CI&T Inc Q1 FY2026 Earnings Call

Good afternoon and thank you for joining us for CI&T First Quarter of 2026 Earnings Call. I am Eduardo Galvao, Director of Investor Relations. Joining me today to discuss our results and strategic milestones are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook, are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. We caution you not to place undue reliance on these forward-looking statements as they are valid only as of the date when made. Additionally, we'll discuss certain non-GAAP financial measures. We believe this provides a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release. Today's session is being recorded. The full presentation deck is available on our Investor Relations website, and a replay of this call will be posted shortly after we conclude. With that, I'm pleased to hand the floor over to our Founder and CEO, Cesar Gon.

Thank you, Eduardo, and good day, everyone. A year ago, I said the future of business is technology and the future of technology is business. Six consecutive quarters of double-digit organic growth tell me that was right. What has changed is the kind of partner companies are looking for: not a traditional horizontal service firm, but what we are choosing to call a tech-integrated business solutions partner. We continue to advance two distinct AI-driven growth vectors for CI&T: AI deployment, which expands revenue through IP-based solutions and AI adoption engagements; and AI monetization, which expands margins by evolving our pricing models to capture a greater share of the productivity gains and business value created by AI. 2025 was a very strong year for AI deployment, and this trend has only strengthened in 2026. At the same time, 2026 marks the year when our AI monetization efforts are becoming more tangible. In Q1 2026, 20% of new sales were already based on new pricing models. We expect these models to contribute to gross margin expansion over the coming quarters as adoption continues to accelerate. By combining strategy, AI-native execution with Agentic SDLC and IP-based solutions, we are positioning CI&T to help lead the next decade of business reinvention. Turning to our financial performance. The first quarter of 2026 was a period of significant scale and sustained momentum. We achieved record revenue of $136.6 million, representing 23.2% year-over-year organic growth. This outperformance is notably broad-based with robust demand across all core geographies and a diversified footprint spanning our key industry verticals. Profitability remains a core strength of our model with adjusted EBITDA reaching $20.8 million, representing a 15.2% margin. On an FX-neutral basis, this would be equivalent to an adjusted EBITDA margin of 17.4%. This performance reflects our ability to continue investing in our AI growth vectors while maintaining a disciplined operational profile. Furthermore, our business continues to demonstrate high-quality cash conversion with $13.5 million in operating cash flow this quarter, equivalent to 65% of adjusted EBITDA. The first quarter of 2026 marked our 60th consecutive quarter of double-digit organic growth, and this growth remains fully organic. This consistency is not accidental; it reflects a structural shift in client demand and CI&T's ability to capture it. We are now seeing a clear acceleration of AI deployment. Clients are moving beyond experimentation and beginning to rebuild their technology foundations, operating models and business processes around AI. They need partners capable of connecting strategy, execution and measurable outcomes in the complex reality of large enterprise environments. This is where CI&T is increasingly differentiated. Our proprietary IP, AI-native delivery capabilities and CI&T FLOW are helping us convert this demand into large, higher-quality engagements, both with new clients and within existing accounts. The case studies that follow show how this AI deployment momentum is translating into tangible business outcomes. These cases serve as empirical evidence of how our Agentic SDLCs are fundamentally resetting the baseline for enterprise productivity and speed to value. I will now hand over to Bruno to discuss how we are scaling this hyper-productivity through our global delivery model and our evolved talent strategy.

Thanks, Cesar. Good afternoon, everyone. I'm excited to share our operational and talent progress for this quarter. We ended the first quarter of 2026 with over 8,000 professionals, including an average of 6,600 AI-builders. While our headcount increased 13.3% year-over-year, this remained below our 15.5% revenue growth at constant currency. This delta has already begun lifting our revenue per professional, and we expect it to widen as AI monetization scales. Value-based pricing led us to capture more of the value we create per engagement, strengthening our unit economics as we continue to grow the team. As Cesar noted, we have pivoted from technology execution to strategic AI deployment. Our talent is no longer merely building code. They are curators of AI, leveraging CI&T FLOW and the Agentic SDLC to collapse development times and deliver hyper-productivity. This shift is only possible because of our culture of continuous adaptation. We ended the quarter with a 4.1 Glassdoor score, the highest among our peer group, and we have been recognized by Great Place to Work for 19 consecutive years. Our voluntary attrition remains at a healthy 10.3%, the lowest level in our recent history, in an era where AI is redefining technical careers. Our industry-leading retention proves that our people feel empowered by these tools, not replaced by them. Our AI-builders are the engine of our innovation and their ability to orchestrate complex AI agents is the fundamental differentiator for CI&T in the global market. I'm proud to announce the launch of our 2025 global ESG report this quarter, reaffirming our commitment to the UN Global Compact. Our culture remains a primary competitive advantage and 52.2% of our global workforce is from underrepresented groups. The diversity of perspective is what allows us to navigate the ethical complexity of AI responsibly. It's not separate from the business. It's why clients trust us with their work. The report also covers our social impact: over 100,000 people reached through funded projects alongside governance and environmental milestones, including the Golden Seal from the Brazil GHG Protocol and 100% renewable energy across our Brazilian operations. I invite you to explore the full report published on our website. Now over to Stanley to guide us through our financial performance.

Thank you, Bruno, and good afternoon, everyone. Let me walk you through our financial performance for the first quarter of 2026. We achieved $136.6 million in net revenue, representing a robust 23.2% growth compared to the same period last year, fully organic. On a constant currency basis, revenue grew 15.5% year-over-year. I want to highlight that this performance exceeded our guidance and surpassed current analyst estimates. This outperformance is underpinned by exceptional momentum in our go-to-market execution. Throughout the quarter, we observed a significant expansion in our sales pipeline and an improved conversion rate, the direct result of intentional sales initiatives and the tangible impact our AI deployment is delivering for our clients. What excites us most is the underlying quality and breadth of this performance. From a geographic perspective, Latin America led the acceleration with 33% growth, while North America delivered a solid increase of 16% and new markets grew 11% year-over-year. We achieved an 18.9% expansion within our top 10 accounts, yet our growth remains healthily distributed. This resilience was visible across nearly all industry verticals, which grew at double digits with our Consumer Goods segment remaining stable. This broad-based performance confirms that our AI deployment is not a localized success. It is a global catalyst that is driving deeper penetration across all regions and industries we serve. This chart illustrates our land-and-expand strategy in action. We grew our $5 million to $10 million client cohort from 15 to 18 clients in the quarter, a compounding effect of our ability to scale wallet share through AI-driven impact. Our performance is fueled by exceptional go-to-market momentum. We observed significant pipeline expansion and improved conversion rates this quarter, the direct result of intentional sales initiatives and the tangible return on investments our AI deployment provides. This strength creates a highly predictable and resilient revenue base as we deepen these strategic partnerships. In the first quarter of 2026, our adjusted EBITDA reached $20.8 million, a 6.3% increase year-over-year, resulting in a 15.2% margin. It is important to note that this margin reflects two specific headwinds: unfavorable foreign exchange comparisons and the impact of increased Brazilian payroll taxes. To provide a clearer view of our operational performance, if we exclude the FX impact, our first quarter 2026 EBITDA would have reached $22.2 million, equivalent to a 17.4% margin and a robust 13.2% year-over-year growth. This FX impact was more pronounced in the first quarter due to the year-over-year Brazilian reais to U.S. dollar comparison base, and it is expected to attenuate over the coming quarters. We remain focused on ensuring that the hyper-productivity we are engineering today becomes the permanent foundation for long-term sustainable profitability. As Cesar mentioned, we expect our new engagement models to contribute to profitability margin expansion over the coming quarters as adoption continues to accelerate and we capture a greater share of the value we create. Moving to our bottom line, adjusted profit reached $10.2 million in the first quarter of 2026. This represents a 6.2% increase compared to the same period last year, resulting in an adjusted net income margin of 7.5%. Most importantly, our adjusted diluted earnings per share was $0.08, representing a robust 11.8% increase over first quarter 2025. This double-digit growth in earnings per share, surpassing our net profit growth, is a direct result of our disciplined capital allocation strategy and the increasing operating leverage within our AI-native platform. I will now turn the call back to Cesar to discuss our business outlook and the strategic path forward for the remainder of 2026.

Thank you, Stanley. For the second quarter of 2026, we expect revenue of at least $140 million, representing 19.5% growth year-over-year or 13.9% at constant currency. Based on our strong first quarter performance and the quality of our current pipeline, we are increasing our full year 2026 revenue guidance to a range of $556 million to $575 million. This implies organic growth of 13.5% to 17.5% with a midpoint of 15.5%. Our revised growth outlook includes a positive FX impact of approximately 350 basis points, which is 50 basis points higher than our previous guidance. Effectively, of the 150 basis points increase in our revenue guidance, 100 basis points are driven by pure organic momentum and improved pipeline conversion. Our updated guidance reflects the continuing strength of our first AI-driven growth vector, AI deployment, which is fueling revenue expansion through IP-based solutions and AI adoption engagements, combined with our well-oiled go-to-market strategy. In addition, we estimate our adjusted EBITDA margin to be in the range of 17% to 19%. We project margin expansion to build sequentially throughout the year, supported by our second AI-driven growth vector, AI monetization, as the adoption of new pricing models accelerates and enables us to incrementally capture a greater share of the productivity gains and business value created by AI. With that, we are ready to begin the Q&A session. Thank you.

The first question comes from Gustavo Farias from UBS.

Two on my end. First of all, congratulations on the results. First question, if you could provide color on the current pipeline of projects and the mix between the types and the types of contracts; time-and-materials, outcome-based, fixed price and how this has been evolving and the margin profile you've been encountering in each of them. My second question is related to margins. We've seen the margin a little bit below our numbers and consensus numbers. Of course, you explained very clearly the main drivers. Just to double check here, how much of that was already expected by the previous and current margin guidance? And is it fair to assume margin, based on Q1 results, could be brought towards the lower end of this 17% to 19% range? That's my second question.

Thanks Gustavo. I can handle the first one and then Stanley can get the second one. Regarding pricing models, as planned, we are now advancing what we are calling the AI monetization effort. That basically is an effort to synchronize AI deployment with the evolution of our pricing models to be more value-based, and of course, giving us the opportunity to capture more margins from the efficiency and impact we are generating. We disclosed, for the first time, this evolution by giving the data point of 20% of all the new sales in the fourth quarter were already based on these value-based models. Value-based models for us are a combination of output-based with price per consumption — or what we call Asia computing units when we sell in a semi-sized model — and outcome-based. So output, consumption, and outcome-based. This is basically what is behind the 20% we disclosed as a combination of a mix of these different pricing models. We believe the future will be really a hybrid model where we combine — it depends on the situation and the scenario, we combine all these alternatives in the end with the will to provide more flexibility to our clients, skin in the game from CI&T regarding our ability to leverage value from the AI deployment and also, of course, capture more of the share of the impact we are generating. So what we — of course, our business model is very current. We have long-term contracts. That's why quarter-over-quarter you're going to see a visible, tangible increment in our gross margin as a result of this move towards new pricing models. But we also will keep — I'm sure we will have part of our revenue still based on time-and-materials. But even time-and-materials, if you see what's happening in the industry, time-and-materials is being rebranded, right, as for the engineering deployment. So there's a new set of opportunities even for time-and-materials engagements to reprice it based on deep AI competence. So I think all good moves and vectors in our favor, and I see a very consistent strategy for CI&T on these two vectors: AI deployment combined with a disciplined AI monetization. Stanley, if you could address specifically the second question from Gustavo.

Yes. Gustavo, thank you for the question about margins. Well, if you see, Gustavo, we are maintaining our guidance of EBITDA in the range of 17% to 19%. And what is built into that guidance? First, structural characteristics of our business and seasonality. We have higher margins towards the second half of the year. We also have an operating leverage going on for the last years, and we will continue to see that throughout 2026. And on top of that, we have the margin expansion out of the AI monetization through new engagement models. So all of that combined is, let's say, compensating for the real appreciation, which is a headwind to the margins, and that is already within this 17% to 19% guidance. And at the end, if you see, in absolute terms, EBITDA will increase in comparison to 2025. So the question is more towards the margin effects on the revenue.

Our next question comes from Puneet Jain from JPMorgan.

I also have a question on this new AI-based delivery model, Agentic SDLC. So assuming some of those contracts stay as time-and-materials, how do you integrate the token cost and overall the AI portion of cost in your delivery structure? And how does the margin profile of some of those contracts compare with your typical people-based models?

Thanks, Puneet. Basically, in terms of pricing, even in time-and-materials engagements, we continue to see a very rational price environment and a lot of openness from our clients to discuss new pricing models and to incorporate eventually the new opportunities regarding AI. So we now see a lot of opportunity. Of course, the easy, or let's say the low-hanging fruit, is just — as now we are really — I think with a very superior approach on AI deployment, we can accommodate any additional cost in our pricing model. But I think the most strategic part is moving from, as I mentioned, from time-and-materials to a new output-based, outcome-based and consumption-based model. So I think as the demand is huge and the eagerness of our clients to leverage AI benefits is increasing, we are not seeing — of course, we need to synchronize everything, and it's what we do. I think we are very good at that. And so I think we are very happy with what we could do in the previous quarters regarding AI deployment and what we see in the speed of the advancement of AI monetization efforts. So I see it more as our ability to demonstrate that. In the end, if you are able to demonstrate the impact you can generate with AI for our clients, they respond accordingly in terms of adjusting the model in the right direction.

And if I can complement, Puneet, the adjustment is not a gradual, incremental one, right? We're talking about 3x, 5x, 7x. So when you create that type of impact, to Cesar's point, clients are open to having more of that and then expand. That's how we've been growing with increasing wallet share within clients, getting more space, and making those relationships closer. The engagement model is open to have more of that. So it's a win-win conversation.

Appreciate that. And are you seeing any impact from the geopolitical uncertainty, the war in the Middle East, on your clients' decision-making at all? Any verticals or regions where you might be seeing signs of slowdown in the second quarter compared to Q1?

Not really, no. So far, we haven't. Again, the dynamics of this growth and the guidance we're giving are based on the dynamic within our clients and our ability to create more value than our competitors within those clients and win wallet share and grow with them. They are big, stable companies, leaders in their market. So they're solid companies. They're growing, they're doing well. So if we do our part, which is create value for them and be ahead of the pack, which we think we are at this point, and we have to keep ahead of the pack, I don't think that the macro will impact us a ton.

Our next question comes from Steven from Wedbush.

Congrats on the quarter. I have two questions, one on the value-based pricing and then one also on the headcount growth. Specifically for the value-based pricing, you mentioned that 20% of the net sales is coming from this value-based pricing approach. Do you have any sort of long-term gauge or any sort of long-term target that we can take into account for this value-based pricing and what the company's expectations are to really get a lot of these new customers onto this value-based pricing approach? And then turning to the headcount, especially when you're starting to see over 80% of your headcount really leveraging AI and becoming the curators of AI as you described, is that going to lead to any sort of headcount reduction in the near term or in the long term and something that we can take into account from there?

I can get the first one. Steve, thank you for your question, and Bruno can help with the second. Regarding new pricing models, we see this change happening in the horizon of maybe 18 months as a natural evolution as the new sales become relevant in terms of revenue quarter-over-quarter. So gradually, you're going to see the effect happening in our gross margin, where you can clearly see the difference on the value we are capturing from the engagement. Another thing is it's not just pricing models. Our offerings are evolving to generate much more impact for our clients. So it gives us a lot of flexibility. As we see the momentum of AI deployment increase and the way we are very well positioned, we see room to accommodate CI&T in a better shape regarding value capture. So, gradually, quarter-by-quarter, following the increased impact we are generating for our clients — impacts around horizontal efficiency, data, app modernization and direct AI impact with the new use cases that are emerging for every vertical and segment — there are a lot of opportunities, and I think we are very well positioned to capture that. Regarding our workforce, I think Bruno can address that.

Yes. So the way we see this, even if the total addressable market reduces in size, it would not reduce by a lot and maybe not reduce at all. Our ambition is to be a leader in this new industry, the industry of the AI builders. If we accomplish that — and to our point here, we are ahead of the curve and our plan is to be aggressively ahead of that curve — we'll capture and be a winner in this new market. Being a winner in this new market does not necessarily mean we will stop growing by revenue or by headcount; we will continue to grow. That's the ambition: to win in this new game and to keep giving opportunity for our people, helping them grow and become the leading professionals in their industry and create value for our clients. I don't think we'll anticipate any headcount reduction in that scenario.

Just to add to that, Steve, one way to look at it is as we evolve these new engagement models, we should see higher revenue per headcount. I think that is the best way to see that trend going forward. So as Bruno mentioned, growing headcount and growing revenue per headcount as well. So that should be a good indicator to track as we evolve in these new models.

Let me add one thing that I think is important. Looking back, we did an amazing job in the past three years. We really introduced CI&T FLOW with faster adoption. We're reskilling our whole team around artificial intelligence. We also turned every single CI&T engagement into an AI engagement. So now we have builders — AI builders. That is the most important talent to make AI deployment feasible. I think it was a very good strategy not to create a different business unit for AI services. We said, let's look at our core offerings and redesign them around AI three years ago. Now we are leveraging the results of those bets.

Our next question comes from Bryan Bergin from TD Cowen.

So I wanted to also ask about this contract structure evolution. Is this across industries, across the portfolio? Can you talk about the nature of the clients that are going along with this and the characteristics those clients have that you could learn from to better cross-pollinate across the entire portfolio?

Thanks, Bryan. Great to see you. I think part of the evolution of the pricing models is combining with our IP-based offerings. As more IP is on the table in a deal, it's more feasible to introduce new commercial models. We are combining, and as we are working hard around our vertical IP-based solutions, we now have a solid set of assets that allow us to really foster our AI monetization through the new model. So IP and intellectual property are an important foundation of our strategy. If I can summarize our strategy: two growth vectors, AI deployment and AI monetization; and four pillars: IP-based offerings, commercial models, data — it's incredible what we are doing around data — and partnerships with the hyperscalers. These four pillars are fostering our growth vectors in an amazing way. Our job is to synchronize all this momentum and capture the growth and the value we deserve by the impact we are generating.

Okay. As it relates to your large clients, you had another good performance in top 1 and top 10. Maybe just dig in there: your visibility to continued momentum in those accounts?

Yes. This quarter we reported growth in all verticals and cohorts of clients: top 1, top 10, ex-top 1, ex-top 10. So it's very broad momentum regarding AI deployment. Of course, we stay focused on the kind of clients we believe are the hot spots for CI&T: large, complex organizations that are really looking for ways to leverage AI impact. I think it's even across regions. We grew in Latin America and North America; even new markets had a good response in this last quarter. So we continue to expect the momentum will continue in all the verticals and regions.

Our next question comes from Luke Morison from Canaccord.

So maybe one on gross margins. They compressed quite a bit in the quarter. Can you just help us unpack what's driving that: whether it's entirely this FX and payroll tax impact or if there's maybe an element of AI spend and AI investment that you need to scale into? And how should we be thinking about modeling gross margins for the rest of the year and onward?

Luke, thank you for the question. Let's unpack as you want. First, by far, it is the FX effect and it's more than 200 basis points only in that aspect we presented in the slides, adjusted by current currency equivalent. You have to bear in mind that due to seasonality, we have a load every first quarter of the year — a load of salary adjustments that will be compensated throughout the year by contract adjustments and so on. So here we have the combination of the structural aspect and this specific FX effect. Those are, I would say, the main aspects for the first quarter. As for modeling the next quarter, again, we have the seasonality play here. We have higher working days throughout the next quarters in comparison to the first quarter, for example. We have the leveraging of SG&A as we grow the business. On top of that, we have the monetization of the new engagement models taking an important role throughout the next quarters. I wouldn't say you should model anything different than what we guided in terms of EBITDA. That's why we are guiding. We have the range for the usual reasons: the midpoint is more conservative; the lower end reflects potential macro effects. So yes, that's the breakdown, Luke.

Got it. Very helpful. And then maybe a quick follow-up. Of that 20% of new sales in Q1 that are on these new pricing models, can you give us a sense of what gross margins look like on those engagements? What can it scale to over time? How can that impact the overall gross margin profile of the business over a two- to five-year period?

What we are doing as we capture value on this monetization — AI monetization — the trend is to reinvest in sales. So if you see increments in gross margin, the trend is that we would reinvest in sales to capture growth. At the end of the day, it's about growth and continuing this organic momentum that we have.

Let me help here, Luke. We can be a little more specific. I think the new pricing models can increase contribution margin depending on the context of the engagement — from three or four percentage points to ten or fifteen percentage points in terms of contribution margin for the engagement. That's why we see it as a pillar in our strategy to capture part of the value. This is only possible because we are delivering a different level of impact. If you try to discuss pricing models with clients while delivering the same value, of course it won't work. But we are discussing delivering a different level of impact. If you combine our organic growth of 23.2% with our adjusted EBITDA margin of 15.2%, we reached 38.4%, nearly back to the famous 'rule of 40.' So putting everything in perspective, looking ahead, I think we can expect better — you're going to see from next quarter better gross margins as a result of seasonality and also the beginning of the impact of the new pricing models. This will allow us to increase our sales investments, which is the strategy to fuel high growth and a strong bottom line in the long term. So this is the piece of the puzzle we are handling now in a very good way.

Our next question comes from Cesar Medina from Morgan Stanley.

Congratulations on the results, quite strong and broad-based. The question I had was twofold. One, sorry to keep pressing on the new pricing mechanism, but it's just 20% of the new sales, right? It's not of the total revenues for the quarter. If I were to ask you about your pipeline that you're building — not the second quarter, but the pipeline — how prevalent is that new sales mechanism? That will be the first question, and then I'll have a different update.

Very good, Medina. Thank you for the question. Basically, as you know, we have a lot of recurring long-term revenue. But in a timeline of 18 months, everything that we will be doing will be new sales. So that's the first data point: it takes about 18 months to renew 100% of the engagements of CI&T. The second point is the pipeline is healthy. The data point now is that it is 30% larger. The pipeline in terms of value is 30% higher now than the same period last year and 100% relates to AI deployment. If you combine this data, you see how we are growing and that is AI deployment and evolving our AI monetization along the next quarters.

But pursuant to what Stanley mentioned in terms of the margins of the new pricing mechanism that you are reinvesting in growth: if I were to look at the gross margin component, are the gross margins of these new types of engagements closer to software or higher? You mentioned earlier...

What's 'software'? I think we have a very healthy strategy here. The new reality is a business with a significantly higher gross margin, but also with different elements in the P&L. In the end, it's moving to a more scalable and profitable business model, but gradually, as we deploy these new models and increase our effort. The mention regarding sales is because we see a huge opportunity. If the market continues to move in our direction as we are seeing, we have the opportunity to really accelerate our expansion, and this will require broad investments around go-to-market and sales.

Okay. And then the second question is regarding your full year guidance: if I do the math in terms of constant currency for first quarter and second quarter, that suggests that in the second half of the year you're going to have more muted growth. Is that the right way to see it?

Yes. We detailed that of the 150 basis points increase, 100 basis points is a pure reflection of demand and pipeline and 50 basis points is an FX tailwind. As we have been doing for six consecutive quarters, we intend to do better and increase our numbers as we win the AI deployment game.

So that concludes our Q&A session. I'll now invite Cesar Gon to proceed with his closing remarks.

Thanks, Eduardo. Thank you, Bruno, Stanley, Eduardo, again. Thank you all for joining us today, and more especially, I want to thank all CI&T-ers around the world. Congratulations for one more record quarter. Let's keep pushing. And a special thank you as well to our clients for choosing CI&T in this extraordinary moment of AI deployment and AI-driven innovation. So stay well. See you soon.