Q3 2025 CGI Group Inc Earnings Call
Good morning ladies and gentlemen, welcome to CGI, third quarter fiscal 2025 conference call. I would now like to turn the meeting over to Mr. Kevin Linder SVP of investor relations. Go ahead Mr. Linder.
Thank you, Joel and good morning with me to discuss cgi's. Third quarter fiscal 2025 results. Our franwill, bologna 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 AM Eastern Time on Wednesday, July 30th, 2025. Supplemental slides, as well as a 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 SEDAR and EDGAR.
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 or update or revised any for are looking statements. Whether as a result of new information, future events or otherwise,
The complete Safe Harbor statement is available in both our mdna and press release as well as on cgi.com, 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 mdna contains definitions of each 1 used in our reporting. All of the dollar figures expressed on this. Call are Canadian unless otherwise, noted now I'll turn the call over to Steve to review our Q3 Financial results. Steve
Thank you, Kevin and good day, everyone.
In our third quarter of fiscal 2025, we continue to demonstrate discipline and managing our operations.
We delivered 4.1 billion dollars of Revenue up. 11.4% year-over-year our up 7% when excluding the impact of foreign exchange,
growth was mainly driven by recent business Acquisitions and continued momentum in the financial services sector
Work UK and Australia at 37%, which incorporates a full quarters revenue of bjss and across our us segments, combined growth was 9%, primarily driven by our aeon and Dory merger Investments.
Geographically. Our growth was balanced with North American operation at 7.4% and growth in our European segments at 6.6%.
And demand remains strong for our asia-pacific offshore delivery with Revenue up 6.4%.
From an industry perspective. Constant currency Revenue. Growth was led by financial services at 9.6% and government at 8.7% RC upset by continued softness and Continental Europe, particularly in the mrd sector.
It Revenue grew in 6 of our 8, proximity segments on the strength of continued client, interests, for our business solutions, especially with our financial services and energy and utilities clients.
IP represented 20.6% of our total revenue impacted by the dilutive. Effect of recent business acquisition and lower volumes in our US, Federal IP enabled business process services
Bookings in the quarter were again over 4 billion dollars for a book to get ratio of 101%. Led by us commercial and state government at 121%.
Finland, Poland, and baltics at 113%.
And Scandinavia northwest and central east Europe at 106%.
when looking at service type,
Both to build ratios were 106% for managed services.
And 96% for business and strategic IT consulting and systems integration.
IP also added another strong quarter with a book-to-bill ratio of 127%, driven by significant demand in the financial services sector at 195% and in government at 134%.
On the trading 12 months basis.
Book to bill was 107%, with North America at 106% and Europe at 108%.
On the same basis, managed services at a book to build ratio of 114%. And the sinc book to build ratio was 98%.
On the training 12 months basis.
IP book to bill was 1003 percent.
Our Global backlog reached 30.6 billion dollars or 2 times Revenue.
Turning to profitability.
Adjusted EBIT in the quarter was $666 million, up 10.5% year-over-year, for a margin of 16.3%. This is down 10 basis points due to the impact of recent mergers, which are in the process of being integrated.
Including restructuring and acquisition related costs of 84 million earnings. Before income taxes were 552 million for a margin of 13.5%.
Our incentive tax rate in the quarter was 25.9% stable compared to last year and we expect our tax rate for future quarters to be in the range of 25.5 to 26.5%.
Adjusted. Net earnings were 470 million up 30 million year over year for a margin of 11.5%.
On the same basis, diluted EPS was 2.10 and accretion of 10% when compared to Q3 last year.
Net earnings were 409 million for a margin of 10% and diluted. EPS was $1.82 impacted by restructuring and acquisition related costs in the quarter.
Reminder of calendar 2025.
Turning to cash.
We generated 487 million in our cache from operation representing 11.9% of total revenue and packed it by 97 million. In restructuring acquisition and related integration payments.
Theo was 43 days and a quarter, 2 days better than our Target.
This compared to 42 days in the prior year.
In Q3 we invested 105 million into our business including in Genai.
286 million to buy back, our stocks and return 34 million to our shareholders, under our dividend program.
On the year to date basis, we invested 288 billion dollars into our business including in Genai.
1.6 billion dollars in business acquisitions.
784 million to buy back our stock and return, 102 million to our shareholders under our dividend program.
Yesterday, our board of directors approved a quality cash dividend of $0.15 per share.
This dividend is payable on September 1925 to shareholder of records as of the close of business on August 15 202.
CGI has 2.7 billion dollars in capital resources, readily available with access to more if needed to deliver on our profitable growth strategy.
Cgi's Capital, allocation priorities, remain consistent focused on investing back in the business and pursuing a creative acquisitions.
Now, I will turn the call over to Fran to further discuss insights on the quarter and the outlook for our business and markets. Thank you, Steve, and good morning, everyone. CGI's performance in the third quarter again demonstrated the value of our resilient mix of services, industry sectors, and global footprint, as well as our ability to proactively manage the fundamentals of our business.
Our strategic deployment of capital in line with cgi's build and buy profitable growth strategy, drove our performance in the quarter.
Cgi's results in the quarter. Place Us in the top cordial of Our, IT services peer group.
Today, I will focus on the first 9 months of fiscal 2025.
their current market environment and the also
For the first 3 quarters Revenue was up 8% or 4.4% on the constant currency basis to 11.9 billion dollars.
Adjusted EBIT was up 7% to $1.9 billion.
Adjusted EPS was up, 8.4% to $6.18.
And on a trailing 12-month basis. Cash from operations total 2.2 billion dollars continuing to reinforce our financial position to execute on our profitable growth strategy.
Delivering quality remained High.
And Klein satisfaction again. Increased across every Dimension, we measure clients continue to partner with CGI, to address their most complex, Enterprise and ecosystem. Why digit why digitization initiatives?
This client trust has driven bookings of nearly 1, 2. 8, 4 0,
Backlog also grew, representing two years of annual revenue.
On a trailing 12-month basis cgi's book to Bill stands at 107%.
Driven by sustained demand to help clients realize operation's.
Notably true managed services and rip.
In the quarter, we continue to see sign of renewed clients spending in banking and the broader Financial Services sector with year-over-year. Bookings up by more than 400 million dollars.
On the trailing 12 month basis, bookings in this sector increased by more than 1 billion dollars as client turned to CGI to help modernize core system and processes.
Of 112%.
Led by strong winds in US, local government.
Agencies are around the world, continue to turn to CGI, to help them transform Mission. Critical applications to more efficiently and effectively deliver government services including through exploration of commercial best practices.
Specific to our US Federal operations, while overall, procurement volumes and contract values are down compared to restorical levels. We are seeing early signs of stabilization.
On the sequential basis. Bookings, and the segment increased by nearly 250 million dollars
CGI remains well positioned to support a wide range of government missions through our end-to-end offering notably our IP which embeds generative AI data protection and cyber security.
in the third quarter representative Awards of our strong financial services and government, bookings included, the state of California, awarded CGI at 200 million US dollar contract extension for the delivery of end to end managed services for its case management information and payroll system
The European Space Agency named CGI to support its new climate monitoring initiative.
Leveraging CGI's expertise in scientific data systems and large-scale processing to enable high precision traceable curve observation data.
A premier U.S. financial services company selected CGI to lead the demonetization of its core IT systems, including the integration of AI-driven automation to drive IT efficiency, system resilience, and enhance cybersecurity.
Finnish Customs extended its partnership with CGI to modernize Customs operations and Advance their goals for trade class station.
Through CGI's expertise in cybersecurity, data analytics, and regulatory compliance.
Standards commitment to cgi's wealth 3606060 platform to streamline, its Advanced portfolio management and trading.
Allowing advisors to spend more time, engaging with customers.
The states of Texas Controllers, Office selected CGI to modernize and unify. Its core Financial systems through the implementation of our cloud-based Advantage. Platform NHS cotton engaged CGI to deliver a user Centric. Digital platform that will help patients connect more easily.
With care services. While also driving efficiency through innovation.
And the Federal Aviation Administration, selected CGI to develop deliver and operate, a modernized notice or Airman system to help improve Aviation safety in the US.
For this mission-critical FAA project, we are collaborating with Google Public Sector, one of CGI's Global Alliance relationships.
During the first 9 months of fiscal 2025, our new bookings from these go to market Partnerships total more than 2.6 billion dollars up over 120% compared to last year.
In the quarter, we continue to see macroeconomic uncertainty impacting the timing of client decisions, not only for larger enterprise engagements. For example, subsequent to the quarter end, one of the largest banks in Europe selected CGI as one of its strategic partners through its vendor consolidation exercise and buying trends we see globally.
Under the 5-year, agreement up to 700 CGI, Consultants will deliver a wide range of IT services to manage the banks in country. It operations and prepare for future International digital transformation.
Across all buying Trends cgi's, end to end offerings continue to position us well as a partner of choice.
Specifically cgi's outcome based value proposition for managed services and IP help clients generate cost savings and accelerate transformation at scale with lower Capital costs and continuous innovation.
This focus on realizing business value from digital is front and center in climbing conversations in short, the expect Partners like us to take accountability for outcomes.
Strategy with execution to deep domain understanding.
Application of emerging Technologies and flexible delivery models including Global capability centers.
Looking at client properties and public sector. Globally are centered on, cyber security, Sovereign, Cloud Solutions, and the modernization of mission critical applications and systems within our, CJ Federal segments, agency agencies are looking to the Future and want to engage in discussions about how technology can more cost, effectively enable their missions.
Our team is fully engaged and productive discussions to propose, bold outcome-driven ideas.
This includes our momentum Erp 1 of 2 approved government Erp Solutions, as it lands commercial application with government Mission requirements.
Commercial sectors, the men remains high for cloud enabled, migration platform, monetization traditional and generative AI with clients seeking practical. Use cases grounded in business reality.
CGI is a strong Market. Positioning is validated by our growing pipeline.
The managed Services pipeline is up by more than 20% year-over-year with increases across all. Major industry sectors.
The pipeline for of assign C opportunities is up by more than 20% across government, the space sector and several commercial Industries compared to this time last year.
And the IP, uh, pipeline is more is up more than 10% year-over-year with significant increases in solutions that accelerate AI based automation application modernization and Cloud migration.
To capture this demand CGI continues to make targeted investment in our talent and offerings. This includes integrating Ai and generative, AI into our offerings and delivery.
Cross Industries and geographies. AI remain remains a powerful enabler for modernization optimization and transformation. For example, in Canada, CGI partnered with a large Insurance firm to use AI to accelerate quality, engineering resolve, and document help desk stories, using agentic Ai and advanced, the development of a claim portal.
In Germany, CGI is serving as one of the partners for the European Space Agency's AI for Ops program, delivering AI-based software to optimize satellite mission planning and execution.
In the US, we are working with a manufacturer to help accelerate their monetization, with AI, powered processes, and agentic automation.
In Finland cgi's, Omni 360 platform, integrates AI directly into Health, clinician, workflows with expansion plan with 3 of the largest Social and Health regions. In the country. In the Netherlands, CGI is providing AI expertise for our gas and electricity Network, operator to develop new Solutions, in the area of energy, grids energy, technology, and digital transformation.
And in India, we are leveraging cgi's, agentic AI solution for IT services management and automated ticket management for multiple clients.
In the third quarter, CGI continued to see strong momentum in AI-related wins, demonstrating the depth of our expertise globally.
Our pipeline of qualified AI opportunities also remains robust, reflecting the continuing strong demand to embed these capabilities within core client systems and operations.
Given ongoing client demand, we continue to integrate AI in our IP. Now driving 40% of our overall IP based Revenue.
We also continue to launch new solutions to help client operations, run faster, smarter and more efficiently.
In fact, we announced this week the global launch of CGI.
Speed up a new platform to digitize and optimize business processes for commercial clients and governments.
Importantly when combined with cgi's managed services and broader process automation initiatives, such as those enabled by CGI Digi, Ops the platform can deliver sustainable double digit efficiency improvements for clients.
Going through the European AI act pledge and the collaboration with government in an industry, programs in the US Canada, and the UK.
Turning now to the buy side, which remains an integral element of our profitable growth strategy.
Integrating accretive mergers to create long-term value for all stakeholders requires rigor and discipline. Our teams continue to finalize recent integrations.
And addition we continue to work through their Regulatory and compliance processes to close a merger with epsode, a quarter in France.
Our pipeline of additional merger targets remains robust.
We have a very active program in terms of sourcing interactive dialogues and due diligence assessments.
We are committed to making sure that we are. We acquired the right companies for the right price at the right time. All 3, without exception,
Cgi's, operational, strength, stability, and financial capacity, will continue to enable us to move quickly with discipline on the right opportunities of all sizes. In closing, we will continue to proactively manage the fundamentals of our business, and invest in our build and buy profitable growth strategy to further deepen, our proximity model, our industry, knowledge and Technology.
Expertise.
Our end to end offerings and our Global Network and scale.
We are confident in the resilience of our model, the death of our client relationships and the dedication of our talented consultants and professionals around the world.
Thank you for your interest and support. Let's go to the questions now Kevin. Thanks Fran. Joel We can now queue for questions. Thank you. Ladies and gentlemen we will now begin the question and answer session. Should you have a question please? Press star followed by the 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Did you wish to decline from the polling process? Please press star followed by the 2. If you are using a speaker-phone, please look for the handset before pressing any Keys? Your first question comes from surrender. Thinned with Jeffrey's your line is now open.
The render.
Uh, hello.
All right, surrender.
You're up.
Oh, I apologize. Um, thank you. Um, the the line went, um,
Got a key for about the last 2 minutes. So, um, I guess we're, I'd like to start with is.
Can you talk a little bit about, um, organic growth and organic growth in the two different segments? And what you're seeing there, um, just to provide some context given all of the FX noise as well as the acquisitions.
But like, okay, uh, I won't talk about the numbers by itself. As you know, we are presenting constant currency growth because again, it's difficult to split, uh, from acquisition and then organic. Uh, if I'm talking about the environment in general, uh, you know, we're still seeing, you know, uh, some some challenges example, with still with the tariffs, uh, you know, we have still some some, uh, clients
Uh, you know, waiting a bit before investing to understand where a Tyrus will will finish with. Uh, so we see that a lot in Europe's, but at the same time, it's uh, it's bringing a lot of opportunities on the, uh, on the, uh, managed Services side. Uh, but on the assigned Seaside, it's still a bit slow, including business Consulting also. So we see that especially in the uh, in, in the manufacturing side. Uh, but on the other side, you know, if I'm taking example, the financial sector, uh, we are seeing good growth, uh, on on the organic side, uh, in that industry, uh, especially in North America.
And, and also, you know, I I was talking about a booking just after Porter and with a large banks in Europe. So, we are seeing a good momentum in the banking side of the business. And so as we saw growth organic growth in the past, and we will see that also in the future.
That's helpful. And then can you talk a little bit about, um,
The evolution in that part of the strategy. Yeah. Uh, you know it it's something that uh, you know, we we invest in the last couple of years, uh, to to promote more our, our, our partnership with large large technology company. Uh, so so it's it's paying off. Uh, so, uh, you know, we're investing in in the training of these technology in certification of these technology and we are talking with them to see how we can better team together. Uh,
And in front of clients. So so it's paying off and and it will continue I think to pay off, uh, in the future. So it's, it's a, it's a, it's a good, uh, a good, uh, initiative that we did in the past and it, uh, it's it will give us dividend more dividend even in the future.
And, and, and I apologize. This is any color. You can provide in terms of the percentage of bookings or any metric or quantitative measure of that strategy. Um, would be helpful if at all possible.
But I think that's the number. I I we we gave to you, right? So so together, and again, we just need to be uh, to be clear, that's not uh, what's what we're doing, uh, with these technology company, but it's really what we are working together.
Uh on uh on on winning a deal. So if uh if I'm going back, what was the number? But uh, you know, we did say that uh,
You know, we booked for 2.6 billion dollars the go to market with them so that and that's a increase of 120% over here. So that that's uh that's really the payoff of investing in these relationships.
Uh, thank you.
Your next question comes from DIA Goyo with Scotia Bank. Your line is now open.
Good morning, everyone. Um, good quarter here.
Thank you.
So, if you could provide us a little bit more color in terms of your margins, um, broadly like what are some of the margin expansion strategies that other than restructuring, that you're deploying. You made a ton of Acquisitions recently. How do you expect those as they get integrated to help with upliftment of the margins? And I, in the same vein? I want to ask you as Federal margins, I did. Notice. They are back to Q3 24 levels. Is there seasonality in those as well?
Yeah, so thanks for the question and Steve, you can come and also, if you want. Uh, but, uh, you know, on the, uh, on the margin for sure, the Integrations of our latest acquisition and specially bjss, uh, will help to, to, uh, to increase the margin. So, so it's the first, uh, full quarter of a bjss we close at, at the end of the last quarter and, and the integration only started so. So the idea is that when, when it will be fully integrated, uh, it will improve the margin in in our UK, uh, in our UK environment, same thing for the us. We still see, yes. We see some improvement in the US, uh, in the US, uh, margin. But, uh, you know, uh, we still have some, some work to do on finalizing some of the integration of the Ori. And, and that will also, again, improve the the margins. So, so the idea is that, when these
Companies will be fully integrated. Uh, you know, we are expecting their margin to go up. Yeah. And the yeah, and the effect also of the restructuring. Yeah. Uh, we are, uh, we are, you know, as you know, we're quite disciplined and making sure that, uh, availability is there. And, uh, so we are taking action currently and in order to, uh, improve, uh, some of the Continental Europe, um, uh, spus and
Uh, reporting segments.
That's very helpful. 1 more question that I have is on the vendor consolidation Trend. You noted some wins that you have observed across Europe and broadly on a on a global basis and we've been hearing about these Trends. So could you help us understand what is it about CGI? That is much more differentiated than the global. It players that is helping you with this vendor consolidation Trend. And how should we expect you to stay differentiate it and continue to win this race? Thank you, but I, I
Delivering, we're delivering, uh, you know, with a client approach. So, so, and and for us, it's making a big, big difference. And, and again, uh, you'll see more of this, you know, I was in the, uh, I was in in Europe meeting with a client with. Uh, we have a good business and they have a 1,200 suppliers, and they feeling it's too much. They are saying that, you know, uh, it's difficult to bring Synergy when you have that much of suppliers and um, and and so they want to reduce it and they like our approach. They like the fact that we are client Centric. They like also the approach that, you know, our partnership approach. We know we are ready to co-invest
In in, in uh, in some of these processes with them and bringing Innovation. So, so on the business side. So that's really what it's helping us to to win in these event or consolation there a deal.
That's very helpful. I'll come back to this question. Thanks a lot.
Thank you.
Your next question comes from Jerome with de your line is now open.
Thanks for for taking my question, the first 1 is uh it's kind of a 2-prong question on Capital allocation uh Accenture recently characterized the m&a environment as as being a bit more, more difficult. So I I wonder if you agree, and if you do, uh, wondering what we should be expecting on the buyback side, with results, improving and the share price lagging, the index.
With Accenture, but I would say I'm not. I'm not, I'm not in that same path. I think. Contrary, I think, uh, acquisition is still something that we're looking very closely. I think, uh, eval with evaluations that are, I would say lower than, than before. Uh, and you have a lot of, uh, of targets that are, at the point now that they need to do taking again decision on their future. Uh, I think it's, uh, it's uh, it's uh, still a pretty active. We have a pretty active pipeline, very good discussion and I think that, uh, we'll continue uh, in. Uh, no, I'm more. I would say, uh, bullish on, on that side on on the acquisition, I'm not saying that we will won't continue to do some share buyback. Uh, you know, we have the capacity and capabilities to do both. I don't know if Steve you want to say a bit more? Yeah. Okay. If you look at the just the recent quarters, there was no cap.
Cash out for, for business acquisition and we invested close to 300 million in share buyback. So obviously, it's all it's our. First priority is to invest in the business after that to to invest in active m&a. And following that is the share buyback.
Great, and second question, uh, like an update on on those if Poss if possible. There's uh, there's a big peer reported last week saying there's a
A bit of a shift from from cost cutting to to modernization initiatives. Uh, and the US federal government, I'm wondering if, uh, if you're seeing the same thing, uh, or or if it's, it's still very much 100% focused on cost cutting,
But for sure, you know, you know, at least all the, the demand of, of information, what are we delivering for, for the clients bio agency, what type of contract we're doing? That's mostly finished and, and, you know, no no more question on that side.
And and, uh, and so we're back to, you know, having good discussion with the, our agencies and, and our clients, uh, on a daily basis. Like I said, in, in the past, right? You know,
To do some cost saving on their side, they will need a new system. They will need more automations.
Awesome.
Okay. Now see
Your next question comes from Thanos. Mushu pulos with BMO Capital markets, your line is now open.
Morning. Um your APAC uh bu continues to grow faster organically than the rest of the business. Can you speak to the key client geographies that are driving? Mass, is that heavily weighted to North America or um other parts as well?
Uh, for sure North America is, is, is big. Uh, and and, uh, you know, we're, we're, we're moving a lot of activities. Gcc's, you know, we, we, we, we won a big contract to create a gcc's, from, from, uh, in the US. So, that's bringing some growth. I would say also, Germany is another place where, you know, we're starting to see a momentum on, on, on India. Uh, you know, they, they have pressure as, you know, we have a lot of manufacturing clients in, um, in in Germany Pi for example. And they, you know, we are talking managed services and we're showing them our capabilities in India and they have a lot of interests. And so, so that's also a good momentum on that time.
Right. Um, and then, on US Federal, uh, it seems like revenues were down a bit. Um, organically on sequential in a year-over-year basis, just to clarify with the lower BPO volumes be Far and Away the biggest reason for that or were there other factors? Yes. Know for sure. You know, as you know, we have a large contract Visa contract, where for 15- countries, and we are producing visa for for people who wants to come to us. And as we know, right lot less traveling in the US in general. And so that has that has an impact on the uh, on the Visa processes.
Well, that's fine. Thank you.
Thanks s.
Your next question comes from Richard C with National Bank Financial, your line is now open.
Yes. Uh, thank you. Uh, with respect to acquisitions, could you maybe talk about whether you have any sort of targets on that over the next 12 months? And I guess related, have you ranked transformational deals against the metro market deals?
Uh, but I'll start with the second, the rank, if I don't know, what do you mean by ranking? You know, we are looking at all of them and, you know, small and big and, you know, it's like I'm always saying it's it needs to be the the right target at the right price at the right time. So, so large or or small, we'll look at them. Uh, and we are looking at large and Smalls and and smaller, uh, and that will continue. So, so, uh, that's, that's something, uh, and again, as for an Outlook, and I'm not sure if your first question was an outlook on on this, uh, you know, I it's difficult to say, how many, how close will close in the future. Uh, again, we need to 2 to dance and we need to have at, uh, come to to write agreement. So, so but we have, uh, a good funnel, a lot of discussions and so, uh, we'll, uh, we'll see how much we can close them.
In the future.
Okay that's helpful. Thanks with respect to. Those are AI it has been a lot of discussion here just on like your customers but just curious that as to how CGI is applying this internally. And uh from that perspective, how do you think it impacts your headcount growth and also implications for your margins. As we we look ahead here.
Yeah, but you know what? We are using AI. We we were using AI in the past and we continue to use. It will continue to use AI in the future and and gen Ai. And you know we are using it in our managed services to know already. You know we we signed deals and in the past where we're saying to the clients, you know, we'll give you savings, we'll give you X percent of saving and we need to produce at saving. Some of it is produced by example offshore ring or some activities to India, but some of it is also to apply automation tools including Ai and so we are using these tools today and we'll continue in the future to produce a savings uh that we promise to clients and also naturally to help us of improving and doing also a profit on the on this delivery. So so we are doing it today and we'll continue and even doing some acceleration.
The impact of a headcount you know, you know, you can expect that you'll see uh you know headcount or you know dollars or Revenue by headcount going up that will continue to uh to increase in the future. Uh
And it's normal because our people will become more and more productive using more and more of these, uh, these tools. So, uh, and and again, overall in AI, you know, where we will need and clients will need expert to implement these uh these tools. And we are the right expert to help them on this.
Okay, great. Thank you.
Thanks, your next question comes from. Susan sukumar with stifel your line is now open.
Thank you. Good morning, Jensen. Uh, thank you for taking my question. Um, from my first 1 I I wanted to touch on uh your IP strategy and and the Investments that you're making in this category. Um, how much are you focused here? Will be on Direct sort of In-House R&D versus code development with clients. And I think you mentioned, uh, about 40% of your IP is now being driven by AI, uh, from a road map perspective. Uh, you know, what are some of the other? Um, IP product priorities, you have Beyond AI.
Yeah, well, first of all on the second question, the, the really the, the idea was to say 40% of our IP is now and you have ai embedded in in these IP. So so that's really what we're saying. And and our large, our IP where we have success. I'll tell you is like our Erp systems, uh, and we have embedded AI in our Erp systems. Uh, we have embedded Ai and several of our uh, Financial uh, financial sector, like our trade platform. Our
Wealth platform. Uh wealth 360 platform. We are implementing AI uh functionality uh to help clients to to gain even more savings uh by using some some of these AI functionality. So so that's really what we're talking about Ai and and overall on the IP side,
A bit, the same answer. You know, government sector IP is doing very well. You saw a couple of announcements. We did the example last quarter with the State of California.
And this quarter again, another one with the state of California. I talked about a well 360 deal or extension that we did in Canada. It's really in these two sectors that we're seeing very good momentum on our IP Solutions.
Great.
Thank you.
Um, on my second question, you wanted to touch on, um, you know, some of the integration programs with, uh, with with the recent deals, uh, that you've done, is there anything that that may have stood out to you, with respect to, you know, the ongoing integration or or rather the growth opportunity with uh with some of these recent deals uh relative to some of your initial assumptions uh going into them.
Uh, for sure, you know we what what we're saying is that, you know, uh I'll take Example The Authority 1 in the US. We are seeing a, a good momentum on, on, on how we can integrate the CGI capabilities with the authority relationship that they have with their clients. Uh, and and we have good discussions with, uh, some of these Authority clients to show to them our expertise that we have example in India. So some of them did visit India and, uh, and seeing what we have and what we can bring to to the table. Uh, same thing with uh, with uh, uh djss and we had the start of this.
But still again, already very good discussion with clients and really, to show to them, you know? Yes. Uh, bjss you'll still have the, the great relationship and the great delivery, uh, from them. But here's what you can also, uh, have from the larger CGI. And for now clients are very, uh, uh, very happy or very impressed about what they're seeing.
Great. Thank you for taking my questions. I'll pass the line.
Thank you. Thank you.
Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open.
You see, AI is increasing overall competition or do you think that AI raises the barriers to enter and then that would strengthen cgi's position versus competitors?
All right. I think AI, you know, to to use it, right? And and and to help the clients you need to have expertise and I think that's where you know our our that's that's what we we're bringing uh at the table. Uh and I think you know, that's why we are doing investment in AI, that's why we're training our people in Ai. And, you know, I'm, I'm a strong believer that clients to be able to uh to implement these tools and use these tools the right way. They'll need expert like us and so so I think that uh that's will bring uh a lot of a new opportunities for us and and and solutions to our clients.
Productivity gains are your clients.
Starting to see product in the gains from Ai and then have they been reinvesting. Those gains, you know, back into other other projects or have they just been, um, you know, using those gains to drive, just High higher Roi on those projects.
I I I would say that clients, you know, you know, clients, you know, will have, you know, budget, right? And, and, you know, uh, yes. Some you'll have and that's more on the environment side. You know, we'll have some sometimes, uh, you know, uh, requests from their CEOs to reduce some of the budget. Uh, but at the same time, you know, they want to spend the money and and now with AI, they can do more.
With less so. So it's really, you know what, what's, what's happening is that some of these, uh, uh, like you're saying Paul, uh, some of these savings that we can produce by delivering uh faster, uh, they're turning around and saying, oh, finally I can do more and let's accelerate some transformation for example that we were not able to, to do in the past because, you know, I still have the uh, the wrong side of the business to happen. So now we're coming in, we're showing them how we can reduce the Run, uh, and and they're taking that uh, run saving and uh, investing it back in the transformation side.
Okay, thanks for taking the questions, very helpful.
Thanks. Thanks Paul.
Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from Stephanie Price with CIBC; your line is now open.
Good morning. Thanks. Um, so if you could, hi, as you look into the second half of the calendar year. Here, it sounds like you're definitely seeing some green shoots out there. Just curious about how you think about overall constant currency organic growth. Um, as you look into the back half of the year, do you think we could have seen a floor already? Or do you think that, you know, things are starting to turn but it could take a few more quarters for the bottom.
Yeah, I I think we're we're we're we're at the floor, right? And and you know but and again the environment you know we're we'll see where the environment is is finishing. Especially on that high risk. I think we're starting to see an end to it or some agreement across our world. And I think when these agreement will be finalized uh you know, that will bring to the clients uh you know, a certain certainty, right of how much they need to pay and stuff like that. And what will be the impact on the economy and 1? That will be digested. I think that's where we'll we'll see some momentum coming back.
Uh so I think it will take a couple still a couple of quarters to arrive to that, uh, but uh, you know, uh, again, uh, you know, I was in Germany and Europe, a couple of weeks ago, you know, like I'm saying I'm seeing, I went to see a bank and Bank were very positive and and and doing some uh, larger Investments. But on the manufacturing side, you know, they were there and saying, ah, okay, we're looking at the terrorists, we're trying to understand where it will finish too. And after that we'll be able to adjust our budgets and and and and and and Investments budget. So so that's that's where we are. Uh and like I am saying, I think it will, it can take a still a couple of quarters.
Makes sense.
Wondering if you could talk a bit about your approach to winning? Share here if there are any key contracts set up for renewal, or how you think about momentum going forward in this environment?
The momentum is only for government only for Bill only for the federal government. So so you know, when when the clients are looking at it, they are saying, it's really answering all their needs.
So so I I'm very uh, you know, if they are really pushing to go to only 2, I think that will create a lot of uh, new opportunities for us in the future, that's for sure. Great, thank you very much.
Thanks Tiffany. Thank you.
There are no further questions at this time. I will now turn the call over to Kevin for closing remarks.
Thanks, everyone, for participating. As a reminder, a replay of this call will be available either via our website or by dialing 1-888-866-0626 and using the passcode 28135. 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 soon.
Thank you.
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