1,017
56
(1,556
)
(329
)
Other income (expenses) net
3,425
(966
)
5,450
(8,458
)
Operating expenses net
(119,489
)
(134,153
)
(460,248
)
(488,573
)
Operating profit before net finance
costs and income tax expenses
54,165
86,544
285,476
273,918
Finance income
12,858
17,358
75,245
172,996
Finance cost
(30,296
)
(49,327
)
(151,426
)
(246,642
)
Net finance costs
(17,438
)
(31,969
)
(76,181
)
(73,646
)
Profit before income tax
36,727
54,575
209,295
200,272
Current income tax
(5,720
)
(22,682
)
(34,536
)
(59,570
)
Deferred income tax
(8,083
)
(9,540
)
(42,186
)
(44,992
)
Total income tax expense
(13,803
)
(32,221
)
(76,722
)
(104,562
)
Net profit for the year
22,924
22,354
132,573
95,710
Earnings per share
Earnings per share – basic (in R$)
0.17
0.17
0.97
0.72
Earnings per share – diluted (in R$)
0.16
0.16
0.95
0.71
Weighted average number of basic
shares
136,368,202
133,717,919
136,419,395
133,186,441
Weighted average number of diluted
shares
139,097,276
141,203,853
139,148,469
134,774,674
Consolidated statement of financial
position
(In thousands of Brazilian Reais)
Assets
December 31, 2023
December 31, 2022
Liabilities and equity
December 31, 2023
December 31, 2022
Restated
Restated
Cash and cash equivalents
211,638
185,727
Suppliers and other payables
21,690
33,376
Financial Investments
3,164
96,299
Loans and borrowings
112,719
236,030
Trade receivables
471,951
501,671
Lease liabilities
17,862
21,539
Contract assets
147,620
217,250
Salaries and welfare charges
196,396
260,156
Recoverable taxes
23,588
17,922
Accounts payable for business acquired
13,365
76,746
Tax assets
17,483
2,959
Derivatives
-
4,109
Derivatives
9,620
11,194
Tax liabilities
2,602
3,890
Other assets
27,072
38,269
Other taxes payable
15,275
14,382
Total current assets
912,136
1,071,291
Contract liability
48,079
32,136
Other liabilities
27,290
47,501
Recoverable taxes
959
3,624
Total current liabilities
455,278
729,865
Deferred tax assets
18,284
15,571
Judicial deposits
7,280
9,819
Restricted cash - Escrow account and
indemnity asset
29,061
31,552
Loans and borrowings
614,744
753,733
Other assets
1,027
3,654
Deferred tax liabilities
68,465
20,942
Property, plant and equipment
38,584
55,266
Lease liabilities
27,037
41,269
Intangible assets and goodwill
1,669,865
1,755,994
Provisions
9,620
12,347
Right-of-use assets
39,695
56,187
Accounts payable for business acquired
122,689
133,299
Total non-current assets
1,804,755
1,931,667
Other liabilities
7,807
3,530
Total non-current liabilities
850,362
965,120
Equity
Share capital
37
37
Share premium
980,893
946,173
Capital reserves
174,153
203,218
Retained earnings reserves
354,240
221,667
Other comprehensive income (loss)
(98,072
)
(63,122
)
Total equity
1,411,251
1,307,973
Total assets
2,716,891
3,002,958
Total equity and liabilities
2,716,891
3,002,958
Consolidated statement of cash
flows
(In thousands of Brazilian Reais)
December 31, 2023
December 31, 2022
Restated
Cash flows from operating
activities
Net profit for the year
132,573
95,710
Adjustments for:
Depreciation and amortization
93,213
94,558
Loss on sale and write-off of fixed
assets
1,689
3,781
Interest, monetary variation and exchange
rate changes
86,793
57,156
Unrealized gain on financial
instruments
(14,735
)
(7,114
)
Income tax expenses
76,722
104,562
Impairment losses on trade receivables and
contract assets
1,556
329
(Reversal of) Provision for tax and labor
risks
(424
)
386
Share-based plan
28,116
5,486
Restructuring expenses
18,327
-
Changes in fair value of accounts payable
for business acquired
4,863
11,497
Others
(571
)
(1,855
)
Variation in operating assets and
liabilities
Trade receivables
4,381
(116,574
)
Contract assets
63,327
(69,101
)
Recoverable taxes
(31,755
)
(547
)
Suppliers
(13,112
)
(29,769
)
Salaries and welfare charges
(61,538
)
10,729
Tax liabilities
1,720
(9,681
)
Contract liabilities
17,175
9,636
Other receivables and payables, net
5,976
1,467
Cash generated from operating
activities
414,296
160,656
Income tax paid
(27,407
)
(48,299
)
Interest paid on loans and borrowings
(91,788
)
(70,096
)
Interest paid on lease
(4,057
)
(6,169
)
Income tax refund
4,198
-
Net cash from operating
activities
295,242
36,092
Cash flows from investment
activities:
Acquisition of property, plant and
equipment and intangible assets
(24,109
)
(22,967
)
Redemption of financial investments
90,298
655,533
Acquisition of subsidiary net of cash
acquired
-
(722,665
)
Escrow deposit
-
(23,061
)
Cash outflow on hedge accounting
settlement
-
25,263
Hedge accounting - ineffective portion
inflow
-
5,337
Net cash from (used in) investment
activities
66,189
(82,560
)
Cash flows from financing
activities:
Exercised share-based compensation
1,227
12,668
Payment of lease liabilities
(24,070
)
(26,993
)
Proceeds from loans and borrowings
205,093
527,507
Settlement of derivatives
12,200
390
Payment of loans and borrowings
(407,013
)
(350,571
)
Payment of installment related to accounts
payable of business acquired
(77,338
)
(62,338
)
Repurchase of treasury shares
(43,414
)
-
Net cash from (used in) financing
activities
(333,315
)
100,663
Net increase in cash and cash
equivalents
28,116
54,195
Cash and cash equivalents as of January
1st
185,727
135,727
Exchange variation effect on cash and cash
equivalents
(2,205
)
(4,195
)
Cash and cash equivalents as of
December 31st
211,638
185,727
Net Revenue Distribution
Net Revenue by industry
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Financial Services
154,657
172,916
-10.6%
647,063
652,089
-0.8%
Consumer Goods
104,875
122,755
-14.6%
448,587
473,871
-5.3%
Technology and Telecommunications
73,957
113,689
-34.9%
387,291
329,787
17.4%
Retail and Industrial Goods
66,206
80,380
-17.6%
274,557
307,995
-10.9%
Life Sciences
61,998
71,563
-13.4%
247,038
274,353
-10.0%
Others
60,868
50,502
20.5%
228,930
149,615
53.0%
Total
522,560
611,805
-14.6%
2,233,466
2,187,710
2.1%
Net Revenue by geography
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
North America
215,459
267,233
-19.4%
977,663
923,174
5.9%
Europe
57,053
63,182
-9.7%
224,698
205,992
9.1%
Latin America
226,396
251,466
-10.0%
924,874
975,948
-5.2%
Asia Pacific
23,651
29,923
-21.0%
106,231
82,596
28.6%
Total
522,560
611,805
-14.6%
2,233,466
2,187,710
2.1%
Top Clients
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Top Client (1)
33,118
75,923
-56.4%
185,317
325,505
-43.1%
Top 10 Clients
199,329
273,122
-27.0%
887,282
1,079,941
-17.8%
(1)
The top client considered in 4Q23 may
differ from that disclosed in the full year and should not be
factored into the calculation of the end-year position.
Reconciliation of various income
statement amounts from IFRS to non-IFRS measures for the three
months ended December 31, 2023 and 2022 and full year ended
December 31, 2023 and 2022:
Net Revenue
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Net Revenue
522,560
611,805
-14.6%
2,233,466
2,187,710
2.1%
Net Revenue at Constant Currency
536,299
611,805
-12.3%
2,277,403
2,187,710
4.1%
Adjusted Gross Profit
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Net Revenue
522,560
611,805
-14.6%
2,233,466
2,187,710
2.1%
Cost of Services
(348,906)
(391,108)
-10.8%
(1,487,742)
(1,425,219)
4.4%
Gross Profit
173,654
220,697
-21.3%
745,724
762,491
-2.2%
Adjustments
Depreciation and amortization (cost of
services provided)
8,705
10,667
-18.4%
35,953
40,968
-12.2%
Stock-based compensation
3,481
3,045
14.3%
13,842
4,235
226.8%
Adjusted Gross Profit
185,839
234,409
-20.7%
795,518
807,694
-1.5%
Adjusted Gross Profit Margin
35.6%
38.3%
-2.8p.p
35.6%
36.9%
-1.3p.p
Adjusted EBITDA
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Net profit for the year
22,924
22,354
2.5%
132,573
95,710
38.5%
Adjustments
Net financial cost
17,438
31,969
-45.5%
76,181
73,646
3.4%
Income tax expense
13,803
32,221
-57.2%
76,722
104,562
-26.6%
Depreciation and amortization
22,233
27,404
-18.9%
93,213
94,558
-1.4%
Stock-based compensation
6,376
3,592
77.5%
28,116
5,486
412.5%
Government grants
(624)
(764)
-18.3%
(931)
(1,141)
-18.5%
Acquisition-related expenses (1)
436
10,601
-95.9%
5,184
44,652
-88.4%
Business restructuring (2)
20,997
0
0.0%
20,997
0
0.0%
Adjusted EBITDA
103,582
127,377
-18.7%
432,056
417,473
3.5%
Adjusted EBITDA Margin
19.8%
20.8%
-1p.p
19.3%
19.1%
0.3p.p
(1)
Include present value and fair value
adjustments on accounts payable for business acquired, consulting
expenses, and retention packages.
(2)
Associated with senior employees'
separation from acquired companies.
Adjusted Net Profit
(in BRL thousand)
4Q23
4Q22
Var.
4Q23 x 4Q22
2023
2022
Var.
2023 x 2022
Net profit for the year
22,924
22,354
2.5%
132,573
95,710
38.5%
Adjustments
Acquisition-related expenses (1)
11,231
24,400
-54.0%
50,717
87,721
-42.2%
Business restructuring (2)
20,997
0
0.0%
20,997
0
0.0%
Tax effects on non-IFRS adjustments
(3)
(6,226)
(3,546)
75.6%
(10,341)
(13,970)
-26.0%
Adjusted Net Profit
48,925
43,208
13.2%
193,946
169,460
14.4%
Adjusted Net Profit Margin
9.4%
7.1%
2.3p.p
8.7%
7.7%
0.9p.p
(1)
Includes amortization of intangible assets
from acquired companies totaled (R$10,795) thousand in 4Q23,
(R$13,799) thousand in 4Q22, (R$45,533) thousand in 2023 and
(R$43,069) thousand in 2022, present value and fair value
adjustment on accounts payable for business acquired, consulting
expenses and retention packages.
(2)
Associated with senior employees'
separation from acquired companies..
(3)
As of the 4Q23, we are contemplating the
tax effects on non-IFRS adjustments as part of the Adjusted Net
Profit calculation. Thus, comparison with previously reported
numbers will differ.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240313136825/en/
Investor Relations Contact: Eduardo Galvão
investors@ciandt.com
Media Relations Contact: Zella Panossian
ciandt@illumepr.com
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