CGI(US:GIB)2025-07-30 14:02Financial 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]