Financial Data and Key Metrics Changes - The company reported revenue of CAD 4.1 billion, an increase of 11.4% year over year, or 7% when excluding foreign exchange impacts [5][6] - Adjusted EBIT for the quarter was CAD 666 million, up 10.5% year over year, with a margin of 16.3%, down 10 basis points due to recent mergers [11] - Adjusted net earnings were CAD 470 million, an increase of CAD 30 million year over year, with a margin of 11.5% [11] - The company generated CAD 487 million in cash from operations, representing 11.9% of total revenue [11] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by business acquisitions and momentum in the financial services sector, with constant currency revenue growth led by financial services at 9.6% and government at 8.7% [7][8] - IP revenue grew in six of the eight proximity segments, representing 20.6% of total revenue [8] - Bookings in the quarter exceeded CAD 4 billion, resulting in a book-to-bill ratio of 101% [9] Market Data and Key Metrics Changes - Geographically, North American operations grew by 7.4%, while European segments saw growth of 6.6% [6] - The Asia Pacific offshore delivery revenue increased by 6.4% [6] - The global backlog reached CAD 30.6 billion, equivalent to 2x revenue [10] Company Strategy and Development Direction - The company continues to focus on a build and buy profitable growth strategy, emphasizing investments in business and accretive acquisitions [13][28] - The strategic deployment of capital aligns with CGI's resilient mix of services and global footprint [14] - The company is actively pursuing partnerships with large technology firms to enhance revenue streams [36][39] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty impacting client decision-making, particularly in larger enterprise engagements [20] - There are signs of renewed client spending in the banking and broader financial services sector, with year-over-year bookings up by more than CAD 400 million [15] - Management expects to see some momentum returning as tariff uncertainties are resolved [96] Other Important Information - The company has CAD 2.7 billion in capital resources readily available for growth initiatives [13] - A quarterly cash dividend of CAD 0.15 per share was approved, payable on September 19, 2025 [12] Q&A Session Summary Question: Can you talk about organic growth in different segments? - Management indicated challenges in Europe due to tariffs but noted good organic growth in the financial sector, especially in North America [34][35] Question: Can you provide insights on margin expansion strategies? - Management highlighted that the integration of recent acquisitions is expected to improve margins, particularly in the UK and U.S. [44][45] Question: What differentiates CGI in the vendor consolidation trend? - Management emphasized a client-centric approach and readiness to co-invest in processes, which helps win vendor consolidation deals [48][50] Question: What is the outlook for acquisitions? - Management remains optimistic about the acquisition environment, noting lower valuations and a robust pipeline of targets [54][55] Question: How is CGI applying AI internally? - Management stated that AI is being used to improve productivity and deliver savings, which will positively impact headcount growth and margins [74][75] Question: What is the competitive position of CGI in AI? - Management believes that expertise in AI will create new opportunities and strengthen CGI's market position [88][89] Question: What is the outlook for constant currency organic growth? - Management believes the company is at the floor for growth and expects momentum to return as tariff uncertainties are resolved [95][96]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was reported at CAD 4.1 billion, an increase of 11.4% year-over-year, or 7% when excluding foreign exchange impacts [4][10] - Adjusted EBIT was CAD 666 million, up 10.5% year-over-year, with a margin of 16.3%, a slight decrease of 10 basis points [10] - Adjusted net earnings were CAD 470 million, an increase of CAD 30 million year-over-year, with a margin of 11.5% [10][11] - The company generated CAD 487 million in cash from operations, representing 11.9% of total revenue [11] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by business acquisitions and strong performance in the financial services sector, with constant currency revenue growth in financial services at 9.6% [5][6] - IP revenue represented 20.6% of total revenue, with growth in six of eight proximity segments [6] - Bookings in the quarter exceeded CAD 4 billion, resulting in a book-to-bill ratio of 101% [7][9] Market Data and Key Metrics Changes - North American operations grew by 7.4%, while European segments saw growth of 6.6% [5] - The Asia Pacific offshore delivery revenue increased by 6.4% [5] - The government sector showed strong demand with a Q3 book-to-bill ratio of 112% [16] Company Strategy and Development Direction - The company continues to focus on a "build and buy" profitable growth strategy, emphasizing capital deployment in line with this strategy [14][28] - CGI's strategic partnerships with large technology companies are yielding positive results, with bookings from these partnerships increasing by 120% year-over-year [40] - The company is actively pursuing mergers and acquisitions, with a robust pipeline of potential targets [27][55] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainties impacting client decision-making, particularly in Europe, but expressed optimism about future growth as tariffs stabilize [20][93] - There is a strong expectation for increased client spending in the financial services sector, with year-over-year bookings up by over CAD 400 million [15] - The company anticipates that the integration of recent acquisitions will enhance margins in the future [46] Other Important Information - CGI has CAD 2.7 billion in capital resources readily available for growth initiatives [13] - The Board of Directors approved a quarterly cash dividend of CAD 0.15 per share, payable on September 19, 2025 [12] Q&A Session Summary Question: Can you talk about organic growth in different segments? - Management indicated challenges in some areas due to tariffs but noted good organic growth in the financial sector, particularly in North America [34][36] Question: Can you provide insights on the partnership strategy? - The company has invested in partnerships with large technology firms, which is paying off with increased revenues [37][40] Question: What are the margin expansion strategies beyond restructuring? - Integration of recent acquisitions is expected to improve margins, particularly in the UK and U.S. [44][46] Question: How does CGI differentiate itself in vendor consolidation trends? - CGI's client-centric approach and willingness to co-invest in processes are key differentiators [48][51] Question: What is the outlook for acquisitions in the current environment? - Management remains optimistic about the acquisition environment, noting lower valuations and a robust pipeline of targets [55][56] Question: Is there a shift from cost-cutting to modernization in U.S. Federal government? - Management confirmed that discussions are shifting towards modernization and automation, moving beyond just cost-cutting [58][59] Question: Can you discuss the growth in the APAC business unit? - North America is a significant driver, with growing activities in Germany and India also contributing to growth [61][62] Question: How is CGI applying AI internally? - CGI is leveraging AI to improve productivity and deliver savings to clients, which is expected to increase headcount productivity [70][71] Question: What are CGI's priorities for IP beyond AI? - The company is embedding AI in various platforms, including ERP systems, and is seeing strong momentum in government sector IP [76][77]

For the three months ended June 30, 2025 and 2024 July 30, 2025 Third Quarter Fiscal 2025 Financial results and highlights Forward-Looking Information and Statements Our presentations contain "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbours. All such forward-looking information and statements are made and disclo ...

Core Insights - CGI Group reported quarterly earnings of $1.52 per share, exceeding the Zacks Consensus Estimate of $1.51 per share, and up from $1.4 per share a year ago [1] - The company achieved revenues of $2.96 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.43% and increasing from $2.68 billion year-over-year [3] Earnings Performance - The earnings surprise for the quarter was +0.66%, with CGI having surpassed consensus EPS estimates three times over the last four quarters [2] - The company had a previous quarter earnings expectation of $1.5 per share but reported $1.48, resulting in a surprise of -1.33% [2] Revenue Insights - CGI's revenue growth reflects a positive trend, having topped consensus revenue estimates three times in the last four quarters [3] - The current consensus EPS estimate for the upcoming quarter is $1.53 on revenues of $2.94 billion, and for the current fiscal year, it is $6.01 on revenues of $11.41 billion [8] Market Performance - CGI shares have declined approximately 8.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [4] - The company's Zacks Rank is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Computer - Services industry, to which CGI belongs, is currently in the bottom 33% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact CGI's stock performance [6]

Financial Performance - For the three months ended June 30, 2025, CGI reported a revenue growth of 8% compared to the same period in 2024, reaching CAD 3.2 billion[11]. - Revenue for Q3 2025 reached CAD 4,090.2 million, reflecting a year-over-year growth of 11.4%[50]. - For the nine months ended June 30, 2025, total revenue was $11,898.8 million, an increase of 8.0% compared to the same period last year[80]. - Adjusted net earnings for the quarter were CAD 250 million, with an adjusted net earnings margin of 7.8%[20]. - Net earnings for the three months ended June 30, 2025, were $408.6 million, a decrease of 7.2% compared to the same period last year[149]. - Adjusted net earnings for Q3 2025 were $470.1 million, up 6.8% from $440.2 million in Q3 2024, while adjusted earnings per share increased by 9.3% to $2.12[155]. Operational Efficiency - The adjusted EBIT margin for the nine months ended June 30, 2025, was 15%, reflecting a strong operational performance[16]. - Days sales outstanding (DSO) improved to 45 days, reflecting efficient collection processes[25]. - The adjusted EBIT margin for the three months ended June 30, 2025, decreased to 16.3% from 16.4%[127]. - Days sales outstanding (DSO) increased to 43 days in Q3 2025 from 42 days in Q3 2024, mainly due to lower cash collections relative to revenue growth[179]. Bookings and Backlog - Bookings for the quarter totaled CAD 1.5 billion, resulting in a book-to-bill ratio of 1.2, indicating robust demand for services[11]. - The backlog at the end of the quarter was CAD 7.5 billion, which includes both new bookings and backlog acquired through acquisitions[11]. - The backlog as of June 30, 2025, was CAD 30,580 million, with approximately CAD 11.7 billion expected to convert to revenue within the next twelve months[50]. - The company aims to maintain a target book-to-bill ratio greater than 100% over a trailing twelve-month period, demonstrating ongoing business development efforts[11]. Cash Flow and Financial Position - Cash provided by operating activities was CAD 450 million, representing 14% of total revenue, highlighting strong cash generation capabilities[24]. - Cash provided by operating activities for Q3 2025 was $486.6 million, representing 11.9% of revenue, down from 13.5% in Q3 2024[159]. - The company reported a net increase in cash and cash equivalents of $455.6 million for Q3 2025, compared to a net increase of $20.9 million in Q3 2024[158]. - Net debt stood at CAD 1.2 billion, indicating a healthy financial leverage position for the company[27]. - The net debt to capitalization ratio was 23.4% as of June 30, 2025, indicating a stable capital structure[50]. - The net debt to capitalization ratio increased to 23.4% in Q3 2025 from 17.2% in Q3 2024, primarily due to recent business acquisitions and share repurchases[177]. Strategic Initiatives - CGI is committed to achieving net-zero carbon emissions, aligning with its environmental, social, and governance (ESG) initiatives[8]. - The company aims to help clients achieve the highest returns on their digital investments through end-to-end services and solutions[38]. - The company is committed to a Build and Buy profitable growth strategy, focusing on investing in business and pursuing accretive acquisitions[185]. Market and Competitive Environment - The competitive environment has remained stable since the end of Fiscal 2024, indicating consistent market conditions[48]. - The company has reorganized its operating segments into nine categories, including Western and Southern Europe, U.S. Commercial and State Government, and Asia Pacific Global Delivery Centers of Excellence[30]. Revenue by Segment - Revenue from the U.S. federal government represented 13.6% of total revenue for the three months ended June 30, 2025, compared to 13.5% for the same period in 2024[74]. - Revenue in the U.S. Federal segment for the three months ended June 30, 2025, was $558.4 million, an increase of 11.9% year-over-year[87]. - Revenue in the U.S. Commercial and State Government segment for the three months ended June 30, 2025, was $645.3 million, an increase of 9.0% year-over-year[84]. - Revenue in the Canada segment for the three months ended June 30, 2025, was $526.6 million, an increase of 3.9% year-over-year[90]. - Revenue in the U.K. and Australia segment for the three months ended June 30, 2025, was $570.8 million, an increase of 46.3% year-over-year[79]. Acquisitions - The company acquired Daugherty Systems, Inc. for CAD 343.0 million and BJSS Ltd for CAD 1,255.6 million in recent acquisitions[62][63]. Taxation - The effective tax rate remained unchanged at 25.9% for the three months ended June 30, 2025[150]. - The company expects its adjusted effective tax rate to be in the range of 25.5% to 26.5% in subsequent periods based on current profitability mix[152]. Goodwill and Revenue Recognition - Goodwill is tested for impairment annually or when circumstances indicate potential impairment, with management reviewing various factors quarterly[200]. - The company has not recorded an impairment charge on goodwill historically, indicating stable financial performance[201]. - Revenue recognition is impacted by the allocation of total arrangement value to performance obligations based on relative stand-alone selling prices, which are reviewed annually[197].

Core Insights - CGI reported a revenue of CAD 4.09 billion for Q3-F2025, reflecting an 11.4% year-over-year growth, with a constant currency growth of 7.0% [3][12] - The company emphasized its focus on AI-related services, indicating strong momentum in this area [2][4] Financial Performance - Earnings before income taxes were CAD 551.6 million, down 7.1% year-over-year, with a margin of 13.5% compared to 16.2% in the previous year [4][6] - Adjusted earnings before interest and taxes increased by 10.5% year-over-year to CAD 666.1 million, with a margin of 16.3% [4][6] - Net earnings decreased by 7.2% to CAD 408.6 million, resulting in a margin of 10.0% [5][6] - Adjusted net earnings rose by 6.8% to CAD 470.1 million, with an adjusted diluted EPS of CAD 2.10, up 9.9% year-over-year [7][12] Operational Metrics - Cash provided by operating activities was CAD 486.6 million, representing 11.9% of revenue [7][12] - Bookings totaled CAD 4.15 billion, yielding a book-to-bill ratio of 101.4% [8][12] - The backlog reached CAD 30.58 billion, equivalent to 2.0 times the annual revenue [8][12] Capital Management - The company invested CAD 105.1 million back into its business and CAD 286.2 million for share repurchases [9][12] - A quarterly cash dividend of CAD 0.15 per share was approved, payable on September 19, 2025 [16] Debt and Financial Ratios - Long-term debt and lease liabilities increased to CAD 4.24 billion from CAD 3.05 billion year-over-year [10][12] - Net debt rose to CAD 3.12 billion, with a net debt-to-capitalization ratio of 23.4% [10][12]

Core Insights - CGI has launched CGI SpeedOps, a business operations transformation solution that integrates advanced technologies like AI with business expertise to enhance operational agility and deliver sustainable value across various sectors [1][2]. Group 1: Product Overview - CGI SpeedOps is designed to help clients achieve faster, smarter, and more adaptive outcomes by leveraging AI, cloud, automation, and data-driven insights [2]. - The solution is built on a scalable platform that connects people, processes, data, and systems, and is currently in production with clients in energy, utilities, and banking sectors [2][3]. - CGI SpeedOps is a key component of CGI's BPO 5.0 strategy, aimed at transforming business operations and enhancing agility, intelligence, and resilience for clients in a digital-first environment [3]. Group 2: Performance and Efficiency - When combined with CGI DigiOps, CGI SpeedOps can deliver efficiency improvements exceeding 40% [3][4]. - The integrated toolset of proprietary technologies within CGI SpeedOps modernizes and optimizes service delivery, unlocking new levels of operational value for clients [4]. Group 3: Company Background - Founded in 1976, CGI is one of the largest independent IT and business consulting services firms globally, with a workforce of 94,000 professionals [5]. - CGI reported a revenue of CA$14.68 billion for Fiscal 2024 and operates through a local relationship model supported by a global delivery network [5].

Group 1 - CGI Inc. is a Canadian IT consulting company with a global workforce of 94,000 consultants [1] - The company faces potential growth challenges due to its 13%+ revenue exposure to the U.S. federal sector [1]

Core Insights - CGI has secured a three-year, US$200-million contract extension with the State of California to provide managed services for the Case Management, Information and Payrolling System (CMIPS) supporting the In-Home Supportive Services (IHSS) program [1][2] Group 1: Contract Details - The contract extension will enable CGI to continue delivering end-to-end managed services for the IHSS program, which serves over 850,000 recipients and employs more than 760,000 caregivers [1][2] - The partnership has led to improvements in payroll and case management processes, reduced administrative overhead, and enhanced security [2][3] Group 2: Service Enhancements - CGI's services include comprehensive business process outsourcing (BPO) and IT services, focusing on efficiency, security, and accessibility of payroll processing for caregivers and beneficiaries [3] - The system processes over 1.5 million payroll payments monthly, totaling more than $19 billion annually, ensuring timely and accurate compensation for caregivers [3] Group 3: Future Focus - The renewal reflects CGI's role in modernizing California's IHSS care infrastructure, with a roadmap that includes cloud modernization, AI-powered insights, and agile responses to new legislation [4] - CGI aims to strengthen the program to provide efficient and reliable services to caregivers and those they support [4] Group 4: Company Overview - Founded in 1976, CGI is one of the largest independent IT and business consulting services firms globally, with 94,000 professionals [5] - CGI reported revenue of CA$14.68 billion for Fiscal 2024 and is listed on both the TSX and NYSE [5]

Core Viewpoint - The market anticipates CGI Group (GIB) to report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus estimate for CGI's quarterly earnings is $1.51 per share, reflecting a year-over-year increase of 7.9%, while revenues are projected to be $2.91 billion, up 8.6% from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 0.1% higher, indicating a slight positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for CGI is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.24%, suggesting a bearish outlook from analysts [12]. Historical Performance - In the last reported quarter, CGI was expected to post earnings of $1.50 per share but delivered $1.48, resulting in a surprise of -1.33%. Over the last four quarters, the company has beaten consensus EPS estimates twice [13][14]. Investment Considerations - Despite the negative Earnings ESP, the stock currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [12]. Investors are advised to consider other factors beyond earnings results when making investment decisions [15][17].