Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CGI Inc (GIB, Financial) reported strong Q4 2024 results with $3.7 billion in revenue, marking a 4.4% year-over-year increase.
- The company achieved a book-to-bill ratio of 104% in Q4, indicating strong demand for its services.
- Managed Services bookings were particularly robust, with a book-to-bill ratio of 120%, highlighting growth in recurring revenue streams.
- CGI Inc (GIB) maintained a strong cash position with $3 billion readily available, supporting future investments and acquisitions.
- The company announced a cash dividend of $0.15 per share, reflecting its commitment to returning value to shareholders.
Negative Points
- Financial services in Europe and communications in North America faced challenges, impacting overall growth in these sectors.
- The effective tax rate increased to 26.4% from 25.7% last year, partly due to tax credit adjustments and changes in the UK statutory rate.
- Bookings for business and strategic IT consulting and system integration were lower, with a book-to-bill ratio of 85%, reflecting softness in discretionary spending.
- The company experienced lower utilization within the financial services sector, particularly in Europe, affecting profitability.
- CGI Federal bookings were below 100% due to the US election year, which typically slows down government procurement processes.
Q & A Highlights
Q: Will CGI be more active in acquisitions in the next 12 months compared to the last 12 months?
A: François Boulanger, President and CEO, mentioned that the M&A pipeline is robust, with discussions ongoing with several targets. However, closing deals depends on agreeing on price and strategic fit. CGI remains optimistic about future acquisitions.
Q: How is AI impacting CGI's business pipeline compared to the previous year?
A: François Boulanger noted an increase in AI-related proof of concepts and mandates, such as the federal government payroll case project. CGI is also integrating AI into its managed services and IP offerings, with expectations for continued growth in this area.
Q: How is CGI preparing its workforce for the scaling of GenAI?
A: CGI has invested $1 billion in AI, including training for its workforce. Basic training is provided to all CGI partners, with more in-depth technical training for developers and programmers. The company is also hiring new talent with AI skills.
Q: Can you provide more color on the bookings for this quarter, particularly the observed weakness?
A: François Boulanger explained that bookings can be lumpy, with some contracts not closing by quarter-end. The U.S. Federal segment was affected by election-related procurement slowdowns. Steve Perron, CFO, added that managed services bookings were strong, but SI&C bookings were softer.
Q: How does CGI view the potential impact of a new U.S. administration on its federal business?
A: François Boulanger stated that changes in government often lead to shifts in priorities, which can create opportunities for IT services. CGI has a long history with the U.S. Federal Government and expects to continue supporting new priorities with IT solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
