CI&T Inc 6-K, filed Nov 14, 2024
CI&T Inc (CINT)
About this 6-K
CI&T Inc filed this 6-K on November 14, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|
Form 6-K |
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDERTHE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2024
Commission File Number: 001-41035
CI&T INC
(Translation of registrant’s name into English)
Estrada Guiseppina Vianelli De Napoli, 1455 – C,
Globaltech 13.100-000 - Brazil
Campinas-State of São Paulo
+55 19 21024500
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
CI&T Inc
ITEM
| 1. | 3Q24 Earnings Release |
| 2. | Unaudited condensed consolidated interim financial information for the nine-month period ended September 30, 2024 |
CI&T Reports Double-Digit Sequential Revenue Growth in 3Q24 Results
New York - November 14, 2024 - CI&T (NYSE: CINT, “Company”), a global technology transformation specialist and fast-growing public company, today announces its results for the third quarter of 2024 (3Q24) in accordance with International Financial Reporting Standards (IFRS). For comparison purposes, we refer to the results for the third quarter of 2023 (3Q23) and the second quarter of 2024 (2Q24).
Third quarter of 2024 (3Q24) highlights
| ● | Record Net Revenue of R$622.2 million, a 17.6% increase compared to 3Q23 and 10.0% sequential growth over 2Q24. |
| ● | Net Profit increased by 5.6%, reaching R$28.6 million in 3Q24, up from R$27.0 million in 3Q23. |
| ● | Adjusted EBITDA improved by 24.2% to R$121.4 million in 3Q24 compared to R$97.7 million in 3Q23. The Adjusted EBITDA margin was 19.5%. |
| ● | Adjusted Net Profit increased by 32.9% to R$56.5 million in 3Q24, up from R$42.5 million in 3Q23. The Adjusted Net Profit margin was 9.1%. |
| ● | CI&T ended 3Q24 with 6,755 employees, an 8.3% increase from 2Q24. |
Cesar Gon, founder and CEO of CI&T, commented, "We are delighted to report 17.6% year-over-year revenue growth for 3Q24, showcasing the strength and resilience of our business model. Our value proposition through CI&T Flow continues to gain significant traction with clients, as evidenced by the revenue growth among our top 10 clients."
"Looking forward, our guidance projects 22% year-over-year revenue growth for 4Q24 at the midpoint, reflecting our confidence in sustaining this momentum. As we move into 2025, we are well-positioned to capitalize on the growing demand for innovative solutions, driven by our commitment to providing exceptional value for all our stakeholders and fostering long-lasting client relationships."
Comments on the 3Q24 financial performance
Net revenue reached a record R$622.2 million in 3Q24, a 17.6% increase compared to R$529.1 million in 3Q23, or 9.0% growth at constant currency. Net revenue growth among our top 10 clients was particularly strong, rising 25.3% in 3Q24 over 3Q23, showcasing our unwavering commitment to delivering exceptional value to our long-term clients.
The Company reported net revenue growth across all regions on a year-over-year basis. The geographic distribution of net revenue in 3Q24 was 45.8% from North America, 40.4% from Latam, 9.4% from Europe, and 4.4% from Asia Pacific.
The cost of services provided in 3Q24 was R$406.5 million, 13.9% higher than in 3Q23, and the gross profit was R$215.7 million. The adjusted gross profit in 3Q24 was R$231.8 million, an increase of 25.8% compared to 3Q23, driven by improved utilization rates. The adjusted gross profit margin was 37.3% in 3Q24, 2.4 percentage points higher year-over-year.
| 1 |  |
In 3Q24, selling, general and administrative (SG&A), and other operating expenses totaled R$137.4 million, an increase of 33.8% compared to 3Q23. This increase was driven by the investments in our sales team to support growth and non-recurring restructuring expenses to optimize our global delivery model based on our nearshoring strategy.
The adjusted EBITDA was R$121.4 million in 3Q24, an increase of 24.2% compared to R$97.7 million in 3Q23. The adjusted EBITDA margin was 19.5% in 3Q24, 1.0 percentage point higher than in 3Q23.
In 3Q24, net finance costs were R$20.6 million, a 1.3% increase compared to 3Q23, mainly driven by higher net foreign exchange volatility in the comparable period, partially offset by a lower debt position. Income tax expense was R$29.2 million in 3Q24, 30.9% higher than in 3Q23. The income tax paid (cash effect) in the quarter was R$9.3 million, equivalent to a cash tax rate of 16.1%.
The net profit was R$28.6 million in 3Q24, 5.6% higher than in 3Q23. Adjusted net profit was R$56.5 million, an increase of 32.9% compared to 3Q23. The adjusted net profit margin increased from 8.0% in 3Q23 to 9.1% in 3Q24, mainly due to the increase in the adjusted gross profit, partially compensated by higher income tax expenses.
In 9M24, cash generated from operating activities was R$294.9 million, a 15.9% increase compared to 9M23, primarily due to an improvement in working capital management.
Business Outlook
We expect our net revenue in the fourth quarter of 2024 to be in the range of R$620 million to R$655 million on a reported basis, equivalent to a 22% year-over-year growth at the midpoint of the range. This assumes an average FX rate of BRL/USD 5.55 in 4Q24.
For the full year of 2024, we are updating the range and increasing the midpoint of the guidance. We expect our net revenue growth at constant currency to be in the range of +0.5% to +2.0% year-over-year. In addition, we estimate our Adjusted EBITDA margin to be in the range of 18% to 19%.
These expectations are forward-looking statements, and actual results may differ materially. See "Cautionary Statement on Forward-Looking Statements" below.
Conference Call Information
Cesar Gon (Founder and CEO), Bruno Guicardi (Founder and President for North America and Europe), Stanley Rodrigues (CFO), and Eduardo
Galvão (Head of Investor Relations) will host a video conference call to discuss the 3Q24 financial and operating results on November
14, at 8:00 a.m. Eastern Time / 10:00 a.m. BRT. The earnings call can be accessed on the Company’s Investor Relations website at
https://investors.ciandt.com or at the following link: https://www.youtube.com/live/WUeMKHlby3c.
About CI&T
CI&T (NYSE: CINT) is a global technology transformation specialist for 100+ large enterprises and fast growth clients. CI&T brings a 29-year track record of helping clients navigate change to deliver accelerated business impact, with deep expertise across AI, strategy, customer experience, software development, cloud services, data and more. CI&T’s proprietary AI platform, CI&T FLOW boosts team productivity, ensuring fast, efficient, and scalable delivery of world-class solutions. Operating globally with over 6,700 professionals across 9 countries, CI&T is recognized by Forrester as a Leader in Modern Application Development Services.
| 2 | |
Basis
of accounting and functional currency
CI&T maintains its books and records in Brazilian reais, which is the presentation
currency of its unaudited condensed consolidated interim financial statements, and the functional currency of our operations in Brazil.
CI&T prepares its unaudited condensed consolidated interim financial statements in accordance with IFRS, as issued by the IASB, and
International Financial Reporting Standard No 34—Interim Financial Reporting (“IAS 34”).
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 its forward-looking non-IFRS Net Revenue Growth at Constant Currency and Adjusted EBITDA Margin 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, share-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 the costs of services provided and (ii) share-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) share-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 related to the optimization of our global delivery model based on our nearshoring strategy, including termination charges, severance and legal services for employee separations from North America, Europe and Asia Pacific regions.
| 3 | |
In calculating Adjusted Net Profit, we exclude components unrelated to the direct management of our services. For the periods presented, the adjustments have been made for (i) 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, and retention packages); (ii) business restructuring expenses related to the optimization of our global delivery model based on our nearshoring strategy, including termination charges, severance and legal services for employee separations from North America, Europe and Asia Pacific regions; (iii) share-based compensation expenses; and (iv) 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.
Contacts:
Investor Relations Contact:
Eduardo Galvão
investors@ciandt.com
Media Relations Contact:
Zella Panossian
ciandt@illumepr.com
| 4 | |
Unaudited condensed consolidated statement of profit or loss
(In thousands of Brazilian Reais)
|
Quarter ended September 30, |
Nine months ended September 30, | ||||||
| 2024 | 2023 | 2024 | 2023 | ||||
| Restated | Restated | ||||||
| Net revenue | 622,160 | 529,083 | 1,711,321 | 1,710,907 | |||
| Costs of services provided | (406,481) | (356,779) | (1,132,103) | (1,138,836) | |||
| Gross profit | 215,679 | 172,304 | 579,218 | 572,071 | |||
| Selling expenses | (54,179) | (40,405) | (149,919) | (132,243) | |||
| General and administrative expenses | (78,483) | (64,807) | (215,714) | (207,968) | |||
| Impairment loss on accounts receivables and contract assets | (5,248) | (836) | (7,832) | (2,573) | |||
| Other income | 512 | 3,363 | 1,106 | 2,025 | |||
| Operating expenses net | (137,398) | (102,685) | (372,359) | (340,759) | |||
| Operating profit before net finance costs and income tax expense | 78,281 | 69,619 | 206,859 | 231,312 | |||
| Finance income | 21,821 | 13,506 | 56,066 | 62,387 | |||
| Finance cost | (42,376) | (33,799) | (100,587) | (121,130) | |||
| Net finance costs | (20,555) | (20,293) | (44,521) | (58,743) | |||
| Profit before income tax | 57,726 | 49,326 | 162,338 | 172,569 | |||
| Current | (21,627) | (12,906) | (43,094) | (28,816) | |||
| Deferred | (7,526) | (9,373) | (19,754) | (34,103) | |||
| Total income tax expense | (29,153) | (22,279) | (62,848) | (62,919) | |||
| Net profit for the period | 28,573 | 27,047 | 99,490 | 109,650 | |||
| Earnings per share | |||||||
| Earnings per share – basic (in R$) | 0.21 | 0.20 | 0.73 | 0.80 | |||
| Earnings per share – diluted (in R$) | 0.21 | 0.19 | 0.71 | 0.77 | |||
| Weighted average number of basic shares | 135,978,319 | 137,086,672 | 136,713,875 | 137,658,999 | |||
| Weighted average number of diluted shares | 138,927,266 | 141,327,614 | 139,662,822 | 141,899,941 | |||
| 5 | |
Unaudited condensed consolidated statement of financial position
(In thousands of Brazilian Reais)
| Assets | September 30, 2024 | December 31, 2023 | Liabilities and equity | September 30, 2024 | December 31, 2023 | |||
| Cash and cash equivalents | 383,369 | 211,638 | Suppliers and other payables | 18,154 | 21,690 | |||
| Financial investments | - | 3,164 | Loans and borrowings | 250,360 | 112,719 | |||
| Accounts receivables | 445,197 | 471,951 | Lease liabilities | 21,270 | 17,862 | |||
| Contract assets | 252,513 | 147,620 | Salaries and welfare charges | 254,427 | 196,396 | |||
| Recoverable taxes | 41,983 | 41,071 | Accounts payable for business acquired | 125,505 | 13,365 | |||
| Derivatives | 4,349 | 9,620 | Derivatives | 7,184 | - | |||
| Restricted cash | 24,489 | - | Current tax liabilities | 9,008 | 2,602 | |||
| Other assets | 31,162 | 27,072 | Other taxes payable | 15,951 | 15,275 | |||
| Total current assets | 1,183,062 | 912,136 | Contract liability | 29,186 | 48,079 | |||
| Other liabilities | 18,725 | 27,290 | ||||||
| Recoverable taxes | 440 | 959 | Total current liabilities | 749,770 | 455,278 | |||
| Deferred tax assets | 21,284 | 18,284 | ||||||
| Judicial deposits | 8,069 | 7,280 | ||||||
| Restricted cash | 9,040 | 29,061 | Loans and borrowings | 587,029 | 614,744 | |||
| Other assets | 6,412 | 1,027 | Deferred tax liabilities | 88,167 | 68,465 | |||
| Property, plant and equipment | 35,460 | 38,584 | Lease liabilities | 34,612 | 27,037 | |||
| Intangible assets and goodwill | 1,787,220 | 1,669,865 | Provisions | 9,598 | 9,620 | |||
| Right-of-use assets | 48,948 | 39,695 | Accounts payable for business acquired | 20,490 | 122,689 | |||
| Total non-current assets | 1,916,873 | 1,804,755 | Other liabilities | 15,445 | 7,807 | |||
| Total non-current liabilities | 755,341 | 850,362 | ||||||
| Equity | ||||||||
| Share capital | 37 | 37 | ||||||
| Share premium | 983,021 | 980,893 | ||||||
| Treasury share reserve | (50,659) | - | ||||||
| Capital reserves | 194,574 | 174,153 | ||||||
| Retained earnings reserves | 453,730 | 354,240 | ||||||
| Other comprehensive gain (loss) | 14,121 | (98,072) | ||||||
| Total equity | 1,594,824 | 1,411,251 | ||||||
| Total assets | 3,099,935 | 2,716,891 | Total equity and liabilities | 3,099,935 | 2,716,891 |
| 6 | |
Unaudited condensed consolidated statement of cash flows
(In thousands of Brazilian Reais)
| September 30, 2024 | September 30, 2023 | ||
| Restated | |||
| Cash flows from operating activities | |||
| Net profit for the period | 99,490 | 109,650 | |
| Adjustments for: | |||
| Depreciation and amortization | 69,119 | 70,980 | |
| Loss on sale and write-off of fixed assets | 2,768 | 875 | |
| Interest, monetary variation and exchange rate changes | 59,279 | 68,579 | |
| Unrealized loss (gain) on financial instruments | 5,409 | (13,257) | |
| Income tax expenses | 62,848 | 62,919 | |
| Impairment losses on accounts receivables and contract assets | 7,832 | 2,573 | |
| Reversal of provision for tax and labor risks | (22) | (286) | |
| Share-based plan | 21,299 | 21,740 | |
| Others | 7 | (559) | |
| Changes in operating assets and liabilities | |||
| Accounts receivables | 61,134 | 61,268 | |
| Contract assets | (91,333) | (26,934) | |
| Recoverable taxes | (19,988) | (23,279) | |
| Suppliers | (7,526) | (16,185) | |
| Salaries and welfare charges | 52,141 | (42,070) | |
| Contract liabilities | (21,895) | (18,484) | |
| Other receivables and payables, net | (5,630) | (3,025) | |
| Cash generated from operating activities | 294,932 | 254,505 | |
| Income tax paid | (16,383) | (25,516) | |
| Interest paid on loans and borrowings | (36,964) | (52,356) | |
| Interest paid on lease | (2,671) | (3,070) | |
| Income tax refund | 4,551 | 4,198 | |
| Net cash from operating activities | 243,465 | 177,761 | |
| Cash flows from investment activities | |||
| Acquisition of property, plant and equipment and intangible assets | (39,192) | (14,738) | |
| Redemption of financial investments | 3,164 | 54,214 | |
| Net cash (used in) from investment activities | (36,028) | 39,476 | |
| Cash flows from financing activities | |||
| Exercised share-based compensation | 3,262 | 578 | |
| Payment of lease liabilities | (16,372) | (18,465) | |
| Proceeds from loans and borrowings | 104,191 | 47,950 |
| 7 | |
| Proceeds from settlement of derivatives | 7,046 | 9,325 | |
| Payment of loans and borrowings | (76,471) | (163,457) | |
| Payment of installment related to accounts payable of business acquired | (10,390) | (47,461) | |
| Repurchase of treasury shares | (50,659) | (37,827) | |
| Net cash used in financing activities | (39,393) | (209,357) | |
| Net increase in cash and cash equivalents | 168,044 | 7,880 | |
| Cash and cash equivalents as of January 1st | 211,638 | 185,727 | |
| Exchange variation effect on cash and cash equivalents | 3,687 | 688 | |
| Cash and cash equivalents as of September 30th | 383,369 | 194,295 |
| 8 | |
Net Revenue Distribution
|
Net Revenue by Industry (in BRL thousand) |
3Q24 | 3Q23 |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Financial Services | 176,422 | 158,592 | 11.2% | 481,831 | 492,406 | -2.1% |
| Consumer Goods | 139,212 | 105,562 | 31.9% | 380,928 | 343,712 | 10.8% |
| Retail and Industrial Goods | 130,334 | 64,438 | 102.3% | 326,766 | 208,351 | 56.8% |
| Technology and Telecommunications | 70,863 | 84,147 | -15.8% | 195,625 | 313,334 | -37.6% |
| Life Sciences | 51,353 | 57,372 | -10.5% | 160,135 | 185,040 | -13.5% |
| Others | 53,976 | 58,972 | -8.5% | 166,036 | 168,064 | -1.2% |
| Total | 622,160 | 529,083 | 17.6% | 1,711,321 | 1,710,907 | 0.0% |
|
Net Revenue by Geography (in BRL thousand) |
3Q24 | 3Q23 |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| North America | 284,910 | 222,860 | 27.8% | 754,219 | 762,204 | -1.0% |
| Latin America | 251,396 | 229,804 | 9.4% | 700,175 | 698,478 | 0.2% |
| Europe | 58,444 | 54,045 | 8.1% | 181,947 | 167,645 | 8.5% |
| Asia Pacific | 27,410 | 22,374 | 22.5% | 74,980 | 82,580 | -9.2% |
| Total | 622,160 | 529,083 | 17.6% | 1,711,321 | 1,710,907 | 0.0% |
|
Top Clients (in BRL thousand) |
3Q24 | 3Q23 |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Top Client (1) | 48,337 | 37,428 | 29.1% | 117,919 | 166,798 | -29.3% |
| Top 10 Clients | 260,984 | 208,305 | 25.3% | 706,077 | 705,773 | 0.0% |
|
(1) The top client considered in one period may differ from that disclosed in another period. |
| 9 | |
Reconciliation of various income statement amounts from IFRS to non-IFRS measures
|
Net Revenue (in BRL thousand) |
3Q24 | 3Q23 |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Net Revenue | 622,160 | 529,083 | 17.6% | 1,711,321 | 1,710,907 | 0.0% |
| Net Revenue at Constant Currency | 576,712 | 529,083 | 9.0% | 1,681,951 | 1,710,907 | -1.7% |
|
Adjusted Gross Profit (in BRL thousand) |
3Q24 | 3Q23 |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Net Revenue | 622,160 | 529,083 | 17.6% | 1,711,321 | 1,710,907 | 0.0% |
| Cost of Services Provided | (406,481) | (356,779) | 13.9% | (1,132,103) | (1,138,836) | -0.6% |
| Gross Profit | 215,679 | 172,304 | 25.2% | 579,218 | 572,071 | 1.2% |
| Adjustments | ||||||
| Depreciation and amortization (cost of services provided) | 8,572 | 9,116 | -6.0% | 25,183 | 27,248 | -7.6% |
| Share-based compensation | 7,597 | 2,949 | 157.7% | 14,972 | 10,361 | 44.5% |
| Adjusted Gross Profit | 231,848 | 184,368 | 25.8% | 619,372 | 609,680 | 1.6% |
| Adjusted Gross Profit Margin | 37.3% | 34.8% | 2.4p.p | 36.2% | 35.6% | 0.6p.p |
|
Adjusted EBITDA (in BRL thousand) |
3Q24 |
3Q23 (Restated) |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Net profit for the period | 28,573 | 27,047 | 5.6% | 99,490 | 109,650 | -9.3% |
| Adjustments | ||||||
| Net finance cost | 20,555 | 20,293 | 1.3% | 44,521 | 58,743 | -24.2% |
| Income tax expense | 29,153 | 22,279 | 30.9% | 62,848 | 62,919 | -0.1% |
| Depreciation and amortization | 23,857 | 22,871 | 4.3% | 69,119 | 70,980 | -2.6% |
| Share-based compensation | 10,848 | 6,627 | 63.7% | 21,299 | 21,740 | -2.0% |
| Government grants | (909) | (29) | 3001.9% | (1,296) | (306) | 323.0% |
| Acquisition-related expenses (1) | 3,906 | (1,341) | -391.3% | 6,769 | 4,748 | 42.6% |
| Business restructuring (2) | 5,401 | - | 0.0% | 11,587 | - | 0.0% |
| Adjusted EBITDA | 121,383 | 97,747 | 24.2% | 314,337 | 328,474 | -4.3% |
| Adjusted EBITDA Margin | 19.5% | 18.5% | 1p.p | 18.4% | 19.2% | -0.8p.p |
| (1) | Include present value and fair value adjustments on accounts payable for business acquired, consulting expenses, and retention packages. |
| (2) | Expenses related to the optimization of our global delivery model based on our nearshoring strategy, including termination charges, severance and legal services for employee separations from North America, Europe and Asia Pacific regions. |
| 10 | |
|
Adjusted Net Profit (in BRL thousand) |
3Q24 |
3Q23 (Restated) |
Var. 3Q24 x 3Q23 |
9M24 | 9M23 |
Var. 9M24 x 9M23 |
| Net profit for the period | 28,573 | 27,047 | 5.6% | 99,490 | 109,650 | -9.3% |
| Adjustments | ||||||
| Acquisition-related expenses (1) | 15,053 | 9,376 | 60.5% | 39,784 | 39,486 | 0.8% |
| Business restructuring (2) | 5,401 | - | 0.0% | 11,587 | - | 0.0% |
| Share-based compensation (3) | 10,848 | 6,627 | 63.7% | 21,299 | 21,740 | -2.0% |
| Tax effects on non-IFRS adjustments (4) | (3,359) | (523) | 542.0% | (8,468) | (4,117) | 105.7% |
| Adjusted Net Profit | 56,515 | 42,527 | 32.9% | 163,692 | 166,759 | -1.8% |
| Adjusted Net Profit Margin | 9.1% | 8.0% | 1p.p | 9.6% | 9.7% | -0.2p.p |
| (1) | Includes amortization of intangible assets from acquired companies totaled (R$11,146) thousand in 3Q24, (R$10,717) thousand in 3Q23, (R$33,015) thousand in 9M24, and (R$34,738) thousand in 9M23, present value and fair value adjustment on accounts payable for business acquired, consulting expenses and retention packages. |
| (2) | Expenses related to the optimization of our global delivery model based on our nearshoring strategy, including termination charges, severance, and legal services for employee separations from North America, Europe and Asia Pacific regions. |
| (3) | As of 1Q24, we are adding back share-based compensation expenses to the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ. |
| (4) | As of 4Q23, we are contemplating the tax effects on non-IFRS adjustments as part of the Adjusted Net Profit calculation. Thus, comparison with previously reported numbers will differ. |
| 11 | |
Inc.
Unaudited interim condensed consolidated
financial statements
September 30, 2024
| 12 | |
Content
| Unaudited condensed consolidated statement of financial position | 14 |
| Unaudited condensed consolidated statement of profit or loss | 15 |
| Unaudited condensed consolidated statement of other comprehensive income | 16 |
| Unaudited condensed consolidated statement of changes in equity | 17 |
| Unaudited condensed consolidated statement of cash flows | 18 |
| Notes to the unaudited interim condensed consolidated financial statements | 19 |
| 13 | |
|
CI&T Inc. Unaudited condensed consolidated statement of financial position September 30, 2024 and December 31, 2023
(In thousands of Brazilian reais – R$) |
| Assets | Note | September 30, 2024 | December 31, 2023 | Liabilities and equity | Note | September 30, 2024 | December 31, 2023 |
| Cash and cash equivalents | 3 | 383,369 | 211,638 | Suppliers and other payables | 18,154 | 21,690 | |
| Financial investments | - | 3,164 | Loans and borrowings | 8 | 250,360 | 112,719 | |
| Accounts receivables | 4.1 | 445,197 | 471,951 | Lease liabilities | 9 | 21,270 | 17,862 |
| Contract assets | 4.2 | 252,513 | 147,620 | Salaries and welfare charges | 10 | 254,427 | 196,396 |
| Recoverable taxes | 41,983 | 41,071 | Accounts payable for business acquired | 11 | 125,505 | 13,365 | |
| Derivatives | 12 | 4,349 | 9,620 | Derivatives | 12 | 7,184 | - |
| Restricted cash | 13.3 | 24,489 | - | Current tax liabilities | 9,008 | 2,602 | |
| Other assets | 31,162 | 27,072 | Other taxes payable | 15,951 | 15,275 | ||
| Contract liability | 29,186 | 48,079 | |||||
| Other liabilities | 18,725 | 27,290 | |||||
| Total current assets | 1,183,062 | 912,136 | Total current liabilities | 749,770 | 455,278 | ||
| Recoverable taxes | 440 | 959 | Loans and borrowings | 8 | 587,029 | 614,744 | |
| Deferred tax assets | 18 | 21,284 | 18,284 | Deferred tax liabilities | 18 | 88,167 | 68,465 |
| Judicial deposits | 13.2 | 8,069 | 7,280 | Lease liabilities | 9 | 34,612 | 27,037 |
| Restricted cash | 13.3 | 9,040 | 29,061 | Provisions | 13.1 | 9,598 | 9,620 |
| Other assets | 6,412 | 1,027 | Accounts payable for business acquired | 11 | 20,490 | 122,689 | |
| Property, plant and equipment | 5 | 35,460 | 38,584 | Other liabilities | 15,445 | 7,807 | |
| Intangible assets and goodwill | 6 | 1,787,220 | 1,669,865 | ||||
| Right-of-use assets | 7 | 48,948 | 39,695 | ||||
| Total non-current assets | 1,916,873 | 1,804,755 | Total non-current liabilities | 755,341 | 850,362 | ||
| Equity | 14 | ||||||
| Share capital | 14.1 | 37 | 37 | ||||
| Share premium | 983,021 | 980,893 | |||||
| Treasury share reserve | 14.2 | (50,659) | - | ||||
| Capital reserves | 14.3 | 194,574 | 174,153 | ||||
| Retained earnings reserves | 453,730 | 354,240 | |||||
| Other comprehensive gain (loss) | 14,121 | (98,072) | |||||
| Total equity | 1,594,824 | 1,411,251 | |||||
| Total assets | 3,099,935 | 2,716,891 | Total equity and liabilities | 3,099,935 | 2,716,891 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
| 14 | |
| Note | Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 restated | Three months ended September 30, 2023 restated | |
| Net revenue | 15 | 1,711,321 | 622,160 | 1,710,907 | 529,083 |
| Costs of services provided | 16 |
(1,132,103) |
(406,481) |
(1,138,836) |
(356,779) |
| Gross profit | 579,218 | 215,679 | 572,071 | 172,304 | |
| Selling expenses | 16 | (149,919) | (54,179) | (132,243) | (40,405) |
| General and administrative expenses | 16 | (215,714) | (78,483) | (207,968) | (64,807) |
| Impairment loss on accounts receivables and contract assets | 16 | (7,832) | (5,248) | (2,573) | (836) |
| Other income | 16 |
1,106 |
512 |
2,025 |
3,363 |
| Operating expenses net | (372,359) | (137,398) | (340,759) | (102,685) | |
|
|
|
|
| ||
| Operating profit before net finance costs and income tax expense | 206,859 | 78,281 | 231,312 | 69,619 | |
| Finance income | 17 | 56,066 | 21,821 | 62,387 | 13,506 |
| Finance cost | 17 |
(100,587) |
(42,376) |
(121,130) |
(33,799) |
| Net finance costs | (44,521) | (20,555) | (58,743) | (20,293) | |
|
|
|
|
| ||
| Profit before income tax | 162,338 | 57,726 | 172,569 | 49,326 | |
| Income tax expense | |||||
| Current | 18 | (43,094) | (21,627) | (28,816) | (12,906) |
| Deferred | 18 |
(19,754) |
(7,526) |
(34,103) |
(9,373) |
| Total income tax expense | (62,848) | (29,153) | (62,919) | (22,279) | |
|
|
|
|
| ||
| Net profit for the period | 99,490 | 28,573 | 109,650 | 27,047 | |
| Earnings per share | |||||
| Earnings per share – basic (in R$) | 0.73 | 0.21 | 0.80 | 0.20 | |
| Earnings per share – diluted (in R$) | 0.71 | 0.21 | 0.77 | 0.19 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
The comparative information is restated for correction of errors. See note 2.1.
| 15 | |
|
CI&T Inc. Unaudited condensed consolidated statement of other comprehensive income For the three months and nine months ended September 30, 2024 and 2023
(In thousands of Brazilian reais – R$) |
| Note | Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 restated | Three months ended September 30, 2023 restated | |
| Net profit for the period | 99,490 | 28,573 | 109,650 | 27,047 | |
| Other comprehensive income (OCI): | |||||
| Items that are or may be reclassified subsequently to profit or loss | |||||
| Exchange differences on translation of foreign operations | 121,675 | 3,699 | (34,186) | 17,453 | |
| Cash flow hedges - effective portion of changes in fair value | 19.2.1.1 |
(9,482) |
6,664 |
7,336 |
(5,998) |
| Total comprehensive income for the period | 211,683 | 38,936 | 82,800 | 38,502 | |
| Total comprehensive income attributed to | |||||
| Owners of the Company |
211,683 |
38,936 |
82,800 |
38,502 | |
| Total comprehensive income for the period | 211,683 | 38,936 | 82,800 | 38,502 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
The comparative information is restated for correction of errors. See note 2.1.
| 16 | |
|
CI&T Inc. Unaudited condensed consolidated statement of changes in equity For the nine months ended on September 30, 2024 and 2023
(In thousands of Brazilian reais – R$) |
| Note | Share capital |
Share premium |
Treasury share reserve |
Capital reserve |
Retained earnings reserve |
Retained earnings |
Other comprehensive income |
Total equity | |
| Balances as of December 31, 2023 | 37 |
980,893 |
- |
174,153 |
354,240 |
- |
(98,072) |
1,411,251 | |
| Comprehensive income for the period | |||||||||
| Net profit for the period | - | - | - | - | - | 99,490 | - | 99,490 | |
| Exchange variation in foreign investments | - | - | - | - | - | - | 121,675 | 121,675 | |
| Cash flow hedges - effective portion of changes in fair value | 19 | - |
- |
- |
- |
- |
- |
(9,482) |
(9,482) |
| Total comprehensive income for the period | - | - | - | - | - | 99,490 | 112,193 | 211,683 | |
| Transactions with the owner of the Group | |||||||||
| Contributions, distribution and constitution of reserves | |||||||||
| Treasury shares acquired | 14.2 | - | - | (50,659) | - | - | - | - | (50,659) |
| Equity settled share-based payment | - | - | - | 19,287 | - | - | - | 19,287 | |
| Restricted stock units exercised | - | 2,128 | - | (2,128) | - | - | - | - | |
| Share options exercised | - |
- |
- |
3,262 |
- |
- |
- |
3,262 | |
| Total contributions and distribution and constitution of reserves | - | 2,128 | (50,659) | 20,421 | - | - | - | (28,110) | |
| Balances as of September 30, 2024 | 37 |
983,021 |
(50,659) |
194,574 |
354,240 |
99,490 |
14,121 |
1,594,824 | |
| Balances as of January 1, 2023 | 37 | 946,173 | - | 203,218 | 221,667 | - | (63,122) | 1,307,973 | |
| Comprehensive income for the period | |||||||||
| Net profit for the period | - | - | - | - | - | 109,650 | - | 109,650 | |
| Exchange variation in foreign investments | - | - | - | - | - | - | (34,186) | (34,186) | |
| Cash flow hedges - effective portion of changes in fair value | 19 | - |
- |
- |
- |
- |
- |
7,336 |
7,336 |
| Total comprehensive income for the period (restated) | - | - | - | - | - | 109,650 | (26,850) | 82,800 | |
| Transactions with the owner of the Group | |||||||||
| Contributions, distribution and constitution of reserves (restated) | |||||||||
| Treasury shares acquired | - | - | (37,827) | - | - | - | - | (37,827) | |
| Equity settled share-based payment | - | - | - | 21,169 | - | - | - | 21,169 | |
| Restricted stock units exercised | - | - | - | 471 | - | - | - | 471 | |
| Share options exercised | - |
- |
- |
578 |
- |
- |
- |
578 | |
| Total contributions and distribution and constitution of reserves | - | - | (37,827) | 22,218 | - | - | - | (15,609) | |
| Restated balances as of September 30, 2023 | 37 |
946,173 |
(37,827) |
225,436 |
221,667 |
109,650 |
(89,972) |
1,375,164 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. The comparative information is restated for correction of errors. See note 2.1.
| 17 | |
|
CI&T Inc. Unaudited condensed consolidated statement of cash flows For the nine months ended on September 30, 2024 and 2023
(In thousands of Brazilian reais – R$) |
| Notes | September 30, 2024 | September 30, 2023 restated | |
| Cash flows from operating activities | |||
| Net profit for the period | 99,490 | 109,650 | |
| Adjustments for: | |||
| Depreciation and amortization | 5, 6, 7 | 69,119 | 70,980 |
| Loss on sale and write-off of fixed assets | 5 e 6 | 2,768 | 875 |
| Interest, monetary variation and exchange rate changes | 59,279 | 68,579 | |
| Unrealized loss (gain) on financial instruments | 12 | 5,409 | (13,257) |
| Income tax expenses | 18 | 62,848 | 62,919 |
| Impairment losses on accounts receivables and contract assets | 4 | 7,832 | 2,573 |
| Reversal of provision for tax and labor risks | (22) | (286) | |
| Share-based plan | 21,299 | 21,740 | |
| Others | 7 | (559) | |
| Changes in operating assets and liabilities | |||
| Accounts receivables | 61,134 | 61,268 | |
| Contract assets | (91,333) | (26,934) | |
| Recoverable taxes | (19,988) | (23,279) | |
| Suppliers | (7,526) | (16,185) | |
| Salaries and welfare charges | 52,141 | (42,070) | |
| Contract liabilities | (21,895) | (18,484) | |
| Other receivables and payables, net | (5,630) |
(3,025) | |
| Cash generated from operating activities | 294,932 |
254,505 | |
| Income tax paid | (16,383) | (25,516) | |
| Interest paid on loans and borrowings | 8 | (36,964) | (52,356) |
| Interest paid on lease | 9 | (2,671) | (3,070) |
| Income tax refund | 4,551 |
4,198 | |
| Net cash from operating activities | 243,465 |
177,761 | |
| Cash flows from investing activities | |||
| Acquisition of property, plant and equipment and intangible assets | (39,192) | (14,738) | |
| Redemption of financial investments | 3,164 |
54,214 | |
| Net cash (used in) from investing activities | (36,028) |
39,476 | |
| Cash flows from financing activities | |||
| Exercised share-based compensation | 3,262 | 578 | |
| Payment of lease liabilities | 9 | (16,372) | (18,465) |
| Proceeds from loans and borrowings | 8 | 104,191 | 47,950 |
| Proceeds from settlement of derivatives | 12 | 7,046 | 9,325 |
| Payment of loans and borrowings | 8 | (76,471) | (163,457) |
| Payment of installment related to accounts payable of business acquired | 11 | (10,390) | (47,461) |
| Repurchase of treasury shares | 14.2 | (50,659) |
(37,827) |
| Net cash used in financing activities | (39,393) |
(209,357) | |
| Net increase in cash and cash equivalents | 168,044 |
7,880 | |
| Cash and cash equivalents as of January 1st | 211,638 |
185,727 | |
| Exchange variation effect on cash and cash equivalents | 3,687 |
688 | |
| Cash and cash equivalents as of September 30th | 383,369 |
194,295 | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
The comparative information is restated for correction of errors. See note 2.1.
| 18 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
Notes to the unaudited interim condensed consolidated financial statements
September 30, 2024
(In thousands of Brazilian reais – R$, unless otherwise indicated)
| 1. | Company overview |
CI&T Inc. (“CI&T”, “Company” or “Parent Company”), is a publicly held company incorporated in the Cayman Islands in June 2021, headquartered at Estrada Giuseppina Vianelli Di Napoli, 1455, Polo II de Alta Tecnologia, in the City of Campinas, State of São Paulo, Brazil. As a holding Company, it is mainly engaged in the investment, as a partner or shareholder, in other companies, consortia or joint ventures in Brazil and other countries. The Company’s subsidiaries are mainly engaged in the development of customizable software through implementation of software solutions, including machine learning, artificial intelligence (AI), analytics, cloud migration and mobility technologies.
These unaudited interim condensed consolidated financial statements comprise the Company and its subsidiaries (collectively referred to as the “Group”).
Since November 10, 2021, CI&T has been a publicly-held company registered with the US Securities and Exchange Commission (“SEC”) and its shares are traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “CINT”.
| 1.1 | Organizational structure |
The table below outlines the information on the Company’s direct and indirect subsidiaries:
|
September 30, 2024 |
December 31, 2023 | ||||
| Subsidiaries | Country of origin | Direct | Indirect | Direct | Indirect |
| CI&T Delaware LLC | United States | 100% | - | 100% | - |
| CI&T Software S.A. | Brazil | - | 100% | - | 100% |
| CI&T Japan, Inc. | Japan | - | 100% | - | 100% |
| CI&T China Inc. | China | - | 100% | - | 100% |
| CI&T Portugal Unipessoal Lda. | Portugal | - | 100% | - | 100% |
| CI&T Australia PTY Ltd. | Australia | - | 100% | - | 100% |
| CINQ Inc. | United States | - | 100% | - | 100% |
| CI&T Inc. | United States | - | 100% | - | 100% |
| CI&T Software Inc. | Canada | - | 100% | - | 100% |
| CI&T UK Limited. | United Kingdom | - | 100% | - | 100% |
| CI&T Colombia | Colombia | - | 100% | - | 100% |
| CI&T Argentina S/A | Argentina | - | 100% | - | 100% |
| CI&T Financial Services Solutions, LLC | United States | - | 100% | - | 100% |
| CI&T FinTech Services, Inc. | United States | - | 100% | - | 100% |
| CI&T Holding Company Ltd (a) | United Kingdom | 100% | - | 100% | - |
| CI&T Digital Ltd (a) | United Kingdom | - | 100% | - | 100% |
| Somo Global Inc. | United States | - | 100% | - | 100% |
| Somo Global SAS. | Colombia | - | 100% | - | 100% |
| Ideonyx Ltd (in liquidation) | United Kingdom | - | 100% | - | 100% |
| Somo Ltd (dormant) | United Kingdom | - | 100% | - | 100% |
| CI&T Oceania PTY Ltd | Australia | 100% | - | 100% | - |
(a) In 2024, Somo Global Ltd was renamed to CI&T Holding Company Ltd and Somo Custom Ltd was renamed to CI&T Digital Ltd.
| 19 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 2. | Management declaration, basis for preparation and presentation of the interim condensed consolidated financial statements |
The Company’s unaudited interim condensed consolidated financial statements for the three and nine-month ended September 30, 2024 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), specifically IAS 34 – Interim Financial Reporting.
The financial statements have been prepared using the Brazilian Real (R$) as both the functional and presentation currency. All amounts are expressed in thousands, unless otherwise specified.
The preparation of these unaudited interim condensed consolidated financial statements necessitates that Management exercise judgment, make estimates, and adopt assumptions that influence the reported amounts of revenues, expenses, assets, and liabilities. However, the inherent uncertainty surrounding these judgments, assumptions, and estimates may result in significant adjustments to the carrying amounts of assets, liabilities, income, and expenses in future periods.
In preparing the Company’s unaudited interim condensed consolidated financial statements, Management applied the following disclosure criteria to assess the changes observed in equity and performance since the end of the last fiscal year on December 31, 2023, which was disclosed on March 28, 2024: (i) regulatory requirements; (ii) relevance and specificity of the information regarding operations; (iii) informational needs of users of the interim condensed consolidated financial statements; and (iv) data from other entities operating in the Company’s industry, when applicable.
The interim unaudited condensed consolidated financial statements were prepared based on the policies, practices and methods presented in detail in the annual financial statements of December 31, 2023, and, therefore, should be read together.
During the three and nine-month period ended September 30, 2024, there were no impacts due to changes in accounting estimates.
Management confirms that all relevant information pertaining to the interim unaudited condensed consolidated financial statements is presented accurately and corresponds to the information utilized in its business management activities.
The interim unaudited condensed consolidated financial statements have been prepared using the historical cost convention, with the exception of the following significant items measured at fair value:
- Short-term investments which are classified as cash and cash equivalents.
- Short-term investments; and
- Derivative financial instruments.
| 2.1 | Restatement of comparative amounts |
The comparative amounts related to the three and nine-month period ended September 30, 2023, have been restated to reflect the correction of certain errors identified by the Company related to:
| 20 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| (i) | the failure to recognize deferred tax liabilities because of the amortization of tax-deductible goodwill; and |
| (ii) | the amortization of the identifiable intangible assets arising from business combination was erroneously determined to be nondeductible in the income tax calculation. |
The errors have been corrected by restating each of the affected financial statements line items for the three months and nine-month period ended September 30, 2023.
The following tables summarize the impacts on the Group’s unaudited interim condensed consolidated financial statements for the three months and nine-month period ended September 30, 2023:
|
Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |||||
| Unaudited condensed consolidated interim statements of profit or loss |
As previously reported |
Adjustments |
As restated |
As previously reported |
Adjustments |
As restated |
| Profit before income tax | 172,569 | - | 172,569 | 49,326 | - | 49,326 |
| Current (ii) | (32,953) | 4,137 | (28,816) | (14,285) | 1,379 | (12,906) |
| Deferred (i) | (3,233) | (30,870) | (34,103) | 1,120 | (10,493) | (9,373) |
| Total income tax expense | (36,186) | (26,733) | (62,919) | (13,165) | (9,114) | (22,279) |
| Net profit for the period | 136,383 | (26,733) | 109,650 | 36,161 | (9,114) | 27,047 |
| Earnings per share – basic (in R$) | 1.02 | (0.22) | 0.80 | 0.27 | (0.07) | 0.20 |
| Earnings per share – diluted (in R$) | 0.99 | (0.22) | 0.77 | 0.26 | (0.07) | 0.19 |
|
Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |||||
| Unaudited condensed consolidated interim statements of other comprehensive income |
As previously reported |
Adjustments |
As restated |
As previously reported |
Adjustments |
As restated |
| Total comprehensive income for the period (i)/(ii) | 109,533 | (26,733) | 82,800 | 47,616 | (9,114) | 38,502 |
|
September 30, 2023 | |||
| Unaudited condensed consolidated interim statements of changes in equity |
As previously reported |
Adjustments |
As restated |
| Retained earnings (opening balance) | 251,873 | (30,206) | 221,667 |
| Net profit for the period (i)/(ii) | 136,383 | (26,733) | 109,650 |
| Balance as of September 30, 2023 | 1,432,103 | (56,939) | 1,375,164 |
|
September 30, 2023 | |||
| Unaudited condensed consolidated interim statements of cash flows |
As previously reported |
Adjustments |
As restated |
| Net profit for the period | 136,383 | (26,733) | 109,650 |
| Adjustments for: | |||
| Income tax (i)/(ii) | 36,186 | 26,733 | 62,919 |
| Other lines not affected by the error | 150,645 | - | 150,645 |
| Changes in operating assets and liabilities: | (68,709) | - | (68,709) |
| Cash generated from operating activities | 254,505 | - | 254,505 |
| 21 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 2.2 | Accounting standards issued but not yet effective |
In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in Financial Statements (“IFRS 18”), which replaces IAS 1 – Presentation of Financial Statements. IFRS 18 introduces new requirements for presentation within the income statement, mandates the disclosure of 'management-defined performance measures,' and establishes new criteria for the aggregation and disaggregation of financial information based on the identified "roles" of the primary financial statements and accompanying notes. Accordingly, IFRS 18 will take effect for annual reporting periods beginning on or after January 1, 2027, and the Company is currently evaluating the potential impacts of this standard.
Additionally, several other new accounting standards, amendments, and interpretations have been published that are not mandatory for reporting periods ending December 31, 2024, or have not materially affected these unaudited interim condensed consolidated financial statements. The Company has not early adopted any of these standards and does not anticipate a material impact in future reporting periods.
| 2.3 | Functional and presentation currency |
The unaudited interim condensed consolidated financial statements of the Company, along with those of its subsidiaries, are measured using the currency of the primary economic environment in which each entity operates, referred to as the "functional currency." For the Parent Company, this functional currency is the Brazilian Real (R$). For presentation purposes, these unaudited interim condensed consolidated financial statements are expressed in such currency. The main exchange rates utilized by the Company to translate its foreign operations are as follows:
| 2.3.1 | Exchange rates |
|
Average rate | ||||||
|
Closing rate |
Three-month period ended September 30 |
Nine-month period ended September 30 | ||||
|
September 30, 2024 |
December 31, 2023 |
2024 |
2023 |
2024 |
2023 | |
| US Dollar ("US$" or "USD") | 5.4481 | 4.8413 | 5.5454 | 4.8805 | 5.2445 | 5.0091 |
| Pound sterling (“£” or “GBP”) | 7.2999 | 6.1586 | 7.2130 | 6.1776 | 6.7029 | 6.2315 |
| 2.3.2 | Subsidiaries functional currency |
| Subsidiaries | Country of origin | Functional currency |
| CI&T Delaware LLC | United States | Brazilian Reais (“R$” or “BRL”) |
| CI&T Software S.A. (“CI&T Brazil”) | Brazil | Brazilian Reais (“R$” or “BRL”) |
| CI&T Japan, Inc. | Japan | Yen (“JP¥” or “JPY”) |
| CI&T China Inc. | China | Yuan (“¥” or “CNY”) |
| CI&T Portugal Unipessoal Lda. | Portugal | Euro (“€” or “EUR”) |
| CI&T Australia PTY Ltd. | Australia | Australian dollar (“AU$” or “AUD”) |
| CINQ Inc. | United States | US dollar (“US$” or “USD”) |
| CI&T Inc. (“CI&T US”) | United States | US dollar (“US$” or “USD”) |
| CI&T Software Inc. (“CI&T Canada”) | Canada | Canadian dollar (“C$” or “CAD”) |
| CI&T UK Limited. (“CI&T UK”) | United Kingdom | Pound sterling (“£” or “GBP”) |
| CI&T Colombia | Colombia | Colombian peso (“COP$” or “COP”) |
| CI&T Argentina S/A | Argentina | Argentinian peso (“ARS$” or “ARS”) |
| CI&T Financial Services Solutions, LLC | United States | US dollar (“US$” or “USD”) |
| CI&T FinTech Services, Inc. | United States | US dollar (“US$” or “USD”) |
| CI&T Ltd. | United Kingdom | Pound sterling (“£” or “GBP”) |
| CI&T Digital Ltd. | United Kingdom | Pound sterling (“£” or “GBP”) |
| Somo Global Inc. | United States | US dollar (“US$” or “USD”) |
| Somo Global SAS. | Colombia | Colombian peso (“COP$” or “COP”) |
| Ideonyx Ltd (in liquidation) | United Kingdom | Pound sterling (“£” or “GBP”) |
| Somo Ltd (dormant) | United Kingdom | Pound sterling (“£” or “GBP”) |
| CI&T Oceania PTY Ltd (“CI&T Oceania”) | Australia | Australian dollar (“AU$” or “AUD”) |
| 22 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 2.4 | Approval and authorization for the issuance of unaudited interim condensed consolidated financial statements |
The approval and authorization for issuance of the unaudited interim condensed consolidated financial statements was granted by the Board of Directors on November 13, 2024.
| 3. | Cash and cash equivalents |
| Weighted average rate (per year) | September 30, 2024 | December 31, 2023 | |
| Cash and cash equivalents | 46,917 | 63,690 | |
| Short-term financial investments | |||
| Short-term financial investments – Reais | 10.44% | 204,772 | 66,192 |
| Short-term financial investments – Dollar | 3.30% | 106,382 | 74,788 |
| Short-term financial investments – Pounds | 2.55% | 23,725 | 6,968 |
| Short-term financial investments – Canadian Dollar | 1.55% | 1,573 | - |
| Total | 383,369 | 211,638 |
| 4. | Accounts receivables and contract assets |
| 4.1 | Accounts receivables |
The balances of accounts receivables are presented, as follows:
| September 30, 2024 | December 31, 2023 | |
| Accounts receivables – in US$ – from US customers | 250,139 | 243,680 |
| Accounts receivables – in R$ – from Brazilian customers | 143,955 | 151,456 |
| Accounts receivables – in other foreign currencies | 57,173 | 78,527 |
| (-) Expected credit losses from accounts receivables | (6,070) | (1,712) |
| Accounts receivables, net | 445,197 | 471,951 |
The balances of accounts receivables by maturity date are as follows:
| September 30, 2024 | December 31, 2023 | |
| Current | 412,222 | 438,076 |
| Overdue: | ||
| from 1 to 60 days | 19,393 | 30,182 |
| 61 to 360 days | 19,652 | 5,401 |
| Over 360 days | - | 4 |
| (-) Expected credit losses | (6,070) | (1,712) |
| Total | 445,197 | 471,951 |
| 23 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
Until October 23, 2024, of the total amount overdue for up to 60 days, the amount of R$ 13,980 has already been received.
The rollforward of the allowance for expected losses
is as follows:
| September 30, 2024 | December 31, 2023 | |
| Balance at beginning of period | (1,712) | (653) |
| Provision | (13,184) | (3,747) |
| Reversal | 8,932 | 2,705 |
| Write-off | - | 20 |
| Exchange rate changes | (106) | (37) |
| Balance at end of period | (6,070) | (1,712) |
| 4.2 | Contract assets |
The balances of contract assets are shown and segregated as follows:
| September 30, 2024 | December 31, 2023 | |
| Contract assets – in US$ – from US customers | 104,619 | 38,248 |
| Contract assets – in R$ – from Brazilian customers | 122,019 | 77,933 |
| Contract assets – in other foreign currencies | 30,734 | 32,632 |
| (-) Expected credit losses from contract assets | (4,859) | (1,193) |
| Total | 252,513 | 147,620 |
The rollforward of the allowance for expected losses is as follows:
| September 30, 2024 | December 31, 2023 | |
| Balance at beginning of period | (1,193) | (673) |
| Provision | (19,852) | (5,238) |
| Reversal | 16,272 | 4,704 |
| Exchange rate changes | (86) | 14 |
| Balance at end of period |
(4,859) |
(1,193) |
| 24 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 5. | Property, plant and equipment |
The rollforward in the balances are as follows:
| Cost | Weighted average rate (per year) | December 31, 2023 | Additions | Disposals | Transfers | Exchange rate changes | September 30, 2024 |
| IT equipment | 75,650 | 8,964 | (1,854) | (16) | 2,192 | 84,936 | |
| Leasehold improvements | 20,758 | 14 | - | 119 | 844 | 21,735 | |
| Furniture and fixtures | 7,101 | 85 | (289) | 32 | 381 | 7,310 | |
| In progress | 11 | 218 | - | (135) | - | 94 | |
| 103,520 | 9,281 | (2,143) | - | 3,417 | 114,075 | ||
| Depreciation | |||||||
| IT equipment | 33.4% | (49,362) | (10,453) | 1,623 | - | (1,736) | (59,928) |
| Leasehold improvements | 14.5% | (11,590) | (2,129) | - | - | (446) | (14,165) |
| Furniture and fixtures | 11.5% | (3,984) | (607) | 280 | - | (211) | (4,522) |
| (64,936) | (13,189) | 1,903 | - | (2,393) | (78,615) | ||
| Total | 38,584 | (3,908) | (240) | - | 1,024 | 35,460 |
The Group does not have property, plant or equipment pledged as collateral.
| 6. | Intangible assets and goodwill |
The rollforward of intangible assets is as follows:
| Cost | Weighted average rate (per year) | December 31, 2023 | Additions | Disposals | Transfers | Exchange rate changes | September 30, 2024 |
| Customer relationship | 302,030 | - | - | - | 18,103 | 320,133 | |
| Internally developed software | 23,558 | - | (1,036) | 20,910 | - | 43,432 | |
| Software in progress | 13,771 | 29,552 | (1,433) | (20,872) | - | 21,018 | |
| Non-compete agreement | 13,462 | - | - | - | - | 13,462 | |
| Brands | 33,797 | - | (21) | - | - | 33,776 | |
| Software | 10,138 | 275 | (60) | (38) | 459 | 10,774 | |
| Goodwill | 1,392,819 | - | - | - | 113,552 | 1,506,371 | |
| 1,789,575 | 29,827 | (2,550) | - | 132,114 | 1,948,966 | ||
| Amortization | |||||||
| Customer relationship | 13.1% | (62,943) | (30,026) | - | - | (3,561) | (96,530) |
| Internally developed software | 33.3% | (16,744) | (4,691) | - | - | - | (21,435) |
| Non-compete agreement | 20.0% | (5,629) | (2,274) | - | - | - | (7,903) |
| Brands | 5.0% | (28,663) | (201) | - | - | - | (28,864) |
| Software | 20.0% | (5,731) | (1,136) | 22 | - | (169) | (7,014) |
| (119,710) | (38,328) | 22 | - | (3,730) | (161,746) | ||
| Total | 1,669,865 | (8,501) | (2,528) | - | 128,384 | 1,787,220 |
| 25 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 7. | Right-of-use assets |
The rollforward of the right-of-use is set for the below:
| Cost | Weighted average rate (per year) | December 31, 2023 | Additions | Derecognition of right-of-use assets | Exchange rate changes | September 30, 2024 |
| Properties | 87,720 | 20,736 | (9,438) | 8,226 | 107,244 | |
| Vehicles | 11,345 | 2,750 | (2,525) | - | 11,570 | |
| 99,065 | 23,486 | (11,963) | 8,226 | 118,814 | ||
| Depreciation | ||||||
| Properties | 20.9% | (53,817) | (14,648) | 9,237 | (4,011) | (63,239) |
| Vehicles | 33.3% | (5,553) | (2,954) | 1,880 | - | (6,627) |
| (59,370) | (17,602) | 11,117 | (4,011) | (69,866) | ||
| Total | 39,695 | 5,884 | (846) | 4,215 | 48,948 |
| 8. | Loans and borrowings |
The rollfoward of loans and borrowings is set forth below:
| Average effective interest rate p.a. (%) | Year of maturity | December 31, 2023 | Proceeds from loans and borrowings | Payments related to loans and borrowings | Interest paid | Interest expenses | Exchange rate changes | September 30, 2024 | |
| In US$ | |||||||||
| Advance on foreign exchange contract (ACC) | 6.31% | 2025 | - | 54,390 | - | - | 752 | 74 | 55,216 |
| Export credit note (NCE) | 7.79% | 2026 | 110,648 | - | (32,738) | (6,803) | 6,462 | 13,777 | 91,346 |
| Working capital loan | 8.24% | 2026 to 2028 |
380,757 |
49,801 |
(30,876) |
(12,326) |
25,068 |
52,240 |
464,664 |
| 491,405 | 104,191 | (63,614) | (19,129) | 32,282 | 66,091 | 611,226 | |||
| In R$ | |||||||||
| Export credit note (NCE) | 11.91% | 2026 to 2028 |
236,058 |
- |
(12,857) |
(17,835) |
20,797 |
- |
226,163 |
| 236,058 | - | (12,857) | (17,835) | 20,797 | - | 226,163 | |||
| Total |
727,463 |
104,191 |
(76,471) |
(36,964) |
53,079 |
66,091 |
837,389 | ||
| Current | 112,719 | 250,360 | |||||||
| Non-current | 614,744 | 587,029 |
The loans and borrowings are not secured by property, plant or equipment, or accounts receivables.
| 26 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 8.1 | Advances on foreign exchange contract |
On June 16, 2024, the subsidiary CI&T Brazil raised R$ 54,390 equivalents to US$ 10,000, at a nominal rate of 6.31% per year, and single payment of interest and principal in July 2025. The proceeds will be used for general corporate purposes.
| 8.2 | Working capital loan |
On March 01, 2024, the subsidiary CI&T US raised R$ 49,596 equivalents to US$ 10,000, at a nominal rate of SOFR 6 months + 2.80% per year, and semi-annual payment of interest and principal until December 2028. The proceeds will be used for general corporate purposes.
| 8.3 | Covenants |
The Company has restrictive clauses covenants in some of its loans and financing agreements, as disclosed in the annual financial statements of December 31, 2023, and summarized below:
| Restrictive Clause related to: | Measurement Frequency | Indicators for Measurement | Required | Achieved |
| NCE | Annual | Net debt/ EBITDA(a) | Less than or equal to 3.0X | Achieved |
| Working Capital | Annual | Net debt/ EBITDA(a) | Less than or equal to 3.0X | Achieved |
| a) | EBITDA means earnings before interest, taxes, depreciation and amortization. |
| 9. | Lease liabilities |
| Weighted average rate per year |
December 31, 2023 |
Additions |
Payments |
Interest paid |
Interest incurred |
Disposals |
Exchange rate changes |
September 30, 2024 | |
| Properties | 6.11% | 38,602 | 20,736 | (13,397) | (1,908) | 1,944 | (201) | 4,679 | 50,455 |
| Vehicles | 17.65% | 6,297 | 2,750 | (2,975) | (763) | 763 | (645) | - | 5,427 |
| 44,899 | 23,486 | (16,372) | (2,671) | 2,707 | (846) | 4,679 | 55,882 | ||
| Current | 17,862 | 21,270 | |||||||
| Non-current | 27,037 | 34,612 |
| 10. | Salaries and welfare charges |
| September 30, 2024 | December 31, 2023 | |
| Accrued vacation and charges | 122,700 | 109,025 |
| Salaries | 33,760 | 28,082 |
| Bonus | 32,458 | 9,571 |
| Christmas bonuses | 23,520 | 2,173 |
| Withholding income tax | 18,955 | 27,013 |
| Payroll charges | 17,176 | 16,188 |
| Others | 5,858 | 4,344 |
| Total | 254,427 | 196,396 |
| 27 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 11. | Accounts payable for business acquired |
| Acquisition | Effective interest rate p.a. | Maturity | December 31, 2023 | Monetary adjustment | Exchange variation | Present value adjustment | Payment | September 30, 2024 |
| Dextra | 10.65% | 2027 | 33,349 | 2,557 | - | - | (6,632) | 29,274 |
| Somo | 5.00% | 2025 | 20,052 | - | 3,768 | 889 | - | 24,709 |
| Box | 10.65% | 2027 | 8,154 | 446 | - | - | (3,758) | 4,842 |
| Ntersol | 4.01% | 2024 | 74,499 | - | 9,398 | 3,273 | - | 87,170 |
| 136,054 | 3,003 | 13,166 | 4,162 | (10,390) | 145,995 | |||
| Current | 13,365 | 125,505 | ||||||
| Non-current | 122,689 | 20,490 |
| 12. | Derivatives |
The Group holds derivative financial instruments to hedge its interest rate risk exposure.
|
September 30, 2024 | |||||
|
Maturity |
Notional in (US$) |
Notional in R$ |
Floating rate receivable |
Fixed rate payable |
Fair value |
| 07/16/2026 | 16,500 | 89,894 | SOFR Overnight | 3.09% | 4,349 |
| 07/07/2026 | - | 65,714 | CDI | US$ variation + 4.90% |
(7,184) |
| (2,835) | |||||
The rollforward of the derivatives is as follows:
| Interest rate swaps | |
| December 31, 2023 | 9,620 |
| Gains (losses) recognized in the statement of profit or loss | (5,409) |
| Payments (receipts) | (7,046) |
| September 30, 2024 | (2,835) |
| Rights with current derivative financial instruments | 4,349 |
| Obligations with current derivative financial instruments | (7,184) |
| (2,835) |
| 28 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 13. | Provisions, judicial deposits and restricted cash |
| 13.1 | Provisions |
The balances of the processes with estimated probable and possible losses are as follow:
| Probable losses | Possible losses | ||||
| Description | September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | |
| Tax | - | - | 3,703 | 3,723 | |
| Labor | 9,598 | 9,620 | 5,041 | 4,796 | |
| Total | 9,598 | 9,620 | 8,744 | 8,519 | |
| 13.2 | Judicial deposits |
The balances of the judicial deposits are as follow:
| Probable losses | Possible losses | Total | ||||||
| Description | September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | ||
| Tax | - | - | 7,797 | 7,008 | 7,797 | 7,008 | ||
| Labor | 272 | 272 | - | - | 272 | 272 | ||
| Total | 272 | 272 | 7,797 | 7,008 | 8,069 | 7,280 | ||
| 13.3 | Restricted cash |
| September 30, 2024 | December 31, 2023 | |
| Escrow account (i) | 24,489 | 20,021 |
| Indemnity asset (ii) | 9,040 | 9,040 |
| Total | 33,529 | 29,061 |
| Current | 24,489 | - |
| Non-current | 9,040 | 29,061 |
(i) Refers to guarantee in connection with business combination, in order to satisfy certain claims, if occur.
(ii) Refers to an indemnification asset in connection with a business combination, where the Group has the right to be indemnified for all losses that may occur related to labor contingent liabilities.
| 14. | Equity |
| 14.1 | Share capital |
| September 30, 2024 | December 31, 2023 | |
| Number of ordinary nominative shares | 134,694,256 | 134,412,014 |
| Class A | 22,461,308 | 21,365,297 |
| Class B | 112,232,948 | 113,046,717 |
| Par value | R$ 0.00027 | R$ 0.00027 |
| Share capital | 37 | 37 |
| 29 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
As established in the Company’s bylaws, the holders of the Class A common shares and Class B common shares have rights that differ which were disclosed in detail in the annual financial statements of December 31, 2023.
| 14.2 | Treasury shares |
In November 2023, the Board of Directors approved a new share repurchase program, pursuant to which the Company may repurchase up to 2.5 million of its outstanding class A common shares until December 31, 2024. No shares were repurchased in as of December 31, 2023, and for the nine month-period ended September 30, 2024, the Company repurchased 1,893,941 of its outstanding class A common shares at a total amount of R$ 50,659.
| 14.3 | Capital reserve |
Stock-based compensation
As of September 30, 2024, the amount of R$ 143,477 (R$ 123,056 as of December 31, 2023) refers to the Group’s share-based compensation plans.
| 15. | Net revenue |
| 15.1 | Revenue breakdown by service line |
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 | Three months ended September 30, 2023 | |
| Software development revenue | 1,636,969 | 591,902 | 1,628,771 | 504,555 |
| Software maintenance revenue | 37,874 | 15,756 | 47,285 | 14,469 |
| Consulting revenue | 25,704 | 9,705 | 30,028 | 9,292 |
| Other revenue | 10,774 | 4,797 | 4,823 | 767 |
| Total net revenue | 1,711,321 | 622,160 | 1,710,907 | 529,083 |
| 15.2 | Revenue breakdown by customers’ industry |
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |
| Financial services | 481,831 | 176,422 | 492,406 | 158,592 |
| Consumer goods | 380,928 | 139,212 | 343,712 | 105,562 |
| Retail and industrial goods | 326,766 | 130,334 | 208,351 | 64,438 |
| Technology and telecommunications | 195,625 | 70,863 | 313,334 | 84,147 |
| Life sciences | 160,135 | 51,353 | 185,040 | 57,372 |
| Others | 166,036 | 53,976 | 168,064 | 58,972 |
| Total net revenue | 1,711,321 | 622,160 | 1,710,907 | 529,083 |
| 30 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 15.3 | Revenue breakdown by geographic region |
| Nine months ended September 30, 2024 |
Three months ended September 30, 2024 |
Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |
| North America | 754,219 | 284,910 | 762,204 | 222,860 |
| Latin America | 700,175 | 251,396 | 698,478 | 229,804 |
| Europe | 181,947 | 58,444 | 167,645 | 54,045 |
| Asia Pacific | 74,980 | 27,410 | 82,580 | 22,374 |
| Total net revenue | 1,711,321 | 622,160 | 1,710,907 | 529,083 |
Net revenues by geographic area are based on the country in which the sale occurred.
| 15.4 | Revenue breakdown by client concentration |
The following table sets forth net revenue contributed by the top client, and top ten clients for the periods indicated:
| Nine months ended September 30, 2024 |
Three months ended September 30, 2024 |
Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |
| Top client (i) | 117,919 | 48,337 | 166,798 | 37,428 |
| Top 10 clients | 706,077 | 260,984 | 705,773 | 208,305 |
(i) The top client considered in one period may differ from that disclosed in another period.
As of September 30, 2024, net revenue from a single customer for 6.9% of the Company’s total net revenues, compared to 10% as of September 30, 2023.
| 31 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 16. | Expenses by nature |
Information on the nature of expenses recognized in the unaudited interim condensed consolidated statement of profit or loss is presented below:
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 | Three months ended September 30, 2023 | |
| Employee expenses | (1,244,012) | (443,189) | (1,239,867) | (386,276) |
| Third-party services and other inputs | (96,637) | (35,334) | (99,104) | (30,711) |
| Depreciation and amortization | (69,119) | (23,857) | (70,980) | (22,871) |
| Travel expenses | (16,460) | (5,893) | (10,017) | (3,871) |
| Share-based compensation | (21,299) | (10,848) | (21,740) | (6,627) |
| Insurance | (6,257) | (2,145) | (9,764) | (3,248) |
| Other post-acquisition expenses | (6,523) | (3,866) | (3,870) | 1,551 |
| Impairment loss on receivables | (7,832) | (5,248) | (2,573) | (836) |
| Short-term leases | (3,794) | (1,375) | (4,629) | (1,236) |
| Other costs and expenses (a) | (32,529) | (12,124) | (17,051) | (5,339) |
| Total | (1,504,462) | (543,879) | (1,479,595) | (459,464) |
| Disclosed as: | ||||
| Costs of services provided | (1,132,103) | (406,481) | (1,138,836) | (356,779) |
| Selling expenses | (149,919) | (54,179) | (132,243) | (40,405) |
| General and administrative expenses | (215,714) | (78,483) | (207,968) | (64,807) |
| Impairment loss on receivables | (7,832) | (5,248) | (2,573) | (836) |
| Other income | 1,106 | 512 | 2,025 | 3,363 |
| Total | (1,504,462) | (543,879) | (1,479,595) | (459,464) |
| (a) | Other costs and expenses mainly include the restructuring expenses incurred during the Nine months of 2024: R$ 9,188 for subsidiaries located in the United Kingdom, R$ 1,437 in the United States, and R$ 962 for subsidiaries located in Canada and Australia. |
| 32 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 17. | Net finance costs |
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 |
Three months ended September 30, 2023 | |
| Finance income: | ||||
| Foreign-exchange gain | 31,550 | 11,530 | 33,095 | 7,667 |
| Gains on derivatives | 8,132 | 4,283 | 21,434 | 2,963 |
| Income from financial investments | 7,266 | 3,406 | 6,391 | 1,813 |
| Monetary variation | 4,913 | 1,007 | 1,062 | 679 |
| Other finance income | 4,205 | 1,595 | 405 | 384 |
| Total | 56,066 | 21,821 | 62,387 |
13,506 |
| Finance cost: | ||||
| Interest on loans and leases (notes 8,9) | (55,786) | (19,541) | (64,368) | (21,111) |
| Exchange variation loss | (23,380) | (15,383) | (39,213) | (5,367) |
| Loss on derivatives | (13,541) | (3,796) | (8,177) | (3,629) |
| Monetary variation | (3,020) | (1,092) | (4,051) | (1,368) |
| Other finance costs | (4,860) | (2,564) | (5,321) | (2,324) |
| Total | (100,587) | (42,376) | (121,130) | (33,799) |
| Net finance costs | (44,521) | (20,555) | (58,743) | (20,293) |
| 18. | Income tax expense |
Income tax expense recognized in profit or loss for the periods are shown as follows:
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 (restated) | Three months ended September 30, 2023 (restated) | |
| Current income tax | (43,094) | (21,627) | (28,816) | (12,906) |
| Deferred income tax | (19,754) | (7,526) | (34,103) | (9,373) |
| Total income tax (expenses) | (62,848) | (29,153) | (62,919) | (22,279) |
| 33 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
The reconciliation of the Company's effective rate computed at the Brazilian federal tax rate of 34%, with the average combined rate, is shown as follows:
| Nine months ended September 30, 2024 | Three months ended September 30, 2024 | Nine months ended September 30, 2023 (restated) |
Three months ended September 30, 2023 (restated) | |
| Profit before income tax | 162,338 | 57,726 | 172,569 | 49,326 |
| Combined income tax rate | 34% | 34% | 34% | 34% |
| Tax using the combined income tax rate | (55,195) | (19,627) | (58,673) | (16,771) |
| Tax benefits (incentive) | 5,021 | 4,010 | 1,472 | 1,472 |
| Income tax refund | 4,188 | 2,128 | - | - |
| Tax rate differences on subsidiaries | (988) | (579) | 207 | (200) |
| Exchange rate changes | 2,138 | 346 | 2,191 | 403 |
| Current-year losses for which no deferred tax asset is recognized | (13,985) | (12,185) | (3,293) | (2,281) |
| Non-deductible expenses / non-taxable gains | (4,027) | (3,246) | (4,823) | (4,902) |
| Income tax expense | (62,848) | (29,153) | (62,919) | (22,279) |
| Current | (43,094) | (21,627) | (28,816) | (12,906) |
| Deferred |
(19,754) |
(7,526) |
(34,103) |
(9,373) |
| (62,848) | (29,153) | (62,919) | (22,279) | |
| Effective rate | 39% | 51% | 36% | 45% |
Deferred tax balances rollforward:
| December 31, 2023 |
September 30, 2024 | ||||||||
| Net amount | Recognition in profit or loss | Exchange rate changes | Net amount | Deferred tax asset | Deferred tax liabilities | ||||
| Tax benefit on unamortized goodwill | (86,896) | (35,240) | (759) | (122,895) | - | (122,895) | |||
| Property, plant and equipment | 5,166 | (60) | (11) | 5,095 | 5,996 | (901) | |||
| Derivatives | 1,546 | 1,565 | - | 3,111 | 3,111 | - | |||
| Lease | 2,438 | (369) | 104 | 2,173 | 2,173 | - | |||
| Partnership's business interest | 3,572 | 1,865 | 512 | 5,949 | 5,949 | - | |||
| Provisions | 9,148 | 9,248 | 1,816 | 20,212 | 20,212 | - | |||
| Research and development tax credit | 3,131 | 2,040 | 482 | 5,653 | 5,653 | - | |||
| Share-based compensation | 6,263 | 3,483 | 351 | 10,097 | 10,097 | - | |||
| Other temporary differences | 3,527 | 165 | 30 | 3,722 | 3,722 | - | |||
| Tax loss carryforward | 1,924 | (2,451) | 527 | - | - | - | |||
| Tax assets (liabilities) before set-off |
(50,181) |
(19,754) |
3,052 |
(66,883) |
56,913 |
(123,796) | |||
| Set-off of tax |
- |
(35,629) |
35,629 | ||||||
| Net tax assets (liabilities) | (66,883) | 21,284 | (88,167) | ||||||
| 34 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 19. | Financial instruments and risk management |
| 19.1 | Accounting classifications and fair value hierarchy of financial instruments |
The following table presents the carrying amounts and fair values of financial assets and financial liabilities, along with their respective levels in the fair value hierarchy. It excludes fair value information for financial assets and financial liabilities that are not measured at fair value, provided the carrying amount is a reasonable approximation of fair value.
|
Carrying amount |
Fair value | |||||
| Financial assets |
Note |
Level | September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 |
| Derivative financial instruments | 12 | 2 | 4,349 | 9,620 | 4,349 | 9,620 |
| Cash and cash equivalents | 3 | - | 383,369 | 211,638 | 383,369 | 211,638 |
| Restricted cash | 13.3 | - | 24,489 | 20,021 | 24,489 | 20,021 |
| Financial investments | - | - | 3,164 | - | 3,164 | |
| Accounts receivables | 4.1 | - | 445,197 | 471,951 | 445,197 | 471,951 |
| Contract assets | 4.2 | - | 252,513 | 147,620 | 252,513 | 147,620 |
| Other assets | - | 37,574 | 28,099 | 37,574 | 28,099 | |
| Financial liabilities | ||||||
| Derivative financial instruments | 12 | 2 | (7,184) | - | (7,184) | - |
| Suppliers and other payables | - | (18,154) | (21,690) | (18,154) | (21,690) | |
| Loans and borrowings | 8 | - | (837,389) | (727,463) | (840,861) | (727,463) |
| Lease liabilities | 9 | - | (55,882) | (44,899) | (55,882) | (44,899) |
| Accounts payable for business acquired | 11 | - | (145,995) | (136,054) | (145,995) | (136,054) |
| Contract liabilities | - | (29,186) | (48,079) | (29,186) | (48,079) | |
| Other liabilities | - | (34,170) | (35,097) | (34,170) | (35,097) | |
| 19.2 | Financial risk management – market risks |
The Group is exposed to market risks arising from its normal business activities, including inflation, interest rate fluctuations, and changes in exchange rates.
Consequently, the Group's operating results may be impacted by shifts in economic policies, particularly concerning short- and long-term interest rates, inflation targets, and exchange rate policies. Exposures to market risk are assessed through sensitivity analysis.
The policies and practices adopted by the Company for managing its market risks are detailed in the consolidated financial statements for the year ended December 31, 2023. During the nine-month period ended September 30, 2024, no significant changes were implemented; therefore, these conditions are not reiterated here.
| 35 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 19.2.1 | Foreign exchange risk |
Foreign exchange risk arises from the potential for unfavorable exchange rate fluctuations that may affect the Company's cash flows.
The exposure to key exchange rate fluctuations is as follows:
|
September 30, 2024 |
December 31, 2023 | |||||
| US$ | £ | Other currencies | US$ | £ | Other currencies | |
| Financial investments | - | - | - | 2,695 | 469 | - |
| Accounts receivables | 251,154 | 46,744 | 8,207 | 245,763 | 65,196 | 11,100 |
| Restricted cash - escrow account | - | 24,489 | - | - | 20,021 | - |
| Derivatives | (7,184) | - | - | 2,728 | - | - |
| Suppliers and other payables | (4,842) | (1,043) | (1,657) | (3,987) | (793) | (1,700) |
| Loans and borrowings | (146,562) | - | - | (110,648) | - | - |
| Lease liabilities | (18,193) | (16,874) | (3,301) | (20,880) | (1,085) | (1,796) |
| Accounts payable for business acquired | (87,170) | (24,709) | - | (74,499) | (20,051) | - |
| Net exposure | (12,797) | 28,607 | 3,249 | 41,172 | 63,757 | 7,604 |
| 19.2.1.1 | Hedge accounting |
The Group establishes hedging relationships to account for the effects of existing hedges on foreign exchange gains or losses related to its long-term debt obligations (denominated in U.S. dollars) and the foreign exchange gains or losses from highly probable future revenues also denominated in U.S. dollars. This approach ensures that gains or losses associated with the hedged transactions (the highly probable future revenues) and the hedging instruments (the debt obligations) are recognized in the statement of profit or loss in the same periods.
The schedule of the hedge accounting transactions as of September 30, 2024, is set forth below:
|
Present value of hedging instrument notional value on September 30, 2024 | |||||
|
Hedging instrument |
Hedged transaction |
Nature of the risk |
Maturity date |
US$ |
R$ |
| Foreign exchange gains and losses on proportion of non-derivative financial instruments cash flows | Foreign exchange gains and losses of highly probable future monthly revenues | Foreign Currency - Real vs U.S. Dollar Spot Rate | |||
| Export Credit Note (NCE) | 2024 to 2026 | 16,500 | 89,894 | ||
| Advance on Foreign Exchange Contract (ACC) | 2025 | 10,000 | 54,481 | ||
| Total amounts designated as of September 30, 2024 | 26,500 | 144,375 |
The rollforward of exchange variations accumulated in other comprehensive income as of September 30, 2024, resulting from realized and expected revenues, is presented below:
| December 31, 2023 | Recognized in other comprehensive income | Reclassified to the statements of profit or loss | September 30, 2024 | |
| Export Credit Note | (2,329) | (14,318) | 4,927 | (11,720) |
| Advance on Foreign Exchange Contract | - | (91) | - | (91) |
| (2,329) | (14,409) | 4,927 | (11,811) |
| 36 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
As of September 30, 2024, the total of the hedge accounting effects expected for the next 12 months correspond to R$ 3,525.
| 19.2.2 | Interest rate risk |
As of September 30, 2024, the Company held financial assets and liabilities linked to various interest rates. In the sensitivity analysis of non-derivative financial instruments, the impact on annual interest was considered solely for positions exposed to such fluctuations. The Group also enter into derivative contracts in order to mitigate this risk.
|
September 30, 2024 |
December 31, 2023 | |||
| CDI | SOFR | CDI | SOFR | |
| Short-term financial investments | 204,772 | - | 147,948 | - |
| Loans and borrowings | (226,163) | (476,387) | (236,058) | (406,786) |
| Accounts payable for business acquired | (33,142) | - | (40,529) | - |
| Derivatives (interest rate swap) | - | 91,346 | - | 110,648 |
| Net exposure | (54,533) | (385,041) | (128,639) | (296,138) |
| 19.2.3 | Credit risk |
The Group applies the simplified standard approach to commercial financial assets, where the provision for losses is analyzed over the remaining life of the asset. For further details about the amounts related to the expected credit losses for accounts receivables and contract assets, see note 4.
In addition, the Group is exposed to credit risk with respect to financial guarantees granted to banks.
The Group held cash and cash equivalents of R$ 383,369 on September 30, 2024 (R$ 211,638 as of December 31, 2023). The cash and cash equivalents are held with bank and financial institution counterparties, which are rated from BB to AAA, based on Standard & Poor’s, Moodys and Fitch ratings.
The carrying amount of financial assets represents the maximum credit exposure. The maximum credit risk exposure on the date of the financial statements is:
| Note | September 30, 2024 | December 31, 2023 | |
| Derivatives | 12 | 4,349 | 9,620 |
| Cash and cash equivalents | 3 | 383,369 | 211,638 |
| Financial investments | - | 3,164 | |
| Accounts receivables | 4.1 | 445,197 | 471,951 |
| Contract assets | 4.2 | 252,513 | 147,620 |
| Other assets (current and non-current) | 37,574 | 28,099 | |
| 1,123,002 | 872,092 |
| 37 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
As of September 30, 2024, the exposure to credit risk for accounts receivables, contract assets and other receivables by geographic region was as follows:
| September 30, 2024 | December 31, 2023 | |
| Latin America | 278,471 | 249,959 |
| North America | 366,393 | 293,195 |
| Europe | 79,143 | 91,471 |
| Asia Pacific | 11,277 | 13,045 |
| Total | 735,284 | 647,670 |
| 19.2.4 | Liquidity risk |
The following table shows the contractual maturities of financial liabilities on the reporting date. The amounts are gross and undiscounted, including contractual interest payments and excluding the impact of netting agreements:
September 30, 2024 | |||||||
| Note | Carrying amount |
Cash contractual cash flow |
6 months or less |
6-12 months |
1-2 years |
2-5 Years | |
| Non-derivative financial liabilities | |||||||
| Suppliers and other payables | 18,154 | 18,154 | 18,154 | - | - | - | |
| Loans and borrowings | 8 | 837,389 | 984,213 | 72,687 | 230,664 | 275,844 | 405,018 |
| Lease liabilities | 9 | 55,882 | 61,335 | 6,594 | 17,573 | 18,216 | 18,952 |
| Accounts payable for business acquired | 11 | 145,995 | 147,764 | 109,909 | 15,777 | 10,405 | 11,673 |
| Contract liability | 29,186 | 29,186 | 29,186 | - | - | - | |
| Other liabilities (current and non-current) | 28,687 | 28,687 | 17,325 | - | 283 | 11,079 | |
| Derivatives | 12 | 7,184 | 7,184 | 7,184 | - | - | - |
1,122,477 |
1,276,523 |
261,039 |
264,014 |
304,748 |
446,722 | ||
| 20. | Related parties |
| 20.1.1 | Transactions with key management personnel |
The Group recognized in the statement of profit or loss the amount of R$ 6,900 as of September 30, 2024 (R$ 8,962 as of September 30, 2023) as direct compensation to key management personnel. These amounts correspond to the executive board compensation, related social charges and short-term benefits and are recorded under line “General and administrative expenses”.
The executive officers also participate in the Group's stock-based compensation program. For the period ended on September 30, 2024, the amount of R$ 307 (R$ 128 on September 30, 2023) was recognized in the statement of profit or loss.
| 38 | |
CI&T Inc. Unaudited condensed consolidated interim financial statements September 30, 2024 |
| 21. | Operating segments |
Operating segments are defined based on business activities that reflect how CODM - Chief Operating Decision Maker reviews financial information for decision.
The Group's CODM is the Group's Board of Director. The CODM is in charge of the operational decisions of resource allocation and performance evaluation. The CODM considers the whole Group as a single operating and reportable segment, monitoring operations, making decisions on fund allocation, and evaluating performance based on a single operating segment.
| 39 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 14, 2024
| CI&T Inc |
|||
| By: | /s/ Stanley Rodrigues | ||
| Name: Stanley Rodrigues | |||
| Title: Chief Financial Officer | |||