Capgemini (CAP) Q3 2024 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 in Q3 2024 totaled €5,222 million, down 0.8% at constant exchange rates, with a book-to-bill ratio of 0.97, indicating 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; public sector and strategy consulting showed resilience.

• GenAI bookings reached over €600 million for the first nine months, with a strong pipeline, hundreds of projects delivered, and more than 135,000 employees trained on GenAI tools.

Financial highlights

• Organic revenue declined by 2.1% year-over-year in Q3, a 20 bps improvement from Q2.

• Reported revenue growth was -1.9% for Q3, with FX impact at -30 bps.

• Free cash flow guidance for the year remains at around €1.9 billion, supported by strong cash mobilization and cost discipline.

• Operating margin guidance narrowed to 13.3%-13.4% for the year.

• Public sector grew 3.9% year-on-year; Manufacturing declined 3.4%; Consumer goods and retail contracted by 5.2%.

Outlook and guidance

• Full-year constant currency growth outlook revised to -2% to -2.4%, including M&A contribution of 40 bps.

• Margin target for 2024 trimmed to 13.3%-13.4%; 14% margin not achievable in 2025, but improvement expected.

• Organic free cash flow target of around €1.9 billion confirmed.

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