CGI, Inc. Q1 FY2024 earnings call

• Steve Perron noted Q1 revenue was $3.6 billion, up 4.4% y-o-y. Growth balanced between Europe and North America. Government had 7.5% constant currency growth, Communication and Utilities had 6.7% constant currency growth. IP was 22% of total revenue, up 30 basis points. Strong contract wins with $4.2 billion booked, book-to-bill ratio 116%. - George Schindler mentioned starting fiscal 2024 in a strong position, team delivered financial results in line with plan. Client satisfaction ratings at record high. Managed services and IP drives bookings. AI investments progressing, global delivery network expanded from 31% to 38% of consultants in 3 years.

In Q1, CGI delivered $3.6 billion of revenue, up 4.4% year-over-year or up 1.5% when excluding foreign exchange. Growth was balanced between Europe and North America. Government is the largest vertical market, representing 36% of Q1 revenue. IP as a percentage of total revenue was 22% in the quarter, up 30 basis points year-over-year. IP revenue growth was 4.2% in constant currency. Managed services represented 57% of total bookings for a book-to-bill ratio of 122%.

• Focus on delivering value to shareholders with capital allocation priorities: investing in business, pursuing accretive acquisitions, repurchasing stock, paying down debt. Board approved extension of NCIB program until February 2025 to repurchase up to 20.5 million shares. Balance sheet strong with net debt-to-capitalization ratio 17.6% and $2.7 billion cash available.

• Market uncertainty affecting client discretionary spending in SI&C. - Potential pricing concessions in SI&C to secure deals. - Impact of interest rates and regulatory elements on banking sector.

Q: Banking sector impact, interest rates and growth back?

A: Uncertainty driving banking sector softness, but interest rates and regulatory elements will likely loosen, with pipeline building for growth.

Q: M&A opportunities current environment?

A: More optimistic on M&A opportunities due to market valuations and company's balance sheet, but will remain disciplined.