Capgemini (CAP) Q2 2024 earnings summary

Executive summary

• H1 2024 revenues reached €11,138 million, down 2.6% at constant exchange rates, with Q2 showing improvement over Q1 across most geographies and sectors.

• Operating margin remained stable at 12.4%, with net profit (Group share) up 3% to €835 million and normalized EPS up 1% to €5.88.

• Organic free cash flow improved to €163 million, up €116 million year-on-year.

• The group demonstrated resilience in a soft demand environment, with recovery most visible in North America and gradual improvement across sectors and regions.

• Over 120,000 employees trained on GenAI tools, with 350+ GenAI projects and 2,000 deals in the pipeline.

Financial highlights

• Revenues declined 2.6% year-over-year at constant currency; Q2 revenue was €5,611 million, down 1.9% year-over-year.

• Operating profit was €1,147 million (10.3% of revenues), up 20 basis points year-on-year.

• Net profit (Group share) rose 3% to €835 million; basic EPS increased 4% to €4.88.

• Gross margin improved to 26.7%, a new high.

• Bookings totaled €11,793 million, with a book-to-bill ratio of 1.06 for H1 and 1.09 in Q2.

Outlook and guidance

• Full-year constant currency growth revised to -0.5% to -1.5% (from 0%-3% initially), reflecting slower recovery in key sectors.

• Operating margin target for 2024 remains at 13.3% to 13.6%; organic free cash flow target unchanged at around €1.9 billion.

• Inorganic contribution to revenue expected at around 0.5 point.

• Exit rate for Q4 expected to be low single-digit growth, setting a positive trajectory for 2025, though visibility remains limited.