Earnings Call
CI&T Inc (CINT)
Earnings Call Transcript - CINT Q2 2022
Eduardo Galvao, Head of Investor Relations
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- Hello, and good morning, everyone. Welcome to CI&T's Second Quarter of 2022 Earnings Call. I'm Eduardo Galvao, Head of Investor Relations at CI&T, and it's a pleasure to be here again to talk about our results. With me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Co-Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After that, there will be a question-and-answer session for analysts and investors only. If you'd like to submit a question, please send it via e-mail to investors at ciandt.com. The Q2 presentation is available on the company's Investor Relations website at investors.ciandt.com. The replay will be available shortly after the event is concluded. Some of the matters we'll discuss on this call, including our expected business outlook, are forward-looking statements and are subject to known and unknown risks and uncertainties including, but not limited to, factors described in our earnings release and discussed in the Risk Factors section of our annual report on Form 20-F and other reports we may file from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. We caution you not to place undue reliance on those forward-looking statements because they are valid only as of the date when made. During this presentation, we will comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables on non-IFRS measures in the appendix for more details. Our agenda for today includes an update on recent events, followed by some of our successful business cases and a few highlights. We'll then talk about our people and discuss our quarterly financial results. At this time, I'm pleased to invite Cesar Gon to begin our presentation. Cesar, please?
Cesar Gon, Founder and CEO
Thanks, Eduardo. Good day, everyone, and thank you for joining us today. During these last months, I could finally physically attend investors' conferences and meetings, and it was good to meet many of you in person. We are excited to report a solid second quarter demonstrating the resilience and consistency of our engagements with our long-tenured clients. We also continue to be disciplined in onboarding new clients every quarter to guarantee sustainable long-term growth. The demand for our services remains strong in all geographies and industry verticals we operate. We continue to expand and diversify our inspiring network of tech talent worldwide. I am glad to announce another move in our programmatic M&A strategy. This week, we announced the acquisition of Transpire in Australia, a funded-led award-winning technology consultancy company to accelerate our growth in the Asia Pacific region. We are excited about the arrival of Transpire to the CI&T family and with all the future possibilities it will spark. Since 2009, Transpire has been the trusted technology partner of some of Australia's most innovative organizations, including Vodafone, Virgin Australia, among several large companies. Headquartered in Melbourne with team members across Australia, Transpire delivers a digital experience across several verticals with a solid design-led, mobile-first, cloud-native approach. As part of this strategic acquisition, Transpire will add around 100 digital specialists to CI&T, further expanding CI&T's operations in the region. Transpire recorded AUD 15.5 million in net revenue in its fiscal year, which ended in June 2022. The purchase price for this acquisition is USD 23.4 million. Previously, in late May, we announced the acquisition of Box 1824, a future-focused strategic consulting firm headquartered in Sao Paulo with around 40 specialized senior strategy professionals, helping Brazilian and global companies to design and implement their future. With their ability to detect, decode, and direct consumer behavior changes, the 3D methodology, they have been able to shape several industries for trading an impressive client list, including names like Itau Bank, Vivo Telefónica, Nike, Google, Disney, and Spotify. Box 1824 will remain an independent business unit, part of the CI&T family to foster their successful business model and enhance CI&T's end-to-end digital capabilities. Now let me comment on the second quarter financial highlights. We are glad to present another set of high growth in revenue with solid profitability metrics. Our net revenue in the second quarter of 2022 grew 67% year-over-year or 73% in constant currency, eliminating FX fluctuation. The main factors contributing to our higher growth base continued to be the expansion of our engagements with existing clients, the addition of 17 new clients this second quarter with annual revenue above BRL 1 million in the last 12 months, and our programmatic M&A strategy. Our adjusted EBITDA margin was 19.1%, 160 basis points higher than our previous quarter. Finally, we continue to expand our global talent network. We ended the quarter with more than 6,700 CI&Tiers, a net addition of 2,700 employees in the last 12 months. That's a 68% growth in our headcount in line with our top line growth. This is our 24th quarter of consecutive net revenue growth, endorsing a business model that allows the rare combination of long-term high growth rates, solid profitability, and cash generation. Once again, I want to express my gratitude to all CI&Tiers across the globe who have been dedicated to making this happen. Stanley will dive into our financial results shortly. Lastly, we are very proud of the business impact through digital initiatives we generate for an ever-increasing number of large and fast-growing clients in several geographies and industries. Regarding our revenue in the first half of 2022, 84% comes from brick-and-mortar companies and 16% from digital natives. To make this more concrete, let’s take a look at some powerful stories with our clients, our data powerhouse, and some additional highlights.
Gabriel Marostegam, Head of Data at CI&T
Hello, everyone. I am Gabriel Marostegam, Head of Data at CI&T and a member of the Data Analytics Powerhouse leadership team. We built the data analytics powerhouse on the principle of thinking globally and acting locally with the goal of rapidly expanding our capabilities and results. Since the beginning, we have experimented with the power of the cloud in communities, using their contributions and more disciplinarity to create space for innovation. Today, we have over 600 people working in small groups around the world to share knowledge, create accelerators with safe solutions, and prepare for the future. Our data journey offer, which aims to help our clients solve their data capabilities gap, cope with cultural challenges, and accelerate their data maturity, is proving successful. This equity source is advanced with data platforms, hybrid intelligence, and leveraging the power of human analysis through AI solutions and daily strategies driven by business impact. Recently, our initiative called Cognitive Lag, in partnership with the University of Convenience, achieved the best paper award at the 24th International Conference on Enterprise Information Systems. In this way, we are accelerating our capabilities, impacting the market, and generating business routes for our clients. This is how we help make their tomorrow. We are super excited to have Box 1824 as part of the CI&T family. With this acquisition, we are bringing together two very solid reputations for envisioning and accelerating the future in the digital space. We believe the corporate world faces two major disruption fronts, technological possibilities and behavioral changes. CI&T has a well-known reputation in this first part, and with Box now, we are profoundly strengthening our capabilities to create value for our clients.
Paula Englert, CEO at Box 1824
Hi. I'm Paula Englert. I'm CEO at Box 1824. We are a strategic consulting firm that connects brands and people to the future. For almost two decades now, we have been bridging this gap between the future and the present, helping global companies to better structure their business and their innovation process. Joining the CI&T family enables both to offer our clients a complete journey from envisioning the future to transforming these visions into business opportunities.
Bruno Guicardi, Co-Founder and President for North America and Europe
Thank you, Cesar. Good morning, everyone. It's nice to be here once again. Our team keeps expanding globally. We ended the second quarter of 2022 with more than 6,700 CI&Tiers, which represents a net addition of 2,700 employees in the last 12 months or a 68% growth year-over-year. And we're proud to be recognized as one of the best companies to promote diversity, equality, and inclusion within our teams, by my Diversity Institute, LGBTQI+ Business, and the Rights Forum in the Human Rights Campaign Foundation. As we continue to grow and expand, we have a great opportunity to tap into the potential presented by the megatrends of remote work and work for anywhere. We're leveraging the processes and practices we have honed for decades, working in a distributed way to further integrate remote work into our operations and diversify our talent pool even more. We're gradually penetrating new labor markets and are excited by these initial results. At the same time, we're pioneering innovative ways of team interaction in new forms of infrastructure to continue improving employee engagement in this new environment. Additionally, acquisitions have been helping in that diversification as well. Throughout this year, the acquisition of Somo has strengthened our footprint in Europe and provided us with a new delivery center in Colombia. With the addition of Transpire, we will enhance our position in Australia and the Asia Pacific region. Now I invite Stanley to dive into our quarterly financial results.
Stanley Rodrigues, CFO
Thank you, Bruno, and good morning, everyone. I'm glad to kick off our financial section with solid numbers in our top line. Our net revenue in the second quarter of 2022 was BRL 525 million, a 66% growth year-over-year. The acquisitions concluded in 2022 contributed to 13 percentage points of revenue growth in the quarter. Around 50% of our revenue comes from U.S. dollar and British pound-denominated revenues. As the Brazilian real appreciated against these currencies during the quarter, when eliminating the FX variation, our net revenue in constant currency would have been BRL 550 million, a 73% increase compared to the second quarter of last year. We continue to diversify our client base with the addition of 17 new clients in the second quarter. This year, we already added 33 new clients to our portfolio that will foster our sustainable growth over the coming years. As Cesar mentioned, our strong revenue growth derives from our expansion within existing clients, the addition of new clients every quarter, and our programmatic M&A strategy. Analyzing our revenue breakdown, you can see in the left-hand chart that we are expanding our global presence. North America continues to be the largest growing market organically for CI&T, and we strengthened our presence in Europe with the acquisition of Somo early this year. Our net revenue by industry verticals remains diversified. It's worth noting that around 84% of our revenue comes from brick-and-mortar companies and only 16% from startups and digital native companies. In terms of revenue by industry verticals, Financial Services grew 50% year-over-year, Food and Beverage increased 17%, and TMT grew 120% in the first half of 2022 compared to the same period of last year. Finally, we reduced our top one client share from 24% in the first half of 2021 to 16% in the first half of 2022, and our top 10 client share diminished from 73% in the first half of 2021 to 52% in the first half of 2022. We expect this trend to continue as we onboard new logos and integrate the recent acquisitions. Now talking about the number of multi-million accounts, we already mentioned the addition of 33 new clients in the first half of 2022, representing pretty much the total amount of new clients added in the full year of 2021. It's worth mentioning that we also increased five accounts with more than BRL 20 million in annual revenues, totaling 21 accounts. The number of clients with revenue above BRL 5 million and BRL 10 million also grew significantly. This is a strongly recurrent business model based on a land and expand strategy. Typically, most of the growth in the upcoming years happens by expanding within current clients, generating an average net revenue retention rate of 120%. But we also ensure the entry of new logos every year, which will mature in 2 or 3 years and guarantee future growth. The result is a year-over-year increase in client wallet share and an increasing number of multi-million accounts. Moving down the P&L, we ended the quarter with BRL 100.4 million in adjusted EBITDA, a 36% growth year-over-year, with an EBITDA margin of 19.1%. The cost of services provided grew 66% compared to the second quarter of 2021, aligned with increasing revenue and headcount. Thus, the decline in EBITDA margin in the quarter was mainly due to FX headwinds, M&A as recently acquired companies have lower margins, and higher SG&A expenses. Sales, general and administrative expenses increased mainly due to three factors: the expansion of our hiring, attracting, and training teams aligned with our revenue and headcount growth; acquisition-related expenses, including the amortization of intangible assets from acquired companies, and the strengthening of our back-office operation in connection with the IPO. The IPO-related expenses are mainly fixed and should be diluted over time as we expand our revenue base. It's worth mentioning that adjusted EBITDA grew 17% compared to the first quarter of 2022, and the margin improved 160 basis points sequentially due to the higher utilization rate and the price increases that occurred throughout the year, as planned and as we mentioned in the previous quarter. In the second quarter of 2022, adjusted net profit was $52.3 million, 16% higher than the second quarter of 2021, equivalent to an adjusted net profit margin of 10%. The reduction in the adjusted net profit margin was mainly due to the higher SG&A and financial expenses. Net financial expenses were $17.5 million in the second quarter of 2022 compared to $2 million in the second quarter of 2021, mainly due to the debt raised in July 2021 to finance the Dextra acquisition in the amount of BRL 650 million, combined with higher interest rates in the second quarter of 2022. In May, we paid down BRL 100 million in debt with cash proceeds, reducing our gross debt and replacing part of our Brazilian real-denominated debt that carries higher interest rates for dollar-denominated debt to reduce the overall cost of debt. Therefore, we expect to see a slight decline in our financial expenses for the coming quarters. We ended the quarter with BRL 358 million in cash, providing us a pretty good liquidity level. I will now pass it back to Cesar to comment on our guidance for the remainder of the year.
Cesar Gon, Founder and CEO
Thank you, Stanley. We remain very confident about the opportunities that lie ahead. Based on current market conditions, we expect our net revenue in the third quarter of 2022 to be at least BRL 540 million, a 46% growth year-over-year on a constant currency basis. For the full year of 2022, we are updating our outlook mainly to reflect FX variation in the period. So we expect a net revenue growth of at least 55% year-over-year on a constant currency basis and revenue growth on a reported basis of at least 49%, which includes a negative FX translation impact of approximately 6 percentage points. In addition, we estimate our adjusted EBITDA margin to be at least 19% for the full year of 2022, assuming an average exchange rate of BRL 5.1 to the U.S. dollar for the full year. That's what we have for now. Thank you all for your trust in CI&T and for attending our call today. We now conclude our presentation and will move to the Q&A session.
Eduardo Galvao, Head of Investor Relations
The first question comes from Ashwin Shirvaikar from Citi. Ashwin, please go ahead.
Ashwin Shirvaikar, Analyst
Thank you, Eduardo, and good to see you all. My question is with regards to FX, since I don't think we had the FX impact disclosure for past periods. But could you walk through how FX volatility affects your EBITDA? That's my first question. The second part is, you're mentioning that the updated outlook is mainly to reflect FX. Are there also other factors regarding the cyclical concerns from clients or slower ramps, things like that, that we are beginning to hear perhaps from other companies?
Cesar Gon, Founder and CEO
Thank you. Stanley, let me start with the second part, and then I'll hand it to you for the first one. Great to see you, Ashwin. Regarding the new outlook, I think, as you mentioned, the main factor is we adjust for mostly FX, 6 percentage points on this variation. We are still onboarding new clients at a very solid pace, basically in two quarters, we did the same as the full last year, but the ramp-up for the digital native cohort is lower. That represents, probably the last, the majority of the 4 percentage points. Regarding past FX impact, I will hand it over to Stanley, please.
Stanley Rodrigues, CFO
Hi, Ashwin. Thank you for the question. In a pragmatic way to see how FX affects our EBITDA, you can consider that for each $0.40 in the FX rate, you can foresee a 1% impact or above or down. That's more programmatic. This comes from the mix of currencies that we have in our top line and costs. As you may know, 70% of our costs are based in Brazilian Reals, while around 50% of our revenues come from hard currencies. We have an FX leverage that is affected by this $0.40 per 1 percentage point ratio.
Ashwin Shirvaikar, Analyst
Okay, understood. Then the other question was, I noticed that you're now adjusting out amortization of acquired intangibles. Is that indicative of a very strong M&A pipeline that you feel the need to do that? You've obviously done many tuck-in type acquisitions since the IPO itself. If you could…
Stanley Rodrigues, CFO
About the adjustment itself, we felt that we were - we would have to be in line with what the industry is doing. Since the amortization, they have a quite significant impact on our SG&A. So it would be better for everybody to understand our operation more quickly. That is the main reason for the adjustment. With regard to the pipeline, we remain active, as we’ve been mentioning. We have a programmatic approach to M&A, which is an important tool to speed up our organic growth, as we incorporate targeted and programmatic acquisitions.
Eduardo Galvao, Head of Investor Relations
Thank you, Ashwin. Our next question comes from Diego Aragão from Goldman Sachs. Diego, please.
Diego Aragão, Analyst
I have a couple of questions here. The first is, how is your current pipeline of M&A at this point? And what should we expect in the next, let's say, 12 months? How do you expect to fund these transactions and future transactions, especially given the market uncertainties, either on the equity side or on the debt side? I just want to understand a little bit of your thoughts on that. Lastly, can you help us understand the cross-sell opportunity, specifically going forward with Somo interest?
Cesar Gon, Founder and CEO
Sure. Thank you, Diego. Great to see you again. We have been following this in a very consistent way, our programmatic approach for M&A, looking for expanding our geography and also virtual expertise. This last move with Transpire is in the same pack, right? We now have a good platform for expanding in Australia, one of the largest markets for digital services, at the same scale as Brazil. So, it's an amazing opportunity to speed up our growth not only in Australia, but in the Asia Pacific region. Regarding—I think you are right—we continue to foresee a very strong pipeline for M&A. Now that may change, of course, as Stan mentioned, M&A for us is a way to speed up our organic growth. We are focused on, especially in our pipeline, where you can see a lot of opportunities in the USA and in Continental Europe, now the U.K., Europe, where we still have markets that we are not addressing. You should expect to see more moves, especially in these two geographies. We are always hoping for opportunities to strengthen our competence and skill set, as we did with Box, which is an amazing complementary expansion of our strategy and competition offering. Regarding funding, I think Stanley could handle that. Please, Stanley.
Stanley Rodrigues, CFO
Well, thanks, Diego, for the question. We may take some debt because we have plenty of space to use that if we cross with any good opportunity that we couldn't miss, but in a very conservative way. We are closely looking at the market, waiting for the market conditions for any movements in the market. Additionally, to offset any debt that we acquired now, we are behaving conservatively as always, observing the market and the opportunities.
Diego Aragão, Analyst
Understood. Thank you. I guess my second question is more related to the overall business dynamic for your services. Now that we are facing a more challenging market macroeconomic environment for a few months, are you seeing any indication that demand is slowing or that clients are somewhat postponing their projects?
Cesar Gon, Founder and CEO
Thank you for your question, Diego. As I mentioned, for large global companies, they continue to invest consistently in digital and technology. What we see, especially in the short term, in the one or two quarters ahead, is a slowdown in the digital natives cohort. I think it's related to the scarcity of funding and of course, this macro environment. That's why we emphasize that 84% of our business is based on this brick-and-mortar set of clients. This cohort continues to expand in a consistent way. I would add that we still see that digital is considered not only important but urgent, even in these uncertain times. Companies are improving their bets on the agility of digital initiatives as a way to increase opportunities, revenue, and client engagements, but also a way to gain efficiency in their operations. So that's an amazing part of the industry that is very resilient to different market conditions.
Diego Aragão, Analyst
Make sense? Thank you.
Eduardo Galvao, Head of Investor Relations
Thanks, Diego. Our next question comes from Tyler DuPont from Bank of America. Tyler, please go ahead.
Tyler DuPont, Analyst
Good morning. Thank you for taking my questions. I want to start specifically on margins. How should we think about that moving forward? Can you maybe just speak a bit to the strength of your pricing model and perhaps the leverage you have to either increase pricing or just to manage costs more generally?
Cesar Gon, Founder and CEO
Tyler, thank you for the question. Pricing always depends on the mix of teams and the technology that we deploy, and we have plenty of space there. As you may know, we are continually working with the top line of our clients, and even the market conditions help us. We are well positioned in the upper tier of the value chain for our clients. So, we always have opportunities to use new technologies and blend those into our mix while preserving margins. We also have new clients entering the portfolio, which play a major role in that mix. It's a portfolio management approach regarding pricing with all existing clients, the growth levers that we have within clients, and also the new clients coming in.
Tyler DuPont, Analyst
Perfect. Thank you. I appreciate that. I know you don't tend to provide numbers on attrition and utilization, but maybe you could just speak more generally to how it's trending versus previous quarters and your internal expectations, and if there's anything specific to call out there?
Cesar Gon, Founder and CEO
I think Bruno could handle that.
Bruno Guicardi, Co-Founder and President for North America and Europe
I'm sorry, could you come again, Tyler?
Eduardo Galvao, Head of Investor Relations
The question was regarding attrition.
Bruno Guicardi, Co-Founder and President for North America and Europe
Attrition continues at very low levels compared to the industry. Our overall attrition is around 16%, and another attrition number that we follow closely is leadership attrition, which is actually the big bottleneck for growth for us. That number is even lower, around 6%, so it's very comfortable levels. What we see in the industry is, I think it continues to be a very hot market, but it’s probably less hot than it has been in the last 12 to 18 months. So, it's good news for us.
Tyler DuPont, Analyst
I appreciate the color. Thank you.
Eduardo Galvao, Head of Investor Relations
We have a question here from Puneet from JPMorgan.
Unidentified Analyst, Analyst
Can you break down components of EBITDA margin deterioration from 22% to 19%? Is the deterioration attributed to FX, SG&A investments in new M&A impact? Are you seeing any adverse impact from macro uncertainty on client spending or have their spending priorities changed at all over the last 3 months?
Stanley Rodrigues, CFO
With regard to EBITDA breakdown, FX plays a major role. As I mentioned, we have this leverage of Reals to Dollar, and we had an effect on gross margin with this leverage. M&A also is relevant as we have increased our expenditures with this activity. Of course, SG&A investments have increased as we became public, and we had to invest in our back office structure. We have a consultancy, stronger teams, and higher D&O insurance; so the whole package starts with FX that plays a major impact.
Cesar Gon, Founder and CEO
Just to add here, in terms of those impacts, we have those investments in SG&A that we expect to be diluted over time. They are mainly fixed expenses when I think about back office operations. This should contribute to our operating leverage in the coming years. M&A impacts, as usually, the companies we acquire have lower margins; there’s a natural impact on that side, but we expect those margins to improve going forward to bring that to CI&T level, so that we can also increase EBITDA margin for the consolidated company.
Stanley Rodrigues, CFO
Let me add regarding client behavior or spending pattern. We see clients looking for initiatives that will generate results in, I would say, more short cycles—that resonates a lot with CI&T's value proposition of combining strategy, design, and engineering in a way that we can really foster results in very short times, typically, nine days. I think that's why we see this environment as an amazing opportunity to continue to grow higher than the industry and much higher than the industry, and it's an opportunity to increase our market share. We are positioned very well to do so.
Eduardo Galvao, Head of Investor Relations
Thank you. We have a follow-up question from Diego from Goldman Sachs. Diego, please.
Bruno Guicardi, Co-Founder and President for North America and Europe
Sure. I can take this one. Dextra's integration has been completed as of December last year. We're considering the business as usual and completely integrated. The business has been reorganized around four group units, and it's completely integrated at this point. We started the integration of Somo in the first half of 2022, and we expect to be fully integrated in 2023, but the integration is going really well. We're collaborating already on some level of accounts, and that forms part of what Diego asked, right? What we expect from cross-sell from those acquisitions is actually using those global accounts that Transpire or Somo have in CI&T so we can support our global clients in those geographies and accounts that we already have a presence in. That’s a clear opportunity for cross-sell. That’s much of what we’re doing now with Somo and will do with Transpire going forward.
Cesar Gon, Founder and CEO
Bruno, let me add that we see our platform, our entrepreneurial platform, the way CI&T is organized around 26 growth units. It's helping us a lot not only in our aggressive organic growth but also allowing us to provide a very strong value proposition for founder-led companies, our target companies. It's been an amazing way to integrate these new companies into CI&T's global platform and leverage the synergies and market capabilities. We are counting on this entrepreneurial organization model to continue to combine an aggressive organic strategy with our programmatic M&A strategy.
Eduardo Galvao, Head of Investor Relations
We have a follow-up question from Ashwin from Citi. Ashwin, go ahead.
Ashwin Shirvaikar, Analyst
Yes, thank you. A follow-up is on M&A. You mentioned a few times the programmatic approach. Are you back-testing the results of past M&A? For example, relative to your initial expectations, how is Dextra doing? How is Somo doing? If you could comment a little bit on that, what gives you confidence to keep doing programmatic M&A?
Cesar Gon, Founder and CEO
Great. Thank you, Ashwin. The main initial purpose is priorities, keeping the growth. We are acquiring high-growth companies. The first indicator, as these companies onboard the CI&T platform, is that they continue to grow at the same pace as they were doing before. Over time, we have two priorities: one is cross-sell opportunities both ways—adding CI&T global capabilities and near-shore capabilities to their operations, which also drives margin improvements; and leveraging their global clients in different geographies or business units. Dextra was amazing; as Bruno mentioned, from August last year to November it was fully integrated and the four new growth units continue to grow at the same pace as CI&T. Somo follows the same pattern. Box is a different entity, a strategy boutique that we are now integrating with the whole CI&T end-to-end portfolio. We have initial good signs, but it's too early for concrete learning from this. Transpire will be our next move; by the way, it is not included in our guidance, but we will do that as soon as we close the operation, and we have the closing date for that.
Ashwin Shirvaikar, Analyst
Just to clarify, when is the closing date?
Cesar Gon, Founder and CEO
We expect it in this third quarter; that's our expectation right now.
Eduardo Galvao, Head of Investor Relations
Thank you, Ashwin. We have a follow-up from Tyler DuPont from Bank of America. Tyler?
Tyler DuPont, Analyst
Great, thank you. I’ll be quick. Just to follow on that M&A front, particularly, the growth rate in Europe. It looks like a significant portion of that comes from the Somo acquisition, if I’m not mistaken. Can you just clarify how much of the European growth is attributable to recent acquisitions versus just additional organic growth?
Cesar Gon, Founder and CEO
If I got it right, the question is how much of the growth is attributed to the acquisition itself. Is that correct, Tyler?
Tyler DuPont, Analyst
Correct.
Bruno Guicardi, Co-Founder and President for North America and Europe
Our operation in Europe was very small, and now the platform is primarily composed of Somo clients expanding into new clients we acquire. This combines with CI&T and new growth. So you want to add more?
Cesar Gon, Founder and CEO
I would say that 80% of the growth comes from the acquisition part.
Bruno Guicardi, Co-Founder and President for North America and Europe
Mostly. To look at it another way, our revenue in Europe before the acquisition was about 3% of total sales. Now it's 9%. This is mainly due to the acquisition.
Tyler DuPont, Analyst
Okay, perfect. Well, thank you again.
Eduardo Galvao, Head of Investor Relations
Thank you, Tyler. So that concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar Gon to proceed with his final remarks. Cesar?
Cesar Gon, Founder and CEO
Thank you, Eduardo, Stanley, and Bruno, for joining me today. Thank you all for participating in our call. Again, I want to thank all CI&Tiers for their amazing contributions, and clients, investors, and partners for their continued support. Stay well. I'm looking forward to seeing you in a couple of months. Bye.
Stanley Rodrigues, CFO
Thank you.
Eduardo Galvao, Head of Investor Relations
Thank you all.