CGI Group Inc. (NYSE:GIB) announced its first-quarter fiscal 2026 results, showcasing a robust performance with a revenue increase of CAD 4.1 billion. This marks a year-over-year growth of 7.7%, or 3.4% when excluding foreign exchange impacts. The company reported a strong book-to-bill ratio exceeding 1.0 and record operating cash flow, despite facing challenges from a U.S. federal government shutdown and a one-time cost issue in India.
Financial Highlights and Regional Performance
During a conference call, Executive Vice President and Chief Financial Officer Steve Perron attributed the revenue growth to strategic acquisitions and ongoing demand from CGI’s Asia-Pacific (APAC) delivery center, which experienced a 5.8% growth primarily through managed services. Despite these gains, CGI’s U.S. operations were impacted by the federal shutdown during the quarter. Perron noted that the effects were consistent with previous communications, but he anticipates a sequential improvement in the next quarter, while describing the environment as “very dynamic.”
The company reported quarterly bookings of CAD 4.5 billion, resulting in a book-to-bill ratio of 110%. Managed services led the way, achieving a 117% book-to-bill, while systems integration and consulting (SI&C) posted a 100% ratio, the first time reaching this mark since the first quarter of fiscal 2025. Excluding the U.S. federal segment, the combined book-to-bill ratio stood at an impressive 118%. On a trailing 12-month basis, CGI’s total book-to-bill ratio remains at 110%, with North America at 122% and Europe at 101%.
Profitability, Cash Flow, and Strategic Investments
Adjusted EBIT for the quarter amounted to CAD 655 million, reflecting a year-over-year increase of 7.1%, with a margin of 16.1%. Perron indicated that results were impacted by the U.S. federal shutdown as well as an CAD 8 million one-time cost related to regulatory changes affecting past service costs for employee benefits in India. After accounting for acquisition-related expenses of CAD 26 million, earnings before income taxes reached CAD 600 million, translating to a margin of 14.7%.
The effective tax rate for the quarter was 26.3%, a 40 basis point increase from last year, primarily due to a statutory tax increase in France. Looking ahead, CGI expects a tax rate between 26% to 27% in future quarters. The company reported adjusted net earnings of CAD 461 million, yielding an adjusted diluted EPS of CAD 2.12, an increase of 8% year over year. Additionally, CGI generated CAD 872 million in cash from operations, representing 21.4% of revenue, attributed to effective collections. Days sales outstanding improved to 37 days, a reduction of 8 days sequentially and 1 day year over year.
CGI invested CAD 87 million back into the business, emphasizing strategic investments in advanced AI initiatives. Furthermore, the company allocated CAD 106 million for business acquisitions and utilized CAD 577 million for share repurchases, alongside CAD 37 million returned to shareholders via dividends. The board has approved the renewal of CGI’s normal course issuer bid through February 2027, allowing for the repurchase of up to 19 million shares in the upcoming year.
The board also declared a quarterly cash dividend of CAD 0.17 per share, payable on March 20, 2026, to shareholders of record as of February 18, 2026.
Acquisitions and AI Strategy
During the quarter, CGI completed two significant mergers: one with a division of Comarch in Europe to enhance its presence in Poland and the Baltic States and another with Online Business Systems in North America to expand capabilities in AI, digital transformation, and cybersecurity. This expansion welcomed over 800 new consultants to CGI.
In a question-and-answer session, management clarified that volatility related to AI has not altered CGI’s approach to mergers and acquisitions, framing AI as an “enabler” within their acquisition strategy. CEO François Boulanger detailed CGI’s focus on integrating AI across services, platforms, and alliances. The company aims to combine talent with AI technologies while scaling internal adoption. Boulanger mentioned a multi-year agreement with Google Cloud regarding “agentic AI outcomes” and a global partnership with OpenAI to support clients in deploying AI responsibly at an enterprise scale.
Boulanger highlighted that 65% of CGI’s intellectual property solutions incorporate AI-enabled intelligent automation, with approximately 40% of CGI’s consultants specializing in advanced AI and data, more than doubling from the previous year.
On market conditions, Boulanger acknowledged the complex and uneven landscape influenced by geopolitical uncertainty and evolving regulatory requirements. Despite this, there is a persistent interest in AI, and CGI is witnessing gradual improvement in certain sectors and regions, expecting continued growth throughout the year.
Regarding the U.S. federal segment, Boulanger explained that the shutdown primarily affected utilization rates, as CGI retained staff despite billing challenges. After the reopening, redeployment of personnel to active contracts helped improve utilization and margins. He characterized the U.S. federal market as attractive in the long term, while also acknowledging potential near-term fluctuations due to shutdown risks.
CGI Group Inc. remains a prominent player in the global information technology and business consulting landscape, providing a vast array of services including IT consulting, systems integration, and managed services. Founded in 1976 in Quebec, CGI has evolved into a multinational organization with a strong commitment to innovation and client success.