CGI Q3 Fiscal 2025 Earnings Call - Resilient Growth and Aggressive AI Integration Drive Market Confidence

Joelle, Conference Call Operator, Unknown: Good morning ladies and gentlemen. Welcome to CGI’s third quarter fiscal 2025 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Go ahead, Mr. Linder.

Kevin Linder, SVP of Investor Relations, CGI: Thank you, Joelle and good morning. With me to discuss CGI’s third quarter fiscal 2025 results are François Boulanger, our President and CEO, and Steve Perron, Executive Vice President and CFO. This call is being broadcast on CGI.com and recorded live at 9:00 A.M. Eastern Time on Wednesday, July 30, 2025. Supplemental slides as well as a press release we issued earlier this morning are.

Steve Perron, Executive Vice President and CFO, CGI: Available for download along with our Q3.

Kevin Linder, SVP of Investor Relations, CGI: MDA financial statements and accompanying notes, all.

Steve Perron, Executive Vice President and CFO, CGI: Of which have been filed with both.

Kevin Linder, SVP of Investor Relations, CGI: Cedar Plus and Edgar. Please note that some statements made on.

Steve Perron, Executive Vice President and CFO, CGI: The call may be forward looking, actual.

Kevin Linder, SVP of Investor Relations, CGI: Events or results may differ materially from those expressed or implied and CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete safe harbor statement is available in both our MDA and press release as well as on cgi.com we recommend.

Steve Perron, Executive Vice President and CFO, CGI: Our investors read it in its entirety.

Kevin Linder, SVP of Investor Relations, CGI: We are reporting our financial results in.

Steve Perron, Executive Vice President and CFO, CGI: Accordance with International Financial Reporting Standards or IFRS.

Kevin Linder, SVP of Investor Relations, CGI: As always, we will also discuss non-GAAP performance measures which should be viewed as supplemental. The MDA contains definitions of each one used in our reporting. All of the dollar figures expressed on this call are CAD unless otherwise noted. Now I’ll turn the call over to Steve to review our Q3 financial results.

Steve Perron, Executive Vice President and CFO, CGI: Steve, thank you, Kevin, and good day, everyone. In our third quarter of fiscal 2025, we continued to demonstrate discipline in managing our operations. We delivered CAD 4.1 billion of revenue, up 11.4% year over year or up 7% when excluding the impact of foreign exchange. Growth was mainly driven by recent business acquisitions and continued momentum in the financial services sector. In constant currency, the CGI client proximity segments with the strongest growth were U.K. and Australia at 37%, which incorporates a full quarter’s revenue of BJSS, and across our U.S. segments, combined growth was 9%, primarily driven by our Aeon and Doherty merger investments. Geographically, our growth was balanced with North American operations at 7.4% and growth in our European segments at 6.6%, and demand remained strong for our Asia Pacific offshore delivery with revenue up 6.4%.

From an industry perspective, constant currency revenue growth was led by financial services at 9.6% and government at 8.7%, partially offset by continued softness in continental Europe, particularly in the MRD sector. IT revenue grew in six of our eight proximity segments on the strength of continued client interest for our business solutions, especially with our financial services and energy and utilities clients. IP represented 20.6% of our total revenue, impacted by the dilutive effect of recent business acquisition and lower volumes in our U.S. Federal IP enabled business process services. Bookings in the quarter were again over CAD 4 billion for a book-to-bill ratio of 101%, led by U.S. commercial and state government at 121%, Finland, Poland, and Baltics at 113%, and Scandinavia, Northwest, and Central East Europe at 106%.

When looking at service type, book-to-bill ratios were 106% for managed services and 96% for business and strategic IT consulting and systems integration. IP also had another strong quarter with a book-to-bill ratio of 127%, driven by significant demand in the financial services at 195% and government at 134%. On a trailing twelve month basis, book-to-bill was 107% with North America at 106% and Europe at 108%. On the same basis, managed services had a book-to-bill ratio of 114% and the SINC book-to-bill ratio was 98%. On a trailing twelve month basis, IP book-to-bill was 113%. Our global backlog reached CAD 30.6 billion or two times revenue. Turning to profitability, adjusted EBIT in the quarter was CAD 666 million, up 10.5% year over year for a margin of 16.3%, down 10 basis points.

Due to the impact of recent mergers which are in the process of being integrated, including restructuring and acquisition related costs of CAD 84 million. Earnings before income taxes were CAD 552 million for a margin of 13%. Our effective tax rate in the quarter was 25.9%, stable compared to last year, and we expect our tax rate for future quarters to be in the range of 25.5%-26.5%. Adjusted net earnings were CAD 470 million, up CAD 30 million year over year, for a margin of 11.5%. On the same basis, diluted EPS was CAD 2.10, an accretion of 10% when compared to Q3 last year. Net earnings were CAD 409 million for a margin of 10%, and diluted EPS was CAD 1.82.

Impacted by restructuring and acquisition related costs in the quarter, we expect to incur approximately CAD 100 million to complete our restructuring program over the remainder of calendar 2025. Turning to cash, we generated CAD 487 million in our cash from operation, representing 11.9% of total revenue, impacted by CAD 97 million in restructuring, acquisition and related integration payments. DSO was 43 days in the quarter, 2 days better than our target. This compared to 42 days in the prior year. In Q3, we invested CAD 105 million into our business, including in generative AI, CAD 286 million to buy back our stock, and return CAD 34 million to our shareholders under our dividend program.

On a year to date basis, we invested CAD 288 million into our business, including in generative AI, CAD 1.6 billion in business acquisitions, CAD 784 million to buy back our stock, and return CAD 102 million to our shareholders under our dividend program. Yesterday our Board of Directors approved a quarterly cash dividend of CAD 0.15 per share. This dividend is payable on September 19, 2025, to shareholders of record as of the close of business on August 15, 2025. CGI has CAD 2.7 billion in capital resources readily available with access to more if needed to deliver on our profitable growth strategy. CGI’s capital allocation priorities remain consistent, focused on investing back in the business and pursuing accretive acquisitions. Now I will turn the call over to François to further discuss insights on the quarter and the outlook for our business and markets.

Kevin Linder, SVP of Investor Relations, CGI: François, thank you Steve, and good morning everyone. CGI’s performance in the third quarter again demonstrated the value of our resilient mix of services, industry sectors, and global footprint, as well as our ability to proactively manage the fundamentals of our business. Our strategic deployment of capital in line with CGI’s build and buy profitable growth strategy drove our performance in the quarter. CGI’s results in the quarter place us in the top quartile of our IT services peer group. Today I will focus on the first nine months of fiscal 2025, the current market environment, and the outlook. For the first three quarters, revenue was up 8% or 4.4% on a constant currency basis to CAD 11.9 billion. Adjusted EBIT was up 7% to CAD 1.9 billion. Adjusted EPS was up 8.4% to CAD 6.18, and on a trailing twelve month basis, cash from operations totaled CAD 2.2 billion.

Continuing to reinforce our financial position to execute on our profitable growth strategy, delivering quality remained high and client satisfaction again increased. Across every dimension we measure, clients continue to partner with CGI to address their most complex enterprise and ecosystem-wide digitization initiatives. This client trust has driven bookings of nearly CAD 12.8 billion over the first three quarters of the fiscal year, up by more than CAD 560 million compared to the same period a year ago. Backlog also grew, representing two years of annual revenue on a trailing twelve month basis. CGI’s book-to-bill stands at 107%, driven by sustained demand to help clients realize operational efficiencies, notably through managed services and IP in the quarter. We continue to see signs of renewed client spending in banking and the broader financial services sector, with year-over-year bookings up by more than CAD 400 million on a trailing twelve month basis.

Bookings in this sector increased by more than CAD 1 billion as clients turned to CGI to help modernize core systems and processes. Government sector demand remains strong, with a Q3 book-to-bill of 112%, led by strong wins in US local government. Agencies around the world continue to turn to CGI to help them transform mission-critical applications to more efficiently and effectively deliver government services, including through exploration of commercial best practices specific to our US Federal operations. While overall procurement volumes and contract values are down compared to historical levels, we are seeing early signs of stabilization on a sequential basis. Bookings in this segment increased by nearly $250 million. CGI remains well positioned to support a wide range of government missions through our end to end offering, notably our IP which embeds generative AI, data protection and cybersecurity.

In the third quarter, representative awards of our strong financial services and government bookings included. The State of California awarded CGI a $200 million contract extension for the delivery of end to end managed services for its case management information and payroll system. The European Space Agency named CGI to support its new climate monitoring initiative, leveraging CGI’s expertise in scientific data systems and large scale processing to enable high precision traceable observation data. A premier US financial services company selected CGI to lead amortization of its core IT systems and including integration of AI driven automation to drive IT efficiency, system resilience and enhance cybersecurity. Finnish Customs extended its partnership with CGI to modernize customs operations and advance their goals for trade through CGI’s expertise in cybersecurity, data analytics and regulatory compliance.

A prominent Canadian bank extended its commitment to CGI’s Wealth 360 platform to streamline its advanced portfolio management and trading, allowing advisors to spend more time engaging with customers. The State of Texas Controller’s Office selected CGI to modernize and unify its core financial systems through the implementation of our cloud based Advantage platform. NHS Kotlin engaged CGI to deliver a user centric digital platform that will help patients connect more easily with care services while also driving efficiency through innovation and the Federal Aviation Administration selected CGI to develop, deliver and operate a modernized notice to airmen system to help improve aviation safety in the US. For this mission critical FAA project, we are collaborating with Google Public Sector, one of CGI’s global alliance relationships.

During the first nine months of fiscal 2025, our new bookings from these go to market partnerships total more than $2.6 billion, up over 120% compared to last year. In the quarter, we continue to see macroeconomic uncertainty impacting the timing of client decisions, notably for larger enterprise engagements. For example, subsequent to the quarter end, one of the largest banks in Europe selected CGI as one of its strategic IT partners through its vendor consolidation exercise, a buying trend we see globally. Under the five-year agreement, up to 700 CGI consultants will deliver a wide range of IT services to manage the bank’s in-country IT operations and prepare for future international digital transformation. Across all buying trends, CGI’s end-to-end offerings continue to position us well as a partner of choice.

Specifically, CGI’s outcome-based value proposition for managed services and IP help clients generate cost savings and accelerate transformation at scale with lower capital costs and continuous innovation. This focus on realizing business value from digital is front and center in client conversations. In short, they expect partners like us to take accountability for outcomes. This expectation aligns well with CGI’s delivery track record and our ability to bridge strategy with execution through deep domain understanding, application of emerging technologies, and flexible delivery models including global capability centers. Looking ahead, client priorities in public sector globally are centered on cybersecurity, sovereign cloud solutions, and the modernization of mission-critical applications and systems. Within our CGI payroll segment, agencies are looking to the future and want to engage in discussions about how technology can more cost effectively enable their missions. Our team is fully engaged in productive discussions to propose bold, outcome-driven ideas.

This includes our Momentum ERP, one of two approved government ERP solutions, as it blends commercial application with government mission requirements. Across commercial sectors, demand remains high for cloud-enabled migration, platform monetization, traditional and generative AI, with clients seeking practical use cases grounded in business reality. CGI’s strong market positioning is validated by our growing pipeline. The managed services pipeline is up by more than 20% year over year with increases across all major industry sectors. The pipeline of systems integration and consulting opportunities is up by more than 20% across government, the space sector, and several commercial industries compared to this time last year, and the IP pipeline is up more than 10% year over year with significant increases in solutions that accelerate AI-based automation, application modernization, and cloud migration. To capture this demand, CGI continues to make targeted investment in our talent and offerings.

This includes integrating AI and generative AI into our offerings and delivery across industries and geographies. AI remains a powerful enabler for monetization, optimization and transformation. For example, in Canada, CGI partnered with a large insurance firm to use AI to accelerate quality engineering, resolve and document help desk queries using AgentIC AI and advance the development of a claim portal. In Germany, CGI is serving as one of the partners for the European Space Agency AI for OPS program delivering AI-based software to optimize satellite mission planning and execution. In the U.S., we are working with a manufacturer to help accelerate their monetization with AI-powered processes and AgentIC automation. In Finland, CGI’s Omni360 platform integrates AI directly into health clinician workflows with expansion planned with three of the largest social and health regions in the country.

In the Netherlands, CGI is providing AI expertise for our gas and electricity network operator to develop new solutions in the area of energy grids, energy technology and digital transformation. In India, we are leveraging CGI’s AgentIC AI solution for IT services management and automated ticket management for multiple clients. In the third quarter, CGI continued to see strong momentum in AI-related wins, demonstrating the depth of our expertise globally. Our pipeline of qualified AI opportunities also remains robust, reflecting the continuing strong demand to embed these capabilities within core client systems and operations. Given ongoing client demand, we continue to integrate AI in our IP, now driving 40% of our overall IP base revenue. We also continue to launch new solutions to help client operations run faster, smarter and more efficiently.

In fact, we announced this week the global launch of CGI SpeedUp, a new platform to digitize and optimize business processes for commercial clients and governments. Importantly, when combined with CGI’s managed services and broader process automation initiatives such as those enabled by CGI DigiOps, the platform can deliver sustainable double-digit efficiency improvements for clients. CGI also continues to lead in responsible AI governance, including through the European AI Act Pledge and the collaboration with government and industry programs in the U.S., Canada and the U.K. Turning now to the buy side which remains an integral element of our profitable growth strategy, integrating accretive mergers to create long term value for all stakeholders requires rigor and discipline. Our teams continue to finalize recent integrations. In addition, we continue to work through the regulatory and compliance processes to close the merger with Apsid headquartered in France.

Our pipeline of additional merger targets remains robust. We have a very active program in terms of sourcing interactive dialogues and due diligence assessments. We are committed to making sure that we acquire the right companies for the right price at the right time. All three, without exception. CGI’s operational strength, stability and financial capacity will continue to enable us to move quickly with discipline on the right opportunities of all sizes. In closing, we will continue to proactively manage the fundamentals of our business and invest in our build and buy profitable growth strategy to further deepen our proximity model, our industry knowledge and technology expertise, our end to end offerings, and our global network and scale. We are confident in the resilience of our model, the depth of our client relationships and the dedication of our talented consultants and professionals around the world.

Thank you for your interest and support. Let’s go to the questions now. Kevin. Thanks François and Joelle.

Steve Perron, Executive Vice President and CFO, CGI: We can now queue for questions.

Joelle, Conference Call Operator, Unknown: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Surinder Singh Thind with Jefferies. Your line is now open.

Steve Perron, Executive Vice President and CFO, CGI: Surrender. Hello?

Kevin Linder, SVP of Investor Relations, CGI: All right, Surinder.

Steve Perron, Executive Vice President and CFO, CGI: You’re up.

Kevin Linder, SVP of Investor Relations, CGI: Oh, I apologize.

Steve Perron, Executive Vice President and CFO, CGI: Thank you. The line went staticky for about the last two minutes.

Kevin Linder, SVP of Investor Relations, CGI: I guess where I’d like to start with is can you talk a.

Steve Perron, Executive Vice President and CFO, CGI: Little bit about organic growth and organic.

Kevin Linder, SVP of Investor Relations, CGI: Growth in the two different segments.

Steve Perron, Executive Vice President and CFO, CGI: What you’re seeing there, just to provide some context, given all of the FX.

Kevin Linder, SVP of Investor Relations, CGI: Noise as well as the acquisitions. Okay, I won’t talk about the numbers by itself. As you know, we are presenting constant currency growth because again, it’s difficult to split from acquisition and then organic. If I’m talking about the environment in general, you know, we’re still seeing, you know, some challenges. Example with, still with the tariffs, you know, we have still some clients, you know, waiting a bit before investing to understand where tariffs will finish with. We see that a lot in Europe, but at the same time it’s bringing a lot of opportunities on the managed services side, but on the same SEAS side it’s still a bit slow, including business consulting also.

We see that especially in the manufacturing side, but on the other side, you know, if I’m taking example the financial sector, we are seeing good growth on the organic side in that industry, especially in North America. Also, you know, I was talking about booking just after quarter end with large banks in Europe. We are seeing good momentum in the banking side of the business. We saw growth, organic growth in the past and we will see that also in the future. That’s helpful.

Steve Perron, Executive Vice President and CFO, CGI: Can you talk a little bit about switching gears here a little.

Kevin Linder, SVP of Investor Relations, CGI: Bit about the partnership strategy?

Steve Perron, Executive Vice President and CFO, CGI: It sounded like maybe a bit more revenues are coming through that channel. Just any color there in any evolution in that part of the strategy?

Kevin Linder, SVP of Investor Relations, CGI: Yeah, you know, it’s something that, you know, we invested in the last couple of years to promote more our partnership with large technology companies. It’s paying off. You know, we’re investing in the training of these technology and certification on this technology and we are talking about to see how we can better team together in front of clients. It’s paying off and it will continue, I think, to pay off in the future. It’s a good initiative that we did in the past and it will give us dividend, more dividend even in the future.

Steve Perron, Executive Vice President and CFO, CGI: I apologize. Any color you can provide in terms?

Kevin Linder, SVP of Investor Relations, CGI: Of the percentage of bookings or any.

Steve Perron, Executive Vice President and CFO, CGI: Metric or quantitative measure of that strategy would be helpful if at all possible.

Kevin Linder, SVP of Investor Relations, CGI: I think that’s the number we gave to you. Right. So together. And again, we just need to be clear, that’s not what we’re doing with these technology companies, but it’s really what we are working together on, on winning deals. If I’m going back, what was the number? You know, we did say that, you know, we book for CAD 2.6 billion the go to market with them. That’s an increase of 120% year over year. That, that’s really the payoff of investing in these relationships.

Steve Perron, Executive Vice President and CFO, CGI: Thank you.

Joelle, Conference Call Operator, Unknown: Good morning everyone. Good quarter here. Thank you. If you could provide us a little bit more color in terms of your margins broadly. Like what are some of the margin expansion strategies that, other than restructuring, that you’re deploying. You made a ton of acquisitions recently. How do you expect those as they get integrated to help with upliftment of the margins. I, in the same vein, I want to ask US federal margins, I did notice they are back to Q3 2024 levels. Is there seasonality in those as well?

Kevin Linder, SVP of Investor Relations, CGI: Yeah, so thanks for the question. Steve, you can comment also if you want. You know, on the margin, for sure, the integrations of our latest acquisition and especially BJSS will help to increase the margin. It’s the first full quarter of BJSS, we closed it at the end of the last quarter and the integration only started. The idea is that when it will be fully integrated, it will improve the margin. In our U.K. environment, same thing. For the U.S., we still see, yes, we see some improvement in the U.S. margin, but you know, we still have some work to do on finalizing some of the integration authority and that will also again improve the margins. The idea is that when these companies will be fully integrated, you know, we are expecting margins to go up.

Steve Perron, Executive Vice President and CFO, CGI: Yeah. And the effect also of the restructuring. Yeah, we are, you know, as you know, we’re quite disciplined in making sure that availability is there. We are taking action currently in order to improve some of the continental Europe spus and reporting segments.

Joelle, Conference Call Operator, Unknown: That’s very helpful. One more question that I have is on the vendor consolidation trend. You noted some wins that you have observed across Europe and broadly on a global basis. We’ve been hearing about these trends. Could you help us understand what is it about CGI that is much more differentiated than the global IT players that is helping you with this vendor consolidation trend? How should we expect you to stay differentiated and continue to win this race?

Steve Perron, Executive Vice President and CFO, CGI: Thank you.

Kevin Linder, SVP of Investor Relations, CGI: Thanks, David. I think, you know, it’s our client-centric approach. I think we are very close to the clients and that’s what we’re, you know, we’re trying always to be understanding their challenges and when we’re delivering, we’re delivering, you know, with a client approach. For us, it’s making a big difference. Again, you’ll see more of this. You know, I was in Europe meeting with a client. We have a good business and they have 1,200 suppliers and they are feeling it’s too much. They are saying that, you know, it’s difficult to bring synergy when you have that many suppliers, and they want to reduce it. They like our approach. They like the fact that we are client-centric. They also like our partnership approach. We are ready to co-invest in some of these processes with them and bring innovation on the business side.

That’s really what is helping us to win in these vendor constellation deals.

Joelle, Conference Call Operator, Unknown: That’s very helpful. I’ll come back.

Kevin Linder, SVP of Investor Relations, CGI: Questions?

Joelle, Conference Call Operator, Unknown: Thanks a lot.

Kevin Linder, SVP of Investor Relations, CGI: Thank you.

Joelle, Conference Call Operator, Unknown: Your next question comes from Jerome Dubreuil with Desjardins. Your line is now open.

Steve Perron, Executive Vice President and CFO, CGI: Thanks for taking my question.

Kevin Linder, SVP of Investor Relations, CGI: The first one is kind of a two-pronged question on capital allocation. Accenture recently characterized the M&A environment as being a bit more difficult.

Steve Perron, Executive Vice President and CFO, CGI: I wonder if you agree.

Kevin Linder, SVP of Investor Relations, CGI: If you do, wondering what we should be expecting on the buyback side with results improving and the share price lagging the index. I don’t know with Accenture, but I would say I’m not in that same path. I think contrary, I think acquisition is still something that we’re looking very closely, I think evaluate with valuations that are, I would say, lower than before. You have a lot of targets that are at a point now that they need to do, taking again decision on their future. I think it’s still a pretty active, we have a pretty active pipeline, very good discussion and I think that will continue. Now I’m more, I would say, bullish on that side on the acquisition. I’m not saying that we won’t continue to do some share buyback. You know, we have the capacity and capabilities to do both.

I don’t know if Steve, you want to say a bit.

Steve Perron, Executive Vice President and CFO, CGI: Yeah, if you look at just the recent quarters, there was no cash out coming for business acquisition and we invested close to CAD 300 million in share buyback. Obviously it’s all our first priority is to invest in the business after that to invest in accretive M and A. Following that it’s the share buyback.

Kevin Linder, SVP of Investor Relations, CGI: Great. Second question, I’d like an update on those if possible. There’s a big period reported last week saying there’s a bit of a shift.

Steve Perron, Executive Vice President and CFO, CGI: From cost cutting to modernization initiatives in.

Joelle, Conference Call Operator, Unknown: The U.S. Federal government.

Steve Perron, Executive Vice President and CFO, CGI: I’m wondering if you’re seeing the.

Joelle, Conference Call Operator, Unknown: Same thing or if it’s still very.

Kevin Linder, SVP of Investor Relations, CGI: Much 100% focused on cost cutting. For sure, you know, at least all the demand of information. What are we delivering for, for the clients by agency, what type of contract we’re doing. That’s mostly finished and you know, no more question on that side. We’re back to having good discussion with our agencies and our clients on a daily basis, like I said in the past, to do some cost saving on their side. They will need new systems, they will need more automations and to do that they’ll need services like us to help them to achieve these targets. That’s where you’re right, that’s where we are now. We have good discussion with them. How can we help them on, on the cost saving, what type of automation we can do with them. That’s the kind of conversation we have with them.

You see, you know the booking that picked up on a sequential basis. We’re still not at the same level that we were a year ago or a year and a half ago. These discussions are now happening and my expectation is that we will see some improvement in the future. Awesome.

Joelle, Conference Call Operator, Unknown: Your next question comes from Thanos Moschopoulos with BMO Capital Markets. Your line is now open.

Steve Perron, Executive Vice President and CFO, CGI: Your APAC BU continues to grow faster.

Kevin Linder, SVP of Investor Relations, CGI: Organically than the rest of the business. Can you speak to the key client geographies that are driving that? Is that heavily weighted to North America or other parts as well? For sure, North America is big and you know we’re moving a lot of activities. GCC, you know, we won a big contract to create a GC from in the US, so that’s bringing some growth I would say. Also, Germany is another place where you know we’re starting to see momentum. On India, you know, they have pressure as you know. We have a lot of manufacturing clients in Germany, for example, and they, you know, we are talking managed services and we’re showing them our capabilities in India and they have a lot of interest and so that’s also good momentum on that side. Great.

Then on US Federal, it seems like revenues were down a bit organically on a sequential and a year over year basis.

Joelle, Conference Call Operator, Unknown: Just to clarify with the lower BPO.

Steve Perron, Executive Vice President and CFO, CGI: Volumes be far and away the biggest.

Kevin Linder, SVP of Investor Relations, CGI: Reason for that or the other factor. Yes, no for sure. You know as you know we have a large visa contract where for 15-ish countries we are producing a visa for, for people who want to come to the U.S. And as we know. Right. A lot less traveling in the U.S. in general. That has, that has an impact on the, on the visa processes. I’ll pass more.

Joelle, Conference Call Operator, Unknown: Thank you.

Kevin Linder, SVP of Investor Relations, CGI: Thanks Daniel.

Joelle, Conference Call Operator, Unknown: Your next question comes from Richard Tse with National Bank Financial. Your line is now open.

Kevin Linder, SVP of Investor Relations, CGI: Yes, thank you. With respect to acquisitions, can you maybe talk about whether you have any sort of targets on that over the next 12 months and I guess related. How do you rank transformational deals against the metro market deals? I’ll start with the second, the rank. If I don’t know what you mean by ranking. We are looking at all of them, small and big. It’s like I’m always saying, it needs to be the right target at the right price at the right time. Large or small, we’ll look at them and we are looking at large and small and smaller and that will continue. That’s something. Again, as for an outlook, I’m not sure if your first question was an outlook on this. You know, it’s difficult to say how many will close in the future.

Again, we need to choose to dance and we need to have come to right agreement. We have a good funnel, a lot of discussions and we’ll see how much we can close them in the future. Okay, that’s helpful, thanks. With respect to sort of AI, there’s been a lot of discussion here just on like your customers, but just curious as to how CGI is applying this internally and from that perspective, how do you think it impacts your headcount growth and also implications for your margins as we look ahead here, you know what, we are using AI. We were using AI in the past and we continue to use, will continue to use AI in the future and gen AI and we are using it in our managed services too.

Already we signed deals in the past where we’re saying to the clients, you know, we’ll give you savings, we’ll give you x% of saving and we need to produce that saving. Some of it is produced by example offshoring or some activities to India. Some of it is also to apply automation tools including AI. We are using these tools today and will continue in the future to produce savings that we promise to clients and also naturally to help us of improving and doing also a profit on this delivery. We are doing it today and we’ll continue and even doing some acceleration of it in the future. The impact of a headcount, you know, you can expect that you’ll see, you know, headcount dollars or revenue by headcount going up.

That will continue to increase in the future and it’s normal because our people will become more and more productive using more and more of these tools. Again, overall in AI we will need and clients will need experts to implement these tools and we are the right expert to help them on this.

Steve Perron, Executive Vice President and CFO, CGI: Okay, great, thank you.

Joelle, Conference Call Operator, Unknown: Next question comes from Suthan Sukumar with Stifel. Your line is now open.

Steve Perron, Executive Vice President and CFO, CGI: Thank you.

Kevin Linder, SVP of Investor Relations, CGI: Good morning, Jensen. Thank you for taking my question. For my first one, I wanted to touch on your IP strategy and the investments that you’re making in this category. How much of your focus here will be on direct sort of in-house R&D versus co-development with clients? And I think you mentioned about 40% of your IP is now being driven by AI. From a roadmap perspective, what are some of the other IP product priorities you have beyond AI? First of all, on the second question, really the idea was to say 40% of our IP now has AI embedded in these IP. That’s really what we’re saying. Our large IP where we have success, I’ll tell you, is like our ERP systems, and we have embedded AI in our ERP systems.

We have embedded AI in several of our financial sector, like our trade platform, our wealth platform, Wealth 360 platform. We are implementing AI functionality to help clients to gain even more savings by using some of these AI functionalities. That’s really what we were talking about with AI, and overall on the IP side, a bit the same answer. You know, government sector IP is going very well. You saw a couple of announcements. We did the example last quarter with State of California, and this quarter again another one with State of California. I talked about a Wealth 360 deal or extension that we did in Canada. It’s really in these two sectors that we’re seeing very good momentum on our IP solutions. Great, thank you. On my second question, I wanted to touch on some of the integration progress with the recent deals that you’ve done.

Is there anything that may have stood out to you with respect to the ongoing integration or the growth opportunity with some of these recent deals relative to some of your initial assumptions going into them? For sure. You know, what we’re seeing is that, you know, I’ll take example Doherty in the US. We are seeing good momentum on how we can integrate the CGI capabilities with the Doherty relationship that they have with their clients. We have good discussions with some of these Doherty clients to show to them our expertise that we have, example, in India. Some of them visit India and see what we have and what we can bring to the table. Same thing with BJSS.

We had the start of this, but still, again, already very good discussion with clients and really to show to them, you know, yes, BJSS, you still have the great relationship and the great delivery from them, but here’s what you can also have from the larger CGI. For now, clients are very, very happy or very impressed about what they’re seeing.

Steve Perron, Executive Vice President and CFO, CGI: Great.

Kevin Linder, SVP of Investor Relations, CGI: Thank you for taking my questions. I’ll pass it on. Thank you.

Steve Perron, Executive Vice President and CFO, CGI: Thank you.

Joelle, Conference Call Operator, Unknown: Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open.

Steve Perron, Executive Vice President and CFO, CGI: Yeah, thanks. Good morning.

Kevin Linder, SVP of Investor Relations, CGI: There’s a couple questions here on AI.

Joelle, Conference Call Operator, Unknown: Further on AI, how do you see?

Kevin Linder, SVP of Investor Relations, CGI: CGI’s competitive position within AI in.

Steve Perron, Executive Vice President and CFO, CGI: The IT services market.

Joelle, Conference Call Operator, Unknown: Meaning, you know, do you see AI.

Steve Perron, Executive Vice President and CFO, CGI: Is increasing overall competition, or do you?

Kevin Linder, SVP of Investor Relations, CGI: Think that AI raises the barriers to entry and then that would strengthen CGI’s position versus competitors? I think I, you know, to use it right and to help the clients, you need to have expertise. I think that’s where, you know, our, that’s what we are bringing at the table. I think, you know, that’s why we are doing investment in AI. That’s why we’re training our people in AI. You know, I’m a strong believer that clients, to be able to implement these tools and use these tools the right way, they’ll need experts like us. I think that will bring a lot of new opportunities for us and solutions to our clients.

Joelle, Conference Call Operator, Unknown: In terms of the economics of.

Kevin Linder, SVP of Investor Relations, CGI: AI and the potential productivity gains, are your clients starting to see product gains from AI and then have they been reinvesting those gains, you know, back into other, other projects, or have they just been using those gains to drive just higher ROI on those projects? I would say that clients, you know, clients will have, you know, budget. Right. And, you know, yes, some you’ll have. And that’s more on the environment side, you know, we’ll have some, sometimes, you know, requests from their CEOs to reduce some of the budget, but at the same time, you know, they want to spend the money and now with AI, they can do more with less.

It is really, you know, what’s happening is that some of these, like you’re saying, Paul, some of these saving that we can produce by delivering faster, they’re turning around and saying, oh, finally I can do more and let’s accelerate some transformation, for example, that we were not able to do in the past because, you know, I still have the run side of the business to happen. Now we’re coming in, we’re showing them how we can reduce run and they’re taking that run saving and investing it back in the transformation side. Thanks for taking the questions.

Steve Perron, Executive Vice President and CFO, CGI: Thanks.

Kevin Linder, SVP of Investor Relations, CGI: Thanks, Paul.

Joelle, Conference Call Operator, Unknown: Ladies and gentlemen, as a reminder, should you have a question, please press Star one. Your next question comes from Stephanie Price with CIBC. Your line is now open. Good morning. Thanks. As you look into the second half of the calendar year here, it sounds like you’re definitely seeing some green shoots out there. Just curious about how you think about overall constant currency organic growth. As you look into the back half of the year, do you think we could have seen a floor already or do you think that things are starting to turn but it could take a few more quarters for the bottom?

Kevin Linder, SVP of Investor Relations, CGI: Yeah, I think we’re at the floor, right. You know, but again, the environment, you know, we’ll see where the environment is finishing, especially on that hybrid. I think we’re starting to see an end to it or some agreement across the world. I think when these agreements will be finalized, you know, that will bring to the clients, you know, a certain certainty, right, of how much they need to pay and stuff like that and what will be the impact on the economy and when that will be digested. I think that’s where we’ll see some momentum coming back. I think it will take a couple, still a couple of quarters to arrive to that. You know, again, I was in Germany and Europe a couple of weeks ago.

Like I’m saying, I’m seeing, I went to see a bank and banks were very positive and doing some larger investments. On the manufacturing side, you know, they were there and saying, okay, we’re looking at the tariffs. We’re trying to understand where it will finish too. After that we’ll be able to adjust our budget and investments budget. That’s where we are. Like I’m saying, I think it will, it can take still a couple of quarters.

Joelle, Conference Call Operator, Unknown: That makes sense. You mentioned in your prepared remarks that Momentum is one of two approved government systems. What if you could talk a bit about your approach to winning share here and if there are any key contracts that are up for renewal or how you think about Momentum going forward in this environment.

Kevin Linder, SVP of Investor Relations, CGI: Our very, you know, momentum is a great tool. Our clients like it. It’s a tool that, you know, is specific. Like, you know, let’s be clear, right? Momentum is only for government, only for bill, only for the federal government. You know, when the clients are looking at it, they’re saying it’s really answering all their needs. I’m very if they are really pushing to go to only two, I think that will create a lot of new opportunities for us in the future, that’s for sure. Great.

Joelle, Conference Call Operator, Unknown: Thank you very much.

Kevin Linder, SVP of Investor Relations, CGI: Thanks Tiffany.

Joelle, Conference Call Operator, Unknown: There are no further questions at this time. I will now turn the call over to Kevin for closing remarks.

Steve Perron, Executive Vice President and CFO, CGI: Thanks everyone for participating.

Kevin Linder, SVP of Investor Relations, CGI: As a reminder, a replay of this.

Steve Perron, Executive Vice President and CFO, CGI: Call will be available either via our website or by dialing 1-888-660-6264 and using.

Kevin Linder, SVP of Investor Relations, CGI: The passcode 28135 as well. A podcast of this call will be.

Steve Perron, Executive Vice President and CFO, CGI: Available for download within a few hours.

Kevin Linder, SVP of Investor Relations, CGI: Follow up questions can be directed to me at 1-905-973.

Steve Perron, Executive Vice President and CFO, CGI: Thanks again everyone and look forward to speaking soon.

Kevin Linder, SVP of Investor Relations, CGI: Thank you.

Joelle, Conference Call Operator, Unknown: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Kevin Linder, SVP of Investor Relations, CGI: Thank you.