Capita (LON:CPI) Posts Quarterly Earnings Results

Key Points

• Operational issues weighed on earnings: First-half operating profit fell 32% to £32 million, largely because of £14 million in Civil Service Pension Scheme remediation costs and related pressure on consulting revenue.
• Cash flow and leverage remain strained: Free cash flow was only £3.5 million, net debt increased to £200 million, and Capita expects a £35 million–£50 million free-cash-flow outflow before business exits during the full year.
• Growth initiatives provide a positive offset: Public-sector and pensions revenue, bookings and the order book grew, while Capita continued simplifying its business and investing in AI-led services; analysts maintained an overall “Moderate Buy” view despite the shares trading down 5.2%.

Capita (LON:CPI - Get Free Report) issued its earnings results on Tuesday. The company reported GBX 13.38 EPS for the quarter, Digital Look Earnings reports. Capita had a negative return on equity of 142.88% and a negative net margin of 7.45%.

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

• CSPS remediation materially weakened results: First-half operating profit fell 32% to £32 million, with the Civil Service Pension Scheme contract contributing £14 million of costs and collateral pressure on consulting revenue. Management said resolving the backlog remains its top operational priority, with improvement targets set for September and October.
• Cash flow and leverage remain under pressure: Free cash flow was positive at just £3.5 million, while pre-IFRS 16 net debt rose to £200 million and leverage increased to 1.6x EBITDA. The company expects a £35 million–£50 million free-cash-flow outflow before business exits for the full year.
• Public-sector and pensions growth supported bookings: Public Service revenue rose 2.4% and Pension Solutions revenue increased 24.7%, while the order book grew to £4 billion before the additional £425 million Transport for London extension. First-half contract wins included Synergy, Army Collective Training System, and expanded Primary Care Support England work, although much of the revenue will arrive beyond 2026.
• Capita is simplifying and investing in AI-led services: The private contact-center divestiture has completed, and management expects further cost savings, including £40 million planned for 2026–27. Executives also highlighted nearly 500 AI agents deployed, expanded hyperscaler partnerships, and a new model for operating and governing agentic AI within public-sector and regulated-industry processes.

Capita Trading Down 5.2%

LON:CPI opened at GBX 256 on Tuesday. The company has a debt-to-equity ratio of 1,526.79, a current ratio of 0.54 and a quick ratio of 0.53. Capita has a one year low of GBX 215 and a one year high of GBX 416. The company has a market cap of £306.64 million, a PE ratio of -1.78, a PEG ratio of 0.18 and a beta of 0.87. The firm has a 50-day moving average of GBX 304.19 and a 200-day moving average of GBX 316.62.

Insider Buying and Selling at Capita

In related news, insider Georgina Harvey bought 2,880 shares of the company's stock in a transaction dated Monday, June 15th. The shares were bought at an average price of GBX 343 per share, for a total transaction of £9,878.40. Also, insider Daniel Wosner bought 20,000 shares of the company's stock in a transaction dated Thursday, May 28th. The stock was bought at an average price of GBX 404 per share, for a total transaction of £80,800. Insiders acquired a total of 27,410 shares of company stock worth $10,897,189 in the last quarter. 5.34% of the stock is owned by insiders.

Wall Street Analysts Forecast Growth

A number of research analysts recently weighed in on CPI shares. Peel Hunt reaffirmed a "buy" rating and set a GBX 311 price target on shares of Capita in a research note on Tuesday. Shore Capital Group restated a "buy" rating on shares of Capita in a report on Thursday, April 23rd. Finally, Canaccord Genuity Group lowered their target price on Capita from GBX 900 to GBX 750 and set a "buy" rating on the stock in a research report on Friday, July 10th. Four analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. According to MarketBeat, Capita has an average rating of "Moderate Buy" and an average price target of GBX 432.20.

Capita Company Profile

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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