CGI Achieves 1.3% Year-Over-Year Revenue Growth

CGI Inc. (GIB) experienced a revenue increase and strong bookings during its third-quarter fiscal 2024 earnings call. The company reported a year-over-year revenue growth of 1.3%, totaling $3.7 billion, largely driven by performance in the government sector and intellectual property (IP) services. Its bookings reached $4.3 billion, reflecting a healthy book-to-bill ratio of 117%. CGI has a robust cash position of $2.7 billion, which it plans to use for business reinvestment and strategic acquisitions to enhance its offerings and expand its geographic presence. Additionally, the company announced two strategic acquisitions and plans to launch a quarterly cash dividend of $0.15 per share starting in the first quarter of fiscal 2025.

### Key Takeaways:
– CGI’s revenue stood at $3.7 billion, a 1.3% increase from last year, with a 4.1% growth in the government sector.
– IP services grew by 5.2% year-over-year, contributing 22.5% of total revenue.
– Strong bookings totaled $4.3 billion, with a book-to-bill ratio of 117%.
– The company announced two acquisitions and the forthcoming dividend program.
– With available cash of $2.7 billion, CGI is focused on reinvesting in its business and pursuing acquisitions.

### Company Outlook:
– CGI is noticing varied digitization investment paces among clients and has a strong pipeline for opportunities across different sectors in the coming year.
– The company is making focused investments in talent and services, improving its managed services delivery, and integrating generative AI into its offerings.
– CGI is committed to addressing clients’ unique paths with a flexible and client-centric approach.

### Challenges:
– The conversion of managed services backlog is slower as clients exercise caution due to the current economic environment.
– Consulting services have been adversely affected by the slowdown, although they are embedded in other activities.
– While AI bookings have increased in number, their value has remained flat or slightly decreased.
– Pricing pressures are present in the market, leading CGI to emphasize value and outcomes over pricing discussions.

### Positive Developments:
– Growth has been observed in the government and utility sectors, with increased billable positions and utilization.
– There is strong demand for IP services particularly in Europe, focusing on operational areas like HR and secure document handling.
– CGI’s solid market position is expected to support continued performance in Finland, Poland, and the Baltics.

### Q&A Highlights:
– CGI’s CEO discussed government-wide contract vehicles’ potential to attract new clients, particularly in national security.
– The CEO emphasized the growth of managed services and discussed margin drivers.
– CGI sees opportunities for growth in various regions, especially in Europe.
– The CEO addressed the current situation in France, noting a cautious approach from commercial markets due to government formation.

CGI’s results for the third quarter of fiscal 2024 show resilience and growth, underscored by strategic acquisitions and the initiation of a dividend program, indicating strong confidence in future prospects. The company’s proactive approach to client digitization investments and targeted investments in talent and services position it well within the evolving IT services landscape. With a strong cash position and a commitment to value-driven growth, CGI aims to enhance shareholder value and expand its global footprint.

In summary, CGI Inc. is displaying strong financial performance and a strategic focus on growth opportunities, maintaining a balance between reinvestment and returning value to shareholders amidst challenging market conditions.