CGI earnings beat estimates as companies look to digitize and modernize
MONTREAL -- Information technology firm CGI Inc. reported an increase in its second-quarter profit from a year ago, saying the rise was on the back of a steady growth in bookings as clients strengthened digitization efforts during the pandemic.
The rise in profits came as CGI reported a revenue this quarter totalling nearly $3.08 billion, down from $3.13 billion a year ago.
"Given the positive market dynamics and strong bookings in the last few quarters, we would like to reiterate our expectation of returning to year-over-year revenue growth in the second half of fiscal 2021," said Francois Boulanger, chief financial officer of the Montreal-based company.
"We will remain disciplined in investing our cash and are ready to deploy our substantial capital capacity on increasing acquisitions."
CGI earned $341.2 million or $1.34 per diluted share for the quarter ended March 31, compared with a profit of $314.8 million or $1.18 per diluted share in the same quarter last year.
Excluding acquisition-related integration and restructuring costs, CGI says its adjusted profit was $1.35 per diluted share, up from $1.26 per diluted share in the same quarter last year.
The company was expected to report $1.34 per share in adjusted profits on $3.08 billion of revenues, according to financial data firm Refinitiv.
The technology and business consulting firm said bookings in the quarter were $3.89 billion, up from $2.78 billion a year ago, adding that bookings increased in every one of its service offerings.
Chief executive officer George Schindler said the COVID-19 pandemic has made improving online experiences a priority for companies, leading to robust demand for CGI's services.
"We do expect that to continue," said Schindler, who fielded questions from shareholders about how the organization's second-quarter results will translate in the long term.
"It's very clear that we're still in the early stages of the digital transformation that many of our clients will have to go through."
Schindler listed large-scale projects around data modernization with a U.S.-based media firm and a project around blockchain implementation with a top Canadian bank as examples of some of the work CGI was taking on. He also pointed to factory automation efforts that CGI is helping implement with a major German automaker.
The company said it saw particular revenue strength in its operations in central and eastern Europe, as well as the Asia-Pacific region and in North America.
Schindler said the company's aspirations remain to double its size in the next five to seven years, and said the type of demand around IT modernization caused by the pandemic fits in CGI's operating sweet spot.
"Clients more than ever are open to these new ideas and new partners, and that's where some of our new work comes from," said Schindler.
"Many of our clients are recognizing that there's technical debt that has been built up that they thought they could get around because they had a slightly longer runway to get there, and I think that the compression and acceleration (from the pandemic) has caused this IT modernization."