Capgemini (CAP) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 revenues were €5,377 million, down 1.6% at constant exchange rates year-over-year, with marginal improvement in activity trends after a Q1 low and persistent sector headwinds, especially in Manufacturing.

• Bookings totaled €5,222 million, down 0.8% at constant exchange rates, with a book-to-bill ratio of 0.97, indicating bookings below revenue and softer demand.

• 9M 2024 revenues totaled €16,515 million, down 2.3% at constant exchange rates, reflecting ongoing market softness and client focus on operational efficiencies.

• Manufacturing sector saw accelerated decline, while financial services showed recovery and are expected to return to growth in Q4.

• Strategic focus on AI, GenAI, and Intelligent Industry, with over €600 million in GenAI bookings for the first nine months and a growing pipeline.

Financial highlights

• Organic revenue declined by 2.1% year-over-year in Q3; reported growth was -1.9% after FX impact.

• Public sector grew 3.9% year-over-year; Manufacturing declined by 3.4%; Consumer Goods & Retail down 5.2%.

• UK & Ireland returned to positive growth at +0.4%; North America declined by 3.9%; France decreased by 2.5%; Rest of Europe up 0.6%; APAC & LATAM down 2.2%.

• Strategy and Transformation revenues up 6.5% year-on-year; Operations and Engineering down 3.4%; Applications & Technology down 1.2%.

• 9M 2024 revenues decreased 2.3% both on a reported and constant exchange rate basis.

Outlook and guidance

• FY 2024 constant currency revenue growth target revised to -2.0% to -2.4%, including 40 bps from M&A.

• Operating margin guidance narrowed to 13.3%-13.4%.

• Organic free cash flow target for FY 2024 remains at around €1.9 billion.

• Medium-term growth ambition of 7%-9% CAGR reaffirmed.