Capita (LON:CPI) Announces Earnings Results

Key Points

• Capita delivered a £250m cost savings program, lifted operating margin 140bps to 5.2%, improved profit before tax by 84% and cash conversion to 74%, and says AI is now operational — about two‑thirds of revenue includes AI elements with a pipeline near ~£20bn, supporting expected positive free cash flow of £20–40m in 2026.
• The Contact Centre division is a clear weakness with substantial revenue declines, a goodwill impairment, ~£50m of underutilized property costs and structural losses (notably in Germany), and is expected to remain loss‑making in 2026, prompting lower margin guidance.
• Despite weak liquidity and high leverage (debt‑to‑equity of 409.05 and a quick ratio of 0.53), insiders have recently bought shares and analysts maintain a "Moderate Buy" consensus with an average target of GBX 494.

Capita (LON:CPI - Get Free Report) announced its earnings results on Tuesday. The company reported GBX 49.71 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Capita had a return on equity of 8.48% and a net margin of 0.69%.

Here are the key takeaways from Capita's conference call:

• We delivered a £250m cost savings program, lifted operating margin by 140bps to 5.2%, saw profit before tax improve 84%, cash conversion rise to 74%, and expect positive free cash flow of £20–40m in 2026.
• Management says AI is now operational—the Catalyst Lab and agentification stack are deployed across front/middle/back office work, about two‑thirds of revenue includes AI elements, the pipeline nearly doubled to ~£20bn and win rates have risen above 60%, which management links to future growth and competitiveness.
• The Contact Centre business is a clear weakness with substantial revenue declines, a goodwill impairment, structural P&L issues (notably losses in Germany and ~£50m of underutilized property costs), and is expected to remain loss‑making in 2026 despite ~£50m of cost savings.
• The Civil Service Pension Scheme had severe legacy data and backlog problems on handover (thousands of unpaid or disputed cases), and although service metrics have improved and remediation is underway, it remains a material operational risk and cost for the company.

Capita Price Performance

Shares of LON CPI opened at GBX 287.50 on Wednesday. The company has a debt-to-equity ratio of 409.05, a quick ratio of 0.53 and a current ratio of 0.67. Capita has a fifty-two week low of GBX 168 and a fifty-two week high of GBX 415.50. The stock has a market cap of £327.03 million, a PE ratio of 21.20, a price-to-earnings-growth ratio of 0.18 and a beta of 0.66. The stock has a fifty day moving average of GBX 375.32 and a 200-day moving average of GBX 336.96.

Trending Headlines about Capita

Here are the key news stories impacting Capita this week:

• Positive Sentiment: Senior insiders bought stock — Capita’s CFO Pablo Andres disclosed a ~£100k/36,xxx-share purchase, signaling management confidence. Capita CFO Pablo Andres Increases Stake with £100k Share Purchase
• Positive Sentiment: Other insider buying — Chief People Officer Scott Hill also purchased shares recently, adding to insider-led confidence signals. Capita Discloses Share Purchase by Chief People Officer Scott Hill
• Positive Sentiment: Operational progress cited — Capita says 2025 was pivotal, reporting profit growth, contract wins and acceleration of its AI-led transformation, which supports a mid‑to‑longer term recovery narrative. Capita boosts profit and contract wins as AI-led transformation gathers pace
• Neutral Sentiment: Quarterly results released — Capita reported GBX 49.71 EPS for the quarter, with a net margin of 0.69% and ROE 8.48%; the company published its conference-call transcript and slide deck for investors to review. Capita Earnings & Conference Call Slide Deck
• Negative Sentiment: Near-term margin guidance disappointed — Management guided to lower 2026 margins citing contact-centre weakness and higher costs, which provoked an earlier selloff and remains a near-term headwind. Capita’s shares tumble as it guides for lower profit margin

Analyst Upgrades and Downgrades

Separately, Canaccord Genuity Group reaffirmed a "buy" rating and issued a GBX 900 price objective on shares of Capita in a research report on Monday, December 15th. Three analysts have rated the stock with a Buy rating and two have issued a Hold rating to the stock. According to MarketBeat, the stock presently has an average rating of "Moderate Buy" and an average target price of GBX 494.

Insider Activity

In other news, insider Pablo Andres bought 12,178 shares of the stock in a transaction on Wednesday, March 11th. The shares were acquired at an average cost of GBX 280 per share, for a total transaction of £34,098.40. Insiders own 13.40% of the company's stock.

About Capita

Capita is a modern outsourcer, helping clients across the public and private sectors run complex business processes more efficiently, creating better consumer experiences. Operating across 8 countries, Capita's colleagues support primarily UK and European clients with people-based services underpinned by market-leading technology. We play an integral role in society - our work matters to the lives of the millions of people who rely on us every day.

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