What CGI Group (GIB) Said on Its Q4 Earnings Call

Key Points

• CGI returned to overall organic growth as fourth-quarter revenue rose 3.3% to C$4.15 billion, with acquisitions contributing about 2.4 percentage points. Bookings reached C$4.5 billion, and the company ended fiscal 2026 with a C$32.1 billion backlog.
• Fourth-quarter net earnings increased to C$461 million, while adjusted diluted EPS rose 8.5% to C$2.31. Full-year cash generation grew 11% to C$2.5 billion, and CGI raised its quarterly dividend 8.8% to C$0.185 per share.
• Management expects the improving growth trend to continue into fiscal 2027, though it offered no formal forecast. CGI cited AI-related productivity gains and said larger acquisition opportunities could be announced in the first half of calendar 2027.

CGI Group NYSE: GIB reported higher fourth-quarter revenue and earnings, with acquisitions driving much of its growth and U.S. federal bookings contributing to a $32.1 billion backlog. Management said it expects further improvement in fiscal 2027, although it did not provide a formal forecast.

Revenue rose 3.3% from a year earlier to $4.15 billion in the quarter, or 2.5% excluding foreign-exchange effects, Chief Financial Officer Steve Perron said on the company’s earnings call. Recent acquisitions contributed approximately 2.4 percentage points of growth. All dollar figures are in Canadian dollars unless otherwise noted.

President and CEO Tim Hurlebaus said CGI returned to organic growth overall in the quarter and expects that trend to continue. He pointed to government and financial services as areas of opportunity, while cautioning that improvement might not follow a straight line.

Bookings and U.S. Federal Growth

Fourth-quarter bookings were $4.5 billion, representing a book-to-bill ratio of 109%. The ratio compares bookings with revenue; a figure above 100% indicates that new bookings exceeded revenue for the period. U.S. federal bookings led CGI’s segments at 185%, while managed services recorded 122% and systems integration and consulting, or SI&C, posted 94%.

For fiscal 2026, bookings totaled $17.5 billion, or 106% of revenue. The company’s $32.1 billion contracted backlog included more than $12 billion expected to be recognized as revenue over the following 12 months, Perron said.

U.S. federal revenue grew 4.4% year over year in the fourth quarter. Hurlebaus said one-time items, including tax credits, affected the segment’s fourth-quarter EBIT margin and that he expects the margin to improve in fiscal 2027. He also said the company’s federal business had not experienced a headwind from concerns about U.S. government purchases from foreign companies, noting that CGI Federal operates under a special security agreement and delivers its work in the U.S. through U.S. citizens.

Among the quarter’s wins, the U.S. General Services Administration awarded CGI a five-year, $250 million contract for application development, modernization and site reliability services across more than 40 acquisition systems. Hurlebaus also cited a $100 million expansion agreement with San Diego County and a 10-year agreement with Sweden’s central bank, Riksbanken.

Profit, Cash and Dividend

Fourth-quarter net earnings rose to $461 million from $382 million a year earlier. Diluted earnings per share increased 30.2% to $2.24. On an adjusted basis, net earnings were $475 million, and diluted earnings per share rose 8.5% to $2.31. Adjusted EBIT increased 1.6% to $678 million, for a margin of 16.4%.

CGI generated $552 million in cash during the quarter and $2.5 billion for the full fiscal year, an 11% annual increase. Perron said the company spent $167 million on share repurchases and repaid $336 million in net debt during the quarter.

The board approved a quarterly dividend of $0.185 per share, an increase of 8.8%. It is payable Dec. 18, 2026, to shareholders of record as of Nov. 27. Perron said CGI ended the quarter with a net debt leverage ratio of one and $3 billion in readily available capital resources.

AI Productivity and Acquisition Plans

Hurlebaus said CGI is using artificial intelligence in activities ranging from software development and requirements tracking to managed services. Productivity gains can reach 40% to 50% in coding and 15% to 20% in design and requirements tracking, he said, while noting that results vary by solution and client.

Asked whether AI-driven efficiencies could reduce consulting revenue, Hurlebaus said some clients are using productivity gains to seek additional work or adjacent services. He acknowledged that other slowdowns have offset some of that demand, contributing to relatively flat growth, but said he expects the company’s improving trend to continue.

CGI completed five acquisitions during fiscal 2026, expanding its presence in Poland, Finland, Canada and the U.S. Hurlebaus said the company has larger acquisition targets in its pipeline and, if discussions stay on track, expects potential announcements in the first half of calendar 2027. He emphasized that timing and returns remain subject to CGI’s acquisition criteria.

About CGI Group (NYSE:GIB)

CGI Inc., formerly known as CGI Group, is a Canadian information technology and business consulting company founded in 1976 in Montréal. It works with businesses and government organizations to plan, build and operate technology and business systems. The company provides IT and business consulting, systems integration, application development and maintenance, managed IT services, and business process services. Its work also covers areas such as cloud computing, cybersecurity, data analytics and digital transformation.

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