Boardroom Insight

Consulting Sector News and Trends

CGI improves its revenue and margins in the second quarter 

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CGI had a solid second quarter that saw the Canadian professional services giant improve both its top line and profit margins.

CGI focuses on two main areas: IT and business process outsourcing. Its IT business assists companies with new technology rollouts and can manage their corporate network to save time for their in-house technical staff. CGI’s business process outsourcing unit, in turn, handles backoffice workflows such as HR and accounting for corporate clients.

The firm’s revenue amounted to 3.74 billion Canadian dollars in the second quarter, up 0.7% from the year-ago period. Outsourced IT infrastructure management and business services accounted for 54% of CGI’s fee income, while the rest came from consulting projects. Those projects are divided into two main categories: systems integration work and initiatives in which CGI professionals advise companies on how to spruce up their business strategy.

The U.S. was the firm’s largest market in the second quarter, accounting for just under a third of total sales. France was in second place with a 16% share while Canada rounded out the top three with 15%.

CGI’s adjusted EBIT worked out to $628.5 million, a 4.6% increase from 12 months earlier. Put differently, the improvement in the firm’s bottom line was more than four times greater than its sales growth. This hints there is an active effort on the part of CGI’s leadership team to identify cost optimization opportunities and streamline business operations. 

One of the best indicators of a consultancy’s future sales growth is bookings. CGI’s second quarter bookings reached $3.75 billion, with new business accounting for 31% of that figure while contract renewals and upsell deals made up the rest. CGI’s total contract backlog now stands at $26.82 billion, which is nearly double its annual revenues.