Q3 2024 CGI Inc Earnings Call

Good morning, ladies and gentlemen. Welcome to CGI's third quarter fiscal 2024 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, Mr. Linder.

Unknown Attendee: First quarter, fiscal 2024 conference call.

Kevin Linder: I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investigations. Thank you, Julie, and good morning.

Kevin Linder: I would not like to be meeting over to Mr. Kevin Linder, SDP of Investor Relations.

Kevin Linder: Please go ahead, Mr. Linder. Thank you, Julie, and good morning. With me to discuss CGI's third quarter, fiscal 2024 results are George Schindler, 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 31, 2024. Supplemental slides, as well as a press release we issued earlier this morning, are available for download along with our Q3M DNA financial statements and accompanying notes, all of which I've been filed with both Cedar Plus and Edgar. Please note that some statements made on the call may be full and looking.

Kevin Linder: With me to discuss CGI's third quarter fiscal 2024 results are George Schindler, our President and CEO, and Steve Perron, Executive Vice President and CFO. This call is being broadcast on CGI.com and recorded live at 9am Eastern Time on Wednesday, July 31st, 2024. Supplemental slides, as well as the press release we issued earlier this morning, are available for download along with our Q3 MD&A, financial statements, and accompanying notes, all of which have been filed with both CedarPlus and Edgar.

Kevin Linder: Thank you, Julie, and good morning. With me to discuss CGI's third quarter fiscal 2024 results are George Schindler, our President and CEO .

Speaker Change: and Steve Perron, Executive Vice President and CFO . This call is being broadcast on cgi.com and recorded live at 9 a.m. Eastern time on Wednesday, July 31st, 2024.

Speaker Change: Supplemental slides, as well as the press release we issued earlier this morning, are available for download along with our Q3 MD&A, financial statements, and accompanying notes, all of which have been filed with both CDERplus and EDGAR. Please note that some statements made on the call may be forward-looking.

Kevin Linder: Please note that some statements made on the call may be forward-looking. Actual 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 MD&A and press release, as well as on CGI.com.

Kevin Linder: The actual 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 MD and press release, as well as on CGI.com. We recommend our investors read it in its entirety. We're reporting our financial results in accordance with International Financial Reporting Standards or IFRS. As always, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD and A contain definitions that each one used in a reporting.

Kevin Linder: We recommend our investors read it in its entirety. We are reporting our financial results in accordance with International Financial Reporting Standards, or IFRS. As always, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting.

Speaker Change: The complete Safe Harbor Statement is available in both our MD&A and press release, as well as on CGI.com.

Kevin Linder: All of the dollar figures expressed on this call are Canadian, and less otherwise noted. I'll now turn it over to Steve to review our Q3 financials, and then George will comment on our business and market outlook.

Speaker Change: We recommend our investors read it in its entirety.

Speaker Change: We are reporting our financial results in accordance with International Financial Reporting Standards, or IFRS. As always, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting.

Kevin Linder: All of the dollar figures expressed on this call at Canadian and otherwise noted.

Speaker Change: All of the dollar figures expressed on this call are Canadian and must otherwise be noted.

Kevin Linder: I'll turn it over to Steve to review our Q3 financials, and then George will comment on our business and market outlook.

Steve Perron: Steve. Thank you, Kevin, and good morning, everyone. I'm pleased to share with you the results of our third quarter of fiscal 2024. In Q3, we deliver $3.7 billion of revenue. Up 1.3% here over here are up 0.2% when excluding the impact of foreign exchange. The strongest CGI segments were northwest and central east Europe at 10% constant currency growth. Asia Pacific at 5.4%. Finland, Poland and Baltics at 3.2%, and US commercial and state government at 2%. From an industry perspective, we continue to have the highest growth in government, representing 4.1% constant currency growth. This was followed by manufacturing, retail, and distribution at 2.2%, driven primarily from North America.

Steve Perron: Thank you, Kevin. And good morning, everyone. I'm pleased to share with you the results of our third quarter of fiscal 2024. In Q3, we delivered $3.7 billion of revenue, up 1.3% year over year, or up 0.2% when excluding the impact of foreign exchange. The strongest CGI segments were

Speaker Change: Thank you, Kevin. And good morning, everyone. I'm pleased to share with you the results of our third quarter of Fiscal 2024.

Speaker Change: In Q3, we delivered $3.7 billion of revenue, up 1.3% year-over-year, or up 0.2% when excluding the impact of foreign exchange.

Steve Perron: Northwest and Central East Europe at 10% constant currency growth. Asia Pacific at 5.4 percent. Finland, Poland, and the Baltics at 3.2%, and U.S. commercial and state government at 2%.

Speaker Change: The strongest CGI segments were North-West and Central-East Europe at 10% constant currency growth.

Speaker Change: Asia-Pacific at 5.4%, Finland, Poland, and Baltics at 3.2%, and U.S. commercial and state government at 2%.

Steve Perron: From an industry perspective, we continue to have the highest growth in government, representing 4.1% constant currency growth this quarter. This was followed by manufacturing, retail, and distribution, at 2.2%, driven primarily from North America. We continue to experience softness in certain verticals within regions, such as financial services and communication in both Western and Southern Europe and North America. However, our IP grew at a faster pace with 5.2% constant currency growth in the quarter as a percentage of total revenue.

Speaker Change: This was followed by manufacturing, retail, and distribution at 2.2%, driven primarily from North America.

Steve Perron: We continue to experience softness in certain verticals within regions such as financial services and communication in both Western and Southern Europe and North America. Our IP grew at the faster pace with 5.2% constant currency growth in the quarter. As a percentage of total revenue, IP represents 22.5%, up 120 basis points year over year. Brookings in the quarter were strong at $4.3 billion, led by managed services and IP wins. Our Booktubil ratio in the quarter was 117%, and were strongest in U.S. Federal at 209%, UK in Australia at 163%, and Western and Southern Europe at 123%.

Speaker Change: Our IP grew at a faster pace, with 5.2% constant currency growth in the quarter. As a percentage of total revenue, IP represents 22.5% of 120 basis points year over year.

Steve Perron: IP represents 22.5%, up 120 basis points year over year. Bookings in the quarter were strong at $4.3 billion, led by managed services and IT wind. Our book-to-bill ratio in the quarter was 117%, and we're strongest in U.S. Federal at 209%, UK and Australia at 163%, and Western and Southern Europe at 123%, on a trading 12-month basis.

Speaker Change: Bookings in the quarter were strong at $4.3 billion, led by managed services and IP wins.

Speaker Change: UK and Australia at 163% and Western and Southern Europe at 123%.

Steve Perron: On the training 12 months basis, Booktubil was 112% with 118% in managed services and 104% in SINC. Global backlog reached 27.6 billion dollars, or 1.9 times revenue, reflecting our overall business resilience.

Steve Perron: Book to bill was 112%, with 118% in managed services and 104% in SINC. Global backlog reached $27.6 billion or 1.9 times revenue, reflecting our overall business resilience. Turning to profitability, Our performance this quarter once again demonstrated our operating discipline in navigating the ongoing dynamic microenvironment. Earnings before income taxes were $594 million for a margin of 16.2%, up 80 basis points year over year. Adjusted EBIT in the quarter was $603 million, representing a margin of 16.4 of 30 basis points year over year.

Speaker Change: On a trading 12-month basis, book-to-bill was 112%, with 118% in managed services and 104% in SINC.

Speaker Change: Global backlog reached $27.6 billion or 1.9 times revenue, reflecting our overall business resilience.

Steve Perron: Turning to profitability. Our performance this quarter once again demonstrated our operating discipline in navigating the ongoing dynamic microenvironment. Earnings before income taxes were $594 million for a margin of 16.2% of 80 basis points year over year. Adjusted EBIT in the quarter was $603 million, representing a margin of 16.4%, 30 basis points year over year. This is mainly a result of our improved mix of business and the benefits realized from our cost optimization program completed. We have strong margin in the five following segments. Asia Pacific at 31%; Canada at 22%; U.S. Federal and SINLIN Poland and Baltics both at 17%, and UK in Australia at 16%.

Speaker Change: Turning to profitability.

Speaker Change: Earnings before income taxes were $594 million for a margin of 16.2% up 80 basis points year-over-year.

Steve Perron: This is mainly a result of our improved mix of business and the benefits realized from our cost optimization program completed. We have strong margins in the five following segments: Asia Pacific at 31%, Canada at 22% U.S. Federal, and Finland, Poland, and Baltics, both at 17%, and UK and Australia at 60%.

Speaker Change: This is mainly a result of our improved mix-up business and the benefits realized from our cost optimization program completed.

Speaker Change: Walker.

Speaker Change: We have strong margin in the five following segments.

Steve Perron: Our effective tax rate in the quarter was 25.9%, and we expect our tax rate for future quarters to be in the range of 25 to 26.5%. Net earnings were $440 million for a margin of 12%, up 50 basis points year over year. Deluted EPS was $1.91, representing an increase of 9% year over year. When excluding specific items, net earnings were $440 million. This represents a margin of 12% up 30 basis points year over year. On the same basis, Deluted EPS was $1.91, a necration of 6% when compared to Q3 last year. In the quarter, cash provided by operating activities was $497 million, representing 13.5% of total revenue.

Steve Perron: Our effective tax rate in the quarter was 25.9%, and we expect our tax rate for future quarters to be in the range of 25 to 26.5%. Net earnings were $440 million for a margin of 12%, up 50 basis points year over year; diluted APS was $1.91, representing an increase of 9% year over year. When excluding specific items, net earnings were $440 billion.

Speaker Change: Our effective tax rate in the quarter was 25.9%, and we expect our tax rate for future quarters to be in the range of 25 to 26.5%.

Steve Perron: This represents a margin of 12% of 30 basis points year over year on the same basis. Diluted EPS was $1.91, an accretion of 6% when compared to Q3 last year. In the quarter, cash provided by operating activities was $497 million, representing 13.5% of total revenue.

Speaker Change: In the quarter, cash provided by operating activities was $497 million, representing 13.5% of total revenue.

Steve Perron: On a trading 12-month basis, cash provided by operating activities was $2.2 billion, up 12% year over year, representing 15.2% of total revenue. The SO was 42 days in the quarter, two days better than last year. In Q3, we used our cash to invest $91 million into our business and invest $499 million to buy back our stock.

Steve Perron: On a trading 12-month basis, cash provided by operating activities was $2.2 billion, up 12% year-over-year, representing 15.2% of total revenue. The S.O. was 42 days in the quarter, two days better than last. In Q3, we used our cash to invest $91 million into our business and invest $499 million to buy back our stock. Subsequent to the quarter, we announced two strategic acquisitions. In Canada, we acquired Fillero's Business Serving Credit Unions, which consists of managed services, core and digital banking, and related IT services.

Speaker Change: On a trading 12-month basis, cash provided by operating activities was $2.2 billion, up 12% year-over-year, representing 15.2% of total revenue.

Speaker Change: The S.O. was 42 days in the quarter, two days better than last year.

Speaker Change: In Q3, we used our cash to invest $91 million into our business and invest $499 million to buy back our stock.

Steve Perron: So, Suthan Sukumar, to the quarter, we announced two strategic acquisitions. In Canada, we acquired Philirou's business serving credit unions, which consist of managed services, core and digital banking, and related IT services. In the US, we announced yesterday that we entered into a definitive agreement to purchase Aeon, a leader in digital transformation for the US federal government. Both mergers, these two acquisitions would add 875 consultants and professionals to CGI. In the quarter, we continued to deliver a strong return on the invested capital at 16.1%, up 40 basis points here of a year, demonstrating our proficiency and discipline on the deployment of capital.

Speaker Change: Subsequent to the quarter, we announced two strategic acquisitions.

Speaker Change: In Canada, we acquired Salero's business-serving credit unions, which consist of managed services, core and digital banking, and related IT services.

Steve Perron: In the US, we announced yesterday that we entered into a definitive agreement to purchase Aon, a leader in digital transformation for the US federal government. Postmerger, these two acquisitions would add 875 consultants and professionals to CGI. In the quarter, we continue to deliver a strong return on invested capital at 16.1%, up 40 basis points year-over-year, demonstrating our proficiency and discipline in the deployment of capital. At the end of the quarter, CGI had $2.7 billion of cash readily available and access to more if needed, as part of our profitable growth strategy.

Speaker Change: Post-mergers, these two acquisitions would add 875 consultants and professionals to CGI.

Speaker Change: In the quarter, we continue to deliver a strong return on invested capital at 16.1%, up 40 basis points year-over-year, demonstrating our proficiency and discipline on deployment of capital.

Steve Perron: At the end of the quarter, CGI had $2.7 billion of cash really be available, and access to more is needed. As part of our profitable growth strategy, CGI capital allocation priorities are primarily focused on investing back in the business and pursuing accretive acquisitions. Additionally, the company has the flexibility to use a portion of its free cash for the repurchase of its stock.

Speaker Change: At the end of the quarter, CGI had $2.7 billion of cash readily available and access to more if needed.

Speaker Change: As part of our profitable growth strategy, CGI capital allocation priorities are primarily focused on investing back in the business and pursuing accretive acquisitions.

Steve Perron: CGI capital allocation priorities are primarily focused on investing back in the business and pursuing accretive acquisitions. Additionally, the company has the flexibility to use a portion of its free cash for the repurchase of its stock, as announced this morning. CGI's Board of Directors has approved a dividend program under which the company intends to pay a quarterly cash dividend of $0.15 per share starting in the first quarter of fiscal 2025.

Speaker Change: Additionally, the company has the flexibility to use a portion of its free cash for the repurchase of its stock.

Steve Perron: As announced this morning, CGI's board of directors has approved a dividend program under which the company intends to pay a quarterly cash dividend of 15 cents per share starting in the first quarter of fiscal 2025. The initiation of this program represents an additional mechanism to return value to our shareholders while continuing to maintain our financial flexibility to invest in our build and buy profitable growth strategy.

Speaker Change: As announced this morning, CGI Board of Directors has approved a dividend program under which the company intends to pay a quarterly cash dividend of $0.15 per share starting in the first quarter of fiscal 2025.

George D. Schindler: The initiation of this program represents an additional mechanism to return value to our shareholders while continuing to maintain our financial flexibility to invest in or build and buy profitable growth strategies. Now, I will turn the call over to George to further discuss the insights on the quarter and outlook for our business and markets.

Speaker Change: The initiation of this program represents an additional mechanism to return value to our shareholders while continuing to maintain our financial flexibility to invest in or build and buy profitable growth strategies.

George Schindler: Now, I will turn the call over to George to further discuss the insights on the quarter and outlook for our business and markets.

George Schindler: George, thank you, Steve, and good morning, everyone. Our team delivered third quarter results that, again, reflect the disciplined execution of our plan to be a partner and expert of choice for our clients and employer choice for our consultants and professionals and investment of choice to deliver shareholder value. In the quarter, we continue to practically manage the fundamentals of our business. We delivered sustained margin expansion and EPS accretion driven by the continued diversification of our business mix through growth of recurring revenue. Importantly, our operational excellence actions continue to contribute to our strong earnings. Our cash from operations increased up 21% year-to-year on the strength of quality client delivery.

George D. Schindler: Thank you, Steve. And good morning, everyone. Our team delivered third quarter results that again reflect the disciplined execution of our plan to be a partner and expert of choice for our clients, an employer of choice for our consultants and professionals, and an investment of choice to deliver shareholder value. During the quarter, we continue to proactively manage the fundamentals of our business. We deliver sustained margin expansion and EPS accretion driven by the continued diversification of our business mix through growth of recurring revenue. Importantly, our operational excellence actions continue to contribute to our strong earnings. Our cash from operations increased 21% year-over-year on the strength of quality client delivery.

Speaker Change: Thank you Steve, and good morning everyone. Our team delivered third quarter results that again reflect the discipline and execution of our plan to be a partner and expert of choice for our clients, an employer of choice for our consultants and professionals, an investment of choice to deliver shareholder value.

Speaker Change: In the quarter, we continued to proactively manage the fundamentals of our business. We delivered sustained margin expansion and EPS accretion, driven by the continued diversification of our business mix through growth of recurring revenue.

Speaker Change: Importantly, our operational excellence actions continue to contribute to our strong earnings. Our cash from operations increased up 21% year-over-year on the strength of quality client delivery.

George Schindler: And as anticipated, our revenue growth and overall bookings in the quarter continue to be largely comprised of managed services and IP engagements, which help clients accelerate cost savings and progress business transformation. As such, currency revenue growth in IP-based services was up 5.2% year-to-year. And managed services revenue up 1.5%. 1% offset by continued softness in systems integration and consulting. And bookings were $4.3 billion for the managed services book to bill of 139% and an IP book to bill of 129%. Both of which were largely driven by government sector awards. In fact, government sector wins comprised just over half of total Q3 bookings, with a book to bill of 164%.

George D. Schindler: And, as anticipated, our revenue growth and overall bookings in the quarter continue to be largely comprised of managed services and IP engagements, which help clients accelerate cost savings and progress business. As such, constant currency revenue growth in IP-based services was up 5.2% year-over-year, and managed services revenue was up 1.5%. Offset by Continued Softness in Systems Integration and Consulting. And bookings were $4.3 billion with a managed services book-to-bill of 139% and an IP book-to-bill of 129%, both of which were largely driven by government sector awards.

Speaker Change: And, as anticipated, our revenue growth and overall bookings in the quarter continue to be largely comprised of managed services and IP engagements, which help clients accelerate cost savings and progress business transformation.

Speaker Change: As such, constant currency revenue growth in IP-based services was up 5.2% year-over-year, and managed services revenue was up 1.5%.

Speaker Change: Offset by continued softness in systems integration and consulting. And bookings were $4.3 billion with a managed services book-to-bill of 139% and an IP book-to-bill of 129%.

Speaker Change: Both of which were largely driven by government sector awards.

George D. Schindler: In fact, government sector wins comprise just over half of total Q3 bookings, with a booked bill of $164,000. Additionally, more clients prioritize the services and solutions necessary to implement current mission objectives and embed flexibility to support evolving policy. All in mind for the natural cycle of government.

Speaker Change: In fact, government sector wins comprise just over half of total Q3 bookings, with a book-to-bill of 164%.

George Schindler: More clients prioritize the services and solutions necessary to implement current mission objectives and embed flexibility to support evolving policies, all in mind for the natural cycle of government. CGI's IP solutions were the core of driving the strong government bookings, as clients increasingly turned to CGI's proven industry specific IP solutions to raise their operational efficiency, while also gaining benefits from embedded security and innovation, including AI. In the quarter, we continued to see clients exercising caution and their spending on standalone consulting and system integration projects. As an end-to-end services provider with strong managed services relationships and market-leading intellectual property, bookings in the quarter are reflective of our positioning for continued strong client interest in managed services and software as a service.

Speaker Change: More clients prioritize the services and solutions necessary to implement current mission objectives and embed flexibility to support evolving policies, all in line with the natural cycle of government.

George D. Schindler: CGI's IP solutions were at the core of driving strong government bookings as clients increasingly turned to CGI's proven industry-specific IP solutions to raise their operational efficiency. We're also gaining benefits from embedded security and innovation, including AI.

Speaker Change: CGI's IP solutions were at the core of driving the strong government bookings, as clients increasingly turned to CGI's proven, industry-specific IP solutions to raise their operational efficiency, while also gaining benefits from embedded security and innovation, including AI.

George D. Schindler: In the quarter, we continue to see clients exercising caution with their spending on standalone consulting and system integration projects. As an end-to-end services provider with strong managed services relationships and market-leading intellectual property, our bookings in the quarter are reflective of our positioning for continued strong client interest in managed services and software as a service. For example, Michelin selected CGI to deliver an open and green IT ecosystem to enable business innovation and support enterprise-wide digital transformation.

Speaker Change: In the quarter, we continued to see clients exercising caution in their spending on stand-alone consulting and system integration projects.

Speaker Change: As an end-to-end services provider with strong managed services relationships and market-leading intellectual property, our bookings in the quarter are reflective of our positioning for continued strong client interest in managed services and software-as-a-service.

George Schindler: For example, Michelin selected CGI to deliver an open and green IT ecosystem to enable business innovation and support enterprise-wide digital transformation. CGI will deliver a range of IT modernization services, including use of AI technologies through a mix of proximity teams in France and the US, as well as global delivery teams in India and Morocco. The US Department of State's Bureau of Consular Affairs extended its relationship with CGI through a US $378 million award. Under this award, we will deliver end-to-end passport application processing services and support of the insurance at more than 21 million passports and travel documents annually.

Speaker Change: For example, Michelin selected CGI to deliver an open and green IT ecosystem to enable business innovation and support enterprise-wide digital transformation.

George D. Schindler: CGI will deliver a range of IT modernization services, including the use of AI technologies through a mix of proximity teams in France and the U.S. as well as global delivery teams in India and Morocco. The U.S. Department of State's Bureau of Consular Affairs extended its relationship with CGI through a $378 million award.

Speaker Change: CGI will deliver a range of IT modernization services, including use of AI technologies through a mix of proximity teams in France and the U.S., as well as global delivery teams in India and Morocco.

Speaker Change: The U.S. Department of State's Bureau of Consular Affairs extended its relationship with CGI through a U.S. $378 million award.

George D. Schindler: Under this award, CGI will deliver end-to-end passport application processing services in support of the issuance of more than 21 million passports and travel documents. Additionally, several local governments in Finland have named CGI as a partner for transforming healthcare service delivery through CGI's Omni 360 patient information platform. This will also create a foundation for broader use of AI in Finland's healthcare.

Speaker Change: Under this award, we will deliver end-to-end passport application processing services in support of the issuance of more than 21 million passports and travel documents annually.

George Schindler: Several local governments in Finland named CGI as a partner for transforming healthcare service delivery to CGI's Omni360 patient information platform. This will also create a foundation for broader use of AI in Finland's healthcare system. Partly Davidson Financial Services selected CGI for a new engagement to modernize the company's loan origination system, replacing disparate IT platforms with the unified CGI Credit Studio solution. Under this agreement, CGI will deliver an AI-nable platform that introduces greater flexibility for dealers and an intuitive buyer experience. The French Ministry of Justice extended its partnership with CGI to drive the modernization of its HR system.

Speaker Change: Several local governments in Finland named CGI as a partner for transforming healthcare service delivery through CGI's Omni360 patient information platform.

Speaker Change: This will also create a foundation for broader use of AI in Finland's healthcare system.

George D. Schindler: Parley Davidson Financial Services selected CGI for a new engagement to modernize the company's loan origination system, replacing disparate IT platforms with a unified CGI credit studio solution. Under this agreement, CGI will deliver an AI-enabled platform that introduces greater flexibility for dealers and an intuitive buyer experience. The French Ministry of Justice extended its partnership with CGI to drive the modernization of its HR system. CGI consultants will leverage their industry knowledge, as well as their expertise in SAP, to implement a new platform and transform key processes, and a major North American bank selected CGI to modernize its wire room, leveraging the CGI All Payment solution, a modular and cloud-based platform. The solution will enable the bank to retire legacy systems, reduce operational costs, and more easily adapt to new industry standards and regulatory requirements.

Speaker Change: Parley Davidson Financial Services selected CGI for a new engagement to modernize the company's loan origination system, replacing disparate IT platforms with a unified CGI Credit Studio solution.

Speaker Change: Under this agreement, CGI will deliver an AI-enabled platform that introduces greater flexibility for dealers and an intuitive buyer experience.

Speaker Change: The French Ministry of Justice extended its partnership with CGI to drive the modernization of its HR system. Our consultants will leverage their industry knowledge, as well as their expertise in SAP, to implement a new platform and transform key processes.

George Schindler: Our consultants will leverage their industry knowledge as well as their expertise in SAP to implement a new platform and transform key processes. In a major North American bank, selected CGI to modernize its wireroom, leveraging the CGI All-Payment solution, a modular and cloud-based platform. The solution will enable the ban to retire legacy systems, reduce operational costs, and more easily adapt to new industry standards and regulatory requirements. Each of these examples are the types of recurring revenue engagements that serve as a base to enhance our resilience and stability of the community. To judge the required results, underscore the ongoing value that are talented consultants and professionals deliver for clients every day.

Speaker Change: And a major North American bank selected CGI to modernize its wire room, leveraging the CGI all-payment solution, a modular and cloud-based platform.

Speaker Change: The solution will enable the bank to retire legacy systems, reduce operational costs, and more easily adapt to new industry standards and regulatory requirements.

George D. Schindler: Each of these examples is the types of recurring revenue engagements that serve as a base to enhance our resilience and stability. Suggest third quarter results underscore the ongoing value that our talented consultants and professionals deliver for clients every day. In the quarter, we again saw rising levels of client satisfaction, notably for the innovation we bring to our engagements, including through the use of AI technology.

Speaker Change: Each of these examples are the types of recurring revenue engagements that serve as a base to enhance our resilience and stability for the future.

Jack: To Jack's third quarter results underscore the ongoing value that our talented consultants and professionals deliver for clients every day.

George Schindler: In the quarter, we again saw rising levels of client satisfaction, notably for the innovation we bring to engagements, including through the use of AI technologies. I would like to recognize CGI's 90,000 consultants and professionals for earning the trust of our clients through their expertise, insights, and commitment. They're helping clients around the world achieve tangible business and mission outcomes, particularly important given today. Dynamic market condition. Looking ahead now to the demand environment. We are starting to see some underlying signs of stability in the macro business environment. This is making it possible for our clients to begin solidifying their future plans.

Speaker Change: In the quarter, we again saw rising levels of client satisfaction, notably for the innovation we bring to our engagements, including through the use of AI technologies.

George D. Schindler: I would like to recognize CGI's 90,000 consultants and professionals for earning the trust of our clients through their expertise, insights, and commitment. They're helping clients around the world achieve tangible business and mission outcomes, particularly important given today's dynamic market. Okay, head now to the demand inbox.

Jack: I would like to recognize CGI's 90,000 consultants and professionals for earning the trust of our clients.

George D. Schindler: We are starting to see some underlying signs of stability in the macro business environment, and this is making it possible for our clients to begin solidifying their future. For the past few months, we increasingly see differentiation in terms of the pace and focus of key digitization investments by our clients. In short, each client is forging a unique path forward, and it is incumbent on partners to meet them where they are and devise the right combination of services and solutions to help them progress their individual business objectives.

George Schindler: For the past few months, we increasingly see differentiation in terms of pace and focus of key digitization investments by our clients. In short, each client is forging a neat path forward and is incumbent on partners to meet them where they are and devise the right combination of services and solutions to help them progress their individual business objectives. This evolution towards differentiated client needs matches well with CGI's greatest strengths, particularly our client relationship proximity model, our end-to-end portfolio services, and our global network and scale. While we do expect to see continuation in the ways and the timing of decisions, particularly for standalone SIMC projects, client interest remains strong for the value proposition CJA can deliver through our end-to-end offerings.

Jack: In short, each client is forging a unique path forward and it's incumbent on partners to meet them where they are and devise the right combination of services and solutions to help them progress their individual business objectives.

George D. Schindler: This evolution towards differentiated client needs matches well with CGI's greatest strengths, particularly our client relationship proximity model, our end-to-end portfolio services, and our global network and scale. While we do expect to see continuation and delays in the timing of decisions, particularly for standalone SINC projects, client interest remains strong for the value proposition CGI can deliver through our end-to-end offerings. This positioning is validated by CGI's pipeline of opportunities for the next year. The IP pipeline is up by more than 15% year over year. The significant increases in transport, logistics, manufacturing, and energy.

Speaker Change: While we do expect to see continuation and delays in the timing of decisions, particularly for stand-alone SINC projects, client interest remains strong for the value propositions CGI can deliver through our end-to-end offerings.

George Schindler: This position is validated by CJA's pipeline of opportunities over the next year. The IP pipeline is up and more than 15% year over year. The significant increases in transport logistics, manufacturing, and energy. The managed service of pipeline is up and more than 40% year over year. The shut increases in government, insurance, banking, manufacturing, and retail. And the pipeline of SIMC opportunities across several commercial industry sectors is rising compared to this time last year. Importantly, we saw some green shoots in our third quarter results, further pointing to stabilization of the business environment. For example, the number of total open available positions picked up on a sequential quarter basis.

George D. Schindler: The managed services pipeline is up by more than 40% year over year, with sharp increases in government, insurance, banking, manufacturing, and retail. And the pipeline of SINC opportunities across several commercial industry sectors is rising compared to this time last year. Importantly, we saw some green shoots in our third quarter results, further pointing to the stabilization of the business environment. For example, the number of total open billable positions picked up on a sequential quarter basis.

George Schindler: CJA's utilization was also up on a sequential quarter basis as we continued to align talent to those areas where we see growth, largely in the government utility sectors. And hires to support growth in Asia Pacific are up on a sequential quarter basis as more commercial industry clients, notably in banking, retail, and manufacturing, are leveraging CJA's offshore centers.

George D. Schindler: CGI's utilization was also up on a sequential quarter basis, as we continue to align talent to those areas where we see growth, largely in the government utility sector, and hires to support growth in Asia Pacific. Or it was up on a sequential quarter basis, as more commercial industry clients, notably in banking, retail, and manufacturing, are leveraging CGI's offshore centers. Kujak continues to make targeted investments in our talent and our end-to-end service. The best partners with clients as they solidify and begin reaccelerating their digital initiatives. For example,

George Schindler: Council. CGI continues to make targeted investments in our talent and our end-to-end services. The best partner appliance, as we solidify and begin re-accelerating their digital initiatives. For example, we are enhancing our managed services delivery approach through the expansion of our CGI DigiOps platform and integrated digital first delivery sleep. This platform delivers higher quality insights for faster client decision-making, better performance and system availability, and cost savings for clients through the use of AI technologies. For SINC services, we continue to invest in our emblematic offerings, methodologies, and talent in areas such as business model transformation, change management, responsible use of AI, and enterprise architecture.

George D. Schindler: We are enhancing our managed services delivery approach through the expansion of our CGI DigiOps platform, and Integrated Digital First Delivery Suite. This platform delivers higher quality insights for faster client decision making, better performance and system availability, and cost savings for clients to the use of AI technology, or SINC services, we continue to invest in our emblematic offerings, methodologies, and talent in areas such as business model transformation, change management, responsible use of AI, and enterprise architecture, and we are accelerating the integration of generative AI into our IP solutions portfolio through our signature CGI Pulse AI platform, which also enables clients to more easily integrate these new technologies into their existing and new.

Speaker Change: We are enhancing our managed services delivery approach through the expansion of our CGI DigiOps platform.

Speaker Change: and integrated digital first delivery suite. This platform delivers higher quality insights for faster client decision-making, better performance and system availability and cost savings for clients through the use of AI technology.

George Schindler: And we are accelerating the integration of genitive AI into our IP solutions portfolio through our signature CGI Pulse AI platform, which also enables clients to more easily integrate these new technologies into their existing and new agent. In line with the investment we announced last year in rising client interest, AI and Gen AI technologies are increasingly integrated into our engagements. Thank you, the number of projects in cooperating AI rose 20% on a sequential quarter basis. Their quarter bookings that integrated AI technologies remain strong, including lens for the top 50 auto parts supplier to establish a Gen AI center of expertise and help evaluate and optimize our live use cases.

Speaker Change: And we are accelerating the integration of generative AI into our IP solutions portfolio through our signature CGI Pulse AI platform.

George D. Schindler: In line with the investment we announced last year, and rising client interest, AI and Gen AI technologies are increasingly integrated into our engagement. Q3, Panevra Projects incorporating AI rose 20% on a sequential quarter-based, Their core bookings that integrated AI technologies remain strong, including wins for the top 50 auto parts supplier to establish a gen AI center of expertise and help evaluate and optimize ROI led, a European logistics company to conduct an AI maturity assessment to evaluate organizational readiness and capability, and a space industry client to assess the creation of a new digital marketplace that integrates space and AI technologies to enable rapid response to natural disasters.

Speaker Change: In line with the investment we announced last year and rising client interest, AI and Gen AI technologies are increasingly integrated into our engagements.

Speaker Change: Q3, Panevra Projects incorporating AI rose 20% on a sequential quarter basis.

Speaker Change: Third quarter bookings at integrated AI technologies remain strong, including wins for the top 50 auto parts supplier to establish a Gen-AI center of expertise and help evaluate and optimize ROI-led use cases.

George Schindler: A European logistics company to conduct an AI maturity assessment to evaluate organizational readiness and capabilities. Now, a space industry client to assess the creation of a new digital marketplace to integrate space and AI technologies to enable rapid response to natural disasters.

Speaker Change: A European logistics company to conduct an AI maturity assessment to evaluate organizational readiness and capabilities.

Speaker Change: and a space industry client to assess the creation of a new digital marketplace that integrates space and AI technologies to enable rapid response to natural disasters.

George Schindler: As Steve mentioned earlier, we are updating our use of cash strategy to incorporate a dividend program as an additional mechanism to deliver value to our shareholders and to broaden our investor base while maintaining financial flexibility to continuously invest in growth opportunities. With a strong balance sheet and liquidity, CGI will continue to prioritize capital allocation strategies that drive profitable growth and enhance value for shareholders for investing in our business, pursuing a creative acquisition, ranging from market to large transformational opportunities, repurchasing our stock, paying down our debt, and now distributing a dividend.

George D. Schindler: As Steve mentioned earlier, we are updating our use of the cash strategy to incorporate a dividend program as an additional mechanism to deliver value to our shareholders and to broaden our investor base while maintaining financial flexibility to continuously invest in growth opportunities with a strong balance sheet and liquidity. CGI will continue to prioritize capital allocation strategies that drive profitable growth and enhance value for shareholders. Investing in a business, pursuing accretive acquisitions, ranging from metro market to large transformational opportunities, purchasing our stock and or paying down our debt, and now distributing a dividend.

Speaker Change: and to broaden our investor base while maintaining financial flexibility to continuously invest in growth opportunities.

Speaker Change: With a strong balance sheet and liquidity, CGI will continue to prioritize capital allocation strategies that drive profitable growth and enhance value for shareholders.

George Schindler: Regarding our strategic priority to pursue a creative acquisitions, I'd like to expand on the two acquisitions and out subsequent to the close of the quarter. In Canada, the acquisition of Slero's Credit Union business compliments and expands CGI's core banking service offerings to an additional 90 Canadian credit unions nationwide. Our services to credit unions are now post to post, covering more than two-thirds of the credit unions across Canada. I would like to warmly welcome the 150 new consultants and professionals to join CGR. And in our U.S. federal operations, we announced the definitive agreement to purchase A on a leader in digital transformation for the U.S.

George D. Schindler: Regarding our strategic priority to pursue accretive acquisitions, I'd like to expand on the two acquisitions announced subsequent to the close of the quarter. In Canada, the acquisition of Solero's credit union business complements and expands CGI's core banking service offering, and an additional 90 Canadian credit unions nationwide. Our services to credit unions are now coast-to-coast, covering more than two-thirds of the credit unions across

Speaker Change: Regarding our strategic priority to pursue accretive acquisitions, I'd like to expand on the two acquisitions announced subsequent to the close of the quarter.

Speaker Change: In Canada, the acquisition of Solero's credit union business complements and expands CGI's core banking service offerings to an additional 90 Canadian credit unions nationwide. Our services to credit unions are now coast-to-coast, covering more than two-thirds of the credit unions across Canada.

George D. Schindler: I would like to warmly welcome the 150 new consultants and professionals to join CGI. And in our US federal operations, we announced a definitive agreement to purchase Aon, a leader in digital transformation for the US federal government. This acquisition, pending regulatory approvals, will further complement and expand our U.S. federal capabilities and relationships, including with NASA, the FAA, the Office of the Secretary of Defense, and multiple branches of the U.S. Military Service. On final closing of the acquisition, 725 AON employees will join CGI, bringing deep expertise in a range of services such as data management and analytics, logistics and supply chain, and AI technology.

Speaker Change: And in our U.S. federal operations, we announced a definitive agreement to purchase Aon, a leader in digital transformation for the U.S. federal government.

George Schindler: Federal government. This acquisition, pending regulatory approvals, will further complement and expand our U.S. federal capabilities and relationships, including with NASA, the F.A., the Office of the Secretary of Defense, and multiple branches of the U.S. Military services. On final closing of the acquisition, 725 A on employees will join CGI, bringing deep expertise in a range of services, such as data management and analytics, logistics and supply chain, and AI technologies. We are in active dialogue with additional merger targets at all stages of our pipeline and are committed to merging with like-minded companies, complementary to a geographic footprint, client base, and portfolio of capabilities.

George D. Schindler: We are in active dialogue with additional merger targets at all stages of our pipeline and are committed to merging with like-minded companies that are complementary to our geographic footprint, client base, and end-to-end portfolio of capabilities. Our operational strength, stability, and financial capacity will continue to enable us to move quickly, with discipline, on the right opportunities for all sides. In closing, we will continue to manage the fundamentals of our business and invest in our build and buy profitable growth strategy to further deepen our client relationship proximity model, our end-to-end portfolio of services, and our global network and scale.

Speaker Change: We are in active dialogue with additional merger targets at all stages of our pipeline and are committed to merging with like-minded companies that are complementary to our geographic footprint, client base, and end-to-end portfolio of capabilities.

George Schindler: Our operational strengths, 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 manage the fundamentals of our business and invest in our build and buy profitable growth strategy to further deepen our client relationship proximity model, our end-to-end portfolio of services, and our global network and scale. As each client forge is their unique path forward, we will continue to devise the right combination of services and solutions to deliver tangible, trusted business and mission outcomes for our clients. Thank you for your interest and support.

Speaker Change: Our operational strength, stability, and financial capacity will continue to enable us to move quickly, with discipline, on the right opportunities of all sizes.

Speaker Change: In closing, we will continue to manage the fundamentals of our business and invest in our build and buy profitable growth strategy to further deepen our client relationship proximity model, our end-to-end portfolio of services, and our global network and scale.

George D. Schindler: As each client forges their unique path forward, we will continue to devise the right combination of services and solutions to deliver tangible, trusted business and mission outcomes for our clients. Thank you for your interest and support. Now, Kevin, we'll go to the questions.

Speaker Change: As each client forges their unique path forward, we will continue to devise the right combination of services and solutions to deliver tangible, trusted business and mission outcomes for our clients.

Kevin Linder: Let's go to the questions now, Kevin.

Kevin Linder: Thank you, George. Julie, can you please share the logistics for the Q&A? Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. If you would like to withdraw a question, please press star 1, please for your. Daniel Chan from TD Cullen, please.

Kevin Linder: Thank you, George.

Julie Godin: Julie, can you please share the logistics for the Q&A? Thank you, ladies and gentlemen. If you'd like us a question, please press star one on your telephone keypad. If you'd like to watch our question, press star two. One moment, please, for your first question.

Speaker Change: Let's go to the questions now, okay? Thank you, George. Julie, can you please share the logistics for the Q&A?

Julie: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press Star 1 on your telephone keypad. If you'd like to withdraw your question, press Star 2. One moment, please, for your first question.

Daniel Chan: Your first question comes from Daniel Chan, from TD Cohen. Please go ahead. Hi, good morning. George, the evidence been something that's been talked about for a while. Can you share some color and white now with the right time to initiate the dividend? Yeah, you're absolutely right. We've been discussing the dividend over the years. As I mentioned before, we review our use of cash priorities with the Board of Directors on a regular basis, including the dividends. It was determined by the board that we could include the dividend as an added mechanism of returning value to our shareholders while maintaining our overall cash priorities to drive EPS growth.

Daniel Chan: Hi, good morning. George, the dividend has been something that's been talked about for a while. Can you give some color and why now is the right time to initiate the dividend? Yeah, you're absolutely right. We've been discussing the dividend over the years. As I mentioned before, we review our use of cash priorities with the board of directors on a regular basis, including dividends. And it was determined by the board that we could include the dividend as an added mechanism of returning value to our shareholders while maintaining our overall cash priorities to drive EPS growth.

Speaker Change: Hi, good morning. George, the dividend has been something that's been talked about for a while. Can you shed some color on why now is the right time to initiate the dividend?

Speaker Change: Yeah, you're absolutely right. We've been discussing the dividend over the years. As I mentioned before, we review our use of cash priorities with the board of directors on a regular basis.

Speaker Change: including the dividends, and it was determined by the board that we could include the dividends.

Speaker Change: as an added mechanism of returning value to our shareholders.

George Schindler: So it's really just a matter of the maturity.

Speaker Change: While maintaining our overall cash priorities to drive EPS growth. And so it's really just a matter of maturity. Steve, I mean, maybe you can talk a little bit about the cash.

George D. Schindler: And so it's really just a matter of the maturity. Steve, I mean, maybe you can talk a little bit about the cash, quarter over quarter, year over year. But it will not change our strategy at all.

Steve Perron: Steve, I mean, maybe you can talk a little bit about the cash. Thank you for the question. We have strong cash, as you said, and it's pretty much stable quarter over quarter, year over year, but it will not change our strategy at all. So what we want first priority is really the investment in our business, and also we want to continue to deploy and allocate the cash to a creative acquisition. So that's why the first thing is really... Internal investment, and also M&A. But in addition to that, as George mentioned, I would believe that by introducing this dividend program, we're going to attract other investors, and that's pretty much the reason why we have to end it now.

Speaker Change: [inaudible]

Steve: Look, thank you for the question. We have strong cash, as you said, and it's pretty much stable quarter over quarter, year over year.

Steve Perron: What we want first, the priority is really the investment in our business, and we also want to continue to deploy and allocate the cash to accretive acquisitions. So, that's why, you know, the first thing is really internal investment and also M&A. But in addition to that, as George mentioned, we believe that by introducing this dividend program, we're going to attract other investors, and that's pretty much the reason why we have done it now. Thank you.

Speaker Change: But it will not change our strategy at all. What we want first, the priority is really the investment in our business, and also we want to continue to deploy and allocate the cash to accretive acquisition.

Speaker Change: So that's why, you know, the first thing is really

Speaker Change: Internal Investment, and also M&A.

Speaker Change: But in addition to that, as George mentioned, we believe that by introducing this dividend program, we're going to attract other investors. And that's pretty much the reason why we have done it now.

Daniel Chan: Thank you; that makes sense.

Daniel Chan: That makes sense. Maybe a related question. Maybe just any color on what you're seeing in the M&A environment. It sounds like you're still pretty active, but any color around pricing and the willingness of other companies to sell.

Daniel Chan: And maybe a related question, maybe just any color from what you're seeing in the M&A environment. It sounds like you're still pretty active, but any color around pricing and the willingness of other companies to sell. Thank you. Yeah, no thanks for the question, Dan. Yeah, the more there are, more reasonable valuations are holding. Even with PD being slightly more active, the valuations are holding. I think there's a lot of sellers believe this is the right time to combine entities. And so we're having, as I mentioned, discussions at all stages of our pipeline, including the later stages, bringing these two.

Speaker Change: Thank you, that makes sense. Maybe a related question, maybe just any color on what you're seeing in the M&A environment. It sounds like you're still pretty active, but any color around pricing and the willingness of other companies to sell. Thank you.

George D. Schindler: Thank you. Yeah, no, thanks for the question, Dan. Yeah, the more reasonable valuations are holding. Even with PE being slightly more active, the valuations are holding. I think a lot of sellers believe this is the right time to combine entities. And so we're having, as I mentioned, discussions at all stages of our pipeline, including the later stages, bringing these two we just announced over the line, but there's more behind that.

Speaker Change: Yeah, no, thanks for the for the question, Dan. Yeah, the more there more reasonable evaluations are holding

Speaker Change: Unknown Speaker Even with PE being slightly more active.

Speaker Change: Unknown Speaker The valuations are holding. I think there's a lot of sellers believe this is a

Speaker Change: The right time to combine.

Speaker Change: Combined entities and so we're having, as I mentioned, discussions at all stages of our of our pipeline, including the later stages, bringing these to, we just announced over the line, but there's more behind that. So it's, we believe it's becoming a more active environment. We're getting more inbound calls.

George D. Schindler: So we believe it's becoming a more active environment. We're getting more inbound calls as well. Now, they tend to be smaller companies on the inbound side, but we're even getting more inbound calls. So it's still a pretty active environment. Thanks, George. I don't know if you'll be on the next earnings call. But if not, best of luck.

George Schindler: We just announced over the line, but there's more behind that. So we believe it's becoming a more active environment. We're getting more inbound calls as well. Now they tend to be smaller companies on the inbound side, but we're even getting more inbound calls. So it's a, it's still a pretty active environment. Thanks, George.

Speaker Change: as well. Now, they tend to be smaller companies on the inbound side, but we're even getting more inbound calls. So it's a it's still a pretty active environment.

George Schindler: I don't know if you're beyond the next learnings call, but if not, best of luck; it's been a pleasure working with you. Thanks a lot. Appreciate it.

Speaker Change: Thanks, George. I don't know if you'll be on the next earnings call, but if not, best of luck. It's been a pleasure working with you.

Unknown Speaker: It's been a pleasure working with you. Thanks a lot. I appreciate it. Your next question, show, please go. Good morning, gents. Suthan?

George: Thanks a lot. I appreciate it.

Unknown Attendee: Here are the next questions.

Unknown Attendee: I'm Susan Cumar from Steve Fowell. Please go ahead.

Speaker Change: Your next question comes from Suthan Sukumar from CIFO. Please go ahead.

Unknown Attendee: Good morning, Jen. Good morning, guys. Good morning. Great.

Suthan Sukumar: Good morning, gents. Suthan? I wanted to...

Suthan Sukumar: I wanted to, yeah. Good morning, guys. Can you hear me?

Unknown Speaker: All right. Yeah, we can hear you now, Suzanne. Unknown Speaker Just wanted to touch on, you know, your comments about, you know, seeing financial science and stability ahead. And when you guys are thinking about the recovery in the demand environment, as you look out in the course ahead, or and really also on the growth side of things. Is that, you know, is that largely dependent on a recovery in more discretionary IT spend or, or do you guys see a potential for a pickup and more on the manager service side and the conversion of that large, large backlog that you have? Yeah, I think, Suzanne. I think it's a combination.

Suthan Sukumar: Good morning, guys. Can you hear me? Hi. Yeah, we can hear you now, Suzanne.

Susan Cumar: Just wanted to kind of touch on your comments about the incremental financial stability ahead. And you know, when you guys are thinking about the sort of recovery in the demand environment, as you look at in the course ahead, or and really also on the growth side of things, is that, you know, is that large dependent on recovery in more discretionary, I can spend or, or you guys see a potential and pick up and even want to manage the service side and the conversion of that large, large backlog, but you have there. Yeah, I think, Susan, I think it's a combination.

Suthan Sukumar: Okay, great. Um, just wanted to, um,

Suthan Sukumar: on your comments about, you know, seeing incremental signs of stability ahead. And, you know, when you guys are thinking about the...

Suthan Sukumar: for the recovery in the demand environment.

Speaker Change: As you look out in the course ahead, and really also on the growth side of things, is that

Speaker Change: Is that largely dependent on a recovery and more discretionary IT spend or do you guys see a potential in pickup in one of the manager service side and the conversion of that large backlog that you have there?

George D. Schindler: Obviously, as discretionary picks up, that's a factor that augments some of the growth that we're seeing or, put differently, a lot of these managed services projects, as they come online, are offsetting the fact that we do see a slower demand environment on the SINC. But as I've said before, I do believe that, you know, clients are making decisions, future plans for their digitization. We play on both sides; we play on the cost-saving side, but we also play on their growth side.

George Schindler: Obviously, as the discretionary picks up, that's a, that augments some of the growth that we're seeing or, said differently. A lot of these manage services projects, as they come online, are offsetting the fact that we do set see a slower demand environment on the S I see. But, as I've said before, I do believe that, you know, clients are making decisions future plans on their digitization. We play on both sides; we play on the cost savings side, but we also play on their growth side. So, but I do believe that some of the green shoots that we're seeing will take hold, but it's going to be, you know, it's still not consistent, still not uniform.

Speaker Change: Yeah, I think, Suzanne, I think it's a combination. Obviously, as the discretionary picks up, that's that that augments some of the growth that we're seeing or said differently. A lot of these managed services projects as they come online, are offsetting the fact that we do see a slower demand environment on the SINC. But as I've said before, I do believe that, you know, clients are making decisions, future plans on their digitization. We play on both sides, we play on the cost saving side, but we also play on their on their growth side. So, but I do believe that, that some of the green shoots that we're seeing

George D. Schindler: So, I do believe that some of the green shoots that we're seeing will take hold, but it's going to be, you know, it's still not consistent, still not uniform. As I mentioned in the opening, every client is looking at this a little bit differently. And I'd still say that caution reigns, even on the bigger deals.

Speaker Change: will take hold. But it's going to be, you know, it's still not consistent, still not uniform. As I mentioned on the in the opening, you know, every client's looking at this a little bit differently. And I'd still say that caution reigns, even on the bigger deals.

George Schindler: As I mentioned on the, in the opening, you know, every client's looking at this a little bit differently, and I'd still say that caution reigns even on the bigger deals. That's a thing.

Suthan Sukumar: Gotcha. Thank you, Unknown Speaker. My next question is on the Aon acquisition because I, you know, because it looked like a pretty compelling acquisition, Unknown Speaker, the US Fed Space that obviously expands your exposure in that segment. Did Aon come with any IP?

Unknown Attendee: Thank you.

Unknown Attendee: For my next question, I want to touch on the Aeon acquisition, because it looked like a pretty compelling deal in the US side space that obviously expanded your exposure in that segment. As did the Aeon come with any IP and with respect to the, you know, what you acquired here, is this an opportunity to go deeper within, and existing relationships that you have within the Fed or is this opening up into newer relationships, you know, across the segment. It does, there is some overlap, but it does, for sure, open up some new avenues for us, particularly in that all important national security space.

Speaker Change: Thank you.

Speaker Change: Unknown Speaker My next question, I want to touch on the Aon acquisition because it looked like a pretty compelling deal in the U.S. Fed space that obviously expanded your exposure in that segment.

George D. Schindler: And with respect to what you acquire here, is this an opportunity to go deeper within existing relationships that you have within the Fed? Or does this open you up to newer relationships, you know, across the sector? It does.

Speaker Change: Did Aon come with any IP?

Speaker Change: Unknown Speaker With respect to the, you know, what you acquire here is this is an opportunity to go deeper within existing relationships that you have within the Fed or does this open you up into newer relationships, you know, across the segment?

George D. Schindler: There is some overlap, but it does, for sure, open up some new avenues for us, particularly in that all important national security space. And that's where a lot of the spending right now is going in the US federal government, just given everything that's going on in the world. And so that's there. They specialize, though, in data analytics and business operations, including finance and logistics and supply chain.

Speaker Change: It does, there is some overlap, but it does for sure open up some new avenues for us, particularly in that all-important national security space.

George Schindler: And that's where a lot of the spending right now is going in the US federal government, just given everything is going on in the world. And so that's there they specialized though in the data analytics and the business operations, including finance and logistics and supply chain. So new avenues, but very similar and like-minded skills in those areas. The other thing I would add, and this is, I think this is important to add, is they have some complimentary government-wide contract vehicles. Provide for maybe a more limited competition expedited deterrent pathway for certain services to those services are those back office automation services that were very strong. And I think it's not only are they going to bring some new clients in that all important national security space, but they're going to give us some avenue to expand on our existing services.

Speaker Change: and that's where a lot of the spending right now is going in the U.S. federal government just given the everything that's going on in the world and so that's their they they specialize though in the data analytics

George D. Schindler: So new avenues, but very similar and like-minded skills in those areas. The other thing I would add, and this is important to add, is they have some complementary government-wide contracts. They provide for maybe a more limited competition, expedited procurement pathway for certain services.

Speaker Change: The business operations, including finance and logistics and supply chain so new avenues but very similar and like minded skills in those areas. The other thing I would add and this is important to add is

Speaker Change: They have some complimentary government-wide contract vehicles.

Speaker Change: They provide for...

Speaker Change: may be a more limited competition expedited.

Unknown Speaker: And those services are those back office automation services that we're very strong in. So I think it's not only are they going to bring some new clients in that all-important national security space, but they're going to give us some avenues to expand on our existing services with other clients. So that's a real positive. No IP, no intellectual property to speak of, so it's straight SINC. But again, in the area that governments around the world and certainly the U.S. government are spending on national security. Unknown Speaker, Unknown Speaker. Thank you. Your next question comes from... an Unknown Speaker from BMO. Hi, good morning.

Speaker Change: The Current Pathway for certain services. And those services are those back office automation services that we're very strong in. So I think it's not only, are they going to bring some new clients in that all-important national security space, but they're going to give us some avenue to expand on our existing services with other clients.

George Schindler: So that's a, that's a, that's a repository.

George Schindler: No IP, no intellectual property to speak us. So it's, it's straight S I and C. But again, in the area that governments around the world and certainly the US government is spending on in national security.

Speaker Change: So that's a real positive. No IP, no intellectual property to speak of, so it's straight SINC. But again, in the area that governments around the world and certainly the U.S. government is spending on in national security.

Unknown Attendee: Okay, perfect. I get a color of that.

Unknown Attendee: Thank you.

Speaker Change: Perfect.

Speaker Change: Thank you. I recall that I passed the line.

Carlos Muscapulos: Your next question comes from Carlos Muscapulos from BMO. Please go ahead. Hi, good morning.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Thanos Moschopoulos from BMO. Please go ahead.

Thanos Moschopoulos: Starting off on margins, I won't ask if there's room for margin expansion because I know the answer is always yes. But if we think about potential drivers of margin, If we could go up to the potential drivers, is it really about maybe the IP mix and the managed services mix increasing? Is that what you'd expect to be the margin driver over the next while? Yeah, well, you know, You didn't, you didn't ask me, but I'm going to I'm going to say it anyway.

Steve Perron: I think I'm not on margins pictures starting off on margins that I won't ask if there's room for marketing expansion because I know the answer is always yes, but if we think to be asking if there's a lot of potential drivers of margins. If we talk to the central drivers, I mean, it really about maybe the IP mix and the managed services mix increasing. Is that what you expect the margin driver over the next while? Yeah, well, you know, you didn't you didn't ask me, but I'm going to say it anyway. You know, we talked last time about kind of the improvement that was coming both from the cost optimization but also kind of that mix of business.

Thanos Moschopoulos: Hi, good morning. Starting off on margins, I won't ask if there's room for margin expansion, because I know the answer is always yes. But if we think about potential drivers of margins,

Thanos Moschopoulos: If we could go through the potential drivers, I mean is it really about maybe the IP mix and the managed services mix increasing, is that what you'd expect to be the margin driver over the next while?

Speaker Change: Yeah, well, you know, um...

Steve Perron: You know, we talked last time about kind of the improvement that was coming, both from the cost optimization but also kind of that mix of business. And that's exactly what you saw this time in the adjusted margin accretion of 30 basis points. And that should continue. Right? Because as we add more of that managed services growth, including global delivery, you see the margins from global delivery. So that's a piece of that puzzle.

Speaker Change: You didn't, you didn't ask me, but I'm gonna I'm gonna say it anyway, you know, we talked last time about kind of the the improvement that was coming both from the cost optimization, but also kind of that mix of business.

Steve Perron: And that's exactly what you saw this time in the and the adjusted margin accretion of the 30 basis points. And that should continue, right, because as we add more that managed services growth, including global delivery, right, you see the margins from global delivery, so that's a piece of that mix. So it's both managed services, but also leveraging the global delivery IP as a percentage revenue, which did take up again this quarter. But we still have some tailwind from the cost optimization program.

Speaker Change: And that's exactly what you saw this time in the adjusted margin accretion of the 30 basis points. And that should continue, right? Because as we add more of that managed services growth,

Speaker Change: including global delivery, right, you see the margins from global delivery. So that's a piece of that mix. So it's both managed services, but also leveraging the global delivery. IP as a percentage of revenue, which did

Steve Perron: So it's both managed services but also leveraging global delivery. IP as a percentage of revenue, which did take up again this quarter. But we're still having some tailwind from the cost optimization program. And then, you know, as I always say, Thanos, there's still an opportunity for us to have continuous improvement in some of the geographies and in not just the revenue mix but also the SGA mix and project execution. So it's always a combination of those factors.

Speaker Change: take up again this, this quarter. But we'll still have some tailwind from the cost optimization program. And then, you know, as I always say, Thanos, there's, there's still an opportunity for us to have a continuous improvement.

Steve Perron: And then, you know, I always say that there's still an opportunity for us to have a continuous improvement in some of the geographies. And not just the revenue mix, but also the SG&A mix and the project execution. So it's a combination of those factors always, but yes, driven by the managers.

Thanos: and some of the geographies in not just the revenue mix, but also the SG&A mix and the project execution. So, it's a combination of those factors always, but yes, driven by the managed services and the IP.

Steve Perron: But yes, driven by managed services. And in the US federal government, the strength you saw in bookings, is there some election dynamic that's contributing to that? Or would you not attribute that? Yeah, it would, it would.

George Schindler: in America. And in US federal, the string he saw in the bookings, is there some election dynamic that's contributed into that? Or, we do not attribute to that? No, yeah, it would do it. There's definitely a piece of that. And if you recall, we did discuss this on last quarter call that we expected that there was a lot of RFP's last quarter, actually lighter bookings, but I mentioned that we would expect those. To be adjudicated, adjudicated in the second half, the other though is exactly as you said. There's some large government bridge contracts in the quarter as they prepare for an election in transition.

Speaker Change: And in U.S. federal, the strength you saw in bookings, is there some election dynamic that's contributing to that or would you not attribute to that?

Thanos Moschopoulos: That's definitely a piece of that. And if you recall, we discussed this on last quarter's call, that we expected that there were a lot of RFPs last quarter, actually later bookings. But I mentioned that we would expect those to be adjudicated, adjudicated in the second half.

Speaker Change: Yeah, it would, it would, that's definitely a piece of that. And if you recall, we did discuss this on, on, on last quarter's call, that we expected that there was a lot of RFPs last quarter, actually later bookings.

Thanos: But I mentioned that we would expect those to be adjudicated in the second half. The other, though, is exactly, as you said, there's some large government bridge contracts.

George D. Schindler: The other, though, is exactly as you said, there are some large government bridge contracts in the quarter as they prepare for an election and transition. So what the bureaucracy does is says, Okay, we don't know who's going to get elected, of course, they'll come in with new policies, but we got to keep things running in the interim. And so you see a lot of these bridge contracts. And as I mentioned, they're a little bit longer than they've been in the past, just because of some of the differences, let's just say, in the policies that could come out.

George Schindler: So what the, what the bureaucracy does is says, okay, we don't know who's going to get elected. Of course, they'll come in with new policies, but we got to keep things running in the interim. And so you see a lot of these bridge contracts. And, as I mentioned, they're a little bit longer than they've been in the past. Just because of some of the, the differences that you say in the policies that could come out. And so they're looking at making that a little bit longer, because I think it'll be maybe a little bit longer transition.

Thanos: in the quarter as they prepare for an election transition. So what the what the bureaucracy does is says, okay, we don't know who's going to get elected, of course, they'll come in with new policies, but we got to keep things running.

George D. Schindler: And so they're looking at making that a little bit longer because they think it'll be maybe a little bit longer transition. So that's what's going on there, exactly as we would have anticipated. And the team is doing a great job to win those contracts through their efforts and their outstanding delivery for the US government. Thanks, George, and I'll echo the congratulations on your upcoming retirement and your successful tenure at CGI. I'll pass it along.

Thanos: And so you see a lot of these bridge contracts, and as I mentioned, they're a little bit longer than they've been in the past just because of some of the differences, let's just say, in the policies that could come out. And so they're looking at making that a little bit longer because they think it'll be maybe a little bit longer.

George Schindler: So that's what's going on there, exactly as we would have anticipated. And the team is doing a great job to win those contracts through their efforts and their outstanding delivery for the US government.

Thanos: Transition. So that's what's going on there exactly as we as we would have anticipated and the team is doing a great job to win those contracts through their through their efforts and their outstanding delivery for the for the US government.

Unknown Attendee: Thanks, George, and I'll echo those contracts on the upcoming retirement and your successful tenure at CGI. I'll go slow. Thanks a lot, Santa. I'll really appreciate it.

Thanos: Thanks, George, and I'll echo the congrats on your upcoming retirement and your successful tenure at CGI. Thanks a lot, Thanos. Really appreciate it.

Thanos Moschopoulos: Thanks a lot, Thanos. I really appreciate it. Your next question comes from Surrender, and some Jeffreys, please. Thank you. George, surrender.

Surinder Thind: Your next question comes from Surrender. Ahead from Jeffries, please go ahead. Thank you. George, surrender. You're going to have you on the call. Hey, thank you, George. I appreciate that. At least I get in one call with you before your retirement. So there you go.

Speaker Change: Your next question comes from Surrender Ehand from Jefferies. Please go ahead.

Surrender: Good to have you on the call. Hey, thank you, George. Appreciate that. Unknown Speaker, At least I get to have one call with you before your retirement, so there you go. Um, big picture question here on AI. If you look to build solutions for a client, is there a lot of third-party integration of solutions, meaning the chat GPT of the world Gemini into those solutions? Or are there more?

Speaker Change: Thank you. George. Surrender. Good to have you on the call.

Surrender Ehand: Hey, thank you, George. Appreciate that.

Surinder Thind: Great picture question here on the AI strategy. If you want to build solutions for clients. Is there a lot of third-party integration of solutions, meaning the chat to the T of the world, the Gemini into the solutions, or are there more. The criteria builds of like smaller models that ultimately you'll have the IPO for. Like how should we think about that, or the evolution of that? Yeah, what's it? It's a combination. So we have our signature intellectual property is called Pulse AI. And it's a multi-modal approach that allows you to leverage those large language, large language models.

Speaker Change: Unknown Speaker We picked your question here on the AI strategy. If you look to build solutions for clients,

Surrender Ehand: Is there a lot of third-party integration of solutions, meaning the chat GPTs of the world, the Gemini, into those solutions, or are there more proprietary builds of like smaller models that ultimately you'll have the IP over? How should we think about that or the evolution of that?

George D. Schindler: Unknown Speaker 0, Like, how should we think about that or the other? Yeah, well, it's a combination. It's a combination. So our signature intellectual property is called Pulse AI, and it's a multimodal approach that allows you to leverage those large language models but also develop some of those closed loop models that most of our clients are really looking at. And that's why I mentioned on the last several calls that our AI work is largely helping clients prepare their data and their architectures to actually leverage the AI in a bigger way. I don't think anybody is looking at just using the large language models that are available to chat with the GPTs of the world.

Speaker Change: Yeah, it's a combination.

Speaker Change: It's a combination. So we have our signature.

Speaker Change: on the intellectual property is called pulse AI and it's a multinodal approach that allows you to leverage those large language models but also develop

George Schindler: But also develop some of those closed loop models that most of our clients are really looking at. And that's why I mentioned the last several calls that our AI work is largely helping clients prepare their data and their architectures to actually leverage the AI in a bigger way. I don't think anybody is looking at just using the large language models that are available to chat to the T of the world. They're going to leverage pieces of them, but not exclusively. They want to build closed loop elements. So yes, there already is some CGI intellectual property and make that easier to integrate.

Speaker Change: Some of those closed loop models that most of our clients are really looking at. And that's why I mentioned the last several calls that our AI work is largely helping clients prepare.

George D. Schindler: They're going to leverage pieces of them, but not exclusively; they want to build closed loop elements. So yes, there is already some CGI intellectual property that could make that easier. To integrate, there will be other CGI intellectual property built on top of those models that is industry specific, and we've already announced and are working with some of the hyperscalers on exactly that. So some more to come on that, but it is still early days for surrender.

Speaker Change: Their data and their architecture is to actually leverage the AI in a bigger way. I don't think anybody is looking at just using,

Speaker Change: Unknown Speaker, The Large Language Models that are available to the CHAT GPT's of the world. They're going to leverage pieces of them but not exclusively. They want to build…

Speaker Change: Closed Loop Elements.

Speaker Change: So yes, there already is some CGI intellectual property to make that easier to integrate. There will be other CGI intellectual property built on top of those models that is industry-specific.

Surinder Thind: There will be other CGI intellectual property built on top of those models that is industry specific, and we're already announcing working with some of the hyper scalers on exactly that. So some more to come on that, but it is still early days for sort of surrender. Thank you.

Speaker Change: And we're already announcing, working with some of the hyperscalers on exactly that. So more to come on that, but it is still early days for Surrender.

Surrender: And then more of a near-term question here just on the managed services backlog, which obviously continues to see good growth. Can you help us understand why maybe it's not converting fast, given that, ultimately, these are highly beneficial projects from a client? Yeah, well, I kind of alluded to that a little bit. You can see the bookings and the growth profile in the SINC. Some of that managed services is coming online. It's just being masked by the softness on the other side.

George Schindler: And then, more of a near-term question here, just on the managed services backlog, obviously continue to see good growth. But can you just understand why maybe it's not converting fast for given ultimately these are highly beneficial projects from a client perspective? Yeah, well, I kind of alluded to that a little bit. But you can see the bookings and the growth profile and the SINC. Some of that managed services is coming online. It's just being masked by the softness on the other side. And that's the goodness of the resilience model of CGI. We are having that balanced portfolio allows us to continue to move forward, even in the current environment.

Speaker Change: Thank you and then more of a near-term question here just on the managed services backlog obviously continues to see good growth.

Speaker Change: Can you help us understand why maybe it's not converting faster given, ultimately, these are highly beneficial projects from a client perspective?

Speaker Change: Yeah, well, I kind of alluded to that a little bit. You can see the bookings.

Speaker Change: and the growth profile in the SINC. Some of that managed services is coming online. It's just being masked by the softness on the other side. And that's the goodness of the resilience model of CGI, right? Having that balance.

George D. Schindler: And that's the goodness of the resilience model of CGI, right? Having that balanced portfolio allows us to continue to move forward even in the current environment. But they are coming on board. Having said that, they are slower.

Speaker Change: Portfolio allows us to continue to

George D. Schindler: It's slower to convert from pipeline to booking, and it's slower to convert from booking to actually start the project. It's slower to go from the start of the project to the actual engagement of revenue because you know there's always a transition. Clients are being cautious on all of the above. So, they're being extra cautious on a lot of these managed services deals. We take on people from our clients who are very cautious about how they do that in the current environment. So, it's just slower all the way around. But be that as may as it may, yes, we are converting some of those on. It's just offset by some of the other softness.

George Schindler: But they are coming on board. Having said that, they are slower, slower to convert from pipeline to booking. It's slower to convert from booking to actually start the project to go from the start of the project to the actual engagement of revenue, because you know, there's always transition. Clients are being cautious on all of the above. So they're being extra cautious on, you know, on a lot of these managed services deals. We take on people from our clients to being very cautious on how they do that in the current environment. So it's just, it's just slower all the way around.

Speaker Change: to move forward even in the current environment, but they are coming on board. Having said that...

Speaker Change: They are slower.

Speaker Change: It's slower to convert.

Speaker Change: from Pipeline to Booking. It's slower to convert from Booking.

Speaker Change: to actually start the project. It's slower to go from the start of the project.

Speaker Change: to the actual engagement of revenue because you know there's always a transition.

Speaker Change: Clients are being cautious on all of the above.

Speaker Change: So they're being extra cautious on, you know, on a lot of these managed services deals, we take on people from our clients are being very cautious on how they do that.

Speaker Change: in the current environment. So it's just slower all the way around, but be that as may, yes, we are converting some of those on, it's just offset by some of the other softness.

Unknown Attendee: But be as made, yes, we are converting some of those on. It's just offset by some of the other softness.

Unknown Attendee: Thank you. Yeah.

Unknown Attendee: Yeah, next question.

Speaker Change: Thank you.

Jerome Dubreuil: Thank you. Yep. Your next question comes from Jerome Dubreuil from Desjardins; please go ahead. Unknown Speaker, Jerome Dubreuil, Robert Young, Daniel Chan, Thanos Moschopoulos, Paul Treiber, that may be a kind of offset your market improvement from the cost improvement program. So is there a word being made done right now to prove the organization that is having an impact, or is it just kind of normal investment that we're seeing? Yeah, it's a good question.

Speaker Change: Yep.

Unknown Attendee: Hi, good morning. Thanks for taking my question. Congrats. George, for me as well. And the first question for me is, what can I be margin improvement, and this is very healthy. Obviously, but I'm wondering if we're, we're nonetheless in the phase of high or isolated technological investment that may be kind of offset your margin improvement from the cost improvement program. So is there a word being made done right now to future proof the organization that is having an impact or it's kind of normal investment that we're seeing right now? Yeah, it's a good question. As you know, we announced a pretty big investment to make sure that we are positioned for how to leverage AI. A lot of that right now is going into our IP and into our talent.

Speaker Change: Your next question comes from Jerome Dubreuil from Desjardins. Please go ahead.

Jerome Dubreuil: Hi, good morning. Thanks. Thanks for taking my question. Congrats, George, for me as well. And first question for me is...

Jerome Dubreuil: Looking at the margin improvement and this is very healthy obviously, but I'm wondering if we're we're nonetheless in the phase of high or actual rated technological investment.

Speaker Change: That may be kind of offset your margin improvement from the cost improvement program. So is there work being made done right now to future-proof the organization that is having an impact or it's kind of normal investment that we're seeing right now?

George D. Schindler: As you know, we announced a pretty big investment to make sure that we are positioned for how to leverage AI. A lot of that right now is going into our IP and into our talent. But it's really just a shift of the investments. We're always investing in training. Now it's focused on AI. We're always investing in our IP. Now it's focused less on maybe some of the generic feature functions.

Speaker Change: Yeah, it's a good question. As you know, we announced a pretty big investment to make sure that we are positioned.

Speaker Change: for how to leverage AI. A lot of that right now is going into our IP.

George Schindler: But it's really just a shift of the investments. We're always investing in training. Now it's focused on AI. We're always investing in our IP. Now it's focused less on maybe some of the generic feature functions, and now it's more focused on leveraging AI into the IP. So yeah, there's an uptick, but it's, and we're taking some of that from the cost optimization, which is why I said that you wouldn't see all of the cost optimization is going to that. But I don't think it prevents us from having the incremental improvements that you've come accustomed to seeing on the margins.

Speaker Change: and Endora Talent. But it's really just a shift of the investments. We're always investing in training. Now it's focused on AI. We're always investing in our IP.

Speaker Change: Now it's focused less on maybe some of the generic feature functions and now it's more focused on leveraging AI into the IP. So yeah, there's an uptick and we're taking some of that from the cost optimization, which is why I said that you wouldn't see all of the cost optimization go into that. I don't think it prevents us from having the incremental improvements that you've come accustomed to seeing on the margin side. And we've got a number of different levers, as I mentioned earlier.

Jerome Dubreuil: And now it's more focused on leveraging AI into the IP. So yeah, there's an uptick. And we're taking some of that from the cost optimization, which is why I said that you wouldn't see all of the cost optimization go into that. But I don't think it prevents us from having the incremental improvements that you've come accustomed to seeing on the margin side. And we've got a number of different levers, as I mentioned earlier. Yeah, pretty clear. Thanks.

Unknown Attendee: And they've got a number of different levers, as I mentioned earlier. Yeah, pretty clear.

George D. Schindler: The second question for me is more from a geographical standpoint. I mean, we're looking at expected GDP growth everywhere in the world. And it's not necessarily the same as it used to be, or as it was when you made your decisions in terms of capital allocation in the past. Where do you think your best marginal dollar is invested right now? Has there been a change in terms of where you want to be operating globally going forward? Yeah, no, it's a it's a great question.

Unknown Attendee: Thanks.

Unknown Attendee: A second question for me is more on the geographical standpoint. I mean, we're looking at expected GDP growth everywhere in the world and not necessarily the same as it used to be or as it was when you took your decisions in terms of capital allocation, the past. Where do you think your best marginal dollar is invested right now? Has there been a change in terms of where you want to be operating? Global legal report? Yeah, no, it's a great question. It's something we look at. We're doing our planning for fiscal year 2025 right now. Of course, it's a rolling three-year plan that we're always updating on an annual basis.

Speaker Change: Yeah, pretty clear. Thanks. Second question for me is more on a geographical standpoint.

Speaker Change: I mean, we're looking at expected GDP growth everywhere in the world, and it's not necessarily the same as it used to be or as it was when you took your decisions in terms of capital allocation in the past.

Speaker Change: Where do you think your best marginal dollar is invested right now? Has there been a change in terms of where you want to be operating globally going forward?

Jerome Dubreuil: It's something we look at. We're doing our planning for fiscal year 2025. Right now, of course, it's a rolling three-year plan that we're always updating on an annual basis. But, of course, we use some of that input that we get from the voice of the clients. I mentioned some of the early findings there. And it's kind of that dual track agenda of both cost savings and optimization but also some of the growth. But But look, I don't I don't see any big changes.

Speaker Change #100: Yeah, no, it's a great question. It's something we look at. We're doing our planning for fiscal year 2025 right now. Of course, it's a rolling three-year plan that we're always updating.

George Schindler: But, and of course, we use some of that input that we get from the voice of the clients. I mentioned some of the early findings there. And it's kind of that dual track agenda of both cost savings and optimization, but also some of the growth. But look, I don't I don't see any big changes. We've been pretty deliberate in the markets, and the clients remember 85% of our work is for enterprise-level clients. They're global by their very nature. We're very deliberate in where we focus our business efforts and the geographies that you see how we're organized.

Speaker Change: on an annual basis.

Speaker Change: But, and of course, we use some of that.

Speaker Change: input that we get from the voice of the clients. I mentioned some of the early findings there. And it's kind of that dual-track agenda of both cost savings and optimization, but also

George D. Schindler: We've been pretty deliberate in the markets, and the clients remember that 85% of our work is for enterprise-level clients. They're global by their very nature.

Speaker Change: some of the growth. But look, I don't see any big changes. We've been pretty deliberate in the markets.

Speaker Change: And the clients, remember, 85% of our work is for enterprise-level clients, they're global by their very nature, we're very deliberate, and where we're, where we

George Schindler: So I don't see any big changes in that, regardless of this. I agree with you, kind of; we see an elongated you from a recovery standpoint. So it's not necessarily going to be the same growth. But I think there's going to be some catalysts as companies continue to look for how they can do more with less, less resources, less people. I think we see some of the demographics changing, particularly in Europe, where not just from an IT perspective, but just from the overall resource perspective. I think you're going to see some pressures on just finding available talent.

Speaker Change: focus our business efforts in the geographies.

Speaker Change: You see how we're organized. So I don't see any big changes in that regardless of this. I agree with you, that kind of we see an elongated you from a recovery standpoint. So it's not necessarily going to be the same growth. But I think it's going to be some catalysts as as companies continue to look for how they can do more with less.

Speaker Change: Less Resources, Less People. I think we do see some demographics changing particularly in Europe where not just from an IT perspective but just from an overall resource perspective, I think you're going to see some

Jerome Dubreuil: We're very deliberate in where we are, where we are, not just from an IT perspective but just from an overall resource perspective. I think you're going to see some pressures on just finding available talent. That's all going to drive a catalyst, we believe, for continued investment in digitization. And, of course, tools like AI, not just discrete AI, but tools like AI are going to allow us to make that happen. So, we still see opportunities in all those areas. It doesn't really change our capital allocation. Great, thank you, and good luck moving on to the event.

George Schindler: That's all going to drive a catalyst. We believe in continued investment in digitization. And of course, tools like AI, it's not just AI, discrete AI, but tools like AI are going to allow us to make that happen. So we still see opportunities in all those areas. It doesn't really change our capital allocation priorities.

Speaker Change: Some pressures.

Speaker Change: on just finding available talent, that's all going to drive a catalyst, we believe, for continued...

Speaker Change: Investment in digitization. And of course, tools like AI, it's not just AI, discrete AI, but tools like AI are going to allow us to make that happen. So we still see, you know, opportunities in all those areas.

Unknown Attendee: Thank you, and good move on to that.

Speaker Change: It doesn't really change our capital allocation priorities.

Unknown Attendee: Thank you.

Speaker Change: Great, thank you and good move on to the event.

Steve Any Price: Your next question comes from Steve Any Price from SkyBC, please go ahead. Hi, good morning. I was hoping it's going to work out on the consulting. Hi, the consulting side of the business and just curious how do you think about that part of the business specifically heading into fiscal 25 and what you think about in terms of recovery as in that consulting side of the business. Yeah, it's very interesting, Stephanie, and I mentioned this before. You know, in prior slowdowns, there's almost no activity on the consulting side. Clearly there's been an impact and a slowdown on consulting, but it hasn't gone to nothing.

Stephanie Price: Thank you. Your next question comes from Stephanie Price from CIBC; please go ahead. Hi, good morning.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Stephanie Price from CIBC. Please go ahead.

George D. Schindler: I was hoping to circle back on the consulting side of the business and just curious how you think about that part of the business specifically heading into fiscal 25. And what you're thinking about in terms of recovery on the consulting side of things. Yeah, it's very interesting, Stephanie. And I mentioned this before, you know, in prior slowdowns, there was almost no activity on the consulting side. Clearly, there's been an impact of a slowdown on consulting, but it hasn't gone to nothing.

Stephanie Price: Hi, good morning. I was hoping to circle back on the consulting side of the business and just curious how you think about that part of the business specifically heading into fiscal 25 and what you're thinking about in terms of recovery in that consulting side of the business.

George D. Schindler: And the reason is that, and you've heard a lot of our AI efforts right now, they're actually driven by consulting, consulting on the data side, consulting on the business transformation side, consulting on the change management side, as clients really think through what models they want to have for the future. So, you know, I think that it will be a slower ramp up and recovery.

Speaker Change: Yeah, it's very interesting, Stephanie, and I mentioned this before, you know, in prior

Speaker Change: Slow downs there there's almost no activity in on the consulting side Clearly there's been an impact and a slowdown on consulting But it hasn't gone to nothing and the reason is that and you even heard a lot of our AI efforts right now they're actually driven by consulting

George Schindler: And the reason is that, and you even heard a lot of our AI efforts right now, they're actually driven by consulting. Consulting on the data side, consulting on the business transformation side, consulting on the change management side, as clients really think through what models they want to have for the future. So, you know, I think that it will be a slower ramp-up and recovery. And as I also mentioned, consulting is maybe embedded in a lot of our other activities, even in some of those managed services deals as they look at those. So, and also our key, some consulting is embedded in our IP sales.

Speaker Change: Consulting on the data side, consulting on the business transformation side, consulting on the change management side, as clients really think through what models they want to have for the future. So you know, I think that it will be a slower ramp up and recovery. And as I also mentioned,

George D. Schindler: And as I also mentioned, consulting is maybe embedded in a lot of our other activities, even in some of those managed services deals, as they look at those. So, and also our IP. Some consulting is embedded in our IP sales. So, you know, it's still going to be an important element. It's smaller by its very nature.

Speaker Change: Consulting is maybe embedded.

Speaker Change: And a lot of our other activities, even in some of those managed services deals, as they look at those. And also our IP.

Stephanie Price: But it still is that tip of the spear. And we will continue to invest responsibly. And, and as I said, on the in the opening, meeting clients where they are, so it's, but it's still important to us and to our Unknown Attendee, Unknown Shareholder, Divya Goyal, CGI Group Inc, Yeah, you know, IP continues to be increasingly strong in Europe, which is which not had has not been our historical and that's, that's good, still really focused on operations and a lot of our IP is there.

George Schindler: So, you know, it's still going to be an important element. It's smaller by its very nature, but it still is that tip of the spear, and we will continue to invest responsibly in, as I said, on the opening meeting clients where they are. So, it is, but it's so important to us. And to us. That makes sense.

Speaker Change: Some consulting is embedded in our IP sales. So, you know, it's still going to be an important element.

Speaker Change: It's smaller by its very nature, but it still is that tip of the spear, and we will continue to invest responsibly.

Speaker Change: And, as I said in the opening, meeting clients where they are, but it's so important to us and to our clients.

George Schindler: And then, in terms of IP as a percentage of revenue and bookings, it was quite solid in the quarter. Can you talk about what you're seeing in terms of just demand between geographies, verticals, commercial, anything that you want to call out there? Yeah, you know, IP continues to be increasingly strong in Europe, which has not had, has not been our historical, and that's a, that's good, still really focused on operations. And a lot of our IP is there. So HR, payroll, secure document handling, the patient information system that I mentioned, it's all more on operations focused, still a lot of growth in government, and it's governments around the world, North America, and Europe, and utilities and health.

Speaker Change: That makes sense. And then in terms of IP as a percentage of revenue and bookings, it was quite solid in the quarter. Can you talk a bit about what you're seeing in terms of just demand between geographies, verticals, commercial, anything that you want to call out there?

Speaker Change: Yeah, you know, IP continues to be increasingly strong in Europe , which has not been historical, and that's good.

Stephanie Price: So HR, payroll, secure document handling, the patient information system that I mentioned, it's all more focused on operations, focused, still a lot of growth in government, and it's governments around the world, North America and Europe, and utilities and health. So it's pretty widespread.

Speaker Change: still really focused on operations. And a lot of our IP is there. So HR, payroll, secure document handling, the patient information system that I mentioned, it's all more on operations focused.

Speaker Change: Still a lot of growth in government, and it's governments around the world, North America and Europe , and utilities and health. So it's pretty widespread, but again, very operational focus, which is where a lot of our IP plays, so it's nice to see.

George Schindler: So it's pretty widespread, but again, very operational focus, which is where a lot of our IP play. So it's nice to, it's nice to see. That makes sense.

George D. Schindler: But again, very operational focus, which is where a lot of our IP plays. So it's, it's, it's nice to, it's nice to see. That makes sense. And George, I'll echo everybody's congratulations on the retirement.

Stephanie Price: And George, I'll echo everybody's congrats on the retirement. It's been a pleasure working with you. Thanks a lot, Stephanie; I appreciate it. Likewise.

Speaker Change: That makes sense. And George, I'll echo everybody's congrats on the retirement. It's been a pleasure working with you.

Stephanie Price: It's been a pleasure working with you. Thanks a lot, Stephanie. I appreciate it. Likewise

Paul Treiber: Here next question, come some poll driver from RBC, please go ahead. Oh, thanks very much.

George: Thanks a lot, Stephanie. I appreciate it. Likewise.

Paul Treiber: Your next question comes from Paul Treiber from RBC. Oh, thanks very much. Good morning.

Speaker Change: Your next question comes from Paul Treiber from RBC. Please go ahead.

George Schindler: Good morning. Could you elaborate more in comments about clients having differentiation and differentiated needs here? And then specifically, it seems some of your competitors' results in being all of the places' core. Do you think some of that, some of your competitors have been negatively impacted by that. Evolution in that CGI is relatively better position for that change. Yeah, you know, it's a tough one for me to mention there, but I think where you see some of that, some of those variations, exactly what I'm saying, you know, every client is kind of doing this at a different pace.

Paul Treiber: Unknown Speaker Thank you. Could you elaborate more on your comments about, Unknown Speaker, Unknown Speaker, The Huffington Post, The Huffington Post, The Huffington Post, Yeah, you know, it's a tough one for me to, to mention there? But I think where you see some of that, some of those variations, exactly what I'm saying, every client is kind of doing this at a different pace. And so, you know, but you got to meet your client where they are, and you got to work with them.

Paul Treiber: Thanks very much. Good morning.

Paul Treiber: Thank you.

Paul Treiber: Can you elaborate more on your comments about clients having differentiation and differentiated needs here, and then specifically...

Paul Treiber: It seems some of your competitors' results have been all over the place this quarter. Do you think some of that, some of your competitors have been negatively impacted by that evolution and that CGI is relatively better positioned for that change?

Paul Treiber: So if they're needing a little more consulting, and that's not as much revenue, that's what they need; that's what you're going to give them. If they're ready for that big managed services deal, you got to be there with that value proposition. So they understand that you have to be providing them with that software and service so they can spend less capital, even if they ultimately want to build some surround systems around that, but they're not ready to do that yet.

Speaker Change: Yeah, you know, it's a tough one for me to mention there, but I think where you see some of that...

Speaker Change: Some of those variations, exactly what I'm saying, you know, every client is kind of doing this at a different pace.

George Schindler: And so if, you know, but you got to meet your client where they are, and you got to work with them. So if they're needing a little more consulting and that's not as much revenue, that's what they need. That's what you're going to give them. If they're ready for that big managed services deal, you got to be there with that value proposition so they understand that. You got to be providing them that software service so they can spend less capital, even if they ultimately want to build some surround systems around that, but they're not ready to do that yet.

Speaker Change: And so if, you know, but you got to meet your client where they are.

Speaker Change: and you've got to work with them.

Paul Treiber: So if they need a little more consulting and that's not as much revenue, that's what they need, that's what you're going to give them. If they're ready for that big managed services deal, you've got to be there with that value proposition so they understand that. You've got to be providing them that software and service so they can spend less capital, even if they ultimately want to build some surround systems around that, but they're not ready to do that yet. And so flexibility is a key attribute and that's kind of the hallmark of CGI and working with our clients because we're so client-focused given our proximity model and our understanding. So I don't know if that's...

George D. Schindler: And so flexibility is, is a key attribute. And that's kind of the hallmark of CGI and working with our clients because we're so client focused, given our proximity model and our understanding. So I don't know if that's the case with others. I'm not going to comment on others.

George Schindler: And so flexibility is a key attribute, and that's kind of the hallmark of CGI and working with our clients because we're so client-focused given our proximity model and our understanding. So I don't know if that's, you know, I'm not going to comment on others, but I can tell you that's where we're finding the biggest opportunities. It's also why I think you also see our pipeline going up because of that approach.

Paul Treiber: But I can tell you, that's where we're finding the biggest opportunity. It's also why I think you also see our pipeline going up because of that, that approach. Secondly, could you speak to the environment? Transcribed by https://otter.ai. Some others have called out a slowdown. Transcripts provided by Transcription Outsourcing, LLC.

Paul Treiber: I'm not going to comment on others, but I can tell you that's where we're finding the biggest opportunities. It's also why I think you also see our pipeline going up because of that approach.

George Schindler: And secondly, could you speak to the environment in France? You know, some others have called out a slowdown through June. That's really to the election or whatnot. How do you see any changes to the quarter and how you think about France and the New York. Yeah, so I was just talking to our leader in France. You know, the current situation is, you know, it's not just causing a delay in government as you'd expect, right? As the government forms the independent of the wonderful Olympics that are going on. But the commercial markets are also taking a bit of a wait-and-see approach.

Speaker Change: Can you speak to the environment in France, some others have called out a slowdown through June , have you seen any changes to the quarter and how you think about France in the near term?

George D. Schindler: Yeah, so I was just talking to our leader in France about the current situation, which is, you know, it's not just causing a delay in government formation, as you'd expect, right, as the government forms independent of the wonderful Olympics that are going on. But the commercial markets are also taking a bit of a wait and see approach. What are the, you know, how's this going to shake out?

Speaker Change: Yeah, so I was I was just talking to our leader in France, you know, the current situation is, you know, it's not just causing a delay.

Speaker Change: In government, as you'd expect, right, as the government forms their independent of the wonderful Olympics that are going on. But the commercial markets are also taking a bit of a wait and see approach.

George Schindler: What's, you know, how's this going to shake out? And so if caution was already raining from a macro perspective, I, you know, I think we're seeing the same thing that you're mentioning that France is definitely taking a wait-and-see approach or at least our clients in France are taking a little more that wait-and-see approach, which does have a short-term impact. Having said that, no change in the longer term outlook. You saw the bookings are strong in Western and Southern Europe. And a lot of that, of course, is dominated by France, and in our pipeline continues to grow there.

Paul Treiber: And so if caution was already reigning from a macro perspective, you know, I think we're seeing the same thing that you're mentioning that France is definitely taking a wait-and-see approach, or at least, our clients in France are taking a little more of that wait-and-see approach, which does have a short-term impact. Having said that, there is no change in the longer-term outlook. You know, our bookings are strong in Western and Southern Europe, and a lot of that, of course, is dominated by France, and our pipeline continues to grow there.

Speaker Change: How's this gonna shake out? And so if caution was already raining from a macro perspective, I think what we're seeing the same thing that you're mentioning that France is definitely taking a wait-and-see approach, or at least our clients in France are taking a little more of that wait-and-see approach, which does have a short-term impact, having said that.

Speaker Change: No change in the in the in the longer term outlook, you saw bookings are strong in Western and Southern Europe . And a lot of that, of course, is dominated by France. And, and our pipeline continues to grow there. So I think it's more just a here and now point in time, but

Paul Treiber: So I think it's more of just a point in time, but yes, we are feeling it and seeing it, and you see that in our business. Thanks for taking the questions, and George, enjoy the evening. Thank you. I appreciate it. Your next question comes from Stephen Lee from Raymond James. Please go ahead. Thank you. Just a couple of questions for me.

Unknown Attendee: So I think it's more just a here and now point in time. But, but yes, we are; we are feeling it and seeing it, and you see that in our results. Thanks for taking the questions and George. Thank you. I appreciate it.

Speaker Change: But yes, we are feeling it and seeing it, and you see that in our results.

Speaker Change: Thanks for taking the questions and enjoy the experiment.

Stephen Lee: Your next question comes from Stephen Lee from Raman James. Please go ahead. Thank you. Just a couple of questions for me. Finland, Berlin, Baltics, big jumping margins.

Speaker Change: Thank you, I appreciate it.

Speaker Change: Your next question comes from Stephen Lee from Raymond James. Please go ahead.

Steven Li: Finland, Poland, the Baltics, big jump in margins, is that 16-17%? Is that sustainable or is it a one-time factor? breaking up a little bit in the beginning.

Stephen Lee: Thank you. Just a couple of questions for me. Finland, Poland, Baltics, big jump in margins, is that 16-17%? Is that sustainable or is it a one-time factor? Thanks.

Steve Perron: Is that 16, 17%? Is that sustainable, or 80, one time practically? Thanks. Thank you. Thank you very much. I think that's a good idea. Thank you very much. And then on the AI-related bookings, I just wanted to check. I think I heard you say up 20% sequentially. What is that in dollars? Is it like 300 million dollars in AI bookings? Yeah, no, I'm glad you asked that question because it. What we had was an increase of 20% in the number of engagements, but those engagements are not large. So you don't see anywhere near a 20% increase in bookings.

Speaker Change: Unknown Speaker I'm from Finland, Poland Baltics. Unknown Speaker Finland, Poland Baltics. Thank you. Yeah, it was just it was breaking up a little bit in the beginning. Yeah, so Finland, Poland Baltics. So as you know, we have a lot of strong intellectual property there. And so I mentioned

George D. Schindler: Yeah, so Finland, Poland, the Baltics. As you know, we have a lot of strong intellectual property there. And I mentioned and pointed out the fact that we had some good IP sales there. But, you know, is that sustainable exactly at that level? You know, if they run a very good business there, as you know, we have a pretty good position in the marketplace, which is allowing us to participate in this social and health reform with this IP.

Speaker Change: called out the fact that we had some good...

Speaker Change: Unknown Speaker IP sales there. So

Speaker Change: You know, is that sustainable? Exactly at that level? You know, if they run a very good business, as you know, we have a pretty good position in the marketplace.

George D. Schindler: So, you know, that exact level, I don't know, but that's what we want to be. So, the team's doing a great job, got it. And then on the AI-related bookings, I just want to check. I think I heard you say up 20% sequentially. What is that in dollars?

Speaker Change #104: which is allowing us to play into this social and health reform.

Speaker Change: with SRT.

Speaker Change: So, you know, at that exact level, I don't know, but you know that's what we want to be. So, that's, the team's doing a great job.

Speaker Change: Got it. And then on the AI-related bookings, I just want to check. I think I heard you say up 20% sequentially. What is that in dollars? Is it like $300 million in AI bookings?

George D. Schindler: Is it like $300 million in AI bookings? Yeah, yeah, no. I'm glad you asked that question. Because what we had was an increase of 20% in the number of engagements, but those engagements are not large. So you don't see anywhere near a 20% increase in bookings. And in fact, although we're up obviously on a trailing 12-month basis, the bookings were flattish to even down a little bit in the quarter on AI.

Speaker Change: I'm glad you asked that question because what we had was an increase of 20% in the number of engagements.

Speaker Change: Unknown Speaker But those engagements are not

Steve Perron: In fact, although we're off, obviously I'm a trailing 12 month basis, the bookings were flatish to even down a little bit in the quarter on AI. But the number of opportunities keeping freezing because it's a bit of a tip of the sphere. Everybody's kind of in a different place on AI. They all recognize they want to use it, but they want to use it for business impact. And so they're really taking a very responsible approach, and we're helping them with that. So a lot more engagements, but they're all still pretty small. Thank you. Yeah, that's great.

Speaker Change: So you don't see anywhere near a 20% increase in bookings. In fact,

Speaker Change: Unknown Speaker Although we're up obviously on a trailing 12-month basis, the bookings

Speaker Change: Unknown Speaker We're, we're, we're flattish.

George D. Schindler: But the number of opportunities keeps increasing because it's a bit of the tip of the sphere. Everybody's kind of in a different place on AI. They all recognize they want to use it, but they want to use it for business. Impact.

Speaker Change: to even down a little bit in the quarter on AI, but the number of opportunities keep increasing.

Speaker Change: because it's a bit of tip of the spear. Everybody's kind of in a different place on AI. They all recognize they want to use it, but they want to use it for business.

Steven Li: And so they're really taking a very responsible approach, and we're helping them with that. So a lot more engagement, but they're all still pretty small. Yeah, that's great. Thanks a lot, guys. Your next question comes from Richard Tse from National Bank. Please go ahead.

Speaker Change: Impact, and and so they're really taking a very responsible approach and we're helping them with that. So a lot more engagement but they're all still pretty small.

Unknown Attendee: Thanks a lot, guys.

George Schindler: Yep. Your next question comes from Richard Sase from National Bank. Please go ahead. Yes, thank you. I know of your competitors flagged recently that they're seeing price pressure becoming increasingly common and current in the market. Like what would CGI be seeing? And then, is that kind of something that's tempered given the backdrop? And short term, or is it something more structural here?

Speaker Change: Yeah, that's great. Thanks a lot, guys.

Speaker Change: Your next question comes from Richard Tse from National Bank. Please go ahead.

Richard Tse: Yes, thank you. A number of your competitors have flagged recently that they're seeing price pressure becoming increasingly common. Unknown Speaker, what is the market like like for CGI?

Richard Tse: Yes, thank you. A number of your competitors have flagged recently that they're seeing price pressure becoming increasingly common occurrence in the market like

George D. Schindler: And then is that kind of something that's temporary given the backdrop in the short term, or is it something more structural? Yeah, so here's what, you know, I think there are two answers to this. There's some short-term pricing whenever you have macro environments like we have. I think the more structural is what I've been talking about, and we've been talking about on this call for a while, the ROI-led, you know, we see clients looking for innovations to improve outcomes, which does save them money, with Improved Efficiencies, which does save them money without sacrificing quality, that's what they're looking for. So it's outcomes, both short and long term, more than inputs. It's an overall solution, more than just price or point price.

Richard Tse: What would CGI be seeing?

Richard Tse: And then, is that kind of something that's temporary, given the backdrop, in short term, or is it something more structural here?

George Schindler: Yeah, so here's what, you know, I think it's two answers to this. There's some short term price in any time you have. I think the more structural is what I've been talking about. We've been talking about on this call for a while. The ROI led, you know, we see clients looking for innovations to improve outcomes, which does save them money with improved efficiencies, which does save them money without sacrificing quality. That's what they're looking for. So it's outcomes, both short and long term, more than inputs. It's its overall solution, more than just price or point price.

Speaker Change: Yeah, so here's what, you know, I think it's...

Speaker Change: Two answers to this. There's some short-term pricing any time you have.

Speaker Change: and you have the macro environments like we have right now.

Richard Tse: I think the more structural is what I've been talking about, we've been talking about on this call for a while, the ROI led, you know, we see clients looking for innovations to improve outcomes, which does save them money.

Richard Tse: with Improved Efficiencies, which does save them money without sacrificing quality. That's what they're looking for. So it's outcomes.

Richard Tse: ?both short- and long-term, More Than Inputs ? ?its overall solution, more than just ?

George Schindler: And that's why I mentioned, you know, our investments in CGI, digi ops, our investments in putting IP, whether AI or investments in the global delivery approach. These are the ways that you're going to get that price competitiveness without that unit price input rate discussion that you might be thinking when when somebody calls out pricing. And I'm not saying some of that doesn't happen point in time, but structurally, I think, you know, we actually see clients being far more sophisticated in what they're looking for and how they're looking for. And, you know, I would say that more often than not, the discussion ends up with, are you going to be able to give me the quality with those operational efficiencies, not the other way around.

George D. Schindler: And that's why I mentioned, you know, our investments in CGI DigiOps, our investments in putting IP with our AI, our investments in the global delivery approach. These are the ways that you're going to get that price competitiveness without that unit price input, you know, rate discussion. That you might be thinking when somebody calls out pricing. And I'm not saying some of that doesn't happen at points in time. But structurally, I think, you know, we actually see clients being far more sophisticated in what they're looking for and how they're looking for it. And, you know, I would say that more often than not.

Richard Tse: Price or point price

Richard Tse: and that's why I mentioned, you know, our investments in CGI DigiOps, our investments in putting IP with our AI, our investments in the global delivery approach. These are the ways that you're going to get that price competitiveness.

Richard Tse: without that unit price input, you know, rate discussion that you might be thinking when somebody calls out pricing. And I'm not saying some of that doesn't happen point in time, but, structurally, I think something is possible.

Speaker Change: Unknown Speaker We actually see clients being far more sophisticated in what they're looking for and how they're looking for it. I would say that, more often than not,

Richard Tse: The discussion ends up with, are you going to be able to give me the quality? with those operational efficiencies, not the other way around. [inaudible] Projects. Just kind of wondering if you might be able to elaborate on those costs.

Unknown Speaker: The discussion ends up with, are you going to be able to give me the quality with those operational efficiencies, not the other way around?

Unknown Attendee: Okay, helpful.

Steve Perron: And then to sort of respect to the regulatory following in the MDNA, under the EBIT, sort of margin section within sort of US Federal, you sort of cited a revaluation of cost to complete specific projects, just kind of want to make people elaborate on those costs. Yeah, well, it's just, you know, it's a fixed price project that is taking longer. That's that's that's about as direct as I can get there when I, you know, we don't call out clients or project names, and it was really one project, but it's a big project and we call it out because it did have an impact, but it's largely behind us and we move forward.

Speaker Change: Okay.

Speaker Change: Helpful.

Speaker Change #103: And then just sort of with respect to the regulatory filings in the MD&A, under the EBIT sort of margin section within sort of U.S. federal, you sort of cited a re-evaluation of cost to complete specific projects. Just kind of wondering if you might be able to elaborate on those costs.

George D. Schindler: Yeah, well, it's just, you know, it's a fixed price project that is taking longer. That's about as direct as I can get there when I, you know, we don't call out clients or project names, and it was really just one project, but it was a big project. And we called it out because it did have an impact, but it's, it's largely behind us, and we move forward. [inaudible] Thank you so much.

Speaker Change: Yeah, well, it's just, you know, it's a fixed price project that is taking longer.

Speaker Change: That's about as direct as I can get there. We don't call out clients or project names, and it was really one project, but it was a big project. And we called it out because it did have an impact, but it's largely behind us, and we move forward.

Unknown Attendee: Okay, and you know, it's been a great work with you. All the best in your time. Thank you so much, Regis.

Speaker Change: Ok. Fair enough. And you know, it's been great working with you. All the best in your retirement.

Divya S. Goyal: Julie, we have time for one more question, please. Your next question comes from Divya Goyal from Scotiabank. Please go ahead. Good morning, everyone.

Divya Goyal: Julie, we have time for one more question, please. Your next question comes from Divya Goyol from Scotia Bank. Please go ahead. Good morning, everyone. Thanks for taking my question. So I'm going ahead on this geographic discussion.

Speaker Change: Thank you so much, Richard. Julie, we have time for one more question, please.

Speaker Change: Your next question comes from Divya Goyal from Scotiabank. Please go ahead.

George D. Schindler: Thanks for taking my question. So I'm going ahead with this geographic discussion. I actually wanted to get some more color on the variances in the growth that you're seeing across geography. So when we look at the global technology services players, we see a lot of them benefiting from the growth across international segments. And North America seems to be picking up. But it looks like, in your case, Europe was fed better than North America.

Divya S. Goyal: Good morning, everyone. Thanks for taking my question. So, going ahead on this geographic discussion, I actually wanted to get some more color.

George Schindler: I actually wanted to get some more color on the variances in the ground. You know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know Yeah, so on the geographies in Europe, we saw the same thing, and if you really look at it, it's the larger, the largest geographies, I should say, in Europe are kind of more impact, we saw more impact to the current macro environment.

Divya S. Goyal: On the variances in the growth that you're seeing across geography, so when we look at the global technology services players, we see a lot of them benefiting from the growth across international segments, and North America seems to be picking up, but it looks like in your case, Europe was fed better than North America.

Divya S. Goyal: So if you could provide some color on these variances, and if you could provide some color in terms of international growth, potentially, as some of those geographies continue to grow. Yeah, so on the geographies in Europe, we saw the same thing. And if you really look at it, the larger, the largest geographies, I should say, in Europe, have kind of more impact; we saw more impact on the current macro environment.

Speaker Change: So if you could provide some color on these variances and if you could provide some color in terms of international growth potentially as some of those geographies continue to grow.

Speaker Change: Yeah, so on the, on the geographies in Europe , we saw the same thing. And if you really look at it, it's

Speaker Change: The larger, the largest geographies, I should say, in Europe are kind of more impact, we saw more impact.

Divya S. Goyal: And part of that is because they tend to be larger enterprise clients that are more impacted by the global economy. So it's not just that we're working with a company in France, but that company in France has global operations. Same thing in Germany, same thing in the UK on the commercial side. In some of their smaller geographies, like Finland, Poland, the Baltics, we have some clients there that are more specific to the region. And so they are a little bit more nimble; they're moving a little bit faster.

George Schindler: And part of that's just, they tend to be larger enterprise clients that are more impacted by the global economy. So it's not just that we're working with a company in France; that company in France has global operations. Same thing in Germany, same thing in the UK on the commercial side. But in some of our smaller geographies, Laika, Finland, Bolton, and the Baltics, we have some clients there that are more specific to the region, and so they are a little bit more nimble; they're moving a little bit faster, and so you see our ability to drive some more growth there.

Speaker Change: to the current macro environment. And part of that is just, they tend to be larger enterprise clients that are more impacted by the global economy. So it's not just that we're working with a company in France, that that company in France has global operations.

Speaker Change: Same thing in Germany. Same thing in in in the UK on the commercial side. In some of the smaller geographies like Finland, Poland, the Baltics.

Speaker Change: We have some some clients there that are more specific to the region and so they are a little bit more nimble They're moving a little bit faster. And so you see our ability to to drive some more more growth there But I think again and that gets back to my differentiation Comment from from the from the opening that every client is operating a little bit differently as you know We don't we don't We don't play into some of those International geographies that are going a little faster, but I would I would suggest is maybe a similar Situation there. They're just going to be a little more agile more nimble and a little more faster to Realize some of those green shoots. That's what I would what I would say

George D. Schindler: And so you see our ability to drive some more, more growth there. But I think, again, and this gets back to my differentiation comment from the, from the, from the opening, that every client is operating a little bit differently. As you know, we don't, we don't, we don't play into some of those international geographies that are going a little faster. But I would, I would suggest it's maybe a similar situation there; they're just going to be a little more agile, more nimble, and a little faster to realize some of those green shoots. That's what I would do; what I would do.

George Schindler: But I think again, and that gets back to my differentiation comment from the opening that every client is operating a little bit differently.

George Schindler: As you know, we don't, we don't, we don't play into some of those international geographies that are going a little faster. But I would, I would suggest there's maybe a similar situation there; they're just going to be a little more agile, more nimble, and a little more faster to realize some of those green shoots.

George Schindler: That's what I would, what I would say.

George Schindler: So George, and this second question here on M&A, so over the last few quarters, you've been, you've closed some acquisitions announced a on yesterday. I wanted to get some color in terms of what are the verticals that you, as a company, are targeting, and some of the technologies and skillsets that you're looking at going forward, because in the past discussion, we assumed IP was an important element of this M&A strategy, but looks like a on did not come with an IP here. So trying to understand what we are focused at going forward. Yeah, so not to, it's a great question.

Divya S. Goyal: That's helpful, George. And this second question here on M&A. So over the last few quarters, you've been, you've closed some acquisitions, and announced Aon yesterday. I wanted to get some color in terms of what the verticals that you as a company are targeting and some of the technologies and skillsets that you're looking at going forward, because in the past discussion, we assumed IP was an important element of this M&A strategy, but it looks like Aon did not come with an IP here

George: That's helpful, George. And this second question here on M&A. So over the last few quarters, you've closed some acquisitions, announced Aon yesterday. I wanted to get some color in terms of what are the verticals that you as a company are targeting, and some of the technologies and skill sets that you're looking at going forward? Because

Speaker Change: In the past discussion we assumed IP was an important element of this M&A strategy, but it looks like Aon did not come with an IP here. So trying to understand what are we focused at going forward.

Divya S. Goyal: So trying to understand what we're focused on going forward. Yeah, so now it's a great question, Divya, gives me an opportunity to maybe restate what we're looking for primarily when we're doing M&A are new client relationships with either existing geographies, where maybe we can continue to grow our scale, or new metros. So when we did momentum, it was a new metro market in the southern US, in Miami. When we do Solero, when we do Aon, it's about getting new client relationships. And in Aon's case, it's national security.

George Schindler: Did he gives me an opportunity to, to maybe restate what we're looking for primarily when we're doing M&A, our new client relationships with either existing geographies where maybe we can continue to go our scale or new metros. So when we did the momentum, it was a new metro market in Southern US in Miami. When we do Solero, when we do an A on, it's about getting new client relationships, and in the A on's case, it's national security; in Solero's case, it's credit unions coast to coast that we didn't have before. So it's always now we get plenty, plenty of strong capabilities, whether it's Corb banking in Solero, whether or payments or data and AI with with a on, you get a lot intelligent automation, you get a lot of capabilities there, but it's actually not about a specific vertical.

Speaker Change #106: Yeah, it's a great question Divya, it gives me an opportunity to maybe restate what we're looking for primarily when we're doing M&A are new client relationships.

Speaker Change #106: with either existing geographies, where maybe we can continue to grow our scale, or new metros.

Speaker Change #106: So, when we did the Momentum, it was a new metro market in the southern U.S. in Miami. When we do Solero...

Speaker Change #106: When we do an Aon.

Speaker Change: It's about getting new client relationships, and in the Aon's case, it's national security. In Solero's case, it's credit unions.

George D. Schindler: In Solero's case, it's credit unions, coast to coast, that we didn't have before. So now we get plenty, plenty of strong capabilities, whether it's core banking in Solero, whether we're payments or data and AI. With Aon, you get a lot of intelligent automation; you get a lot of capabilities there.

Speaker Change: coast to coast that we didn't have before.

George D. Schindler: So, it's always, now, we get plenty.

Speaker Change: plenty of strong capabilities, whether it's core banking in a selero, whether we're payments or data and AI, with, with a on, you get a lot intelligent automation, you get a lot of capabilities there.

George D. Schindler: But it's actually not about a specific vertical; it's about building out a metro market across verticals, with all those capabilities. That's what we believe is the right way to continue to build the business for the longer term. And, and so that's what we're looking for. And all those acquisitions fit the bill.

Unknown Attendee: It's about building out a metro market across verticals with all those capabilities. That's what we believe is the right way to continue to build the business for the longer term. And so that's what we're looking for in all those acquisitions; fit the bill. That's very helpful.

Speaker Change: But it's actually not about a specific vertical, it's about building out a metromarket across verticals with all those capabilities.

Speaker Change: That's what we believe is the right way to continue to build the business for the longer term. And so that's what we're looking for, and all those acquisitions fit the bill.

Divya S. Goyal: That's very helpful. If I may ask one small question, and I think I know the answer to it already, but could you provide some sort of, you and one of your comments mentioned that the guidance, the valuations outside are reasonable. Is there a reasonable valuation multiple that the companies are getting a little, Unknown Speaker You know, yeah, it's, Sorry, you broke up there again. Do you have another?

Unknown Attendee: If I may ask one small question, and I think I know the answer to it already, but could you provide some sort of you and one of your comments mentioned that the guidance, the valuations outside as reasonable, is there a reasonable valuation multiple that the companies are getting? You know, yeah, it's sorry. You broke up there at the end. Do you have another? No, no, that's all. I was just trying to understand what the reasonable valuation multiple. Yeah, well, I mean, I could maybe I can answer it this way. I can tell you what an unreasonable valuation is, and that's where we were.

Speaker Change: That's very helpful. If I may ask one small question, and I think I know the answer to it already, but could you provide some sort of, you and one of your comments mentioned that the guidance, the valuations outside are reasonable. Is there a reasonable valuation multiple that the companies are getting a look at?

Speaker Change #107: You know, yeah, it's...

Divya S. Goyal: No, no, that's all. I was just trying to understand what a reasonable valuation multiple is. Yeah, well, I mean, I can, maybe I can answer it this way.

Speaker Change #101: Sorry, you broke up there at the end. Do you have another?

Speaker Change #110: No, no, that's all. I was just trying to understand what's a reasonable valuation multiple.

Speaker Change #105: Yeah, well, I mean, I can, maybe I can answer it this way. I can tell you what an unreasonable valuation is. And that's where we were. We're sellers, we're looking at, at multiples,

George D. Schindler: I can tell you what an unreasonable valuation is, and that's where we were. We're sellers, and we're looking at multiples that don't make any sense and would have taken 50 years for us to get a return on that investment. That doesn't make any sense. And that's where a lot of these sellers were. What you saw is some of these digital transformation companies just had outside multiples that didn't make a whole lot of sense, at least in the context of a CGI in our discipline.

George Schindler: Where we're sellers, we're looking at multiples that didn't make any sense. And what would have taken 50 years for us to get a return on that investment? That makes no sense. And that's where a lot of these sellers were. They were what you saw as some of these digital transformation companies just had outsides, mouth closed. They didn't plan. And that is not where it is. Our historic Steve is somewhere between one time, one time, maybe a little under one time, a little over one time revenue, depending on the margin of the asset, but that's where we see more reasonable risk there.

Speaker Change #109: That didn't make any sense and would have taken 50 years for us to get a return on that investment. That makes no sense.

Speaker Change #109: and and that's where a lot of these sellers were they were

Speaker Change: What you saw is some of these digital transformation companies just had outsized multiples.

Speaker Change: It didn't make a whole lot of sense, at least in the context of a CGI in our discipline, and that is not what it is. Our historic Steve is somewhere between one time...

George D. Schindler: And that is not where it is. Our historic Steve is somewhere between one time and one time, maybe a little under one time, a little over one time revenue, depending on the margin of the asset. But that's, that's where we see it as more reasonable.

Speaker Change: One time, maybe a little under one time, a little over one time, revenue, depending on the margin of the asset, but that's where we see more reasonableness there.

Unknown Attendee: That's all for me. Thank you so much. And congratulations on the diamond. It was great working with you. Thanks a lot.

Divya S. Goyal: That's all for me. Thank you so much and congratulations on your retirement. It was great working with you. Thanks a lot, Divya.

Speaker Change #108: That's all from me. Thank you so much and congratulations on the retirement. It was great working with you.

Kevin Linder: And I will turn the call back over to Kevin Lender for closing remarks. Thank you, Julian. Thanks, everyone, for participating.

Kevin Linder: And I will turn the call back over to Kevin Linder for closing remarks. Thank you, Julie, and thanks, everyone, for participating. As a reminder, a replay of the call will be available either via our website or by dialing 1-877-674-7070 and using the passcode 875394. Additionally, a podcast of this call will be available for download within a few hours. Follow-up questions can be directed to me at 1-905-973-8363. Thanks again, everyone, and I look forward to speaking with you. This concludes today's conference call. You may now disconnect. Unknown Attendee, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Copyright 2020, New Thinking Allowed Foundation [inaudible] Unknown Attendee, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Unknown Shareholder, Un

Divya: Thanks a lot, Divya.

Divya: And I will turn the call back over to Kevin Linder for closing remarks.

Kevin Linder: As a reminder, a replay of the call will be available either via our website or by dialing 1-877-674-7070 and using the pass code 875-394. As well, a podcast of this call will be available for download within a few hours.

Kevin Linder: Thank you Julie and thanks everyone for participating. As a reminder, a replay of the call will be available either via our website or by dialing 1-877-674-7070.

Kevin Linder: and using the passcode 875394. As well, a podcast of this call will be available for download within a few hours. Follow-up questions can be directed to me at 1-905-973-8363. Thanks again, everyone, and look forward to speaking soon.

Kevin Linder: Follow-up questions can be directed to me at 1-905-973-8363. Thanks again, everyone, and look forward to speaking soon.

Unknown Attendee: This concludes this conference call; you may now disconnect. Thank you.

Speaker Change #111: This concludes today's conference call. You may now disconnect. Thank you.

Unknown Attendee: Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah. Yeah, yeah, yeah, yeah, yeah, yeah. yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah, yeah, yeah yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah, yeah yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah, yeah, yeah

Kevin Linder: www.globalonenessproject.org