Capgemini (CAP) H1 2024 earnings summary

Executive summary

• H1 2024 revenues reached €11,138 million, down 2.5% year-over-year on a reported basis and 2.6% at constant exchange rates, with Q2 showing improvement over Q1 across most geographies and sectors.

• Operating margin remained stable at 12.4%, with net profit (Group share) up 3% to €835 million and normalized EPS up 1% to €5.88.

• Organic free cash flow improved to €163 million, up €216 million year-over-year.

• Bookings totaled €11,793 million, with a book-to-bill ratio of 1.06 for H1 and 1.09 in Q2, indicating robust commercial momentum.

• The group demonstrated resilience in a soft demand environment, with recovery most visible in North America and gradual improvement across sectors and regions.

Financial highlights

• Operating profit was €1,147 million (10.3% of revenues), nearly flat year-over-year, with a 20 basis point margin improvement.

• Gross margin improved to 26.7%, a new high, offsetting higher selling expenses.

• Net financial result swung to €20 million income from a €22 million expense in H1 2023, mainly due to higher interest income.

• Net debt stood at €2.8 billion at June 30, 2024, up from €2.0 billion at year-end 2023 but down from €3.2 billion a year ago.

• Basic EPS rose 4% to €4.88.

Outlook and guidance

• 2024 constant currency revenue growth guidance revised to -0.5% to -1.5% (previously 0% to 3%) due to slower recovery in key sectors.

• Operating margin target for 2024 remains at 13.3% to 13.6%; organic free cash flow target unchanged at around €1.9 billion.

• Inorganic contribution to growth expected to be around 0.5 percentage points.

• Exit rate for Q4 expected to be low single-digit growth, setting a positive trajectory for 2025, though visibility remains limited.