CGI Group (NYSE:GIB) reported first-quarter fiscal 2026 results marked by higher revenue, a book-to-bill ratio above 1.0, and what management described as record operating cash flow, while also navigating impacts from a U.S. federal government shutdown and a one-time cost item in India.
Financial results and regional performance
Executive Vice President and CFO Steve Perron said CGI delivered CAD 4.1 billion in revenue, up 7.7% year over year, or 3.4% excluding foreign exchange impacts. Perron attributed growth to recent acquisitions and continued demand tied to CGI’s APAC delivery center, where growth was 5.8%, “mainly through delivery of managed services.”
- UK and Australia: growth of 31%, driven by the acquisition of BJSS, which management described as “transformative” for CGI’s UK operation.
- Western and Southern Europe: growth of 9%, led by the acquisition of Apside, which includes engineering services.
Management reiterated that CGI’s U.S. operations were affected by a federal shutdown during the quarter, noting that the timing and effects were “in line with what we communicated last quarter.” Perron said a sequential improvement is expected next quarter, but described the U.S. federal segment as operating in a “very dynamic environment.”
Bookings, backlog, and mix
CGI reported quarterly bookings of CAD 4.5 billion, representing a book-to-bill ratio of 110%. Perron said bookings were led by:
- U.S. commercial and state government: 169%
- Finland, Poland, and Baltics: 124%
- Scandinavia, Northwest and Central East Europe: 113%
Managed services remained the largest driver, with a 117% book-to-bill in the quarter. Systems integration and consulting (SI&C) posted a 100% book-to-bill, which Perron noted was last reached in the first quarter of fiscal 2025.
Because the shutdown affected U.S. federal bookings, management also discussed performance excluding that segment: Perron said teams delivered a combined 118% book-to-bill excluding U.S. federal.
On a trailing 12-month basis, CGI’s total book-to-bill ratio was 110%, with North America at 122% and Europe at 101%. The company’s contracted backlog reached CAD 31.3 billion, or 1.9 times revenue.
President and CEO François Boulanger said quarterly bookings were up by more than CAD 300 million year over year, with “just over half” comprised of new awards and add-ons. He also said CGI’s win rate on renewals was over 95%. On a trailing 12-month basis, Boulanger said total bookings were up 12% to nearly CAD 18 billion, led by managed services bookings up 16%.
Profitability and cash flow
Adjusted EBIT was CAD 655 million, up 7.1% year over year, with a margin of 16.1%, down 10 basis points. Perron said results were impacted by the U.S. federal shutdown and a CAD 8 million one-time impact related to past service costs for statutory employee benefits in India due to a regulatory change. Including acquisition and integration costs of CAD 26 million, earnings before income taxes were CAD 600 million, for a margin of 14.7%.
The quarter’s effective tax rate was 26.3%, 40 basis points higher than last year, which Perron said was mainly explained by a statutory tax increase in France. CGI expects future quarters to reflect a tax rate of 26% to 27%.
Adjusted net earnings were CAD 461 million (margin 11.3%), with adjusted diluted EPS of CAD 2.12, an 8% increase year over year. Net earnings were CAD 442 million (margin 10.8%), with diluted EPS of CAD 2.03, up 6%.
CGI generated CAD 872 million in cash from operations, representing 21.4% of revenue, which Perron attributed to strong collections. Days sales outstanding were 37 days, improving by 8 days sequentially and 1 day versus the prior year.
Capital allocation, acquisitions, and shareholder returns
Perron said CGI invested CAD 87 million back into the business, including “strategic investment in advanced AI,” spent CAD 106 million on business acquisitions, used CAD 577 million for share repurchases, and returned CAD 37 million via dividends.
The board approved renewal of CGI’s normal course issuer bid (NCIB) through February 2027, authorizing repurchases of up to 19 million shares over the next 12 months. Perron said CGI expects to remain “very active” in repurchases at current share prices. The board also approved a quarterly cash dividend of CAD 0.17 per share, payable March 20, 2026 to shareholders of record as of Feb. 18 (as stated on the call).
Boulanger said CGI closed two mergers during the quarter: a division of Comarch in Europe to expand CGI’s presence in Poland and the Baltic States and deepen public sector expertise and IP, and Online Business Systems in North America to expand CGI’s Canadian footprint and enhance capabilities in AI, digital transformation, and cybersecurity. He welcomed “more than 800 new consultants” from the two deals. In the Q&A, management said AI-related volatility has not changed CGI’s approach to M&A, describing AI as an “enabler” rather than a factor that alters acquisition philosophy.
AI strategy, demand signals, and U.S. federal dynamics
Boulanger said CGI is advancing an AI strategy focused on embedding AI into end-to-end services, AI-integrated platforms and alliances, and uniting talent with AI technologies, while also scaling internal adoption. He said CGI’s AI-enabled software delivery lifecycle is improving engineering speed and quality, and that governance is being reinforced through CGI’s responsible use of technology framework. He described client adoption as moving from experimentation to enterprise integration, though not “fast or direct,” citing data quality, modernization, and governance as prerequisites.
Among alliances, Boulanger referenced a multi-year agreement with Google Cloud related to “agentic AI outcomes with Gemini Enterprise,” and a global go-to-market alliance with OpenAI to help clients deploy AI “securely, responsibly, and at an enterprise scale.” He also said 65% of CGI’s IP solutions incorporate AI-enabled intelligent automation, and that roughly 40% of CGI’s consultants have expertise in advanced AI and data, more than double year over year.
On market conditions, Boulanger said the environment remains complex and uneven across regions and industries, influenced by geopolitical uncertainty and shifting regulatory requirements, while interest in AI remains high. Still, he said CGI is observing gradual improvement in some industries and geographies and anticipates continuing improvement for the rest of the year.
On the U.S. federal segment, Boulanger told analysts the shutdown’s impact was driven by reduced utilization, as CGI kept staff despite an inability to bill during the shutdown, rather than by pricing pressure. He added that, after reopening, CGI redeployed people to contracts, improving utilization and margins. He also characterized U.S. federal as a long-term attractive market, while acknowledging potential near-term “lumpiness” given shutdown risk.
About CGI Group (NYSE:GIB)
CGI Group Inc is a global information technology and business consulting firm that delivers a broad range of services including IT consulting, systems integration, application development and maintenance, infrastructure and network services, managed IT and business process outsourcing. The company works with clients to design, build and operate IT systems and business solutions, with capabilities spanning cloud and hybrid IT environments, cybersecurity, data analytics and artificial intelligence, digital transformation and enterprise resource planning implementations.
Founded in 1976 in Quebec by Serge Godin and André Imbeau, CGI has grown from a regional systems integrator into a multinational professional services organization.
