CI&T Aktie

Good afternoon, and thank you for joining us for CI&T Second Quarter of 2026 Earnings Call. I am Eduardo Galvao, Director of Investor Relations. Joining me today to discuss our quarterly results are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO.

Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook, are based on 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'll discuss certain non-GAAP financial measures. We believe this provides a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release. Today's session is being recorded [Operator Instructions]. The full presentation deck is available on our Investor Relations website, and a replay of this call will be posted shortly after we concluded.

With that, I'm pleased to hand the floor over to our Founder and CEO, Cesar 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's actually just experimenting.

In both cases, the constraint was never the technology. It's the organization's capacity to absorb it. That gap is exactly where CI&T plays. And it's 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 sustaining revenue growth and 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're making to capture it. We delivered record revenue of $142.8 million, up 21.9% organically and above our guidance. Broad-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, one 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 2026 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've extended this streak without a single M&A deal, prioritizing our capital allocation towards our own transformation and our sales effort and growth engines. This embodies one of our cultural tenets. We play the infinite game. We 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 CI&T's ability to capture it.

The case studies that follow show how this AI deployment momentum is translating into tangible business outcomes.

[Presentation]

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 over to Bruno to discuss how we are scaling this hyperproductivity through our global delivery model and our evolved talent strategy.

Thank you, Cesar. Good afternoon, everyone. I'm glad to share our operational and talent progress for this quarter. We closed Q2 2026 with roughly 8,100 professionals with voluntary attrition at 10.1%, continuing to trend towards some of the healthiest levels in our history. At the center of this workforce are our 6,700 AI builders, the result of reskilling 100% of our professionals to work AI natively. That matters right now. Recent independent research mapped a widening gap in the market for AI deployment talent with demand for engineers who deploy AI at enterprise scale, growing roughly 50% year-over-year. Most of our industry is racing to hire into an increasingly scarce pool of talent. We didn't have to. We build it from within ahead of the market.

Revenue per AI builder continues to grow, reaching over $80,000 in Q2 2026 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 has been reinforced by a strategic partnership we announced this quarter, one that speaks directly to the role CI&T plays for large enterprises. We joined Anthropic Claude Partner Network, certifying more than 1,000 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.

CI&T already runs Claude Code extensively inside CI&T FLOW, and this partnership expands that work into a joint go-to-market motion with a focus on co-developing 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're co-developing, directly feeding our commercial momentum.

Large enterprise need a partner who can take frontier models into complex regulated mission-critical environments and deliver production-grade outcomes. That deployment layer is exactly where CI&T operates, and this partnership makes us a 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. And this chart from Forrester is the clearest way we found to show clients why. Most of what's 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's 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 and 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 one I wanted to walk you through now, the one 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 don't 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 agent journey in months.

Three things differentiate this from traditional systems integration. Who delivers it? Small, senior forward deployment and 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 billed. And it compounds once we reinvent one core process, it becomes a 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.

Thank you, Bruno, and good afternoon, everyone. Let me walk you through our financial results for the second quarter of 2026. 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 evenly 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 science, 16%; and retail and industrial goods, 11%. The one 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 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 the first quarter 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% adjusted EBITDA margin. The year-over-year compression reflects 2 main factors. The first is the appreciation of the Brazilian real against the U.S. 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 Agentic 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 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, that 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.

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 2026, we expect revenue of at least $145.7 million, a 14.4% increase over the third quarter of 2025 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 margin for the 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 doesn't 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 Instructions] The first question comes from Puneet Jain from JPMorgan.

I want to follow up on margin guidance like the cut of around 200 basis points. Like I understand like a lot of its discretionary investments and then currency. Can you break down like that impact for us, like how much of the incremental impact is FX versus investments? And why should we expect like the level of investments to go down? Like we're still in very early stages of AI build-out AI ramp-up. Like why won't like this level of investment stay where it is into next year and beyond?

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're 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 one. And everything is pure organic. We have a pipeline growing 40%.

So everything is funded by this investment that we've been making ahead of the pack and specifically in this second quarter. We heavily -- it's an answer to this surge in demand for AI deployment, then we reshape, redesign our go-to-market, and that's what you see in the second quarter.

Going forward, we see part of this investment, we are reducing along throughout the quarters, which is the -- specifically the SDLC -- Agentic SDLC deployment. But the other half, I would say, we will continue to see there. So it's more structural. So if you see from last year's quarter sales, it's 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's why you see EBITDA growing and everything already counting on this deep pressure from the FX, everything is compounding there.

Okay. That's 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's up nicely sequentially in this quarter. So how broad-based like the growth in financial services is and your expectations for the rest of the year there for that vertical?

Sure. I can get this one. You're 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's a solid growth around all the -- not only verticals, but if you see -- if you look at our top 10 clients, even if you exclude our top 1 client, it's still a very high growth, 16% year-over-year among the top 10, excluding the top 1 that grew solid too. 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 the 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 [ Estavo ] mentioned in our sales organization. So we expand verticals, reach across the board to really speed up growth and increase the wallet share in our portfolio and also increase the land in new clients.

So this is -- I think it's the second time we are raising our revenue guidance, and we continue to see a growing demand, and it's basically across the board. Of course, financial services will continue to be our #1 vertical. I think, it's the use case for efficiency and customer experience in the financial services, especially in the banking sector has become very clear now in terms of impact. So -- but we see also other verticals evolving like retail with agentic commerce will be a big trend, and it's a head start. Every single industry will have a set of very powerful use case to explore. So we are preparing our offerings and teams to capture that.

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

Got it. Yes. No, I was looking at on a sequential growth basis and like it was up nicely at top client as well as rest of the financial services even on sequential growth, but I understand. So appreciate it.

Our next question comes from Steven from Wedbush.

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're seeing there because you mentioned that 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?

Sure. I can start, Bruno, you can jump in. Well, I think roughly 35%, 40% of our demand, we articulate as Agentic SDLC, especially transforming the current engagements we already have, so old traditional digital engagements now being reshaped as Agentic SDLC engagements with different commercial models and different margin profile, too. So this is one 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 CI&T 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 gives us a lot of room for replacing and then on our clients and also land on new avenues of growth. So -- and the second question, we are -- sorry.

Specifically on the deal sizes for Agentic SDLC versus your traditional deal sizes.

Yes. We are seeing an increase in the deal size. We are not sure if it's a trend or some more just momentum or -- but we see in the last 2 quarters, the size of the deals are larger. But we are not sure yet if it's just a transition from previous recurring model or if it's a long-term tenets. 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 tenets. It depends on how the market evolves.

Okay. Got it. And if I can ask a quick follow-up because I want to ask you 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?

Let me take this one. 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 kind of situations or kind of ad hoc, nothing systematic.

Our next question comes from Bryan Bergin from TD Cowen.

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 I 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's driving that because there's 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?

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 Agentic SDLC. 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 don't have really a lot of demand from the techie companies, but it's happening now. I think it's also correlated with the AI deployment demand. And so now we have some big tech companies increase their spending with us. It's also correlated with the partnerships we are announcing probably you saw not only the typical hyperscalers, Amazon, Google, Microsoft, but also the new big players, especially Anthropic. So it's a new revenue source for us, and we are forcing -- we're very happy to see this also adding to our growth.

Okay. Okay. 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?

Well, Bryan, thank you for the question. I may start here and Bruno, if you may add. Again, if you see, Bryan, as a comparison, for example, we have a 2.2 more or less percentage point effect from the FX if you compare to second quarter of '25. So pretty much we are in line there, and that includes our efficiency gains that compensate 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&L, we will see a leverage -- operating leverage on top of the SG&A. And in sales specifically, as we don't have in the coming quarters, the SDLC -- Agentic SDLC investment component that we saw heavier in the second quarter, you will have -- 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's implied in the guidance that we provided.

I don't know, Bruno, if you have to -- if you could add more color there?

No, I would just say that the seasonality of the sales investment that was done in Q2, right, that will stop in kind of halfway, right? So from the 8 to 12 percentage points on the revenue, right? So it was -- if you look at where we were last quarter, 8% now we're 12%. So we think we're going to see kind of a long-term will be around 10%. So that's 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.

Our next question comes from Maria Clara from Itau.

I have 2 questions here. So the first one 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 formats 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?

Sure. Let me start with your second question. We basically are introducing 4 new price-based models that are -- so fixed price with higher margin output-based that 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 percentage points higher than the traditional time material. So it depends on the mix. We have something in this range. So it's a very significant improve 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, that's why we are foreseeing this expansion in gross margin. And our efforts are showing that this will -- this trend of 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 AI deployment game and really align the purpose of the engagements with our clients. And we are seeing 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 -- 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 AI age, reducing the fragmentation and creating the right infrastructure 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 industry, we now see a set of powerful use case to explore.

And finally, I think what is new, probably what I mentioned is 85%, 90% of this increased demand. And we have a new trend in our pipeline that Bruno mentioned during the call, we launched the enterprise reinvention services. It is a new line of services, very transformative where we help our clients not just improve current workflows, but really reinvent core process around AI. And this is always an outcome-based engagement. So this is a new trend is -- and probably we will see this being more relevant in the future in our pipeline. So basically, AI deployment in these 3 groups.

If I may add, Cesar, I think we're very excited with the consumer experience element there that Cesar mentioned because if you're hearing those calls for the last 2 years, we've been telling a lot that this will come, right? So the first phase of AI demand was solely focused on efficient kind of efficiencies and operational excellence, right, so only internal, where the user of AI was only our clients' employees, right? And now we're seeing the first kind of big scale programs geared towards consumers and customers of our clients, which is very exciting for us because it's a completely new type of demand that we predict that will be exponential as kind of clients kind of build more confidence into the models and the results that they're 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, like we are the ones actually kind of being very successful on those initial work streams with the internal implementations and kind of position ourselves very well to actually take on this new one that's coming out upcoming and with a lot of potential for growth.

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

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

Our next question comes from Gustavo Farias from UBS.

So 2 questions. First one on the AI deployment demand, I'd like to unpack it. If you could share color on how much of it is AI deployment 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 First of all, how do you think of this structural expansion in the commercial department or commercial effort? If it's a multiyear effort or if we could expect normalization to happen next year?

Thanks, Gustavo. I will start with the first one. It's roughly 30%. We put legacy monetization, data monetization 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 monetization.

The second, I think, 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's a sustainable long-term invest to keeping accelerating our growth and increase our wallet and market share. So roughly, we went from 8% to 12% and 1/2 is a transition of current SDLC engagements to AI agentic model and new commercial models. And we -- but part of this is a bigger, a more strong global reach, new verticals, 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 puzzle of scaling CI&T in a very profitable way.

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

Our next question comes from Luke Morison from Canaccord.

Nice job with the quarter. I got a couple of 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. If you're 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?

Look, it's 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 weight models like we are now investing a lot of 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 don't 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 by engagement, by clients in the most proper way. So -- but this is a long, long and complex game on adjusting pricing and cost structure around this I think luckily, it's just a small part of our bets.

Yes. Fair enough. Makes sense. And then maybe just dovetailing, you mentioned Mistral there. You've partnered with multiple frontier model providers on different terms at this stage. 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 one? And to what extent do your clients care what's sitting underneath your platform and under FLOW?

Bruno, you want to try?

I can take this one. Yes. They care, Luke, because they're sensitive terms on privacy and data controls, right? So they care. But FLOW is a agnostic platform, right? So FLOW at this point is connected to more than 37 models and can kind of control that complexity for clients, right? So -- but for us, we have to be agnostic and multi-model because we have clients in -- we have more than 200 clients in different geographies and different sectors. We were the main providers there have different types of footprint, right? So we have to work with our clients and what's best for them and kind of help them throughout that complexity in respecting their requirements for compliance and security, right?

So that's the positioning that we are in and kind of 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's a knowledge that we built over the almost 4 years with FLOW and kind of automating many different type of work streams. That's what we're helping our clients with. And I think that's what driving a lot of those conversations and the deal FLOW that we're seeing.

Our next question comes from Cesar Medina from Morgan Stanley.

Congrats on the 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 is this on the pipeline?

Yes, yes. 40% of the new sales, Medina, thank you for your question because we measure bookings and also revenue, right? So I mentioned in our last call, 40% now of everything 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 renewal of the current engagement. So that's why we are saying the increase in our gross margin will be sequentially, incrementally, sequentially along the next quarters because we have the new sales pushing for the new margin level, but also an effort on converting, let's say, legacy engagements into the new commercial models and margin potential.

To make sure, do you expect within the next 18 months, you will be 100% under the new revenue scheme, no less...

Yes. But considering the new is a combination. There is some -- that's part of what we do that is mature is very appropriate. And even FDEs, now famous forward-deployed engineers, are time and material by design. So it's 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 living this new territory in terms of contribution margin in a time frame 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.

That concludes our Q&A session. Thank you all for attending our event today. I'll now invite Cesar to proceed with his closing remarks.

Sure. Thanks, Bruno, Stanley, Eduardo. Thank you all for joining us again today. And again, I need to thank all CI&Ters around the world. Thank you for your hard work and dedication. And I'm glad that you are seeing our transformation happening. And of course, a special thank you for our clients and to trust CI&T as AI deployment and innovation partner. So that's it. We see you soon. Stay well. Bye-bye.

Good afternoon, everyone. Thanks for joining us. I am Eduardo Galvao. I'm the Executive Director of Investor Relations. And before I pass it over to our Chairman, Fernando Matt, I would like to welcome our distinguished shareholders, Board members and guests, welcome to CI&T 2026 Annual General Meeting held today in a hybrid format from our Campinas office and virtually via Zoom.

As we proceed with today's resolution, please be advised that the right to take the floor and actively manifest is strictly reserved for Class A and Class B common shareholders of record as of April 24, 2026, as the record date, or their authorized proxies.

In accordance with our notice of meeting, formal participation and manifestation are exclusively permitted for those attendees who have verified their identity and shareholder position by providing the required documentation, including valid identification, certified proxy cards or powers of attorney, within the prescribed deadlines. Thank you all for your cooperation in ensuring an orderly and legally compliant assembly. Thank you, Fernando. Please go ahead.

Good afternoon, and welcome to CI&T Inc.'s Annual General Meeting. The meeting will now come to order. As Galvao introduced me, I am Fernando Matt, the Chairman of the Board of Directors of the company, and thank you all for joining us today. I will act as the Chairman of the meeting and Eduardo Galvao will act as the Secretary of the meeting. Shareholders should not address the meeting until recognized. [Operator Instructions] And now I ask the Secretary to give an update on the qualification of this meeting to proceed.

This building is held pursuant to a written notice sent to all shareholders of record as of the close of the business on April 24, 2026, Sao Paulo time. The notice included a proxy form and the 2025 annual report on Form 20-F, which covers the fiscal year ending on December 31, 2025. It was made accessible on the company's website. These documents will be filed with the records of this meeting.

Secretary, do we have a quorum?

Yes. As set out in the Articles of Association of the company, one or more shareholders holding not less than 1/3 in aggregate of the voting power of all shares in issue and entitled to vote present in person or by proxy or if a corporation or other nonnatural person by its duly authorized representative constitutes a quorum of the shareholders and all legal requirements for holding this meeting have been satisfied.

Okay. So the meeting is lawfully convened and ready to transact business. You have received a copy of the meeting notice, which is also the agenda of this meeting, which includes the matters to be submitted to a vote of the shareholders. At this time, the polls are now open, and we ask any shareholder who has not yet turned in a proxy and wishes to do so at this time to use the raise your hand button. Shareholders who have sent in proxies do not need to take any further action at this time.

Okay. We will now proceed to the matters to be voted on. The first item of business is a proposal to as an ordinary resolution, approve and ratify the company's financial statements and the auditor's report for the fiscal year ended 31 December 2025. Is there any discussion concerning the first proposal?

So no discussions or comments.

The second item of business is a proposal to as an ordinary resolution appoint Marcelo Dodsworth Penna to be a director of the company to serve for an unlimited term in accordance with the amended and restated memorandum and articles of the company. Is there any discussion concerning the second proposal?

I hereby declare the polls closed. The Secretary will now tabulate votes and report the preliminary results before the close of the meeting.

The floor is open for questions and answers. If you would like to address the meeting, please stand or use the raise your hand button and identify yourself and tell us whether you are a shareholder or appearing by proxy and the number of shares of the company that you represent. Are there any questions or other matters that any of the shareholders would like to present?

So if there are no questions or comments, I have been advised by the secretary that the tallies are now available, and I will ask the Secretary to read them.

Thank you, Fernando. Both proposals voted on at this meeting have received the approval of a majority of the votes cast by the holders of shares present in person or represented by proxy and entitled to vote on these proposals. Mr. Chairman, the final results of the shareholder vote, reflecting all proxies received by mail through the close of this meeting, and any votes cast in person during this meeting with respect to the proposals will be included in the minutes of this meeting and will be published in our Form 6-K after the final results are known and will be available upon request.

Thank you, Secretary. This meeting is now concluded. I want to thank you all for attending today's meeting and for the support you have shown for CI&T Inc. Thank you.

Thank you, Fernando. Thank you all. Bye.

Good afternoon and thank you for joining us for CI&T First Quarter of 2026 Earnings Call. I am Eduardo Galvao, Director of Investor Relations. Joining me today to discuss our results and strategic milestones are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO.

Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook, are based on 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'll discuss certain non-GAAP financial measures. We believe this provides a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release.

Today's session is being recorded. [Operator Instructions] The full presentation deck is available on our Investor Relations website, and a replay of this call will be posted shortly after we conclude.

With that, I'm pleased to hand the floor over to our Founder and CEO, Cesar Gon.

Thank you, Eduardo, and good day, everyone. A year ago, I said the future of business is technology and the future of technology is business. Six consecutive quarters of double-digit organic growth tell me that, that was right. What has changed is the kind of partner companies are looking for, not a traditional horizontal service firm, but what we are choosing to call tech-integrated business solutions partner.

We continue to advance 2 distinct AI-driven growth vectors for CI&T; AI deployment which expands revenue through IP-based solutions and AI adoption engagements and AI monetization which expand margins by evolving our pricing models to capture a greater share of the productivity gains and business value created by AI.

2025 was a very strong year for AI deployment, and this trend has only strengthened in 2026. At the same time, 2026 marks the year when our AI monetization efforts are becoming more tangible. In Q1 2026, 20% of new sales were already based on new pricing models. We expect these models to contribute to gross margin expansion over the coming quarters as adoption continues to accelerate. By combining strategy, AI-native execution with Agentic SDLC and IP-based solutions, we are positioning CI&T to help lead the next decade of business reinvention.

Turning to our financial performance. The first quarter of 2026 was a period of significant scale and sustained momentum. We achieved record revenue of $136.6 million, representing 23.2% year-over-year organic growth. This outperformance is notably broad-based with robust demand across all core geographies and a diversified footprint spanning our key industry verticals.

Profitability remains a core strength of our model with adjusted EBITDA reaching $20.8 million, representing a 15.2% margin. On an FX-neutral basis, this would be equivalent to an adjusted EBITDA margin of 17.4%. This performance reflects our ability to continue investing in our AI growth vectors while maintaining a disciplined operational profile.

Furthermore, our business continues to demonstrate high-quality cash conversion with $13.5 million in cash -- operating cash flow this quarter, equivalent to 65% of adjusted EBITDA. The first quarter of 2026 marked our 60th consecutive quarter of double-digit organic growth, and this growth remains fully organic. This consistency is not accidental, it reflects a structural shift in client demand and CI&T's ability to capture it.

We are now seeing a clear acceleration of AI deployment. Clients are moving beyond experimentation and beginning to rebuild their technology foundations, operating models and business processes around AI. They need partners capable of connecting strategy, execution and measurable outcomes in the complex reality of large enterprise environments. This is where CI&T is increasingly differentiated.

Our proprietary IP, AI native delivery capabilities and CI&T FLOW are helping us convert this demand into large higher-quality engagements, both with new clients and within existing accounts. The case studies that follow show how this AI deployment momentum is translating into tangible business outcomes.

[Presentation]

These cases serve as empirical evidence of how our Agentic SDLCs fundamentally resetting the baseline for enterprise productivity and speed to value. I will now hand over to Bruno to discuss how we are scaling this hyper productivity through our global delivery model and our evolved [ talent ] strategy.

Thanks, Cesar. Good afternoon, everyone. I'm excited to share our operational and talent progress for this quarter. We ended the first quarter 2026 with over 8,000 professionals, including an average of 6,600 AI-builders. While our headcount increased 13.3% year-over-year, this remained below our 15.5% revenue growth at constant currency. This delta has already begun lifting our revenue per professional, and we expect it to widen as AI monetization scales.

Value-based pricing led us capture more of the value we create per engagement, strengthening our unit economics as we continue to grow the team. As Cesar noted, we have pivoted from technology execution to strategic AI deployment. Our talent is no longer merely building code. They are curators of AI, leveraging CI&T FLOW and the Agentic SDLC to collapse development times and deliver hyper productivity. This shift is only possible because of our culture of continuous adaptation. We ended the quarter with a 4.1 Glassdoor score, the highest among our peer group and having been recognized by Great Place to Work for 19 consecutive years.

Our voluntary attrition remains at a healthy 10.3%, the lowest level in our recent history, in an era where AI is redefining technical careers. Our industry-leading retention proves that our people feel empowered by these tools, not replaced by them. Our AI-builders are the engine of our innovation and their ability to orchestrate complex AI agents is the fundamental differentiator for CI&T in the global market.

I'm proud to announce the launch of our 2025 global ESG report this quarter, reaffirming our commitment to the UN Global Compact. Our culture remains a primary competitive advantage and 52.2% of our global workforce is from underrepresented groups. The diversity of perspective is what allows us to navigate the ethical complexity of AI responsibly. It's not separate from the business. It's why clients trust us with their work.

The report also covers our social impact. Over 100,000 people reached through funded projects alongside governance and environmental milestones, including the Golden Seal from the Brazil GHG Protocol and 100% renewable energy across our Brazilian operations. I invite you to explore the full report published on our website.

Now over to Stanley to guide us through our financial performance.

Thank you, Bruno, and good afternoon, everyone. Let me walk you through our financial performance for the first quarter of 2026. We achieved $136.6 million in net revenue, representing a robust 23.2% growth compared to the same period last year, fully organic. On a constant currency basis, revenue grew 15.5% year-over-year.

I want to highlight that this performance exceeded our guidance and surpassed current analyst estimates. This outperformance is underpinned by exceptional momentum in our go-to-market execution. Throughout the quarter, we observed a significant expansion in our sales pipeline and an improved conversion rate, the direct result of intentional sales initiatives and the tangible impact our AI deployment is delivering for our clients. What excites us most is the underlying quality and breadth of this performance.

From a geographic perspective, Latin America led the acceleration with 33% growth, while North America delivered a solid increase of 16% and new markets grew 11% year-over-year. We achieved an 18.9% expansion within our top 10 accounts, yet our growth remains healthily distributed. This resilience was visible across nearly all industry verticals, which grew at double digits with our Consumer Goods segment remaining stable. This broad-based performance confirms that our AI deployment is not a localized success. It is a global catalyst that is driving deeper penetration across all regions and industries we serve.

This chart illustrates our land and expand strategy in action. We grew our $5 million to $10 million client cohort from 15 to 18 clients in the quarter, a compounding effect of our ability to scale wallet share through AI-driven impact. Our performance is fueled by exceptional go-to-market momentum. We observed significant pipeline expansion and improved conversion rates this quarter, the direct result of intentional sales initiatives and the tangible return on investments our AI deployment provides. This strength creates a highly predictable and resilient revenue base as we deepen these strategic partnerships.

In the first quarter of 2026, our adjusted EBITDA reached $20.8 million, a 6.3% increase year-over-year, resulting in a 15.2% margin. It is important to note that this margin reflects 2 specific headwinds, unfavorable foreign exchange comparisons and the impact of increased Brazilian payroll taxes.

To provide a clearer view of our operational performance, if we exclude the FX impact, our first quarter '26 EBITDA would have reached $22.2 million, equivalent to a 17.4% margin and a robust 13.2% year-over-year growth. This FX impact was more pronounced in the first quarter due to the year-over-year Brazilian reais-U.S. dollar comparison base, and it is expected to attenuate over the coming quarters.

We remain focused on ensuring that the hyper productivity we are engineering today becomes the permanent foundation for long-term sustainable profitability. As Cesar mentioned, we expect our new engagement models to contribute to profitability margin expansion over the coming quarters as adoption continues to accelerate and we capture a greater share of the value we create.

Moving to our bottom line. Adjusted profit reached $10.2 million in the first quarter of 2026, This represents a 6.2% increase compared to the same period last year, resulting in an adjusted net income margin of 7.5%. Most importantly, our adjusted diluted earnings per share was $0.08, representing a robust 11.8% increase over first quarter '25. This double-digit growth in earnings per share, surpassing our net profit growth, is a direct result of our disciplined capital allocation strategy and the increasing operating leverage within our AI native platform.

I will now turn the call back to Cesar to discuss our business outlook and the strategic path forward for the remainder of 2026.

Thank you, Stanley. For the second quarter of 2026, we expect revenue of at least $140 million, representing 19.5% growth year-over-year or 13.9% at constant currency. Based on our strong first quarter performance and the quality of our current pipeline, we are increasing our full year 2026 revenue guidance to a range of $556 million to $575 million. This implies organic growth of 13.5% to 17.5% with a midpoint of 15.5%.

Our revised growth outlook includes a positive FX impact of approximately 350 basis points, which is 50 basis points higher than our previous guidance. Effectively, of our 150 basis points increase of our revenue guidance, 100 basis points are driven by pure organic momentum and improved pipeline conversion. Our updated guidance reflects the continuing strength of our first AI-driven growth vector, AI deployment, which is fueling revenue expansion through IP-based solutions and AI adoption engagements, combined with our well-oiled go-to-market strategy.

In addition, we estimate our adjusted EBITDA margin to be in the range of 17% to 19%. We project margin expansion to build sequentially throughout the year, supported by our second AI-driven growth vector, AI monetization, as the adoption of new pricing models accelerates and enable us to incrementally capture a great share of the productivity gains and business value created by AI.

With that, we are ready to begin the Q&A session. Thank you.

[Operator Instructions] The first question comes from Gustavo Farias from UBS.

Two on my end. First of all, congratulations on the results. First question, if you could provide color on the current pipeline of projects and the mix between the types and the types of contracts; time-and-materials, outcome-based, fixed price and how this has been evolving and the margin profile you've been encountering in each of them.

My second question is related to margins. We've seen the margin below -- a little bit below our numbers and consensus numbers. Of course, you explained very clearly the main drivers. Just to double check here, how much of that was already expected by the previous and current margin guidance? And is it fair to assume margin, based on Q1 results, could be brought towards the lower end of this 17% to 19% range? That's my second question.

Thanks Gustavo. I can handle the first one and then Stanley can get the second one. Regarding pricing models, as planned, we are now advancing what we are calling the AI monetization effort. That basically is an effort to synchronize AI deployment with the evolution of our pricing models to be more value-based, and of course, giving us the opportunity to capture more margins from the efficiency and impact we are generating.

We disclosed, for the first time, this evolution by giving the data point of 20% of all the new sales in the fourth quarter were already based on this value-based models. Value-based models is -- for us is a combination of output based with price per consumption or we call Asian computing units when we sell in a semi-sized model and outcome-based. So output consumption and outcome based.

This is basically what is behind the 20% we disclosed as a combination of a mix of these different pricing models. We believe the future will be really a hybrid model where we combine -- it depends on the situation, the scenario, we combine all these alternatives in the end with the will to provide more flexibility to our clients, skin in the game from CI&T regarding our ability to leverage value from the AI deployment and also, of course, capture more of the share of the impact we are generating.

So what we -- of course, our business model is very current. So we have long-term contracts. So that's why quarter-over-quarter you're going to see a visible, tangible increment in our gross margin as a result of this move towards new pricing models. But we also will keep -- I'm sure we will have part of our revenue still based on time-material. But even time-material, if you see what's happening in the industry, time-material is being rebranded, right, as for the engineering deployment.

So there's a new set of opportunities even for time-material engagements to reprice it based on deep AI competence. So I think all good moves, vectors in our favor, and I see a very consistent strategy for CI&T on these 2 vectors, AI deployment combined with a disciplined AI monetization.

Stanley, if you could address specifically the second question from Gustavo.

Yes. Gustavo, thank you for the question about margins. Well, if you see, Gustavo, we are maintaining our guidance of EBITDA of the range of 17% to 19%. And what is built in that guidance? First, structural characteristics of our business seasonality. We have higher margins towards second half of the year. We also have an operating leverage going on for the last years, and we will continue to see that throughout 2026.

And on top of that, we have the margin expansion out of the AI monetization through new engagement models. So all of that combined is, let's say, compensating for the real appreciation, which is a headwind to the margins, which is already within or in this 17% to 19% guidance. And at the end, if you see, in absolute terms, EBITDA will increase from -- in comparison to 2026. So the question is more towards the margin effects in the revenue.

Our next question comes from Puneet Jain from JPMorgan.

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

Thanks, Puneet. Basically, in terms of pricing, even in time-material engagements, we continue to see a very rational price environment and a lot of openness from our clients to discuss new pricing models and to incorporate eventually the new opportunities regarding AI. So we -- now we see a lot of opportunity. Of course, the easy or let's say the low-hanging fruit is just -- as now we are really -- I think with a very superior approach on AI deployment, we can accommodate any additional cost in our pricing model.

But I think the real -- the most strategic part is moving from, as I mentioned, from time-material to a new output-based, outcome-based and consumption-based model. So I think this -- as the demand is huge and the eagerness of our clients to leverage AI benefits are increasing, we are not seeing -- of course, we need to synchronize everything, and it's what we do. I think we are very good on that. And so I think we are kind of very happy with what we could do in the previous quarters regarding AI deployment and what we see the speed of -- what we are seeing in the advancement of AI monetization efforts.

So very -- I see more as our ability to demonstrate that. In the end, if you are able to demonstrate the impact you can generate with AI for our clients, they respond accordingly in terms of adjusting the model in the right direction.

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

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

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

Our next question comes from Steven from Wedbush.

Congrats on the quarter. So I have 2 questions, one on the value-based pricing and then one also on the headcount growth. Specifically for the value-based pricing, you mentioned that 20% of the net sales is coming from this value-based pricing approach. Do you have any sort of long-term gauge or any sort of long-term target that we can take into account for this value-based pricing and what the company's expectations are to really get a lot of these new customers onto this value-based pricing approach?

And then turning to the headcount, especially when you're starting to see over 80% of your headcount really leveraging AI and becoming the curators of AI, as you described. Is that going to lead to any sort of headcount reduction in the near term or in the long term and something that we can take into account from there?

I can get the first one. Steve, thank you for your question, and Bruno can help with the second. Regarding new pricing models, we see this change happening in the horizon of maybe 18 months as a natural evolution of -- as the new sales become relevant in terms of revenue quarter-over-quarter. So gradually, you're going to see the effect happening in our -- especially in our gross margin, where you can clearly see the difference on the value we are capturing from the engagement.

Another thing that is, it's not just pricing models. I think our offerings are evolving to generate much, much more impact to our clients. So it give us a lot of flexibility. And as we see the momentum of AI deployment increase and the way we are very well positioned, we see room for really accommodate the CI&T in a better shape regarding value capture.

So, gradually, quarter-by-quarter, following the impact, the increased impact we are generating for our clients; impacts around, like say, horizontal impact regarding efficiency. So, a lot of things that we can do now with an amazing return on investment for them regarding data, regarding app modernization and so on and direct AI impact with the new use cases that are emerging for every vertical and segment. So a lot of opportunities, and I think we are very well positioned to capture that.

Regarding our workforce, I think Bruno can address that.

Yes. So thank you for the question, Steve. Like the way we see this, right, so even if the total addressable market reduces in size, like it would not reduce by a lot and maybe not even not reduce at all. But our ambition here is actually to be a leader in this new industry, in the industry of the AI builders. And if we accomplish that and to our point here, we are ahead of the curve and our plan is to be aggressively ahead of that curve, and we'll capture -- we will be a winner in this new market, right?

So being a winner in this new market, I think will not necessarily mean that we will grow by revenue, but even by headcount, we'll continue to grow. So that's the ambition, is to win in this new game and to keep giving opportunity for our people and having them -- have their own grow and becoming the leading professionals in their industry and creating value for our clients. And I don't think we'll kind of anticipate any headcount reduction in that scenario.

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

Let me add one thing that I think is important. Looking back, we did an amazing job in the past 3 years. We really introduced CI&T FLOW with faster adoption. We're reskilling our whole team around artificial intelligence. And we also turned every single CI&T engagement into an AI engagement. So now we have builders, AI builders. That is, I think, the most important talent for -- to make AI deployment feasible. So I think it was a very good strategy not to create a different business unit for AI services. We said, let's look at our core offerings and redesign around AI 3 years ago. So now we are leveraging the results of these bets.

Our next question comes from Bryan Bergin from TD Cowen.

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

Thanks, Bryan. Great to see you. I think part of the evolution of the pricing models is combining with our IP-based offerings. As more IP is on the table in a deal, more, I would say, more feasible it is to introduce new commercial models. So we are combining, and as we are working hard around our vertical IP-based solutions, by now, we have, I think, a solid set of assets that allow us to really foster our AI monetization through the new model.

So I think IP intellectual property is an important foundation of our strategy. If I can summarize our strategy in first 2 growth vectors we mentioned, AI deployment, AI monetization; and 4 pillars, IP-based offerings, commercial models, data is incredible what we are doing around data and partnerships with the hyperscalers. So these 4 pillars are fostering our growth vectors, I think, in an amazing way. So our job is to synchronize all this momentum and capture the growth and the value we deserve by the impact we are generating.

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

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

Our next question comes from Luke Morison from Canaccord.

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

Luke, thank you for the question. Well, let's unpack as you want. First, by far, it is the FX effect and it's more than 200 basis only in that aspect we presented in the slides, adjusted by current currency equivalent, right? And you have to bear in mind that by seasonality, we have a load every first quarter of the year, a load of salary adjustments that will be throughout the year compensated by contract adjustments and so on.

So, again, here, we have the combination of the structural aspect and this specific FX effect. So -- those are, I would say, the main aspects for the first quarter. And as modeling for the next quarter, again, we have the seasonality play here. We have higher working days throughout the next quarters in comparison to first quarter, for example. We have the leveraging of SG&A as we grow the business. So what else?

We have a combination of structural aspects. And in addition, we do have the monetization of the new engagement models taking a play, an important role here as well throughout the next quarters. So I wouldn't say that you shouldn't model anything different than what we guided in terms of EBITDA. That's why we are guiding, right?

So -- and we have the range for the reasons usually we have for that range, right? On top of the range, we have a reflection of what we envision in all the pipeline that we have; midpoint, we have a more conservative aspect of that; and in the lower, we have macro effects or something compounding there to be more conservative. So yes, that's the breakdown, Luke.

Got it. Very helpful. And then maybe a quick follow-up there. Of that 20% of new sales in Q1 that are on these new pricing models, can you just give us a sense of like what do gross margins look like on those engagements? What can it scale to over time? How can that like impact the overall gross margin profile of the business over like a 2- to 5-year period?

Yes. Well, we -- what we are doing as we capture value on this monetization, AI monetization, the trend is to reinvest in sales. So if you would see increments in gross margin, the trend is that we would reinvest in sales to capture and to benefit growth. So at the end of the day, it's about the growth and the organic growth and to continue in this strong momentum that we are. So usually, that's the engineering.

Let me help here. Luke, we can be a little more specific. I think the new pricing models can increase. Depends on the -- of course, in the context, the engagement from 3 or 4 percentage points to 10 or 15 percentage points in terms of contribution margin, the engagement. So -- and that's why we see as a pillar in our strategy to capture part of the -- this is only possible because we are not delivering the same kind of impact. We are delivering much higher impact. If you try to discuss pricing model with the clients, delivering the same value, it's -- of course, it's not going to work. But we are discussing delivering a different level of impact. And this has allowed us to move towards these more powerful pricing models.

Another thing is, I think if you look at our -- the numbers we just released, if you combine our organic growth of 23.2% with our adjusted EBITDA margin of 15.2%, we reached -- and we add that, we reached 38.4%, nearly back to the famous rule of 40%. So if we would put in perspective, everything we are doing, looking ahead, I think we can expect better -- you're going to see from next quarter better gross margins as a result, of course, the fundamental seasonality, a lot of things that Stanley described, but also the beginning of the impact of the new pricing models, and this will allow us to increase our sales investments, what is the strategy to fuel high growth and strong bottom line in the long term? So this is the piece of the puzzle we are handling now, I think, in a very good way.

Our next question comes from Cesar Medina from Morgan Stanley.

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

Very good, Medina. Thank you for the question. Basically, as you know, we have a lot of recurring long-term revenue. But in a time line of 18 months, everything that we will be doing will be new sales. So that's the first data point. So it takes basically 18 months to renew 100% of the engagements of CI&T.

And the second, is pipeline healthy. We -- the data point now, it is 30% large. So the number of deals in terms of value is 30% higher now than the same period last year and 100% relate to AI deployment. So this is -- if you combine this data, you see how we are growing and that is AI deployment and evolving our AI monetization along the next quarters.

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

[ But then ] What's software? I think now we are looking -- I think we have a very healthy strategy with -- but the new reality is a business with higher gross margin, significant higher gross margin, but also with different elements in the P&L. So -- but I think it's -- in the end, it's moving to a more scalable and profitable business model, but gradually, as we deploy these new models and increase our effort.

The mention regarding sales is because we see a huge opportunity. If the market continues to move in our direction as we are seeing, we have the opportunity to really accelerate our expansion, and this will require broad investments around go-to-market and sales.

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

Yes. We kind of detailed that what we increased in 150 basis points, 100 basis points is a pure reflection of demand and pipeline and so on and 50 basis points is FX tailwind. So -- and of course, as we have been doing for several -- 6 consecutive quarters, we intend to do better, increase our numbers as we win the AI deployment game.

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

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

[Presentation]

Good afternoon, and thank you for joining us for CIMT Fourth Quarter and Full Year 2025 Earnings Call. I am Eduardo Galvao, Director of Investor Relations. Joining me today to discuss our results and strategic milestones are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO.

We're excited to share the details of a landmark year for the company. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook are based on 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'll discuss certain non-GAAP financial measures. We believe this provides a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release.

Today's session is being recorded. [Operator Instructions] The full presentation deck is available on our Investor Relations website and a replay of this call will be posted shortly after we concluded. With that, I'm pleased to hand the floor over to our Founder and CEO, Cesar Gon.

Good day, everyone. It is a privilege to share our results for 2025, our fifth year as a public company. 3 years ago, I suggest that while software has been eating the world, AI has fundamentally changed in the menu. It's not just another wave. It's a different ocean. In our latest partnership with MIT's law management review, we explore why 95% of organizations still see little measurable returns on their AI investments.

The companies that successfully scale AI are not necessarily dose with the largest budgets, but those brave enough to redesign their culture. The real constraint on changing is the speed of learning. We recently published a paper offering a map for organizations willing to close the gap between AI's potential and real-world performance. The man has changed. The question is whether organizations have the appetite to embrace it.

AI adoption is no longer discretionary. It's a structural necessity Yet we see a clear productivity paradox organizations that effectively orchestrate people, processes and technology can unlock productivity gains of up to 20x, compressing innovation cycles from years into weeks. So why do most companies struggle to capture value?

Three reasons. First, the 2 trap treating AI is software instead of transforming the operating model. Second, the learning gap. The real constraint is how fast the workforce learns to work with AI. And third, fragmented governance, without a unified backbone like CI&T FLOW initiatives remain isolated experiments. At CI&T, we know transformation is never just technology. It's fundamentally human, that is what separates the 5% who we scale from the 95% who only experiment. Success in this new environment requires more than tools. It requires architecture, CI&T has codified decades of leading digital expertise into our AI transformation framework designed to convert AI potential into financial performance.

It focuses on 3 priorities: first, identify high-impact value streams; second, defined measurable business outcomes third, aligned the operating model to scale AI across the enterprise. This is powered by CI&T FLOW, orchestrating humans, AI agents, data and governance, into a single management system, and we have already reskilled our workforce around this model, enabling our clients to scale with real business impact.

Now let's turn to our financial highlights. In the fourth quarter, CI&T delivered record revenue of $134.3 million, representing 19.3% organic growth compared to Q4 '24. On a constant currency basis, growth was 13.9% year-over-year, exceeding the top end of our guidance range. Our adjusted EBITDA margin was 18.4%, demonstrating stability and resilience as we continue to scale. Adjusted profit margin reached 14% for the quarter.

For the full year 2025, our organic revenue growth at constant currency was 13.2%, positioning CI&T as the fastest-growing company among our peer group. This is high conviction growth. We continue to invest in the foundations of our future leadership in AI services, our CI&T FLOW platform, our people and our global sales engine. Stanley will provide a deeper dive into our financial metrics shortly. This marked our fifth consecutive quarter of double-digit organic growth, reflecting the compounding impact of our strategy.

Our performance is driven by the trust of our strategic enterprise clients and our ability to deliver measurable outcomes in complex environments. Over the past 3 years, we have embedded AI into our core offerings and entering what we call the acceleration phase, where our proprietary IP amplifies the value we deliver. As a result, our AI-powered offerings are expanding our pipeline, increasing engagement quality and growing wallet share with the existing accounts. To bring this to life, -- let's look at a few case studies that demonstrate how we are converting this framework into tangible business outcomes.

[Presentation]

The results we are seeing with our clients collapsing months into weeks and achieving 10x productivity gains are a testament of what's possible when AI becomes a core capability rather than just hype to explain how we are crystallizing this success across our global footprint. I will invite Bruno to discuss our evolving delivery model and the strategic offerings driving these outcomes.

Thank you, Cesar. It's a pleasure to be here to discuss the evolution of our delivery model and the strength of our global offerings. We finished 2025 with a global team of 8,000 CI&T-eers averaging 6,400 AI tech professionals over the period, a 14% increase from 2024. These are not just developers. They are consultants, designers and engineers, who empower our clients by planning strategy, customer-centric design and advanced AI engineering.

As Cesar touched upon, people are at the heart of any AI for its transformation. Our framework recognizes that this journey is more dimensional. You cannot simply install AI. You must advance people, processes and technology simultaneously. We believe that breakthroughs in technology can only be sustained if they move in lockstep with organizational maturity.

As the service industry evolves into a hybrid of IP and talent, we are empowering our people to be architects of solutions and platforms. Through CI&T FLOW, our teams can create share and reuse autonomous agencies across the entire enterprise. By integrating lean principles and robust governance with our talent and technology, we are enabling our clients to move best simple efficiency gains and award a complete reinvention of their business models.

Now let's see how we're fundamentally redefining the unit economics of software production. CI&T is capturing a massive performance at crush, by staying relentlessly ahead of the curve. The productivity gap between CI&T and non-AI or low-performing vendors is widening into a significant competitive moat. We're navigating this through a stage evolution.

Today, we're in the AI augmented phase with our AI native talent, we are already realizing 2x gains in individual productivity across the board. In more mature engagements, we moved to AI coordinated efficiency by integrating autonomous agencies into the workflow, we achieved 5x gains by collapsing lead times across the entire value stream. And we're continuously working towards a 20x performance increase through AI orchestrated reinvention, where AI coordinates the entire journey from concept to market. This evolution of our delivery engine remains a corresponding evolution in our business model.

To capture the value of this 20x potential, we are gradually transitioning our clients to modern engagement models. We're moving beyond time and [indiscernible] fixed-price, outcome-based and consumption-based contracts. This allows us to decouple our revenue from headcount and participate directly in the value we create. We aren't just watching the industry change. We're architecting the new standard to see the technology making this 20x leap a reality today.

Let's look at our newest offering, the Agentic SDLC. Historically, software development was a linear human-dependent relay race. Our Agentic SDLC breaks this model by deploying an ecosystem of autonomous AI agents that mirror key development roles. This agents orchestrate the process to eliminate systemic waste, such as waiting times in handoff errors while our senior engineers provide strategic guardrails to ensure every output is enterprise-ready.

The backbone of this system is the enterprise knowledge base. This 360-degree data the [indiscernible] enables our agents to continue to evolve, making decisions based on each client's specific context, this coordination of agent speed in human strategic supervision is what unlocks an presented performance levels. We partner with clients to map and reinvent their entire SDLC migrating their legacy processes into our Agentic platform. We are already seeing the financial and operational impact of this shift. We [indiscernible] Life Sciences client. We've secured over 8x productivity gains. We've seen development cycles that previous to 8.5 days collapsed just half a day. with [indiscernible] as seen in our client case video. What used to take months is now delivering weeks. They achieved up a 10x productivity increase through end-to-end automation across coating, documentation and testing.

Agentic SDLC is a structural engine that allows us to deliver superior value at a lower cost to serve. By compressing product creation cycles for months to date, we are fundamentally shifting our business model. We're moving from a labor-intensive delivery model to an IP-led model, where our margins can expand significantly without traditional constraints of linear headcount growth.

Our momentum and competitive edge are being validated by the world's leading ecosystems. 2025 has been a landmark year of recognition. [indiscernible] generative AI services competence CEO and was selected as 1 of only 19 partners worldwide in the AWS GenAI Partner Innovation Alliance, giving us early access to emerging technologies that keep our clients at the forefront of innovation.

Our data expertise was also highlighted by Databricks, which recognized CI&T as LATAM Enterprise Data Warehouse Partner of the year for 2025 underscoring our ability to modernize legacy data foundations into high-value assets for agentic orchestration.

Our strategic positioning is consistently validated by the industry most respected independent analysts, including Forrester and Gartner, Everest and ISG, most notably, Forrester has named CI&T a leader in modern application development services for 2025. And the ISG [indiscernible] reports recognized as a leader in enterprise data modernization in AI services, while Gartner Peer Insights rates as a strong performance in customer software development services.

Together, these accolades show that CI&T is not simply following market trends, but helping to find a new gold standard for our industry. Now I invite Stanley to guide us through our financial performance.

Thank you, Bruno, and good afternoon, everyone. It's a pleasure to provide more detail on what has been a year of exceptional execution and financial discipline for CI&T. In the fourth quarter of 2025, we delivered a robust revenue of $134.3 million representing a 19.3% increase on a reported basis fully organic. On a constant currency basis, we grew 139% year-over-year. This performance is significant, as Cesar mentioned, it marks our fifth consecutive quarter of double-digit organic growth. In a volatile macroeconomic environment, this consistency is a clear differentiator, providing the resilience of our business model.

For the full year 2025, total revenue reached $489.7 million, an 11.5% increase over 2024 or 13.2% on a constant currency basis. By balancing high-velocity top line expansion with stable margins, we are successfully compounding value for our shareholders. The narrative for 2025 is defined by the quality and composition of our growth. Our performance is anchored by our 2 most significant markets, Latin America delivered an outstanding 26.8% revenue growth for the full year, fueled by a rapid acceleration in digital and AI modernization across the region.

In North America, we maintained a solid and steady trajectory with revenue growing 9.2% year-over-year, reflecting our maturing presence in the world's most competitive tech market. From a vertical perspective, we continue to see strong demand across our core sectors, specifically in financial services and retail and consumer goods verticals where the demand for measurable AI-driven efficiency is reshaping how technology budgets are allocated.

I want to double-click on the quality of our client partnerships. At CI&T, our objective is to be the partner of choice for high-impact strategic transformations. The results of this approach are clear. Revenue from our top 10 clients grew 16.5% year-over-year in 2025. It is important to note that each of these top 10 accounts now generates a minimum of $10 million in annual revenue. This outsized double-digit growth within our most deeply embedded accounts is a powerful market signal.

It proves that even in our largest partnerships, we are finding new high-value opportunities to drive impact through the Agentic SDLC and AI-driven reinvention. Beyond our existing base, we are equally encouraged by our new client onboarding. Throughout 2025, we saw a consistently strong pipeline and robust conversion rates. This balanced portfolio of regions, loyal top-tier clients and diverse industries provides us with a very solid foundation for the year ahead.

Now let's discuss our profitability and cash flow. For the fourth quarter, adjusted EBITDA reached $24.8 million an 11.6% increase year-over-year, resulting in an adjusted EBITDA margin of 18.4%. The margin decline was driven by 2 specific headwinds. The unfavorable foreign exchange environment and the resumption of payroll taxes in Brazil. In addition, we have been deliberately investing upfront in our AI platform, our workforce reskilling and global sales initiatives as a strategic choice to accelerate our top line growth. For the full year 2025, adjusted EBITDA was $89.4 million, up 9.1% from 2024. This resulted in a full year margin of 18.3%. In 2025, cash generated from operating activities reached $81.2 million, representing a remarkable 90.8% cash conversion rate from adjusted EBITDA.

Our free cash flow totaled $45.8 million, which represents a cash conversion rate of 91.3% from adjusted profit. This level of conversion is a testament to our operational efficiency and disciplined working capital management. It provides us with significant balance sheet flexibility to continue funding our strategic pivot toward an AI genic model while maintaining a strong derisked financial position.

Turning to the next slide. Let's look at how our top line momentum translated into bottom line results. For the fourth quarter, adjusted net profit reached $18.8 million, a 41.8% increase year-over-year. This pushed our adjusted net profit margin to 14%. Consequently, our adjusted diluted earnings per share rose to $0.14 a marking a 48% increase from the previous year. For the full year 2025, adjusted profit was $51.9 million, up 16.9% compared to 2024, and with margins expanding 50 basis points to 10.6%.

Our full year adjusted diluted earnings per share grew to $0.39 a 20% increase over the prior year. This earnings outperformance was driven by 2 key factors. First, our disciplined management of SG&A expenses; second, the strategic execution of our share repurchase program.

By reducing the share count at what we believe are highly attractive valuation levels, we have successfully amplified the value delivered to our shareholders. In summary, 2025 was a year of consistent high-quality execution. We delivered 5 consecutive quarters of double-digit organic growth, maintained a resilient margin profile and achieved a late level cash conversion.

Combined with our active buyback program, CI&T is demonstrating its ability to be both a high-growth AI leader and a disciplined compounder of shareholder value. We entered 2026 with a stronger balance sheet, a more efficient delivery model and a clear path to continued outperformance. With that, I would like to invite Cesar back to share our business outlook for 2026. Thank you.

Thank you, Stanley. Our 2026 outlook reflects our commitment to sustaining growth while continuing to invest in the shift towards an AI-native operating model. For the first quarter of 2026, we expect revenue of at least $134.7 million, representing 21.5% growth year-over-year or 14.3% at constant currency. For the full year 2026, we expect revenue in the range of $548.4 million to $568 million. implying organic growth of 12% to 16% year-over-year, so with a midpoint of 14%. This outlook includes a favorable FX tailwind of approximately 300 basis points.

And we expect our adjusted EBITDA margin to be in the range of 17% to 19%. Before we open for questions, I want to thank all CI&T-eers around the world. Your commitment to innovation, continuous learning and delivering exceptional value to our clients, making these results possible. With that, we are ready to begin the Q&A session. Thank you.

[Presentation]

Okay. [Operator Instructions] The first question comes from Abbie from JPMorgan.

This is Abbie on for [indiscernible] . So I was wondering if you could walk us through the guide and some of your assumptions 1Q looks pretty strong, but on a constant currency organic basis, it seems like it's going to decel from this year. So can you just walk us through that?

Well, I think after 5 consecutive double-digit growth, we were able to really forecasted. We end the year with a very strong exit rate. So we are now able to forecast a very strong Q1 and then project continue almost in the same pace. Our guidance assumes that we will have an average FX rate of 5.3 in terms of Brazilian reals to the U.S. dollars along the average along the year.

If we look at the lower end of our guidance basically reflects macro uncertainty and the high end, where we want to be reflects our current strong commercial pipeline, 30% higher now than the same period last year and keeping the very good level of conversion, certainly driven by AI demand and our -- the differentiation we achieved for our main offerings.

We are seeing Brazil and U.S. basically expanding in a good pace. I think this last Q4, we could see our main regions all expanding and also our 5 main verticals expanding sequentially. So it's -- I think it's a good start, of course, a lot of things to do, but I think we were able to guide what I believe is the fastest growing -- continue to be -- continue to be the fastest-growing company among our peer group.

That's great. And just as a follow-up, are you guys seeing any impacts from geopolitical uncertainty so far in 1Q?

So far no in our even Europe is a very good start for the strong, solid start for the year and pursuing in U.S., we are also expanding.

Thank you, Abbie. Our next question comes from Gustavo Farias from UBS. I think we have Leo now, right? So the next question comes from Leonardo Cintra from Itau.

Just want to check about your expectation regarding the performance from the top 1 client and your top 10 clients throughout 2026. And if you could give us a little bit more breakdown about the flow adoption between the different sectors.

Sure. Thank you. I will start with the segments. Q4 was a very good year for or our 5 main verticals, we expand almost 14% in life size as the most the larger expansion, but even financial services that we have been an amazing year, and we sequentially expand more than 3%. So we continue to see demand around orders -- for our 5 main verticals. Regarding the top clients, I think also Q4 was basically in average, we expand 21% year-over-year in our top 10 clients. Excluding top 1, we spent 17% year-over-year. And if you look ex top 10, it's 18% year-over-year. So in average all the cohorts are expanding.

And so we continue to see our strategy working around our top clients and also the new clients we lend last year. So sequentially, we could grow among 8 of our top 10 clients from Q2 to Q4. So very solid, and we receive our top 1 continuing to expand, but for sure accelerated this last year.

I can take the other 1 was about the flow adoption rates. So we don't see a lot of difference across verticals and AI adoption. It's pretty much -- our team's adoption at this point continues very high, close to 100%, just really a few laggard clients that don't AI to be used in the environment which we get very minimal. So at this point, it's a full-blown utilization. And as I mentioned in my slides is well over the assistant phase and really moving into restructuring processes and workflows to actually deliver a way bigger impact at this point already.

Our next question comes from Bryan Bergin from TD Cowen.

On the AI and agentic activity and the workloads you're working on there, I'm curious if you can give us a sense of the mix of kind of new work that is the modernized version of what you've always done as far as high value, custom build solutions but now being leveraging GenAI and FLOW platform versus newer areas for you like agentic-led managed services where you may be displacing some of the kind of the larger legacy vendors? I'm just trying to ask this because trying to understand the different avenues of demand and how clients are thinking about this right now.

Sure. Thanks, Bryan, for the question. In general terms, we kind of categorize the demand in 2 groups. The first 1 is, as you mentioned, is we continue to see a big wave of foundational spending. So it means large-scale projects regarding upgrade legacy technology application or data foundation and really accelerating the cloud migration.

This is foundational moves if you want to explore the full potential of the AI-driven world. And the second, what I believe is a big trend now is direct AI investment. We see a relevant now a relevant budget allocation for AI-specific solutions. And then we are talking about hyper efficience around the software development life cycle. We see a lot of demand regarding customer experience journeys now reinvented with AI in Brazil is around [indiscernible] . But globally, it evolves for commercial commerce -- conversational commerce and so on.

We also see broad problems regarding AI for transformation. That means look at the end-to-end business model and structure of our clients and find the best way to really build a strong strategy around specific value streams or business units. And finally, we also see a growing number of what we call use case around GenAI, meaning optimizing what everything that is labor-intensive or data-intensive business process now in the redesign and reshape with the new AI capabilities. So basically, 2 groups, foundational demand and then what we call direct investment.

Okay. And if I could ask a follow-up on margin. So can you comment on maybe the drivers of adjusted EBITDA margin going forward? You've had ramped workforce investments and flow investments in 2025. It looks like that will persist based on the guide for I'm curious how you kind of envision this ultimately playing out where like a crossover point may be for the potential to start recovering margin, particularly gross margin as you benefit from all these investments and the productivity yourselves.

Bryan, thanks for the question. With regard to gross margin, you're right. So million we saw playing at gross margin. We saw both investments towards people meaning investing in the preparation ahead of the strong pipeline we experienced throughout the whole year -- we also had in that zone investments in AI itself. I mean towards the platform flow. We also some -- had some headwinds in terms of FX, especially towards the end of the year. We had like 8% of the valuation of the real in the Q4 itself.

If you combine that with investments in sales, and efficiency and operating leverage that we saw in 2025, we get to this 18.3% EBITDA if we go to 2026, the guidance we provide pretty much talk to that -- the midpoint talks to that 2025 number.

And what that means is we are continuing in that, I would say, winning AI strategy. meaning that we are investing in our AI platform we're preparing teams ahead of the opportunities that we saw in -- we see in the pipeline. We have a strong pipeline, usually 30% bigger than the same period previous year. So this is allowing us, Bryan, to expand the wallet share, which is very good. and also acquire new clients.

So that's -- we are repeating. Of course, we are leading in the sector, and that's the winning strategy. We will continue to see -- and that's why we're guiding that range of EBITDA. We want to do -- we want to continue to do that formula, let's say.

Next question comes from Luke Morison from Canaccord.

Excellent results. So maybe I'll just to start dovetailing somewhat off of Bryan's question. Just thinking about like the productivity improvements you're seeing with FLOW. As you think over the long term, like over a multiyear period, like how do you think about the relationship between headcount growth and revenue growth over time? And should -- are you expecting revenue per employee to rise as you sort of roll out these new pricing models and you see more productivity from your existing headcount or are you thinking more this growth phase still requires adding people at roughly the same rate as you're growing?

Thanks, Luke. I can start here. Bruno, you can add if you want. For sure, we see the rise of AI and the agentic solution as will provoke an inevitable space for an evolution in the commercial and price models in our industry. So -- in terms of U.S., the midterm, yes, we see the future of our industry evolving from basically the [indiscernible] model to value-based pricing models more closely tying the business to business outcome.

And this is, for sure, an opportunity to gradually monetize the intellect property embedded now in everything we do and also different experiment different business models for the agentic that are, for sure, will dominate the future of IT investment. So proactively, we are introducing all these different approach with our clients. And we have, I would say, encouraged early results but as I mentioned, we see as a midterm opportunity.

It will translate our superior performance into margins and scalability and, of course, giving our clients more options to better connect outcomes to the investor they are doing. So it's -- I think it will be gradually but inevitable change in our industry.

Yes, makes sense. Very helpful. And then maybe just to double-click on sort of the new pricing model evolution. You talked about experimenting with consumption-based subscription models for flow access at your Analyst Day last October. Maybe just update us on how those conversations are going with clients, are you seeing a willingness to pay for flow as a stand-alone platform? Or is that still primarily a differentiator that's helping you win business today?

Bruno, you want to answer that?

So primarily is a differentiator, look. So of course, clients, when they see the type of performance, they want to share in the success. I want that for myself, but we're not leading with that, right? So we're not trying to push a product, right? So they're just seeing what our teams can do and what the performance of those teams are and go actually how you're doing this.

And so -- and then we actually get another sort of engagement, which is some work transformation engagement, which is, okay, let us teach how to achieve that type of performance, which includes -- yes, it includes the different tool set and different usage of not only our agents but also the third-party tools available in the market, right? So but again, that's more on the back track of -- they've seen a different performance because all the public reports that you can read everywhere, like it's a lot of frustration there on the utilization and kind of transforming AI into actually real value, right? So when you say you can do 5x, it's very usually faced with a lot of skeptics.

So it's -- so our approach was more of a it's more show than tell, like this is what actually we're doing and this is what we're achieving and then we kind of I can break the big wall of skepticism and we have those conversations. So that's been the approach.

Our next question comes from Cesar Medina from Morgan Stanley.

I guess you both Bruno and Cesar sort of just answer 1 of them, but let me ask in a different way. When you're thinking of the changes in trends, Cesar mentioned, for instance, that your main customer will continue to grow robust but should be a slower relative to 2025. Can you maybe walk us through the changes in trend that you're seeing between projects that are sort of more discretionary spending versus other projects that are sort of take out costs and things like that.

So that's the first part of the question. The second question, exactly the same thing as changes in trend, but instead of by client, by region, what are you seeing sort of U.S., Brazil and the new markets?

Sure. Thank you, Medina, for our questions. We see -- again, we see both trends, foundational investments. Now with a very better return on invest equation regarding legacy and data modernization. We continue to capture. These are very large scale endeavors to modernize decades of technical debt in our clients. And then we are seeing also the strength of direct AI investments with different shapes and colors.

But in average, we see our engagements basically accommodating multiyear contract with more spot demand. So we don't see, I would say, meaningful difference in terms of the duration of our engagements or the ticket size in both kind of demand.

Regarding markets, U.S. and Brazil, we are very confident and very well established in terms of land and expand. So acquiring new customers in these markets and continue to expand to increase our wallet share among our global clients. And we see our new markets as a more exploratory, Europe, Asia, that now represent 10%. We have an amazing Q4 for these regions, but it's even harder to predict.

But we see a solid forecast for our main markets in North America and Latin America.

And when you see your pipeline last year, you had very ramp-up of very large projects for international like non-Brazilian customers. Are you -- when you think of this pipeline, do you have similar opportunities this year, 2026 on that front?

Yes. And part of when we say expand is a very important game because these large companies, they -- we need to move from 1 geography to another for 1 business unit to another. So it's a long-term strategy to continue increase our wallet share year-over-year, quarter-over-quarter as we establish our reputation what play in favors of our approaches FLOW and our discipline of metrics.

And so when we can clearly demonstrate the kind of results we are achieving. And this is the natural response from our clients is giving us more opportunities to expand along the way. So I think this is basically the expand strategy and as you know, we have very, very large companies operating around the world. So it's a fertile soil for long-term expansion.

Our next question comes from Gustavo Farias from UBS.

Can you hear me?

Yes. No, we can.

So my question is regarding the alternative billing model. So when you go from time and materials towards fixed or even outcome based, there's probably a higher risk reward profile, so if you could comment on which of those alternative models are gaining more traction? And what are you experiencing in terms of the effective margin upside gains in each of them? That would be very helpful.

Sure, Gustavo. Thank you. We are experimenting really 7 different models now and basically it's a blend, it's a hybrid moment where we combine demature with price per unit that is basically tripled with price per consumption using our Asian computing unit for the SaaS agentic solutions and an outcome based.

I think it's too early. But of course, all these models they have potentially better margin if you know how to execute. And again, we are very confident in our ability to execute these engagements that allow us to be very confident in the predictability of these new models. And also, it's part of the evolution of services become an IP-based game. We are -- FLOW is not only our management system for AI, but it's also the stack where we are building our vertical solutions, all the IP that we [indiscernible] with specific vertical opportunities by industry.

So it's part of this evolution of game. But for sure, all this models potentially can increase our -- not only our margins, but our scalability in terms of headcounts. But it will be, as I mentioned, an incremental midterm game, not something that's going to happen from Friday to Monday, and -- but we are very confident in our ability to execute.

Great. Just a follow-up, if I may. So just to confirm, there's nothing from this potential upside, like you said, embedded in this year's guidance, right, for margins?

Yes. For 2026, we are guiding the natural evolution of our pricing models. But considering that we believe that our clients will be, let's say, conservative in terms of -- they are willing to test different models. But to really -- it will take a few years to really see this as a relevant part of our P&L.

But it is, as I mentioned, is inevitable, not only for CI&T, but for the whole industry, it's just a transition that is -- it will take a while, especially because of the cohort of our clients. There's large companies. They tend to move, but in a very consistent in a careful way.

That concludes our Q&A session. Thank you all for attending our event today. I will now invite Cesar to proceed with his closing remarks. Cesar?

Sure. Thank you, Galvao, thanks, Bruno, Stanley, for joining me. Thank you all for joining us today. And of course, a special thank you to all CI&T-eers around the world. Congratulations on another record quarter, let's keep pushing. And a special thank you also for our clients to choosing CI&T as a partner for this exciting new AI-driven innovation area. Stay well. See you soon.

Good morning. Welcome to CI&T earnings call for the third quarter of 2025. I am Eduardo Galvao, Investor Relations Director at CI&T. Joining me on today's call are Cesar Gon, Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. This event is being recorded. [Operator Instructions] The presentation is available on the company's Investor Relations website, and 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. They are subject to known and unknown risks and uncertainties, which could cause actual results to differ from those expressed on this call. We caution you not to place undue reliance on these forward-looking statements as they are valid only as of the date when made. During this presentation, we'll comment on certain non-IFRS financial measures to evaluate our business. Please refer to the reconciliation tables of non-IFRS measures in the earnings release for more details.

Our agenda for today includes an overview of our quarterly highlights, followed by some of our business cases. We'll then talk about our people and our financial results.

At this time, I'll pass it on to Cesar Gon to begin our presentation. Cesar, please?

Thank you, Galvao, and good day, everyone. As we celebrate 30 years, I would like to highlight our winning operating model built on 4 pillars. It starts with 3 decades of experience shaping a world-class talent ground. Our teams use this expertise to co-create AI agents and digital solutions that solve real client problems. We deploy this combination of talent, proprietary technology, and methodology using a unique delivery model to win and expand clients. With every engagement, the learning accelerates, expanding our knowledge, refine our tools, and propelling our growth. And we are amplifying this flywheel by dogfooding AI across our operations.

As we look back, it's remarkable how CI&T has evolved through each major tech shift from the early internet and e-commerce to mobile, to cloud, and now artificial intelligence. At every stage, we have helped clients adapt and turn technology into business impact.

Today, the same spirit continues with CI&T Flow, our AI management system. With an unprecedented level of adoption, we are combining leading large language models with our proprietary tools and data to create thousands of AI agents and prepare our clients for the inevitable Agentic world.

Across the industry, there is still a clear gap between AI ambition and real results. Most enterprises haven't yet turned AI investments into meaningful impact. A recent MIT study titled the GenAI Divide highlighted that 95% of GenAI projects are failing to deliver measurable financial results. That gap created strong demand for partners who can turn experimentation into scalable business value. This is where CI&T stands, built to help the 5% who are making AI work and to expand that group. It's a challenging tailor-made for our model and a major opportunity ahead.

Now let me turn to our quarterly earnings highlights. Revenue reached another historical record of $127.3 million in the third quarter of 2025, representing 12.1% organic revenue growth at constant currency year-over-year, above our guidance. This also reflects a 13.4% year-over-year increase in reported revenue.

Our adjusted EBITDA margin was 18.5%, showing a healthy and sustainable profitability. Finally, our adjusted profit margin was 8.9%. This quarter marks CI&T's fourth consecutive quarter of double-digit organic revenue growth. Our AI strategy is effectively bridging the GenAI Divide for our clients, transforming their AI investments into tangible efficiencies and high-impact solutions. These AI-powered offerings have expanded our sales pipeline, increased our wallet share with clients, and reinforce our role as a key partner in their digital and AI transformation journeys.

Now let's explore some inspiring client stories that showcase the diverse and powerful applications of AI.

[Presentation]

Now I would like to invite Bruno to provide insights into our talent strategy and the evolution of our offerings.

Thank you, Cesar. It's a pleasure to be here.

We ended the quarter with more than 7,800 CI&Ters, a strong 16.3% year-over-year, ensuring we have the talent to meet the growing demands of our clients. Our people strategy begins with an advanced hiring process. We have built a systematic engine to attract and onboard the right people. It begins with our partnerships with top technical universities, which provide a large high-quality pipeline of young talent.

Simultaneously, our reputation as a next-generation technology firm committed to a career-long development makes us a desirable destination for experienced professionals. Finally, we utilize an AI-enabled screening process to quickly identify the best candidates, and we prioritize filling open positions with our own internal talent whenever possible. This creates a robust and efficiency hiring model. The direct result of our hiring process is the ability to scale our workforce quickly, supporting our revenue pipeline. Our robust training and development programs drives industry-leading employee satisfaction and retention, leading to a healthy voluntary attrition rate of 10.9%.

Now let me discuss our delivery model, which is central to delivering AI value for our clients. Before extending these capabilities externally, we ensured mastery of AI internally by developing a systematic playbook for driving AI adoption. We have achieved an impressive 85% adoption rate of AI tools across our entire organization. This highlights our capability to effectively integrate new technology at scale. This widespread adoption has significantly fueled the growth of CI&T Flow. Over the past 18 months, the number of agents our teams have created and are using to deliver value to our clients has increased 15-fold. Today, our system operates at substantial scale with 4,700 active agents executing tasks across our business from simple automations to highly complex workflows.

Leveraging our extensive network of AI agents, we've developed compelling solutions that address our clients' critical needs. To give you a concrete example, our data modernization studio features a set of AI agents designed to streamline and modernize data pipelines. This end-to-end approach encompasses data assessment, quality checks, and script generation, ensuring seamless integration into modern data architectures.

Our solutions significantly automates the transformation of legacy systems into advanced data platforms. By utilizing GenAI, we generate code, create technical augmentation, and produce visual data lineage diagrams, therefore, significantly reducing manual effort and risk. Through our data modernization fast track, we convert isolated data islands into comprehensive data intelligence systems, expediting the process from assessment to post migration. This approach overcomes the time and resource challenges of traditional migration, enabling our clients to quickly unlock the full potential of their data.

As we continue to innovate with generative AI, we are witnessing a shift in the market towards more flexible value-based pricing models. Clients are seeking greater predictability and a clear connection between their investments and business outcomes, presenting us with an opportunity to monetize the value created by our AI-driven approaches.

To align with this shift, we are actively experimenting with new engagement models such as fixed price and output-based contracts, which better align our compensation with the successful outcomes we deliver for our clients. We anticipate a gradual transition to these models over time.

With our AI management system, we are unlocking entirely new revenue streams. The large-scale opportunities driving our growth today were not feasible just a few years ago. Clients turn to us for our advanced AI capabilities, which empower them to address their most ambitious and complex challenges, whether it involves modernizing legacy systems, building predictive platforms, or creating new AI native business models.

The direct result of our AI value proposition is our ability to consistently grow and capture market share. The value we deliver to our clients translates directly into the strong financial performance we provide to our shareholders.

To guide you through our financial profile in detail, I'll now hand it over to Stanley.

Thank you, Bruno, and good afternoon, everyone. Let me walk you through our third quarter 2025 financial performance.

Our revenue in the third quarter was $127.3 million, an increase of 13.4% compared to the same period last year, fully organic. On a constant currency basis, revenue grew 12.1% year-over-year. Looking at the year-to-date, our revenue reached $355.4 million, a 12.8% increase over the 9 months '24 at constant currency. As Cesar mentioned, this quarter marks CI&T's fourth consecutive quarter of double-digit organic revenue growth, demonstrating the resilience and solidity of our business model.

In the third quarter of 2025, our revenue from Latin America experienced a remarkable 35% year-over-year growth. In North America, revenue increased by 6% compared to the same period last year. Starting this quarter, we are reporting the performance of our Europe and Asia Pacific regions together under the designation New Markets. We are pleased to announce that both regions have recorded sequential growth in third quarter 2025. Focusing on industry verticals, we particularly highlight the strong performance in financial services and retail and industrial goods, which grew by 51% and 11%, respectively, in third quarter compared to the previous year. These sectors have been actively prioritizing digital transformation and modernization.

In the financial services sector, companies are increasingly investing in AI-driven analytics to enhance customer experience, streamline operations, and improve risk management. Similarly, retailers and industrial goods are adopting AI technologies to better understand consumer behavior, optimize inventory management, and enhance supply chain efficiency.

Our strategic cornerstone for growth continues to be our disciplined land-and-expand approach. This strategy has resulted in a predictable and stable revenue base characterized by exceptional logo retention and long client tenure. We have 10 clients each generating over $10 million in revenue. This cohort has seen a reported revenue increase of 19.5% in the third quarter of 2025 compared to the same quarter last year.

Another solid indicator of our expansion with our large clients can be seen by the growing number of clients, each generating $5 million to $10 million in revenue annually from 11 clients in 2024 to 15 clients in the last 12 months. This illustrates our capacity to compound growth from within our established client base.

In the third quarter of 2025, we achieved an adjusted EBITDA of $23.5 million, marking a 7.5% increase from the previous year. The adjusted EBITDA margin stood at 18.5%, reflecting a 1 percentage point decrease from third quarter 2024. This decrease is largely attributed to our anticipated upfront investment in expanding our workforce with an increase of over 1,100 employees during this period, supporting our pipeline and revenue growth trajectory, combined with an unfavorable FX rate in the comparable period.

We've maintained a disciplined approach towards our operating expenses. This is evident in our reduced SG&A as a percentage of sales. For the first 9 months of 2025, we generated $46.5 million in cash from operating activities, translating to a robust 72% cash conversion rate from adjusted EBITDA to operating cash. This strong cash conversion provide us with the flexibility to reinvest in strategic initiatives to foster growth.

In the third quarter of 2025, our adjusted net profit reached $11.3 million, marking a 10.6% increase compared to the same period in 2024 with an adjusted net profit margin of 8.9%. Our adjusted diluted earnings per share for the quarter was $0.09, demonstrating a notable 16.4% increase from last year.

In summary, we have successfully achieved double-digit organic revenue growth on a consistent basis while maintaining solid profitability metrics and strong cash generation. Additionally, we are actively executing our share repurchase program, further enhancing shareholder value.

At this point, I would like to invite Cesar back to the stage to share our business outlook.

Thank you, Stanley.

For the fourth quarter of 2025, we project revenue to be between $130.4 million and $132.6 million. The midpoint of this range represents a year-over-year growth of 16.8% on a reported basis and 12.5% at constant currency. For the full year of 2025, we are maintaining the midpoint of our revenue guidance while refining our expectations. We anticipate organic revenue growth at constant currency to be between 12.5% and 13% year-over-year.

Additionally, we are reaffirming our adjusted EBITDA margin guidance, which we expect to be in the range of 18% to 20%. This guidance reinforced the strong pace of organic revenue growth reported throughout the year, above the industry average and positioning us well for continued expansion as we move into 2026. This outlook also reflects the effectiveness of our growth initiatives, a robust commercial pipeline, ongoing expansion with our largest clients and the evolution of our AI-boosted offerings.

In closing, I want to extend my heartfelt gratitude to all CI&Ters around the world. Your dedication to innovation and to delivering exceptional value to our clients remains the driving force behind our progress.

This concludes our presentation. We will now open the floor for questions.

[Operator Instructions] The first question comes from Luke Morison from Canaccord.

Nice results. So I just want to double-click on the new engagement model slide that you presented. It first came out at your Analyst Day, you showed it here again. Just maybe help us think like how should we be thinking about the scalability of those models from here? Where are you seeing the earliest traction or client readiness? And what needs to happen operationally or contractually for those newer constructs, particularly flow or agent-based consumption to represent a more meaningful share of your revenue mix over time?

Thank you, Luke. Great to see you. I can start and Bruno will complement me, if he will. Well, as you mentioned, we see the future of our industry evolving from time material-based model pricing model to more value-based pricing models, more close -- which have more close link to the business outcome. And -- but we see this happen in a gradual way. So it's also an opportunity to monetize the intellectual property that will be embedded in every single engagement in the future agent architecture.

So what we are doing now is proactively, we are introducing this approach to our clients and encouraging -- and getting encouraging new results with our main clients. And in terms of time line, I see this as a midterm opportunity. Gradually, we will translate -- and this is a major opportunity to translate gradually our superior performance into not only margins, but also scalability and also giving our clients a more flexible, a more powerful set of options in terms of pricing models.

So we are not giving a concrete or outlook right now. But I think along the -- probably along the next 6, 12 to 18 months, we will have this as a relevant part of our P&L and the way we are seeing the future in our commercial and pricing models.

And maybe just to complement, Luke, on your question around the education that clients require on their side to buy those models, right? So of course, there's the consumption base is actually where most of the ramp-up of that education needs to happen, and it's not easy. So it's going to go to procurement and they have to learn a new way to buy, right? So that's -- that will take some time to happen.

But there are other models that also tap into that ability to automate work in kind of -- which is kind of an output-based models where we can have like a fixed price by unit of software developed. We have like even fixed price of overall engagements because of the tools that we have that we kind of can map those engagements and can be really assertive in terms of what we will deliver. So there are models that are very easy to buy that any procurement area could buy just right now. There's no -- they don't require any education, right? So and there are -- and there's this new threat here with the consumption base, with IP-based consumption that will take some time. But all in all, I think we will go to move very quick in the next 12 to 18 months towards those models.

Maybe just a quick follow-up here. So just regarding your guidance, the guidance for Q4 implies continued sequential acceleration in growth as we exit the year. I know it's early and you're not guiding to next year, but just help us think about just sort of the durability of that growth. How do you view the cadence of that sustainable growth as we enter 2026? And are there any factors we should be keeping in mind around seasonality or demand normalization as we enter next year?

Sure. We are, base our outlook for Q4, I think basically on the consistent performance of the months of 2025 and combined with a very solid commercial pipeline. And what is, I think, a good data point is now we are having a strong sales conversion. I credit this to our differentiation based on our AI strategy, CI&T Flow, the kind of efficiency, and even the whole positioning regarding adoption of AI. So basically, a consistent track record, a solid pipeline with a stronger sales conversion when compared to the last year, for example.

Our next question comes from Gates Schwarzmann from TD Cowen.

Gates Schwarzmann with TD Cowen on for Bryan Bergin. Just wanted to touch on gross margin. It looks like it ticked down 30 bps sequentially. Just curious if you could talk a little bit about the underlying trends there? What are the drivers in terms of gross margin? And particularly, how should we think about what levers you guys have moving into fiscal 2026 that you can pull to for margin expansion and support EBITDA growth? And also any sort of color on the actual underlying FX impacts on EBITDA margin or gross margin would be greatly appreciated.

Gates, thank you for the question. This is Stanley here. Well, first of all, Gates, we are very confident on our ability of delivering this full year guidance of EBITDA margin, so 18% to 20% adjusted EBITDA margin for the full year. We've been delivering those robust profitability metrics out of a bunch of initiatives, efficiency gains, of course, we are scaling SG&A throughout the years. Every quarter, we deliver lower SG&A as a percentage of revenue. And that will not change. We will continue that towards the future, right?

So -- and combining that the fact that we are delivering those robust profitability under this benchmark organic growth path, this showcases our capacity to balance very well this investment in the AI opportunity and also this cost discipline that we've been managing the company. So we are scaling our business in this very solid manner. And this will not change. Of course, we are not guiding 2026 yet, but we don't have any factor that would mean that this will change.

And just a follow-up. I wanted to touch on demand trends. Obviously, tariff-related volatility has brought a lot of uncertainty in the environment. Can you touch on maybe how that's impacting your various verticals and then also touch on the U.S. versus Latin America dynamics. Have clients started to gain any comfort with the tariff-related volatility? And subsequently, have you seen any sort of recovery in terms of discretionary spending or smaller, more strategic spend?

Sure. I can get this one. I think we are growing sequentially in our regions. We -- of course, LatAm is stronger now. 12.5% growth sequentially, 35% year-over-year. So driven basically by fast AI adoption among not only companies but users. North America is also getting a good traction now with 5.4% sequential growth. And even new markets now are growing with 4.8% sequentially.

So basically, we see 2 main sources of demand. And then we see the overall environment improving, certainly driven by the evolution of the AI momentum that is, as I mentioned, very strong in Brazil and warming up in the U.S. And we can see by our commercial activity evolving and giving us a very strong commercial pipeline for next years and give us a lot of confidence that we will continue in a growth trajectory in a very good base.

But as a way to qualify demand, I see 2 groups. One is basically demand for foundational spending, let's say, that's large scale projects to upgrade legacy technology and accelerate cloud and data migration. I think this is huge now. And of course, we are extensively using AI and Flow agents in this, let's say, from the foundational engagement.

And there is another very well source of demand that is direct AI investment. I see relevant budget allocation moving from traditional IT to AI-specific solutions. So around -- let's start with the low-hanging fruit of hyper efficiency in the software development life cycle, but going for customer experience journeys, like how you move for more conversational commerce or AI boosted chatbots. So especially in Brazil using WhatsApp, for example. And we see more broad programs like AI-first transformation engagements. This is when the client wants a kind of design and strategy and a road map to accelerate their AI adoption.

And finally, we are seeing a growing number of use case using GenAI for optimized or labor-intensive or data-intensive business process. So it's real. It's amazing AI momentum, and I think we are very well positioned to continue to capture this opportunity.

Our next question comes from Maria Clara Infantozzi from Itau.

I just wanted to double-click on the improvement of pipeline to sales conversion topic. Cesar, can you give us more color on this? Is there any region that is calling more attention, maybe any specific client vertical that is worth highlighting? And what is the pricing strategy behind those new contracts? Are they all coming from output based? Or do you still sell time and material? And lastly, if you could please provide a view on how you perceive the competitive environment, it would be great as well.

Sure. Thank you for your question, Maria Clara. I think in terms of vertical, I need to highlight financial services. It's 51% year-over-year growth expansion and 15% sequentially. So it's a combination of lending in new clients and expanding our main financial service clients. So -- and also, we see a lot of growth in retail and industrial goods, particularly in the auto industry, where we are very well positioned and expanding in the U.S. It's more about expanding our wallet share in this retail and industrial growth portfolio. And then we also have the good news of tech and telco that were year-over-year was stable, but sequentially now it's a 19% expansion. So it's very good news.

Other -- consider our 5 main verticals, 3 are expanding and 2 are stable. We see consumer goods and life science is stable in a sequential base. So going for your question regarding pricing models, it's a mix. Our strategy is not a radical move from time material to other models, but offering to offer to our clients a mix of models, and we can combine creatively these models in the best interest of them. So it's more of a mix game of some time material, some consumption basis, some outcome-based and other models we are inventing because this is a moment where we are really discovering the best way to play this new game in the AI Agentic world. And a lot of engagements also extend from just build for build and run engagements, and we need different pricing models for -- to support this shift to.

So this is basically -- I think it's a long-term game, but it's inevitable that the AI will reshape the way pricing and business model operate in our industry. And I think this is an amazing opportunity for us to improve not only margins, but scalability of our business.

And your last question were regarding?

The competitive environment overview, how you see competition?

Yes. I think we did -- looking back, we did an amazing job over the last 3 years, introducing CI&T Flow in July 2023 and transform every CI&T engagement into an AI engagement. We mentioned a lot the massive reskilling of 8,000 people. And I see CI&T really ahead of our competitors. I know that everyone is trying to figure out how to play in this new moment of the industry. But what we get from our clients is, I think we are ahead. And in my perspective, we are accelerating.

Our next question comes from Puneet Jain from JPMorgan.

Very nice quarter. So this year, you are all set to grow in, give or take, in low teens despite significant headwinds like tariffs and whatnot. As we think about next year, I know you're not providing the guidance, but should we expect growth rates to accelerate next year from current levels?

Thank you, Puneet. Thank you for your question. Unfortunately, we are not anticipating 2026 yet. But as I mentioned, we are very confident on our future growth based on the evolution of commercial, our commercial pipeline and better sales conversion. By now, it's more about delivering a very strong Q4. And in the next call, we will be very happy to really give you our guidance for next year.

And can you talk about your hiring plans like the skills of people you hire, experience level? And should we expect revenue growth to continue to outpace your headcount growth? And what would that mean for margins over the near term at EBITDA margin level?

I'll take this one. Puneet, our strategy has always been to develop our own people, right? So -- and that's -- we think of ourselves as a teaching organization, as a learning organization. We're very proud that I think we learned faster than the average market. And I think the achievements around what we are at with Flow and our adoption and the results we're creating for our clients is a proof of that. So we hired -- we continue our strategy to hire from the base of the pyramid and promote from inside and give opportunities for people to grow with us and to invest in our people and invest -- give people the opportunity to develop themselves to reskill, to upskill and to move on to different roles and different profiles.

I think that will be an absolutely critical ability going forward as the industry will transform, all those roles will transform, people will do things in a completely different way than they do now 2 to 3 years from now. So that ability to be always learning and not try to hire for a job description because those job descriptions will be very fluid from now on. So it's that we continue to hire for potential, continue to hire for ability to learn and to grow. That's our strategy, and I think it will be a winning strategy going forward.

Our next question comes from Leonardo Olmos from UBS.

Congrats on the numbers, very good revenue beat. I just want to make sure we don't have anything misunderstood here. So you -- for the full year 2025, you reinforced the midpoint of revenue growth guidance, right? But you beat Q3's figure. So that could assume -- and I'm probably wrong here, but that could assume Q4 is going to be slightly slower than you anticipated. Maybe you advanced some revenue to Q3, I don't know. How should we read this? I know you just said in a previous answer, I'm not going to talk about 2026. I get that, but I just don't want to leave a wrong impression here on this shift between the quarters.

Thank you, Leo. I think it's basically -- we are guiding keeping the pace, keeping our goal for the year. Last quarter, we raised the midpoint. So we are, of course, leaving some room to beat again the number, and we are very confident. I think it's a strong year and with an amazing exit rate for projecting 2026. So it's basically keeping our pace and make sure we leave room for -- even to accommodate some FX, surprising FX moves. We are not expecting, but we need to be conservative in terms of projecting FX. But at the end, we are really projecting a solid Q4. And again, a very good exit rate for projecting next year.

Just if I could do a second one. It's another question related to how well you did and what's going to be ahead, okay, that is a risk. Top client, right? Top client now when you round up, gets to 12% of total sales. Performance was amazing, right? Congrats on that. I'm sure this is something to celebrate because in the past, we saw how large clients can impact all IT service peers. So what do you -- how do you think about that, especially about -- I don't know, should you diversify, should you not? And how -- what do you expect in terms of -- what we heard in the media a couple of months ago that this top clients supposedly is going to reduce third party. Is that other part of third-party personnel? So if you could talk a little bit about top client.

Sure. I think we are in good shape. Gradually, we have been growing and diversifying our portfolio of clients. I think top 1 is a massive victory of our value prop. And you saw sequentially, it grew 13%. But our top 10 clients is growing consistently, too. So we sequentially 11%, our top 10. If you exclude top 1, it's still a strong 10% growth in our top 10. If you look only the tax top 10 is 7% sequential growth. So I think it's a very solid evolution. To give you another data point, 8 of our top 10 clients are growing sequentially.

So regarding specifically our top 1, as you know, it's a very large financial service organization with dozens of different business, and we are very proud to be involving in different parts of their business strategy. And we continue to expand in different areas. I think it is a result of our ability to demonstrate efficient superior results across the board. And we see this engagement will continue to grow. But of course, at a slower pace, but it's part of what we were anticipating. And we are -- we have now a lot of new avenues for growth. So it's part of the game. We work with very large clients. And when they see the concrete results of engaging with CI&T, it tends to -- they tend to concentrate a lot of demand on us. But we manage, I think, in a good way this kind of expansion.

So I think we are in good shape. If you look at in a more, let's say, long-term perspective, 4 years ago, we were top 10 were kind of 67% of our revenue. Now it's 43%. So it's gradually as we evolve, we will have -- we will continue to diversify the revenue source, but I think we are in good shape.

Yes. No, very good point. The numbers talk by themselves, right? Very good. Just a quick follow-up, sorry to abuse my time. How should we think about revenue in the top 1 clients or maybe top 10 as a whole? How recurring is it? How can we see so recurring? I get that you maybe won't grow like 70% year-on-year, but how recurring is that?

Historically, it's very recurring revenue. Annually, we disclose our net revenue retention, and it's always a some number. I think the business model kind of engagement is the same, if you are investing in AI and digital and if you are leveraging real concrete results, you will increase your investment. So it's an equation of success instead of a project-based model.

So as we continue to support our clients to expand their strategy, I think we are in good shape to continue expanding and having a very high level of recurring revenue with them by design.

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 closing remarks. Cesar, please?

Sure. Thanks, Bruno, Stanley, Eduardo. Thank you all for joining us today. And to all CI&Ters around the world, I'm very proud of what you accomplished this quarter, what we could do as a team. Congratulations for another record quarter. Let's keep it pushing. And a special thank you for our clients for choosing CI&T in such an important moment in the industry. We are helping you, clients, to co-create the future in this exciting moment of AI-driven innovation. So everyone, stay well. See you soon.