CGI(US:GIB)2025-07-30 11:14Financial 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].