Q3 2025 CGI Group Inc Earnings Call

Joelle: Good morning, ladies and gentlemen. Welcome to CGI's third quarter fiscal 2025 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, Senior Vice President of Investor Relations. Go ahead, Mr. Linder.

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. Let's go ahead Mr. Linder.

Kevin Linder: Thank you, Joelle, and good morning. With me to discuss CGI's third quarter fiscal 2025 results are François Boulanger, our President and CEO, and Steve Perron, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9:00 A.M. Eastern Time on Wednesday, July 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 Plus 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 to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Thank you, Joel and good morning with me to discuss cgi's. Third quarter fiscal, 2025 results are 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 our available for download along with our Q3 mdna, financial statements and accompanying notes. All of which have been filed with both Cedar plus and Edgar

Kevin Linder: The complete safe harbor statement is available in both our MD&A 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 MD&A contains definitions of each one 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.

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 4 looking statements whether as a result of new information, future events or otherwise

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

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 in 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

in constant currency. The CGI client proximity segments with the strongest growth were UK and Australia at 37%, which incorporates a full quarters revenue of bjss

And I crossed 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 remained strong for our Asia-Pacific offshore delivery, with revenue up 6.4%.

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

From an industry perspective, constant currency revenue growth was led by Financial Services at 9.6% and Government at 8.7% RC, offset by continued softness in Continental Europe, particularly in the MRD sector.

It Revenue grew in 6 of our 8, proximity segment on the strength of continued client, interests for our business solutions, especially with our financial services and energy and utilities clients.

Bookings in the quarter were again over $4 billion, resulting in a book-to-get ratio of 101%. This was led by U.S. commercial and state government at 121%.

Finland, Poland, and baltics at 113%.

Steve Perron: When looking at service type, book-to-bill ratios were 106% for managed services and 96% for business and strategic IT consulting and systems integration. IP also had another strong quarter with a book-to-bill ratio of 127%, driven by significant demand in the financial services at 195% and government at 134%. On a trading 12-month basis, book-to-bill was 107%, with North America at 106% and Europe at 108%. On the same basis, managed services had a book-to-bill ratio of 114%, and the SINC book-to-bill ratio was 98%. On a trading 12-month basis, IP book-to-bill was 113%. Our global backlog reached $30.6 billion, or two times revenue.

And Scandinavia northwest and central east Europe at 106%.

when looking at service type,

Book to build ratios were 106% for managed services.

And 96% for business and strategic IT consulting and systems integration.

IP, also add another strong quarter with a book to build ratio of 127% driven by significant demand in the financial services at 195% and government at 134%.

On the trading 12 months basis.

Book to bill was 107% with North America at 106% in Europe at 108%.

On the same basis, managed services had a book-to-bill ratio of 114%, while the sync book-to-bill ratio was 98%.

On the training 12 months basis, IP book to bill was 113%.

Our Global backlog reached 30.6 billion dollars or 2 times Revenue.

Steve Perron: Turning to profitability, adjusted EBIT in the quarter was $666 million, up 10.5% year over year, for a margin of 16.3%, down 10 basis points due to the impact of recent mergers, which are in the process of being integrated, including restructuring and acquisition-related costs of $84 million. Earnings before income taxes were $552 million, for a margin of 13.5%. Our effective tax rate in the quarter was 25.9%, stable compared to last year, and we expect our tax rate for future quarters to be in the range of 25.5% 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, an accretion of 10% when compared to Q3 last year.

Turning to profitability.

I just did it in the quarter. Was 666. Million up 10.5%. Year-over-year for a margin of 16.3% down 10 basis point 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 effective tax rate in the quarter was 25.9% stable compared to last year and we expect our tax rate for future quarters to win the range of 25.5 to 26.5%.

I just did net earnings worth 470 million dollars of 30 million dollars year over year for a margin of 11.5%.

On the same basis. Diluted EPS was $2.10. An accretion of 10% when compared to Q3 last year.

Steve Perron: 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. We expect to incur approximately $100 million to complete our restructuring program over the remainder of calendar 2025. Turning to cash, we generated $487 million in our cash from operation, representing 11.9% of total revenue, impacted by $97 million in restructuring, acquisition, and related integration payments. DSO was 43 days in the quarter, two 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 stock, and returned $34 million to our shareholders under our dividend program.

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.

We expect to incur approximately $100 million to complete our restructuring program over the remainder of calendar 2025.

Starting to cash.

We generated 487 million in our cache from operation representing 11.9% of total revenue and impacted 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 a business including in gen AI.

286 million to buy back our stock and return, 34 million to our shareholders, under our dividend program.

Steve Perron: On a year-to-date basis, we invested $288 million into our business, including in GenAI, $1.6 billion in business acquisitions, $784 million to buy back our stock, and returned $102 million to our shareholders under our dividend program. Yesterday, our board of directors approved a quarterly cash dividend of $0.15 per share. This dividend is payable on September 19, 2025, to shareholder of records as of the close of business on August 15, 2025. CGI has $2.7 billion in capital resources readily available, with access to more if needed to deliver on our profitable growth strategy. CGI's capital allocation priorities remain consistent, focused on investing back in the business and pursuing accretive acquisitions. Now, I will turn the call over to Francois to further discuss insights on the quarter and the outlook for our business and markets. Francois. Thank you, Steve, and good morning, everyone.

On a year-to-date basis. We invested 288 billion into our business including in Jai.

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 15 cents per share.

This dividend is payable on September 1925 to shareholder of records as of the close of business on August 15th, 2025.

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.

Steve Perron: CGI's performance in the third quarter again demonstrated the value of our resilient mix of services, industry sectors, and global footprint, as well as our ability to proactively manage the fundamentals of our business. Our strategic deployment of capital, in line with CGI's build-and-buy profitable growth strategy, drove our performance in the quarter. CGI's results in the quarter place us in the top quartile of our IT services peer group. Today, I will focus on the first nine months of fiscal 2025, the current market environment, and the outlook. For the first three quarters, revenue was up 8%, or 4.4% on a constant currency basis, to $11.9 billion. Adjusted EBIT was up 7% to $1.9 billion. Adjusted EPS was up 8.4% to $6.18. On a trailing 12-month basis, cash from operations totaled $2.2 billion, continuing to reinforce our financial position to execute on our profitable growth strategy.

Now I will turn the call over to fra 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 and 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.

The current market environment and the Outlook.

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 dollars.

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.

Steve Perron: Delivering quality remained high, and client satisfaction again increased across every dimension we measure. Clients continue to partner with CGI to address their most complex enterprise and ecosystem-wide digitization initiatives. This client trust has driven bookings of nearly $12.8 billion over the first three quarters of the fiscal year, up by more than $560 million compared to the same period a year ago. 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 operational efficiencies, notably through managed services and RIP. In the quarter, we continue to see signs of renewed clients' spending in banking and the broader financial services sector, with year-over-year bookings up by more than $400 million.

Delivering quality remain high.

And client satisfaction again increased across every dimension we measure.

Clients continue to partner with CGI to address their most complex, Enterprise and ecosystem. Why digit why digitization initiatives?

This client trust has driven bookings of nearly 12.8% of the fiscal year up by more than 560 million dollars compared to the same period a year ago.

Backlog. Also grew representing 2 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 operational efficiencies.

Notably, through managed services and R.I.P.

Steve Perron: On a trailing 12-month basis, bookings in this sector increased by more than $1 billion as clients turned to CGI to help modernize core systems and processes. Government sector demand remains strong, with a Q3 book-to-bill of 112%, led by strong wins in U.S. local government. Agencies around the world continue to turn to CGI to help them transform mission-critical applications to more efficiently and effectively deliver government services, including through exploration of commercial best practices. Specific to our U.S. federal operations, while overall procurement volumes and contract values are down compared to historical levels, we are seeing early signs of stabilization. On a sequential basis, bookings in this segment increased by nearly $250 million. CGI remains well-positioned to support a wide range of government missions through our end-to-end offering, notably CGI Advantage, which embeds generative AI, data protection, and cybersecurity.

In the quarter, we continue to see signs of renewed client spending in banking and the broader financial services sector, with year-over-year bookings up by more than $400 million.

On the trailing 12 months basis bookings in this sector increase by more than 1 billion dollars as client turned to CGI to help modernize core system and processes.

Government sector demand remains strong with the Q3 book to Bill of 112.

Led by strong winds in US, local government.

Agencies around the world continue to turn to CGI, to help them transform Mission. Critical applications to more efficiently and effectively deliver government services including through exploration of commercial best practices.

Specific to our U.S. federal operations, while overall procurement volumes and contract values are down compared to historical levels, we are seeing early signs of stabilization.

On the sequential basis. Bookings, and the segment increased by nearly 250 million dollars

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

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, which awarded CGI a $200 million contract extension for the delivery of end-to-end managed services for its case management information and payroll system.

The European Space Agency named CGI to support its new climate monitoring initiative, leveraging cgi's expertise in scientific Data Systems and large-scale processing to enable High Precision traceable curve, observation data.

Systems, including integration of AI driven automation to drive it efficiency, system resilience and enhance cyber security.

Finnish Customs, extended its partnership with CGI to modernize Customs operations and Advance their goals for trade, faster station.

Through cgi's expertise in cyber security data analytics and Regulatory Compliance.

Steve Perron: A prominent Canadian bank extended its commitment to CGI's Wealth360 platform to streamline its advanced portfolio management and trading, allowing advisors to spend more time engaging with customers. The state's Texas Comptroller's Office selected CGI to modernize and unify its core financial systems through the implementation of our cloud-based Advantage platform. NHS Scotland 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. The Federal Aviation Administration selected CGI to develop, deliver, and operate a modernized notice-to-airmen system to help improve aviation safety in the U.S. For this mission-critical FAA project, we are collaborating with Google Public Sector, one of CGI's global alliance relationships. During the first nine months of fiscal 2025, our new bookings from these go-to-market partnerships totaled more than $2.6 billion, up over 120% compared to last year.

Can you back extended its 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 Scotland, 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 1 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.

Steve Perron: In the quarter, we continue to see macroeconomic uncertainty impacting the timing of client decisions, notably for larger enterprise engagements. For example, subsequent to the quarter end, one of the largest banks in Europe selected CGI Inc. as one of its strategic IT partners through its vendor consolidation exercise, a buying trend we see globally. Under the five-year agreement, up to 700 CGI Inc. consultants will deliver a wide range of IT services to manage the bank's in-country IT operations and prepare for future international digital transformation. Across all buying trends, CGI Inc.'s end-to-end offerings continue to position us well as a partner of choice. Specifically, CGI Inc.'s outcome-based value proposition for managed services and IP helps clients generate cost savings and accelerate transformation at scale with lower capital costs and continuous innovation. This focus on realizing business value from digital is front and center in client conversations.

In 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 1 of the largest banks in Europe selected CGI as 1 of its tragic. It Partners through its vendor consolidation. Exercise, a buying Trend. 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.

Steve Perron: In short, they expect partners like us to take accountability for outcomes. This expectation aligns well with CGI Inc.'s delivery track record and our ability to bridge strategy with execution through deep domain understanding, application of emerging technologies, and flexible delivery models, including global capability centers. Looking ahead, client priorities in the public sector globally are centered on cybersecurity, sovereign cloud solutions, and the modernization of mission-critical applications and systems. Within our CGI Inc. payroll segment, agencies are looking to the future and want to engage in discussions about how technology can more cost-effectively enable their missions. Our team is fully engaged in productive discussions to propose bold, outcome-driven ideas. This includes our Momentum ERP, one of two approved government ERP solutions, as it blends commercial application with government mission requirements.

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.

this expectation aligns, well with cgi's delivery, track record and our ability to bridge strategy, with execution to deep domain understanding

Application of emerging Technologies and flexible delivery models including Global capability centers.

Looking at client priorities and public sector globally are centered on, cyber security, Sovereign, Cloud Solutions, and the modernization of mission critical applications and systems.

Within our cjac 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 in 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.

Steve Perron: Across commercial sectors, demand remains high for cloud-enabled migration, platform modernization, traditional, and generative AI, with clients seeking practical use cases grounded in business reality. CGI Inc.'s strong market positioning is validated by our growing pipeline. The managed services pipeline is up by more than 20% year over year, with increases across all major industry sectors. The pipeline of SINC opportunities is up by more than 20% across government, the space sector, and several commercial industries compared to this time last year. The IP pipeline is up more than 10% year over year, with significant increases in solutions that accelerate AI-based automation, application modernization, and cloud migration. To capture this demand, CGI continues to make targeted investment in our talent and offerings. This includes integrating AI and generative AI into our offerings and delivery. Across industries and geographies, AI remains a powerful enabler for modernization, optimization, and transformation.

Commercial sectors. The man remains High.

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.

Steve Perron: For example, in Canada, CGI partnered with a large insurance firm to use AI to accelerate quality engineering, resolve and document helpdesk queries using agentic AI, and advance the development of a claim portal. In Germany, CGI is serving as one of the partners for the European Space Agency AI for Ops program, delivering AI-based software to optimize satellite mission planning and execution. In the U.S., we are working with a manufacturer to help accelerate their modernization with AI-powered processes and agentic automation. In Finland, CGI's Omni 360 Patient Information platform integrates AI directly into health clinician workflows, with an expansion plan with three of the largest social and health regions in the country. In the Netherlands, CGI is providing AI expertise for a gas and electricity network operator to develop new solutions in the area of energy grids, energy technology, and digital transformation.

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 across 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 1 of the partners for the European Space Agency, AI for Ops program, delivering AI based software to optimize satellite Mission planning and execution.

In the U.S., we are working with a manufacturer to help accelerate their monetization with AI-powered processes and agentic automation.

In Finland cgi's, 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.

Steve Perron: 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 SpeedUp, a new platform to digitize and optimize business processes for commercial clients and governments.

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 death of our expertise globally.

Our pipeline of qualified AI opportunities also remains robust, reflecting the continuing, strong demand to embed these capabilities within 4 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.

Steve Perron: Importantly, when combined with CGI's managed services and broader process automation initiatives, such as those enabled by CGI DigiOps, the platform can deliver sustainable double-digit efficiency improvements for clients. CGI also continues to lead in responsible AI governance, including through the European AI Act pledge and the collaboration with government and industry programs in the U.S., Canada, and the U.K. Turning now to the buy side, which remains an integral element of our profitable growth strategy. Integrating accretive mergers to create long-term value for all stakeholders requires rigor and discipline. Our teams continue to finalize recent integrations. In addition, we continue to work through the regulatory and compliance processes to close the merger with ABSID headquartered in France. Our pipeline of additional merger targets remains robust. We have a very active program in terms of sourcing, interactive dialogues, and due diligence assessments.

We 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.

CGI. Also continues to lead and responsible AI governance, including 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.

In addition, we continue to work through the Regulatory and compliance processes to close a merger with absin, a quarter in France.

Our pipeline of additional merger targets remains robust.

Steve Perron: We are committed to making sure that we acquire the right companies for the right price at the right time, all three without exception. CGI's operational strength, stability, and financial capacity will continue to enable us to move quickly with discipline on the right opportunities of all sizes. In closing, we will continue to proactively manage the fundamentals of our business and invest in our build-and-buy profitable growth strategy to further deepen our proximity model, our industry knowledge and technology expertise, our end-to-end offerings, and our global network and scale. We are confident in the resilience of our model, the depth of our client relationships, and the dedication of our talented consultants and professionals around the world. Thank you for your interest and support. Let's go to the questions now, Kevin.

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.

Of our talented consultants and professionals around the world.

Kevin Linder: Thanks, Francois and Joelle. We can now queue for questions.

Joelle: 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 one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Surinder Thind with Jeffries. Your line is now open.

Thank you for your interest and support. Let's go to the questions now. Kevin thanks Franco and 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 lift the handset before pressing any keys.

Your first question comes from surrender. Thind with Jeffrey's your line is now open.

Kevin Linder: Surinder? Hello? All right, Surinder. You're up?

Surrender.

Uh, hello.

All right, surrender.

Surinder Thind: Oh, I apologize. Thank you. The line went staticky for about the last two minutes. I guess where I would like to start is, can you talk a little bit about organic growth and organic growth in the two different segments and what you are seeing there? Just to provide some context, given all of the FX noise as well as the acquisitions.

You're up.

Oh, I apologize. Um, thank you. Um, the the line went, um,

got you for about the last 2 minutes. So, um, I guess we're we're, I'd like to start with is

can you talk a little bit about um, organic growth and organic growth in in the 2, different segments and and what you're seeing there um to just to provide some context given all of the FX noise as well as the the acquisitions

Steve Perron: Okay. I won't talk about the numbers by itself. As you know, we are presenting constant currency growth because, again, it's difficult to split from acquisition and organic. If I'm talking about the environment in general, you know we're still seeing some challenges, for example, still with the tariffs. You know we have still some clients waiting a bit before investing to understand where tariffs will finish with. So we see that a lot in Europe. At the same time, it's bringing a lot of opportunities on the managed services side. On the SINC side, it's still a bit slow, including business consulting also. So we see that, especially in the manufacturing side. On the other side, you know if I'm taking an example, the financial sector, we are seeing good growth on the organic side in that industry, especially in North America.

But like, okay, I won't talk about the numbers by itself. As you know, we are presenting constant currency growth because again, it's difficult to split, 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

Steve Perron: Also, you know I was talking about booking just after quarter end with large banks in Europe. So we are seeing good momentum in the banking side of the business. We saw growth, organic growth in the past, and we will see that also in the future.

Uh, you know, waiting a bit before investing to understand where terrorists 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, we are seeing good growth, uh, on on the organic side, uh, in that industry, uh, especially in North America. And, and also, uh, you know, I, I was talking about a booking just after Porter and with a large banks in Europe. So, uh, we are seeing, uh, good momentum in the banking, uh, side of the business. And so, as we saw growth, uh, organic growth in the past, and we will see that also in the future.

Surinder Thind: That's helpful. Can you talk a little bit about, just switching gears here, a little bit about the partnership strategy? It sounded like maybe a bit more revenues are coming through that channel. Just any color there in any evolution in that part of the strategy?

That's helpful. And then can you talk a little bit about, um,

Steve Perron: You know, it's something that we invested in the last couple of years to promote more our partnership with a large technology company. So it's paying off. We're investing in the training of this technology and certification of this technology. We are talking with them to see how we can better team together in front of clients. So it's paying off, and it will continue, I think, to pay off in the future. So it's a good initiative that we did in the past, and it will give us more dividend even in the future.

The Switching gears here a little bit about the partnership strategy. It sounded like um maybe a bit more revenues are coming through that channel just any color there. Um in in any 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 and 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, 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.

Surinder Thind: I apologize. Any color you can provide in terms of the percentage of bookings or any metric or quantitative measure of that strategy would be helpful, if at all possible.

And and and I apologize just any color you can provide in terms of the percentage of bookings or any metric or quantitative measure of of that strategy um would be helpful if at all possible.

Steve Perron: Well, I think that's the number we gave to you, right? So together. Again, we just need to be clear that's not what we're doing with this technology company, but it's really what we are working together on winning deals. If I'm going back, what was the number? But you know we did say that you know we booked for $2.6 billion in the go-to-market with them. That's an increase of 120% year over year. So that's really the payoff of investing in these relationships.

Well, 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 deals. 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.

That's uh, that's really the payoff of investing in these.

Relationships.

Surinder Thind: Thank you.

Thank you.

Joelle: Your next question comes from Divya Goyal with Scotiabank. Your line is now open.

Your next question comes from DIA Goyo with Scotia Bank. Your line is now open.

Divya Goyal: Good morning, everyone. Good quarter here.

Steve Perron: Thank you.

Good morning, everyone. Um, good quarter here.

Divya Goyal: Francois, if you could provide us a little bit more color in terms of your margins broadly. What are some of the margin expansion strategies, other than restructuring, that you are deploying? You made a ton of acquisitions recently. How do you expect those, as they get integrated, to help with upliftment of the margins? In the same vein, I want to ask, U.S. federal margins, I did notice they are back to Q3 2024 levels. Is there seasonality in those as well?

if you could provide us a little bit,

Steve Perron: Yeah. Thanks, Divya Goyal, for the question. Steve Perron, you can comment also if you want. On the margin, for sure, the integrations of our latest acquisition, and especially BJSS, will help to increase the margins. It is the first full quarter of BJSS. We closed it at the end of the last quarter, and the integration only started. The idea is that when it will be fully integrated, it will improve the margin in our U.K. environment. Same thing for the U.S. We still see some improvement in the U.S. margin, but we still have some work to do on finalizing some of the integration of Doherty. That will also, again, improve the margins. The idea is that when these companies will be fully integrated, we are expecting the margin to go up.

The color in terms of your margins. Um, broadly, like, what are some of the margin expansion strategies that other than restructuring, that your 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 us Federal, margins, I did notice. They are back to Q3 24 levels. Is that seasonality in those as well?

Yeah, so thanks for the question and Steve, you can comment also if you want. Uh, but, uh, you know, on the, uh, on the margins for sure the Integrations of our latest acquisition and specially bjss, uh, will help to, to, uh, to increase the margins. So, so it's the first, uh, full quarter of a bjss, we close it 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

Steve Perron: Yeah, and the effect also of the restructuring.

Steve Perron: Yeah.

Steve Perron: As you know, we are quite disciplined in making sure that availability is there. So we are taking action currently in order to improve some of the continental Europe SBUs and reporting segments.

Okay, 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 Dorothy. 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 a 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

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

Steve Perron: Thank you, Divya Goyal. I think it is our client-centric approach. We are very close to the client, and that is what we are trying always to be, understanding their challenges. When we are delivering, we are delivering with a client approach. For us, it is making a big, big difference. You will see more of this. I was in Europe meeting with a client. We have a good business, and they have 1,200 suppliers. They are feeling it is too much. They are saying that it is difficult to bring synergy when you have that much of suppliers. They want to reduce it. They like our approach. They like the fact that we are client-centric. They also like our partnership approach. We are ready to co-invest in some of these processes with them and bring innovation on the business side.

That's 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 differentiated and continue to win this race? Thank you. But I, I

I think, you know, it it's our client Centric approach. Uh, I think we are very close to the client and that's what we're, you know, we're trying to always to, to be, uh, understanding their, their challenges and and when we're 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, uh, 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

Partners have approached. We know we are ready to co-invest.

Steve Perron: That is really what is helping us to win in these vendor consolidation deals.

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 their deals.

Divya Goyal: That's very helpful. I'll come back to the question. Thanks a lot.

Steve Perron: Thanks, Divyat.

That's very helpful. I'll come back to the questions. Thanks a lot.

Joelle: Your next question comes from Jerome Dubreuil with Desjardins. Your line is now open.

Your next question comes from your line is now open.

Jerome Dubreuil: Hey, bonjour tout le monde. Thanks for taking my question. The first one is kind of a two-pronged question on capital allocation. Accenture recently characterized the M&A environment as being a bit more difficult. I wonder if you agree. If you do, I am wondering what we should be expecting on the buyback side with results improving and the share price lagging the index.

Steve Perron: I do not know with Accenture, but I would say I am not in that same path. I think contrary. I think acquisition is still something that we are looking very closely. I think with evaluations that are, I would say, lower than before. You have a lot of targets that are at a point now that they need to do, taking again decision on their future. I think it is still a pretty active. We have a pretty active pipeline, very good discussion. I think that will continue. No, I am more, I would say, bullish on that side on the acquisition. I am not saying that we will not continue to do some share buyback. You know we have the capacity and capabilities to do both. I do not know if, Steve, you want to say a bit more.

I, I don't know with Accenture but I would say I'm not I'm not I'm not in that same path, I think. Contrary, I think acquisition is still something that we're looking very closely. I think, uh, if I was 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, on the acquisition, I'm not saying that we will won't continue to do some share buyback.

Steve Perron: Look, if you look at just the recent quarters, there was no cash out coming for business acquisition. We invested close to $300 million in share buyback. Obviously, our first priority is to invest in the business. After that, to invest in accretive M&A. Following that, it is the share buyback.

You know, we have the capacity and capabilities to do both. I don't know if Steve, you want to say a bit more? Yeah. Look, if you look at the just the recent quarters, there was no cash out, uh, coming uh, for for business acquisition. And we invested close to 300 million in uh, share BuyBacks. So what obviously, it's all it's. Our first priority is to invest in the business after that to, uh, to invest in a creative m&a and following that it's the share buyback, okay?

Jerome Dubreuil: Great. Second question, an update on those, if possible. There's a big period reported last week saying there's a bit of a shift from cost-cutting to modernization initiatives in the U.S. federal government. I'm wondering if you're seeing the same thing or if it's still very much 100% focused on cost-cutting.

Great, and second question. Uh, like an update on on those, if both, 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 still very much 100% focused on cost cutting,

Steve Perron: Well, for sure. You know, at least all the demand of information, what are we delivering for the clients, by agency, what type of contract we're doing, that's mostly finished. You know, no more question on that side. We're back to having good discussion with our agencies and our clients on a daily basis. Like I said in the past, to do some cost-saving on their side, they will need new systems. They will need more automations. To do that, they'll need services like us to help them to achieve these targets. That's where you're right. That's where we are now. We have a good discussion with them. How can we help them on the cost-saving? What type of automation we can do with them? That's the kind of conversation we have with them. You see the booking did pick up on a sequential basis.

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 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 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 new systems. They will need more automations. Uh and and to do that, they'll need services like us to help them to achieve these targets. So that's where you're right. That's where we are now. We have good discussion with them. How can we help them on on the cost saving? What type of automation we can do with them? That's the kind of conversation. We have with them and and you

Steve Perron: We're still not at the same level that we were a year ago or a year and a half ago. But these discussions are now happening. My expectation is that we will see some improvement in the future.

You see, you know, the booking I did picked up uh, on a sequential basis. We're still not at the same level that we were, uh, a year ago or a year and a half ago. Uh, but these discussion are now happening. And my expectation is that uh, we we will see some improvement in the future.

Jerome Dubreuil: Awesome. Merci beaucoup.

Steve Perron: Okay. Merci.

Awesome.

Okay. Now see

Joelle: Your next question comes from Thanos Moschopoulos with BMO Capital Markets. Your line is now open.

Your next question comes from Thanos Mushu Pulos. With BMO Markets, your line is now open.

Jerome Dubreuil: Morning. Your APAC BU continues to grow faster organically than the rest of the business. Can you speak to the key client geographies that are driving that? Is that heavily weighted to North America or other parts as well?

Morning. Um, your Apex, uh, beu continues to grow faster. Organically even the rest of the business, can you speak to the key client geographies that are driving? That is that heavily weighted to North America or um other parts as well.

Steve Perron: For sure, North America is big. We are moving a lot of activities, GCCs. We won a big contract to create the GCCs in the U.S. That is bringing some growth. I would say also Germany is another place where we are starting to see momentum on India. They have pressure. As you know, we have a lot of manufacturing clients in Germany, for example. We are talking managed services, and we are showing them our capabilities in India. They have a lot of interest. That is also good momentum on that side.

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, we want a big contract to create a gcc's, from from, uh, in the US. So, that's bringing some growth. I would say also, uh, Germany is another place where, you know, we're starting to see a momentum on on, uh, on India. Uh, you know, they, they have pressure as, you know, we have a lot of manufacturing clients in, um, in uh, 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

Of interest. And so, so that's also a good momentum on that side.

Jerome Dubreuil: Great. Then on U.S. federal, it seems like revenues were down a bit organically on sequential and a year-over-year basis. Just to clarify, would the lower BPO volumes be far and away the biggest reason for that, or are there other factors?

Right.

And then on us.

We're down a bit.

Steve Perron: Yes, no, for sure. As you know, we have a large contract, a Visa contract, where for 15-ish countries, we are producing Visa for people who want to come to the U.S. As we know, there is a lot less traveling in the U.S. in general. That has an impact on the Visa processes.

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 uh, that has an impact on the uh, on the Visa processes.

Jerome Dubreuil: Well, last one. Thank you.

Steve Perron: Thanks, Thanos.

Well, that's fine. Thank you.

Thanks.

Joelle: Your next question comes from Richard Tse with National Bank Financial. Your line is now open.

Your next question comes from Richard C. with National Bank Financial. Your line is now open.

Jerome Dubreuil: Yes. Thank you. With respect to acquisitions, can you maybe talk about whether you have any sort of targets on that over the next 12 months? I guess related, how do you rank transformational deals against the metro market deals?

Yes. Uh, thank you uh, with respect to the Acquisitions. Uh, can you maybe talk about whether you have any sort of targets on that over the next 12 months and I guess related? How do you rank transformational deals against, uh, the Metro Market deals?

Steve Perron: will start with the second, the ranking. I do not know what you mean by ranking. We are looking at all of them, small and big. It is like I am always saying, it needs to be the right target at the right price at the right time. Large or small, we will look at them. We are looking at large and small and smaller. That will continue. That is something. Again, as for an outlook, I am not sure if your first question was an outlook on this. It is difficult to say how many we will close in the future. Again, we need to dance, and we need to have come to a right agreement. We have a good funnel, a lot of discussions. We will see how much we can close them in the future.

Uh but I'll start with the second, the rank, if I don't know what you mean by ranking, you know, we are looking at all of them and, you know, a 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 we'll close in the future. Uh, again, we need to

To 2 to dance, and we need to have at the 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, uh, in the future.

Jerome Dubreuil: Okay. That's helpful. Thanks. With respect to AI, there's been a lot of discussion here just on your customers. Just curious as to how CGI Inc. is applying this internally. From that perspective, how do you think it impacts your headcount growth and also implications for your margins as we look ahead here?

Okay, that's helpful. Thanks with respect to is there AI? It has been a lot of discussion here just on like your customers but just curious 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.

Steve Perron: Well, you know what? We are using AI. We were using AI in the past, and we continue to use it. We'll continue to use AI in the future and GenAI. You know, we are using it in our managed services too. Already, you know, we signed deals in the past where we're saying to the clients, you know, we'll give you savings. We'll give you X% of saving, and we need to produce that saving. Some of it is produced by, for example, offshoring or some activities to India. But some of it is also to apply automation tools, including AI. We are using these tools today, and we'll continue in the future to produce savings that we promise to clients, and also naturally to help us improve and do also a profit on this delivery.

We are using AI. We we were using AI in the past and we continue to use a 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 that 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

Steve Perron: We are doing it today, and we'll continue, and even doing some acceleration of it in the future. The impact of headcount, you know, you can expect that you'll see headcount, dollars, or revenue by headcount going up. That will continue to increase in the future. It's normal because our people will become more and more productive using more and more of these tools. Again, overall in AI, you know, we will need, and clients will need, experts to implement these tools. We are the right expert to help them on this.

Improving and doing also a profit on the on this uh delivery. So so we are doing it today and we'll continue and even doing some acceleration of it uh in in the future. So 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 account 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.

Jerome Dubreuil: Okay. Great. Thank you.

Okay, great. Thank you.

Joelle: All right. Your next question comes from Surinder Thind with Stifel. Your line is now open.

Thank you. Your next question comes from Susan Sukumar with Stifel. Your line is now open.

Jerome Dubreuil: Thank you. Good morning. Thank you for taking my question. For my first one, I wanted to touch on your IP strategy and the investments that you are making in this category. How much of your focus here will be on direct sort of in-house R&D versus co-development with clients? I think you mentioned about 40% of your IP is now being driven by AI. From a roadmap perspective, what are some of the other IP product priorities you have beyond AI?

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.

Steve Perron: Well, first of all, on the second question, really the idea was to say 40% of our IP is now, and you have AI embedded in these IPs. That's really what we're saying. Our large IP where we have success, I'll tell you, is like our ERP systems. We have embedded AI in our ERP systems. We have embedded AI in several of our financial sectors, like our trade platform, our wealth platform, our Wealth360 platform. We are implementing AI functionality to help clients to gain even more savings by using some of these AI functionalities. That's really why we were talking about AI. Overall, on the IP side, it's a bit the same answer. Government sector IP is going very well. You saw a couple of announcements we did, the example last quarter with the state of California. This quarter, again, another one with state of California.

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 uh, wealth platform. Uh well 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, uh, what we were talking about Ai and, and overall on the IP side,

A bit, the same answer, you know, government sector IP is, is, is going very well. You saw a couple of announcement. We did the example with last quarter with State of California,

Steve Perron: I talked about a Wealth360 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.

Uh and this this quarter again another 1 with state California. Uh I talked about a well 360 deal uh or extension that we did in uh in Canada. Uh it's it's uh it's really in these 2 sectors that we seeing a very good momentum on our IP Solutions.

Jerome Dubreuil: Great. Thank you. On my second question, I wanted to touch on some of the integration progress with the recent deals that you have done. Is there anything that may have stood out to you with respect to the ongoing integration or rather the growth opportunity with some of these recent deals relative to some of your initial assumptions going into them?

Great.

Thank you. Um, on, on my second question, I wanted to touch on, um, you know, some of the integration programs with, uh, with with the recent deals, uh, that you've done as as 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.

Steve Perron: For sure, what we are seeing is that, I will take an example of the Doherty one in the U.S. We are seeing good momentum on how we can integrate the CGI capabilities with the Doherty relationship that they have with their clients. We have good discussions with some of these Doherty clients to show to them our expertise that we have examples in India. Some of them did visit India and see what we have and what we can bring to the table. Same thing with BJSS. We had the start of this, but still, again, already very good discussion with clients and really to show to them, yes, BJSS, you still have the great relationship and the great delivery from them, but here is what you can also have from the larger CGI. For now, clients are very happy or very impressed about what they are seeing.

Uh, for sure, you know, we what what we're saying is that, you know, I'll take example 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 and they are and and seeing what we have and what we can bring to to the table. Uh, same thing with, uh, with uh, uh djss. 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 of, uh, from them. But here's what you can also have from the larger CGI and for

Are now clients are very uh uh very happy or very impressed about what they're seeing.

Jerome Dubreuil: Great. Thank you for taking my questions. I will pass it along.

Great.

Steve Perron: Thank you.

Thank you for taking my questions. I'll pass the line.

Jerome Dubreuil: Thank you.

Thank you. Thank you.

Joelle: Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open.

Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open.

Jerome Dubreuil: Yeah. Thanks, and good morning. There are a couple of questions here on AI, further on AI. How do you see CGI's competitive position within AI in the IT services market? Meaning, do you see AI as increasing overall competition, or do you think that AI raises the barriers to enter? That would strengthen CGI's position.

Joelle: versus competitors?

Yeah, thanks, and good morning. There's a couple of questions here on AI, further on AI. How do you see CGI's competitive position within AI? And in the IT services market, meaning, you know, do you see AI as increasing overall competition? Or do you think that AI raises the barriers to enter, and that would strengthen CGI's position versus competitors?

Francois Boulanger: Well, I think AI, you know, to use it right and to help the clients, you need to have expertise. I think that's where, you know, our that's what we're bringing at the table. I think, you know, that's why we are doing investment in AI. That's why we're training our people in AI. You know, I'm a strong believer that clients, to be able to implement these tools and use these tools the right way, they'll need experts like us. I think that will bring a lot of new opportunities for us and solutions to our clients.

But 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 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 uh will bring uh a lot of the new opportunities for us and and and solutions uh to our clients

Joelle: In terms of the economics of AI and the potential productivity gains, are your clients starting to see productivity gains from AI? Have they been reinvesting those gains back into other projects, or have they just been using those gains to drive higher ROI on those projects?

In terms of the the economics of AI and and the potential 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 higher Roi on those projects.

Francois Boulanger: I would say that clients, clients will have budget, right? Yes, some will have, and that is more on the environment side. We will have sometimes requests from their CEOs to reduce some of the budget. But at the same time, they want to spend the money. Now with AI, they can do more with less. So what is happening is that some of these, like you are saying, Paul, some of these savings that we can produce by delivering faster, they are turning around and saying, “Oh, finally, I can do more.” Let us accelerate some transformation, for example, that we were not able to do in the past because I still have the run side of the business to happen.

Can do more.

Francois Boulanger: So now we are coming in, we are showing them how we can reduce the run, and they are taking that run saving and investing it back in the transformation side.

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 that'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 Run 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.

Joelle: Okay. Thanks for taking the questions. It's very helpful.

Okay, thanks for taking the questions. Very helpful.

Francois Boulanger: Thanks. Thanks, Paul.

Thanks. Thanks Paul.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Stephanie Price with CIBC. Your line is now open.

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.

Kevin Linder: Good morning. Thanks.

Joelle: Hi, Stephanie.

Kevin Linder: Hi. As you look into the second half of the calendar year here, it sounds like you are definitely seeing some green shoots out there. Just curious about how you think of an overall constant currency organic growth as you look into the back half of the year. Do you think we could have seen a floor already, or do you think that things are starting to turn, but it could take a few more quarters for the bottom?

Good morning, thanks. Um, if you can

Francois Boulanger: Well, I think we're we're we're at the floor, right? But again, the environment, you know, we'll see where the environment is finishing, especially on the tariff. I think we're starting to see an end to it or some agreement across the world. I think when these agreements will be finalized, that will bring to the clients a certain certainty, right, of how much they need to pay and stuff like that and what will be the impact on the economy. When that will be digested, I think that's where we'll see some momentum coming back. I think it will take a couple, still a couple of quarters to arrive to that. Again, I was in Germany and Europe a couple of weeks ago. Like I'm saying, I went to see a bank, and banks were very positive and doing some larger investments.

Hi. If 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 for the bottom.

Yeah, I I think we're we're we're at the floor right? And and you know but 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 once that will be digested, I think that's where we'll we'll see some momentum coming back.

Francois Boulanger: On the manufacturing side, they were there and saying, "Okay. We're looking at the tariffs. We're trying to understand where it will finish too. After that, we'll be able to adjust our budgets and investments budget." That's where we are. Like I'm saying, I think it can take still a couple of quarters.

So I think it will take a couple still a couple of quarters to arrive to that, uh but you know again you know, I was in Germany and Europe a couple of weeks ago, you know, like I am saying I'm seeing, I want 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 to. And after that, we'll be able to adjust our budgets and and and and and and and Investments budget. So so that's that's where we are. Uh and like I'm saying, I think it will, it can take a still a couple of quarters

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

Francois Boulanger: Well, we're very, you know, Momentum is a great tool. Our clients like it. It's a tool that is specific. Let's be clear, right? Momentum is only for government, only for build, only for the federal government. So, when the clients are looking at it, they're saying it's really answering all their needs. So, I'm very, you know, if they are really pushing to go to only two, I think that will create a lot of new opportunities for us in the future. That's for sure.

That make sense. And then you mentioned that you prepared remarks that momentum is 1 of 2 approved government systems. Wonder if you could talk a bit about your approach to winning, share here and if there's any key contracts that are for Renewal or or or how you how you think about momentum going forward in this environment.

Oh, we're very, uh, you know, momentum is a is a great Tool, uh, our clients like it, uh, it's a tool that, you know, is specific like, you know, let's, let's be clear, right? Uh, momentum is only for government only for billed, only for the federal government. So so, you know, when when the clients are looking at it they're saying it's really answering all their needs.

So so I I'm very uh, 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.

Kevin Linder: Great. Thank you very much.

Francois Boulanger: Thanks, Stephanie.

Thanks Stefan. Thank you.

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

At this time, I will now turn the call over to Kevin for closing remarks.

Steve Perron: Thanks, everyone, for participating. As a reminder, a replay of this call will be available either via our website or by dialing 1-888-660-6264 and using the passcode 28135. 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.

Thanks, everyone, for participating. As a reminder, a replay of this call will be available either via our website or by dialing 1-888-626-264 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, 9059738363. Thanks again everyone and look forward to speaking soon.

Francois Boulanger: Thank you.

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

Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.