GIB — CGI Inc.

Summary of CGI's Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $4.1 billion, up 11.4% year-over-year (7% growth excluding foreign exchange effects).
• Adjusted EBIT: $666 million, a 10.5% increase year-over-year, with a margin of 16.3% (down 10 basis points).
• Net Earnings: $409 million with a margin of 10%; adjusted net earnings were $470 million, up $30 million year-over-year.
• Diluted EPS: $2.10, reflecting a 10% increase compared to Q3 last year.
• Cash from Operations: $487 million, representing 11.9% of total revenue.
• Global Backlog: $30.6 billion, equivalent to 2x revenue.
• Book-to-Bill Ratio: 101% for the quarter, with strong performance in IP (127%) and managed services (106%).

2. Strategic Updates and Business Highlights

• Growth driven by acquisitions and strong demand in financial services, particularly in North America.
• Significant growth in the U.K. and Australia, attributed to the full quarter impact of the BJSS acquisition.
• Notable contracts awarded include a $200 million extension with the State of California and partnerships with the European Space Agency and various financial institutions.
• Continued investment in AI and generative AI, which now drives 40% of IP revenue.
• CGI launched CGI SpeedOps, a platform aimed at optimizing business processes.

3. Forward Guidance and Outlook

• Expectation of continued growth in the financial services sector and stabilization in U.S. federal operations.
• Anticipated completion of restructuring costs around $100 million through the remainder of 2025.
• Positive sentiment regarding client spending in banking and government sectors, with a focus on modernization and cybersecurity.
• Margins expected to improve as recent acquisitions are fully integrated.

4. Bad News, Challenges, or Points of Concern

• Continued softness in Continental Europe, particularly in the MRD sector.
• U.S. federal revenues showed a decline, attributed to lower volumes in business process outsourcing (BPO) contracts.
• Macroeconomic uncertainties, particularly regarding tariffs, are causing clients to delay investments.
• Integration of recent acquisitions may temporarily impact margins until fully realized.

5. Notable Q&A Insights

• Management indicated that organic growth is challenging to quantify separately from acquisitions but noted positive momentum in financial services.
• The partnership strategy is yielding results, with a 120% year-over-year increase in bookings from go-to-market collaborations.
• There is a shift in U.S. federal government spending from cost-cutting to modernization, which could benefit CGI.
• Management remains optimistic about the M&A environment, viewing current valuations as favorable for potential acquisitions.
• AI is being integrated into CGI's operations, enhancing productivity and potentially increasing headcount efficiency in the future.

Overall, CGI's Q3 2025 results reflect strong growth driven by strategic acquisitions and demand in key sectors, though challenges remain in certain regions and sectors. The company is focused on integrating recent acquisitions, investing in AI, and navigating macroeconomic uncertainties.