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01/11 04:45
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate strong demand in AI services, growing pipelines in managed services and SI&C, and strategic M&A activities. Positive trends in revenue per employee and client spending, combined with a focus on AI and automation, suggest a favorable outlook. Concerns about the federal sector and management's vague responses on growth specifics are noted but outweighed by overall positive developments. No drastic negative factors were present, supporting a positive sentiment.
Revenue $4 billion, up 9.7% year-over-year or up 5.5% excluding the impact of foreign exchange. Growth driven by recent business acquisition and demand for APAC delivery centers.
Adjusted EBIT $667 million, up 11.2% year-over-year, with a margin of 16.6%, up 20 basis points. Growth attributed to operational discipline and strategic execution.
Adjusted Net Earnings $472 million, up $33 million year-over-year, with a margin of 11.8%. Growth due to higher recurring revenue mix and operational excellence.
Diluted EPS $2.13, an increase of 11% year-over-year. Growth driven by share buybacks and operational improvements.
Net Earnings $381 million, with a margin of 9.5%. Impacted by restructuring and acquisition-related costs.
Cash from Operations $663 million, representing 16.5% of total revenue. Includes $43 million in restructuring, acquisition, and integration payments.
Bookings $4.8 billion for a book-to-bill ratio of 119%. Growth led by U.S. Federal (185%), U.S. commercial and state government (136%), and Western and Southern Europe (117%).
Contracted Backlog $31.5 billion, equivalent to 2x revenue. Reflects strong demand and long-term client commitments.
DSO (Days Sales Outstanding) 45 days, compared to 41 days in the prior year. Increase due to recent business acquisitions.
Dividend Quarterly cash dividend of $0.17 per share, representing a 13% increase. Reflects strong financial position and shareholder returns.
Agentic and Gen AI: Invested $368 million in strategic initiatives, including Agentic and Gen AI, to enhance offerings and productivity.
AI-driven transformation: Positioned as the AI to ROI partner for clients, focusing on embedding AI into consulting, systems integration, and managed services.
AI integrated platforms: Invested in AI platforms like PulseAI and DigiOps, with 65% of strategic IP portfolio incorporating intelligent automation.
APAC delivery centers: Reported 6.4% growth driven by demand for APAC delivery centers.
U.K. and Australia segment: Achieved 28% growth due to the acquisition of BJSS, expanding U.K. operations.
U.S. segments: Reported 5.7% growth, driven by mergers with Aeyon and Daugherty, and increased pipeline opportunities.
Poland expansion: Announced acquisition of Comarch, doubling presence in Poland and incorporating new ERP IP solutions.
Revenue growth: Delivered $4 billion in Q4 revenue, up 9.7% year-over-year, with a book-to-bill ratio of 119%.
Profitability: Achieved adjusted EBIT of $667 million, with a margin of 16.6%, and adjusted net earnings of $472 million.
Cash flow: Generated $663 million in cash from operations, representing 16.5% of total revenue.
Mergers and acquisitions: Closed 5 acquisitions in fiscal 2025, all accretive within the first year, expanding geographic footprint and offerings in AI, data, cloud, and engineering.
AI strategy: Focused on embedding AI into services, developing AI integrated platforms, uniting talent with AI technologies, and accelerating internal AI adoption.
Dividend increase: Board approved a 13% increase in quarterly cash dividend for Q1 2026.
Economic Environment: Challenging macroeconomic conditions are impacting client demand, particularly for discretionary IT spending in SI&C projects. This could affect revenue growth and project pipelines.
Government Procurement Cycles: Lengthy federal shutdowns in the U.S. and related impacts on state and local government clients are causing delays in procurement cycles, leading to an estimated revenue impact of $60 million to $75 million and a margin impact of $15 million to $22 million in the next quarter.
H-1B Visa Program Changes: Potential changes to the U.S. H-1B visa program could have manageable but still notable impacts on operations, particularly in talent acquisition and deployment.
Integration of Acquisitions: Planned runoff of lower-margin work from recent acquisitions and the integration of new acquisitions like Comarch could pose challenges in maintaining profitability and operational efficiency.
Client Budget Rebalancing: Clients are rebalancing IT budgets, which may lead to reduced discretionary spending in some areas, potentially impacting short-term revenue.
AI and Technology Adoption: While AI adoption is a growth driver, the complexity of integrating AI into existing systems and ensuring responsible use could pose operational and reputational risks.
Supply Chain and Delivery Centers: Dependence on APAC delivery centers for growth could expose the company to geopolitical and operational risks in the region.
Tax Rate: The company expects its effective tax rate for future quarters to be in the range of 26% to 27%.
Capital Allocation: CGI plans to continue its aggressive use of capital in 2026, including investments in business acquisitions, share buybacks, and dividend payments.
Dividend Increase: The Board of Directors approved a 13% dividend increase for Q1 2026.
Mergers and Acquisitions: The company expects recent mergers to drive future growth by expanding geographic footprint and offerings in areas such as AI, data, cloud, and engineering. The acquisition of Comarch is expected to double CGI's presence in Poland and incorporate new ERP IP solutions and digital transformation services.
AI Strategy: CGI's AI strategy is structured around embedding AI into services, leading with AI-integrated platforms, uniting talent and AI technologies, and accelerating internal AI adoption. This strategy is expected to create new opportunities for revenue growth and margin improvement.
Managed Services Demand: Demand for managed services remains robust, with opportunities in the pipeline increasing by more than $11 billion compared to last year.
U.S. Operations Impact: The company expects a revenue impact of approximately $60 million to $75 million and a margin impact of $15 million to $22 million in the next quarter due to the federal shutdown and related challenges in U.S. government procurement cycles.
IT Spending Trends: Clients are rebalancing IT spending, with a focus on managed services and AI-integrated services to reduce operational costs and fund modernization initiatives.
Dividend Payments in Fiscal 2025: Returned $135 million to shareholders through dividend payments.
Quarterly Cash Dividend Approval: Board of Directors approved a quarterly cash dividend of $0.17 per share, representing a 13% increase. This dividend is payable on December 19, 2025, to shareholders of record as of November 21, 2025.
Share Buyback Program in Fiscal 2025: Invested $1.3 billion to buy back stock.
Share Buyback in Q4 2025: Allocated $491 million to buy back stock in Q4 2025.
Future Share Buyback Plans: Company expects to remain very active in its repurchase program.
The earnings call reflects a positive sentiment with strong financial performance, including a 29% increase in net income and growth across all segments. The Q&A highlights optimism about synergies from the RF Capital acquisition and confidence in achieving accretion sooner than expected. Although there are concerns about investment income reduction and unclear management responses, the overall outlook remains positive with favorable acquisition strategies, strong core earnings, and a robust dividend payout ratio.
The earnings call summary and Q&A indicate strong demand in AI services, growing pipelines in managed services and SI&C, and strategic M&A activities. Positive trends in revenue per employee and client spending, combined with a focus on AI and automation, suggest a favorable outlook. Concerns about the federal sector and management's vague responses on growth specifics are noted but outweighed by overall positive developments. No drastic negative factors were present, supporting a positive sentiment.
The earnings call reveals strong financial performance, strategic growth through acquisitions, and a positive outlook on AI investments and partnerships. Despite challenges in separating organic from acquisition growth and some regional headwinds, CGI's focus on modernization and client-centric approach is promising. The Q&A session highlights optimism in partnerships and AI as competitive advantages, with ongoing share buybacks adding further investor confidence. Overall, the sentiment leans positive, with expectations of continued growth and strategic investments driving stock price upwards.
The earnings call shows a mixed picture: strong financial metrics with record bookings and revenue growth, but concerns over restructuring costs and lack of guidance. The Q&A reveals uncertainties in U.S. Federal contracts and capital allocation. While acquisitions are performing well, the lack of detailed guidance and restructuring impacts create uncertainty. The positive aspects like share repurchases and dividend returns are offset by these concerns, leading to a neutral sentiment.
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