CI&T (CINT) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, Aug. 11, 2026, at 4:30 p.m. ET

CALL PARTICIPANTS

• Director of Investor Relations-Eduardo Galvao
• founder and CEO-Cesar Nivaldo Gon
• founder and president for North America and Europe-Bruno Guicardi
• CFO-Stanley Rodrigues

TAKEAWAYS

• Net Revenue -- reached $142.8 million, representing 21.9% organic growth and exceeding the company's previous guidance of at least $140 million.
• Full-Year Revenue Guidance -- was raised to a range of $566 million to $578 million, implying organic growth of 15.5% to 18%.
• Adjusted Gross Margin -- expanded to 32.4% from 30.6% in the previous quarter, reflecting the scaling of new value-based commercial models.
• Adjusted EBITDA -- was $19 million with a 13.3% margin, including an $1.8 million headwind from foreign exchange fluctuations.
• Sales Pipeline -- expanded 40% year over year, supported by increased investments in the commercial engine and demand for artificial intelligence deployment.
• Financial Services Vertical Revenue -- grew 36% year over year, continuing as the company's largest vertical engine.
• Technology and Telecommunications Vertical Revenue -- grew 68% year over year, reflecting a turnaround from contraction in the previous year.
• Latin America Revenue -- expanded 32.1% year over year, serving as the largest regional growth contributor.
• North America Revenue -- increased 10.2% year over year on a large mature base.
• Adjusted Profit -- was $8.7 million for the quarter, representing a 6.1% net margin.
• Adjusted Diluted EPS -- was $0.07, compared to $0.09 in the second quarter of the previous year.
• Total Headcount -- reached 8,100 professionals, including 6,700 AI builders who have been reskilled to work with artificial intelligence natively.
• Revenue per AI Builder -- reached over $80,000 on a last 12-month basis, a 7% year-over-year increase.
• Voluntary Attrition -- was 10.1%, trending toward the healthiest historical levels for the company.
• Sales Investment -- increased to 12% of net revenue compared to 8% in the prior year, funding vertical initiatives and new offering practices.
• Full-Year Adjusted EBITDA Margin Guidance -- was established at 15% to 17%, reflecting planned sequential margin improvements in the second half.
• Third Quarter Revenue Guidance -- is at least $145.7 million, representing a 14.4% increase over the third quarter of 2025.
• Top Client Growth -- reached 27% year over year, while the remaining top 10 clients grew 16% as a group.
• Non-Top 10 Client Revenue -- grew 24.1% year over year, outpacing the 19% growth rate of the top 10 clients.
• Share Repurchases -- totaled $2.8 million during the quarter, with the weighted average diluted share count decreasing 3.6% year over year.
• Constant Currency Revenue Growth -- was 14.1% year over year, reflecting significant foreign exchange headwinds.
• Value-Based Pricing Adoption -- accounted for 30% of new engagements in the first six months of 2026.
• New Markets Revenue -- grew 26.3% year over year, supporting geographic diversification.
• Consumer Goods Vertical Revenue -- contracted 9% year over year, representing the only segment to experience a decline due to temporary softer demand.
• Organic Growth Performance -- marked the seventh consecutive quarter of double-digit organic revenue growth.

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RISKS

• Rodrigues stated, "The year over year compression reflects 2 main factors: the first is the appreciation of the Brazilian real against the US dollar which we have flagged before," noting a significant impact on EBITDA margins.
• Rodrigues warned that demand in the consumer goods vertical has been softer, identifying the segment as a temporary headwind for the company.

SUMMARY

CI&T Inc. (NYSE:CINT) management reported that the company is transitioning toward value-based commercial models designed to monetize artificial intelligence deployment and productivity gains. The company is currently investing in its global commercial engine and vertical-specific offerings to capitalize on a 40% expansion in the sales pipeline. These investments are intended to drive durable growth into 2027 by decoupling revenue expansion from headcount growth through agentic native operations. Management stated that growth remains broadly based across geographies and industry verticals, with the exception of the consumer goods sector.

• The company joined the Anthropic Claude Partner Network, certifying more than 1,000 AI engineers on the Claude platform to establish standards for enterprise AI deployment.
• CEO Gon stated, "We play the infinite game," to characterize the company's long-term approach to organic growth and capital allocation.
• Management reported that 30% of new client engagements in the first half of 2026 were signed under value-based pricing models, which contribute 3% to 15% higher margins than traditional time-and-materials contracts.
• The company open-sourced its Business Complexity Points (BCP) framework on GitHub, sharing a methodology developed over 10 years with a major financial institution.
• Bruno Guicardi identified "agentic enterprise reinvention" as the company's fastest-growing offering, aimed at helping established enterprises redesign core operations onto agentic journeys in months.
• The company established a partnership with Mistral to leverage open weight AI models for the next generation of agentic enterprise solutions.
• Management confirmed that the company is the first software entity in Latin America to have its net zero targets validated by the Science Based Targets initiative (SBTI).

INDUSTRY GLOSSARY

• Agentic SDLC: A software development life cycle that utilizes autonomous AI agents to automate workflows and increase engineering productivity.
• CI&T Flow: The company's proprietary platform for managing and deploying AI-driven software development processes.
• SBTI: The Science Based Targets initiative, a global body enabling businesses to set ambitious emissions reductions targets in line with climate science.
• Constant Currency: A reporting method that eliminates the effects of exchange rate fluctuations to compare financial results between periods.
• Agentic Enterprise Reinvention: A strategic service focused on redesigning core business processes to be AI-native rather than just automating existing tasks.
• Open Weight AI: Artificial intelligence models where the underlying weights are made publicly available, allowing for specialized enterprise customization.

Full Conference Call Transcript

Eduardo Galvao: Good afternoon. And thank you for joining us for CI&T's second quarter of 2026 earnings call. I am Eduardo Galvao, Director of Investor Relations. Joining me today to discuss our quarterly results are Cesar Nivaldo Gon, our founder and CEO Bruno Guicardi, founder and president for North America and Europe and Stanley Rodrigues, our CFO. Before we begin, I would like to remind you that our remarks today will be forward-looking statements. These statements, including our business outlook, are based on the management's current expectations. And are subject to risks and uncertainties that could cause actual results to differ materially.

We caution you not to place undue reliance on these forward looking statements. as they are valid only as of the date when made. Additionally, we will discuss certain non-GAAP financial measures. We believe these provide a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics please refer to the tables in our earnings release. Today's session is being recorded and all participants are currently in a listen only mode. Following our presentation, we will host a Q and A session. To participate, please submit your question via email to investors@cint.com.

The full presentation deck is available on our Investor Relations website, and a replay of this call will be posted shortly after we conclude it. With that, I am pleased to hand the floor over to our founder and CEO, Cesar Nivaldo Gon.

Cesar Nivaldo Gon: Thank you, Eduardo, and good afternoon. Everyone. Global AI spend is projected to hit $2.6 trillion this year. Up 47% year over year. And yet, according to MIT, roughly 95% of AI initiatives still show no measurable business return. That gap is where I want to begin today. We published 2 papers this quarter that get at why. The first argues that most companies are optimizing the wrong variable. Chasing incremental task efficiency instead of asking where AI can return 10x rather than 10%. The second paper calls it organizational hallucination. The confident belief that a company is transforming when it is actually just experimenting.

In both cases, the constraint was never the technology. it is the organization's capacity to absorb it. That gap is exactly where CINT plays. And it is why we build our business around 2 things. AI deployment, installing real capability inside a client's core, and AI monetization. Capturing together with our clients the productivity gains and business impact that AI deployment creates. Through value based commercial models rather than headcount. Everything you will hear from us today the robust and sustained revenue growth the increase in our sales investments to foster momentum given the AI opportunity is the same thesis playing out inside our own business. This quarter's numbers reflect that opportunity.

And the deliberate choices we are making to capture it. We delivered record revenue of $1.428 billion. Up 21.9% organically and above our guidance. Broadly based across geographies, industry verticals, and client cohorts. Growth was increasingly fueled by new client wins. And by initial engagements scaling into large partnerships. Our new commercial models are also letting us capture a greater share of the value we create. That shows up directly in adjusted gross margin. Which expanded from 30.6% in the first quarter to 32.4% as this model scale. In the first 6 months, of 2026, 30% of new engagements were under new value based pricing models. And we project this gross margin expansion to accelerate in the coming quarters.

Our adjusted EBITDA margin in the quarter was 13.3%, reflecting our deliberate choice: 2026 is a transition year, 1 where we invest in our commercial engine, to turn this AI deployment opportunity into durable, profitable growth in 2027 and beyond. As a result, our commercial pipeline is now 40% larger than in the first half of 2025. In short, our top line shows the demand is solid, our gross margin shows monetization is working, and this year's commercial investment is what lets us compound that advantage going forward. And here we go again. The second quarter of 26 marks our seventh consecutive quarter of double-digit organic growth.

At a time when parts of our industry are consolidating through acquisitions, buying growth rather than building it, We have extended this streak without a single M&A deal. Prioritizing our capital allocation toward our own transformation. And our sales effort and growth engines. This embodies 1 of our cultural tenants. We play the infinite game. Are not optimizing for a single quarter. We are building a company designed to keep compounding for decades. This consistency reflects a structural shift in client demand, and CINT's ability to capture it. The case studies that follow show how this AI deployment momentum is translating into tangible business outcomes. MRV Latin America's largest homebuilder. now has rebuilt how it speaks to the world.

5 brands, 1 voice. CINT with Adobe laid the foundation for a new digital experience. Then handed over the keys. The marketing team runs it alone now. No scaffolding, no outside help left on-site. 3 months in, the traffic tripled. 117% more people at the door. MRV brought the ground. CINT brought the blueprint. The windows opened on their own. Let me show you some facts. A leader in market share in a country the size of a continent. A presence in over 350 thousand retail points. More than 150 million pairs out there. In motion. At Alpargatas, home of Havaianas and Rothy's. A full day at our HQ in Campinas, Brazil. Mapping the digital terrain together.

From AI powered commerce to the journeys that turn products into seamless experiences. Some journeys are better walked with the right partner. At Alpargatas, and CINT. I think brands that are going to be successful this new age are brands that have solid foundations, whether it is found data foundations, awareness of customer behavior, because it is not necessarily about speed to market, but how fast you can learn and pivot and build experiences that really matter and resonate for the customer. The agentic enterprise is not coming. it is here. And it just got a bold ally. CI&T just joined Anthropics Claude partner network. Our engineers now certified in Claude, Claude code wired into CI&T flow.

30 years across the globe, now setting the standard for how the world's largest enterprises deploy AI. Options generated, outcomes decided, This is the power of a partnership of a global AI deployment partner boosted by Anthropic. We got your back. A quick recap of our quarter. First, we launched Organizational Hallucination, a new pocket book by the CI&T team with chapters from Cesar Nivaldo Gon and Silvio Mera. On why companies invest in AI and keep solving the wrong problems. Then came The Wrong Math of AI. A paper from the CI&T team. Our CFO, Stanley Rodrigues, and co-founder, Bruno Its bottom line, AI will not transform your organization. You will. Business complexity points, BCP, went open source.

10 years of work with Itau, 1 of Latin America's largest banks, now free for everyone on GitHub. The Retail Tech Report, Agentic Edition landed next, led by Melissa Minkow, our global director of retail strategy. On how Agentic AI is already reshaping retail. We were around the clock at the biggest stages in AI and innovation this quarter. We introduced the ESG Consumer Index 2026 a sharp read on what people now expect brands to prove. And 1 milestone stands out. We are the first software company in Latin America with SBTI validated net zero targets. Climate action measured by science, not marketing.

Beyond that, a partnership with Mistral, a pioneer in open weight AI, to power the next generation of agentic enterprises. that is our quarter. Explore more at our website. These case studies demonstrate how our Agentic SDLC and CI&T Flow are resetting the baseline for enterprise productivity and speed to value. I will now hand it over to Bruno to discuss how we are scaling this hyper productivity to our global delivery model and our evolved talent strategy.

Bruno Guicardi: Thank you, Cesar. Good afternoon, everyone. I am glad to share our operational and talent progress for this quarter. We closed Q2 26 with roughly 8.1 thousand professionals, with voluntary attrition at 10.1%, continuing to trend toward some of the healthiest levels in our history. At the center of this workforce are our 6.7 thousand AI builders, the result of reskilling 100% of our professionals to work with AI natively. That matters right now. Recent independent research mapped a widening gap in the market for AI deployment talent. Demand for engineers who deploy AI at enterprise scale growing roughly 50% year over year. Most of our industry is racing to hire into and increase its core pool of talent.

We did not have to. We built it from within ahead of the market. Revenue per AI builder continues to grow. Reaching over $80 thousand in Q2 26. On a last 12-month basis, an increase of 7% year over year. This is a direct result of AI monetization and value based pricing. Providing operating leverage and contributing to the expansion of our gross margin. Our momentum is being reinforced by a strategic partnership we announced this quarter. 1 that speaks directly to the role CI&T plays for large enterprises.

We joined Anthropic's Claude Partner Network, certifying more than 1 thousand AI engineers on Claude, and working with Anthropic to help set a new standard for how AI gets deployed inside the world's largest organizations. Already runs Claude code extensively inside the CI&T Flow. And this partnership expands that work into a joint go-to-market motion. With a focus on codeveloping industry solutions for financial services, retail, consumer goods among other verticals. it is designed to open new enterprise accounts and expand our pipeline into verticals we are codeveloping. Directly feeding our commercial momentum. Large enterprise, meet a partner who can take frontier models into complex regulated mission critical environments. And deliver production grade outcomes.

That deployment layer exactly where CINT operates. This partnership makes us the connective tissue between the leading model providers and the world's largest organizations. That embedded engineering capability is exactly what enables us to play where the real value is shifting in the AI era. In this chart from Forrester, is the clearest way we found to show clients why. Most of what is being sold as enterprise AI so far sits on the left side of this chart. Automating individual tasks with copilots and agents. Augmenting existing workflows end to end, it is a productivity story. Efficiency gains on the top of an operating model that stays the same. The disruption is what Forrester calls the process chasm.

Cross it in the business case changes entirely. From efficiency to new revenue and margin structures, and ultimately to growth relevance and the long term perpetuity of the business itself. CI&T built 2 offerings, specifically for the 2 quadrants on the right side of that chasm. The 1 I want to walk you through now, the 1 gaining the fastest traction with our clients today. Is agentic enterprise reinvention. Agentic enterprise reinvention is how we help establish enterprises redesign the core of their operations. Moving from legacy ways of working to agentic native operations. We do not stop at advisory. Or isolated use cases. We install real operational capacity inside existing value streams.

And we stay until it runs on its own. In practice, that means bringing 60% to 80% of a core end to end process. Onto an agentic journey in months. 3 things differentiate this from traditional systems integration. Who delivers it? Small senior forward deployment engineering teams. How we find the value, 3 decades of lean based process transformation. Along with our industry expertise give us the insight into where reinvention pays off. And how we get paid. Increasingly outcome based with fees tied to business results, not to hours built and it compounds. We reinvent 1 core process, it becomes the reference architecture for the rest of the enterprise. Giving every account a natural land and expand path.

That means revenue that scales with the impact we create for clients. Not with headcount. Now I will hand it over to Stanley to comment on our financial performance.

Stanley Rodrigues: Thank you, Bruno, and good afternoon, everyone. Let me walk you through our financial results for the second quarter of 26. As Cesar mentioned, we delivered record net revenue of $142.8 million, up 21.9% year-over-year, entirely organic, and 14.1% at constant currency above our guidance of at least $140 million. This performance reflects the strength of our go to market execution. Through the quarter, we saw our sales pipeline expand and our conversion rates improve the direct payoff of deliberate commercial initiatives and the tangible results of our AI deployment delivers for our clients. Beyond the headline number, what matters is how weavingly this growth is spread across our footprint.

This slide shows the composition of our growth and the message is clear: our momentum is not carried by any single vertical or client. Every region contributed, Latin America was the largest engine. expanding 32.1% year-over-year. New Markets grew 26.3% and North America added a consistent 10.2% on a large mature base. Financial services, our largest vertical, continued to grow strongly, up 36% year over year. Technology and telecommunications accelerated to 68% growth, a robust turnaround from the contraction we saw just a year ago. Others grew 25%, Life Sciences 16% and Retail and Industrial Goods 11%. The 1 exception is consumer goods where demand has been softer, a headwind we view as temporary.

The composition by client cohort tells an equally healthy story. Clients outside our top 10 grew 24.1% outpacing the 19% growth of our top 10. Reinforcing that our momentum is not dependent on any single account. Taken together, this confirms that our AI deployment is a global catalyst driving deeper penetration across every region and every client tier we serve. As you may recall from our last quarter's call, we said that as our new engagement models gained traction, they would begin to expand our gross margin and that is exactly what we are seeing. This quarter, our adjusted gross margin expanded sequentially from 30.6% in Q1 to 32.4%.

An increase of 1.8 percentage points as those models lift the value we capture per engagement. That said, on a year-over-year basis, adjusted gross margin declined driven by a foreign exchange headwind as our productivity gains offset the impact of the payroll tax resumption. Looking ahead, we expect gross margin to continue improving over the coming quarters as adoption of these models broadens across our book of business, a core driver of the profitability expansion we are working toward. Adjusted EBITDA was $19 million, with a 13.3% EBITDA margin. The year over year compression reflects 2 main factors: the first is the appreciation of the Brazilian real against the US dollar which we have flagged before.

On an FX neutral basis, adjusted EBITDA would have been $20.8 million, a 15.6% margin giving a clearer view of our underlying performance. The second factor is deliberate, and it reflects 2 distinct components related to our sales efforts. Part of it is a targeted investment specific to 2026, including scaling our AgenTek SDLC initiative to capture the current acceleration in demand for AI deployment. This is not a permanent addition to our cost base. The other part is structural. An expansion of our commercial organization to support new offerings practices and vertical initiatives as well as commission expenses which will remain part of how we go to market going forward.

Together, these investments are funding the 40% pipeline expansion year over year, as Cesar mentioned, and the higher conversion rate already showing up in our top line. This is a conscious trade off between near term margin and durable, higher quality growth. Importantly, the underlying trend is encouraging Our adjusted gross margin expanded sequentially, showing that the pressure at the EBITDA level comes from our deliberate investments and external headwinds, not from our core delivery economics. Which are in fact improving. Looking ahead, we expect our adjusted EBITDA margin to improve sequentially, while these investments position us to fuel growth into 2027 and beyond.

Moving to our bottom line, adjusted profit was $8.7 million in the second quarter, with a 6.1% margin. This reflects the same 2 main factors I just described on EBITDA. The appreciation of the Brazilian Real and our deliberate investment in growth. Adjusted diluted earnings per share was $0.07 versus $0.09 in the prior year. We see this as an investment cycle, not a new baseline. As these investments continue to fuel our growth into 2027 and beyond, we expect profitability to recover and our capital discipline to keep amplifying returns for shareholders. This quarter, debt discipline included repurchasing $2.8 million in shares continuing our ongoing buyback program even as we invest in growth.

Combined with these repurchases, our weighted average diluted share count is down 3.6% year-over-year meaning each remaining share now carries a larger claim on our future earnings. I will now turn the call back to Cesar to discuss our business outlook and the strategic path forward for the remainder of 2026.

Cesar Nivaldo Gon: Thanks, Stanley. We continue to see an improving demand environment. As enterprises increase their spending on AI deployment. And we are pleased with the evolution of our AI monetization efforts. Through new value based commercial models. For the third quarter of 26, we expect revenue of at least $145.7 million, a 14.4% increase over the third quarter of 25 or 12.3% at constant currency. For the full year, we are raising our revenue guidance to the range of $566 million to $578 million. Implying organic growth of 15.5% to 18%. Our revised outlook includes a positive FX impact of approximately 400 basis points.

Alongside that, we now expect adjusted EBITDA for the full year in the range of 15% to 17%. Reflecting deliberate investment in the commercial engine, that drives demand and accelerates monetization. With sequential margin improvements through the second half as planned. This is a forward leaning choice to move first on AI deployment and expand our wallet share. And to be clear, this does not trade away financial discipline. Profitable cash generative growth is still the bar we hold ourselves to. What we are building is a company that scales revenue with less headcount and grows more profitable. As the new commercial models mature. With that, we are ready to begin the Q&A session. Thank you.

Operator: Alright. We will now begin the Q&A session. I will announce each participant's name, Once you hear your name, please unmute your line and ask your question. Then when you are done, please mute your line. The first question comes from Puneet Jain from JPMorgan.

Puneet Jain: Hi, Puneet. Hey. Thanks for taking my question. I want to follow up on margin guidance. Look, the cut of around 200 basis points, like I understand, a lot of it is discretionary investments and then currency. Can you break down, like, that impact for us? Look, how much of the incremental impact is FX versus investments, and why should we expect the level of investments to go down? Look, we are still in very early stages of AI build out AI ramp-up. Look, why will not this level of investment stay where it is? Into next year and beyond?

Stanley Rodrigues: I may start here. Puneet, thanks for the question. Puneet, let's take the full picture here. And if you see 7 quarters of double-digit growth growing 4x faster than our peers, We are gaining market share. We are gaining wallet share. Which means we are deepening relationship with our clients. We have this broad based, you see growth in the top 10 clients. Outside the top 10 clients, you see growth in all the regions. You see growth in most of the segments except by 1. And everything is pure organic. We have a pipeline growing 40%. So everything is funded by this investment that we have been making ahead of the pack and specifically in this second quarter.

We heavily invested. it is an answer to this surge in demand for AI deployment. Then we reshape and redesign our go to market and that is what you see in the second quarter. Going forward, we see part of this investment, we are reducing throughout the quarters, is specifically the SDLC, Agentic SDLC deployment. But the other half I would say, we will continue to see there. So it is more structural. So if you see from last year's quarter, sales are 8% of net revenue. And this quarter, we are talking about 12%, so going forward, we will be pretty much in between.

And this will be more than compensated by what you see in the gross margin as this will continue to improve and also, we will have operating leverage on top of SG&A as a whole, sales as well, And as a consequence, that is why you see EBITDA growing. And everything already accounting on this deep pressure from the FX everything's compounding there.

Puneet Jain: Got it. No. that is helpful. And then like, on your top line, like, it seems like the financial services vertical is doing really well, like, including the top client that up nicely sequentially in this quarter. So how broad based, that growth in financial services is and your expectations for the rest of the year for that vertical?

Bruno Guicardi: Sure. I can get this 1. You are right. Financial services was the second fastest vertical for us. We grew 36% year-over-year in financial services, but we grew across the board Retail 11%, Tech and Telco 68%, Life Sciences 16%. So we see only by the way, only Consumer Goods minus 9%. So it is a solid grower around all the not only verticals, but if you see you look at our top 10 clients, even if you exclude our top 1 client, it is it is still very high growth, 16% year-over-year over year among the top 10, excluding the top 1. That grew.

So basically, we will continue to see we are forecasting expansion across the board in our all the verticals in the top 10 clients and also whole cohort of clients. I think what is behind us is a solid increase in AI deployment demand. And also the fact that I think we did all the investments to capture this momentum as Gustavo mentioned in our sales organizations we expand verticals, reach across the board to really speed up growth and increase wallet share in our portfolio and also increase the land in new clients. So this is I think it is the second time we are raising our revenue guidance and we continue to see a growing demand.

And it is basically across the board. Of course, financial services will continue to be our number 1 vertical. I think it is the use case for efficiency and customer experience in the financial services, especially in the banking sector is become very clear now in terms of impact. So but we see also other verticals evolving like retail with agent commerce will be a big trend and is already starting. Every single industry will have a set of very powerful use cases to explore. So we are preparing our offerings and teams to capture that.

Stanley Rodrigues: Just to add to that, financial service grew 36% year-over-year while our top client grew 27%. So if you exclude the top client, within that vertical, the other clients grew faster than that. So even higher than the 36% we see here Got it.

Puneet Jain: Yeah. Yeah. No. Was looking back on sequential growth basis, and like, it was up nicely at top client as well as rest of the financial services. On sequential growth. But I understand. So appreciate it. Thank you.

Cesar Nivaldo Gon: Thanks, Puneet.

Operator: Thank you, Puneet. Our next question comes from Steven from Wedbush. Steven, please go ahead.

Steven Wahrhaftig: Alright. Thanks, guys. Thanks for taking the question. I want to start on the Agentic SDLC that you guys pointed out in the quarter. I want to ask specifically about the pipeline that you are seeing there because you mentioned you saw 40% year-over-year growth in the pipeline. But what percentage of that was specifically tied to agentic SDLC And does this carry any higher average deal sizes? And can you talk a little bit about the metrics there?

Cesar Nivaldo Gon: Sure. I can start, Bruno. You can jump in. I think roughly 35% to 40% of our demand, we articulate as Agentic SDLCs, especially transforming the current engagements we already have So old traditional digital engagements now being reshaped as an Agentic SDLC engagements with different commercial models and different margin profile too. So this is 1 specific offering where we are very, very competitive. I think we are 5 to 10x ahead of our typical competitors. So we have a lot of space for replacing underperforming competitors and I think the gap is increasing. We have been investing with CINT flow and all the reskilling of our teams a lot in the last 3 years.

And I see the gap of performance versus our competitors increasing that give us a lot of room for replacing and land on our clients and also land new avenues of growth.

Steven Wahrhaftig: So and the second question, were sorry. Specifically on deal sizes for Agentic SDLC your traditional deal sizes?

Cesar Nivaldo Gon: Yes. We are seeing an increase in the deal size We are not sure if it is a trend or just momentum or but we see in the last 2 quarters, the size of the deals are larger. But we are not sure yet. It was a just a transition from previous recurring model or if it is a long term tenants. We disclosed the number. We are 40%. We have a 40% larger pipeline versus the same period last year and with a very solid conversion rate. So and the deals are larger now, but not sure yet if it is a trend. It depends on how the market evolves.

Steven Wahrhaftig: Okay. Got it. And if I can ask a quick follow-up because I want to ask about the geographic split moving forward because Latin America, was another solid quarter of growth at 32%. If you look at North America though, it was a 600-basis-point deceleration from 1Q 26, where last quarter was 16%, and this quarter was 10%. Is there anything to point out there from a demand perspective? Is there any sort of competitive displacement happening there? Anything that you would want to point out specifically within North America?

Bruno Guicardi: I can take this 1. No, just seasonality, Steven. I think we can expect that to be accelerating again throughout the year. So I think it was just Q2 seasonality some gaps in contract renewals and, other kinds of situations that were kind of ad hoc. Nothing systematic.

Steven Wahrhaftig: Alright. Appreciate the time. I will hop back in the queue.

Cesar Nivaldo Gon: Thanks.

Operator: Thank you, Steven. Our next question comes from Bryan Bergin from TD Cowen. Hi, Bryan. Please go ahead.

Analyst: Hi, guys. Thank you. I wanted to ask on tech and telecom. So really strong growth number there in the quarter. The second consecutive really strong growth number. So guess first, is this being driven by a handful of large transformation wins? Are you seeing broader demand there in the client base. Maybe just give us more detail on what is driving that because there is been some peers that have had more challenging results in that vertical. And how should we think about that going forward as we go through the second half?

Cesar Nivaldo Gon: Sure, sure. Thanks, Bryan. Great to see you here. First is telco. I think we have some big telcos as clients and we are getting a lot of traction with them. Especially around agent STLC And again, it resonates with I think the level of differentiation we are being able to showcase in terms of productivity. The second is a new trend that is because we combine tech and telco, but it was majority telco. Historically, CI&T was not we do not have really a lot of demand from the tech companies, but it is happening now. I think it is also correlated with the AI deployment demand.

And so now we have some big tech companies increasing their spending with us it is also correlated with the partnerships we are announcing Probably you saw not only the typical hyperscalers, Amazon, Google, and Microsoft, but also the new, big players, especially Anthropic. So it is a new revenue source for us and we are, and we are very happy to see this also adding to our growth.

Analyst: Okay, OK. Understood. And then just a follow-up on the margin recovery path. So to achieve that full year EBITDA margin target, it looks like you have to meaningfully improve from just over 14% in the first half. So can you just categorize kind of what are the biggest drivers of that improvement as you go through the second half? How much is coming from commercial model benefits versus moderating investment spend? Versus potentially moderating FX headwind?

Stanley Rodrigues: Well, Bryan, thank you for the question. Let me start here and Bruno, if you may add. Again, if you see Bryan as a comparison, for example, we have roughly 2.2 percentage point headwind from the FX. If you compare to second quarter 25. So pretty much we are in line there and that includes our efficiency gains that compensates the tax resumption in the payroll in Brazil. So you see there efficiency gains rolling, right? Going forward, what we have, we continue to see conversion, more and more conversion of the new models that they have higher margins. Playing at the gross margin level. So at the gross margin level, you will see improvement sequentially.

Going down the P and L, we will see a leverage operating leverage on top of the SG&A And in sales specifically, as we do not have in the coming quarters the Agentic SDLC investment component that we saw heavier in the second quarter, you will see an alleviation there. Of course, we do have a structural sales part that will remain there. But again, the combination of better gross margins and the leverage the operating leverage will bring the EBITDA sequential improvement that it is implied in the guidance that we provided.

Bruno Guicardi: And Bruno, if we have to, if we could add more colors there, No, I would just say that the seasonality of the sales investment that was done in Q2, right, that will stop and kind of kind of halfway, right, so from the 8% to 12% percentage points on the revenue, right? So it was if you look at the where we were last quarter, it is 8% now with 12. Look, so we think we are going to see kind of a long term will be around 10%, so that is another 2%, probably not in Q3, but certainly for the long run. So but that kind of peak will kind of recede a little bit Okay.

Analyst: Understood. Thank you.

Operator: Thank you, Bryan. Our next question comes from Maria Clara from Itau. Hi, Maria Clara. Please go ahead.

Maria Clara Infantozzi: Hi, everyone. Thanks for the opportunity. I have 2 here. So the first 1 more related on more color on the increase in pipeline. So can you please comment which industries have been outperforming if you already see a trend of new clients gaining more traction, and also if you could please comment about the evolution of the new monetization format within those new potential deals? And the second question is a follow-up about the gross margin expansion. Stanley just mentioned that those new, monetization formats are already helping the gross margin expansion. So can you please elaborate more on that What is the profitability boost here coming from those models? And the profitability expansion potential in the long run?

Thank you.

Cesar Nivaldo Gon: Sure. Let me start with your second question. We basically are introducing 4 new value-based models. That are so fixed price with higher margin output base that it is a kind of throughput model. Price per consumption, and then outcome based. This is and this model will depends on the way we combine are giving us 3% to 15% of points higher than the traditional time material. So depends on the mix We have something in this range. So it is a very significant improvement in our contribution margin And as I mentioned, 40% of everything we sold this year was already based on this new model.

And as we execute this contract we that is why we are foreseeing this expansion in gross margin. And our efforts are showing that this trend is increasing the new commercial models in our engagements will continue. So this is what we are working on and we believe that this is a better way to play the AI deployment game and really aligned the purpose of the engagements with our clients. And we are seeing a lot of a lot of good reception from our clients. So this is I think I gave you a range on what we are expecting as an improvement and an incremental improvement. In our gross margin ahead.

So and the second is regarding how we see the demand and the pipeline expansion. We are putting everything under this AI deployment umbrella. That is basically we can group this demand in 3 set of offerings. The first is adoption, AI adoption is a big trend, particularly when we see opportunities around the software engineering in Agentic SDLC, as we mentioned, a lot of productivity gains to be captured and speed to value to be captured just reinventing the ways of work in the digital software space.

The second is our IP based solutions that is things like our Modernization Studio where we can streamline the conversion of a legacy system into modern AI based architecture The same for data. Data is a huge demand for us. Regarding, preparing our clients for the IH reducing the fragmentation and creating the right foundation around data. And then you have the specific use case by industry, efficiency or customer experience I mentioned before some for financial services, there is retail, and for every single We now see a set of powerful use cases to explore. And finally, I think what is new probably what I mentioned is 85% to 90% of this increased demand.

And we have a new trend in our pipeline that Bruno mentioned during the call, we launched is the enterprise reinvention services. it is a new line of services very transformative where we help our clients not just improve current workflows, but to really reinvent core process around AI. And this is always an outcome based engagement. So this is a new trend is and we will probably see this being more relevant in the future in our pipeline.

Analyst: So basically, deployment industry groups.

Bruno Guicardi: If I may add Cesar, I think we are very excited with the customer experience element there that Cesar mentioned because if you if you are hearing those calls for the last 2 years, we have been selling a lot that this will come. Right? So the first phase of AI demand was solely focused on efficiencies and operational excellence. Right? So only internal, where the user of AI was only our clients' employees. Right? And now we are seeing the first kind of a big scale programs geared toward consumers and customers of our clients, which is very exciting for us because this it is a completely new type of demand.

A demand that we predict that will be exponential. As kind of a clients kind of build more confidence. Into the into the models and the results that they are getting. This is a new kind of tsunami of demand that will come and will come for the ones that are better positioned, and I think we are. We are the ones that actually kind of being very successful of those initial work streams. With the internal, you know, the implementations. And kinda position ourselves very well to actually take on this new 1 that is coming out upcoming and with a lot of a lot of potential for growth.

Maria Clara Infantozzi: So just a very quick follow-up on that, Bruno. Do you foresee any sign of potential from this next step of AI revenues? potentially in 2027.

Bruno Guicardi: I think that this area of customer experience has a lot of potential to for exponential growth. Right? And, again, as clients get more confident about results and exposing those experiences and embedding agentic into the consumer customer experience, that has a lot of potential for growth.

Maria Clara Infantozzi: Thank you. Very clear.

Operator: Thanks, Clara. Our next question comes from Gustavo Farias from UBS. Hi, Gustavo.

Gustavo Farias: So, 2 questions. First 1, on the AI deployment demand. I would like to unpack it, if you could, share some color on how much of it is AI deployment per se versus the legacy modernization required for this AI deployment, and how much of the guidance raise was supported by those new partnerships with Anthropic and Mistral. That you announced recently? My second question just a follow-up on the margin outlook. First of all, I wanted to confirm if these investments in Agentic SDLC are mostly concentrated in the second quarter. And most of all, how do you think of this structural expansion in the commercial department or commercial effort?

If it is an interim effort or if we could expect normalization to happen next year. Thank you.

Cesar Nivaldo Gon: Thanks, Gustavo. I will start with the first 1. it is roughly 30% We put legacy modernization, data modernization inside the AI deployment umbrella because these are foundational investments. Companies, large companies need to do if they want to fully explore the potential, the reinvention potential of AI. So, 30% is toward this legacy data and system modernization. The second thing, Stanley mentioned, we are expanding from 8% of revenue our sales effort to 12% along this year, but for next year, we plan to stabilize around 10%. I think this will be more than offset by the new gross margin we are already seeing in our engagements based on the new offerings and commercial models.

So and I think it is a sustainable long-term investment to keep accelerating our growth and increase our wallet and market share. So roughly, we went from 8% to 12%, and half is a transition of current STLC engagements to AI agent model and new commercial models. And we but part of this is a bigger, a stronger global reach, new vertical geographies and capabilities. We are introducing in our sales. And so we will use our better gross margin and the dilution of our G&A as part of the of the puzzle of scaling CI&T in a very profitable way.

In the end, I think what we why we are very excited is we are building a company that can scale revenue faster than headcount and also can grow more profitable as our new commercial models mature. And it is clear now that it is going to happen. So we are very excited with the this new this improvement in our typical pre AI business model.

Gustavo Farias: Very clear. Thank you, Cesar.

Operator: Thanks, Gustavo. Thanks, Gustavo. Our next question comes from Luke Morrison from Canaccord. Hey, Luke. Please go ahead.

Luke Morrison: Hey, guys. Good to see you. Nice job with the quarter. I got a couple questions here. The first, I guess, on just consumption pricing and the new pricing model you guys are rolling out, the agent computing unit model. Just as I think about sort of the underlying cost of running these models keeps falling, token costs are falling, you are billing on consumption and the unit cost drops every year of that pricing model, how do you stop that from becoming a deflationary force and a deflationary revenue line over time.

Cesar Nivaldo Gon: Luke, it is not a simple question. All these curves are moving, right? The cost per token is drastically reducing. But as the capabilities of the model increase, we are using more tokens And so but now we have the advent of different options regarding open weights models like we are now investing a lot on the Mistral partnership. So we have different alternatives, depends on the scenario And but in the end, our price per consumption model is important as an alternative for our clients. But we do not see this being the majority of our commercial model. It will be relevant, but also always combined with other models. We are not betting everything on a SaaS ACU model.

We just want to have a portfolio of models and then combine, you know, by engagement, by client in the most proper way. So but this is a long and complex game on adjusting pricing and cost structure. Around this. I think luckily, we it is just a small part of our bets.

Luke Morrison: Yep. Fair enough. Gates sense. And then maybe just dovetailing, you mentioned Mistral there. You know, you have partnered with multiple frontier model providers on different terms at this stage. The cap you know, obviously, I think that Mistral Alliance is attractive to different types of clients and different geos. But just how should I think about staying model agnostic versus going deep with 1? And the what extent do your clients care what is sitting underneath your platform in CI&T Flow?

Bruno Guicardi: Bruno, you want to try? I can take this 1. Yeah. They care, Luke. They are sensitive in terms on privacy. And data controls. Right? So they care. But Flow is a is a agnostic platform. Right? So Flow at this point is connected to more than 37 models. And can kind of a simply controls that complexity for clients. Right? So but for us, we have to be agnostic in multimodal because we have clients in we have more than, you know, 200 clients in different geographies and different the sectors. We were, you know, the provide the main providers there have different types of footprint. Right?

So we have to work with our clients and what is best for them and kinda help them through throughout that complexity in the in respecting their requirements for compliance and security. Right? So that is so that is the positioning that we are in. And kinda helping even with the FinOps that kind of implies. Right? So, like, what are the models that are best for certain tasks? Right?

So that is a knowledge that we build over the you know, almost 4 years with flow and kind of automating many different type of work streams. that is what we are helping our clients with and I think that is what I driving a lot of those conversations and the and the deal flow that we are seeing.

Operator: Thank you. Thanks, Luke. Our next question comes from Cesar Medina from Morgan Stanley.

Cesar Medina: Hi. Hey. Thanks for taking my questions and congrats on results. Again, boring question, but can you confirm what you mentioned that 40% of your revenues in the first half are linked to this new pricing mechanism? And if that is correct, how much of this is in the pipeline?

Cesar Nivaldo Gon: Yeah. Yeah. 40% of the new sales 40% of everything we are we sold in the first half of the year, are now based on new revenue. But we have a lot of long term contracts that we are converting more incrementally to this new model. So I estimate that it will take, 18 months, around 18 months to have everything repriced in the new model as we renew and we compound the new sales with the renew of the current engagement.

Cesar Medina: So What you are saying, please?

Cesar Nivaldo Gon: Why we are saying the increase in our gross margin will be increased sequentially. Incrementally, sequentially among the next quarters because we have the new sales pushing for a new margin level, but also an effort on converting let's say, legacy engagements into the new commercial models and margin potential.

Cesar Medina: So make sure do you expect within the next 18 months you will be 100% under the new revenue scheme.

Cesar Nivaldo Gon: No But considering the new models are a combination, there is some that is part of what we do that is time material is very appropriate. And even FDEs, the now famous for deploying engineering are time and materials by design. So it is not 100% in a single model. We see a combination of 5 different even in a single engagement. Normally, we have 2 or 3 components. So but we will be leaving this new territory in terms of contribution margin in a timeframe of 18 months, if we can under the current market conditions and if we continue to succeed on our journey of introducing these new models.

Cesar Medina: Okay. Thank you so much and congrats again on the results.

Operator: Thanks, Medina. Thanks, Medina. That concludes our Q and A session. Thank you all for attending our event today. I will now invite Cesar to proceed with his closing remarks.

Cesar Nivaldo Gon: Sure. Thanks, Bruno, Stanley, Eduardo. Thank you all for joining us again today. And again, I need to thank all around the world. Thank you for your hard work and dedication, and I am glad that you are seeing our transformation happening. And, of course, a special thank you for our clients and to trust CI&T as their AI deployment and innovation partner So that is it. We will see you soon. Stay well. Bye.

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