Organic revenue growth accelerated in Q2 21 (+12.9%) thanks to strong demand for the digital transformation. Capgemini posted growth in all verticals, all geographic areas and all businesses. In H1 21, the operating margin reached 12% of revenue (1.2pt) thanks to the strong top line (+7.1% organically), higher utilisation rate and the cost synergies related to Altran. Capgemini revised upwards 2021 revenue growth at constant currency, the operating margin and organic free cash flow.
Companies: Capgemini (CAP:EPA)Capgemini SE (CAP:PAR)
The trend in organic revenue (+1.7%) was better than expected in Q1 21, while the return to organic growth was anticipated in Q2 21. An improvement in activities was seen in all sectors and all geographic areas. The group employs a strong portion of employees in India and Brazil where the COVID-19 pandemic is severe. Capgemini has not had operational disruption up to now and does not see any issue in the coming weeks. 2021 guidance is maintained.
In Q4 20, the decrease in organic revenue slowed sequentially. The commercial activity was strong with a book-to-bill ratio of 121%. In 2020, Capgemini beat expectations with an operating margin of 11.9% of revenue (-0.4pt), which is above the high range of guidance. Organic free cash flow was strong (above €1bn). The outlook is positive with the confirmation of organic revenue growth returning in Q2 21 and an operating margin at 2019’s level in 2021.
Companies: Capgemini SE
In Q3 20, the decrease in organic revenue slowed significantly (-3.6% vs -7.7% in Q2 20). This was attributable to all sectors, geographies and business lines. Digital and cloud services continued to grow by more than 10%. The integration of Altran is on track and the combined group launched three joint offerings in the market. For 2020, guidance was confirmed. Management is targeting a turnaround in organic revenue growth in Q2 21.
Capgemini had a rather good H1 20 given the significant decrease in organic revenue in Q2 20 (-7.7%) due to the lockdown. In H1 20, organic revenue decreased by 3.4% and the decline of the operating margin (-0.6pt to 10.8% of revenue) was limited thanks to lower selling expenses (mainly travel costs) and the control of G&A costs. The order intake was satisfactory in H1 20. 2020 guidance is globally a positive sign of the group’s adaptation.
The COVID-19 pandemic had a modest impact on the group’s activities in Q1 20. Organic revenue growth was +2%. This resulted from the ability of the group to implement remote working for 95% of its headcount worldwide in less than three weeks and a rather well-balanced revenue breakdown. Management believes that cost savings should enable an improvement in the operating margin by 100bp (12.3% of revenue in 2019) if the economic activity resumes gradually in Q3-Q4 20.
As expected, Capgemini ended the year 2019 on a low note. Organic revenue growth slowed strongly in Q4 19 (+2.2% vs +4.9% in 9 months 19) and organic growth was slightly below the low range of guidance in FY2019 (+4.2% vs +4.5%). Growth was fuelled by digital & cloud while the rest of the business decreased at a higher pace yoy. The positive mix related to digital & cloud contributed to support the operating margin (+0.2pt to 12.3% of revenue).
Capgemini barely succeeds in its cash offer on Altran Technologies with 53.57% of the shares and at least 53.41% of the voting rights. It is a narrow result but positive in a long-term view. Capgemini has a foothold in the customers’ R&D process and industrialisation phase with the consultants of Altran Technologies. The question mark is on the synergies. There is no reason for the amounts to change significantly but the timing to deliver could be longer than initially estimated.
Organic revenue growth was solid in Q3 19 (+5% vs +4.9% in H1 19). The picture was positive in all geographic areas, including North America where revenue growth improved following a poor Q2 19. The disappointment came from the announcement of a slowdown by the end of the year and the downgrade of revenue growth to the low range of guidance (+5.5% at constant currency, c.+4.5% organically). Conversely, the target of an operating margin of 12.3-12.6% of revenue is unchanged.
At constant currency, revenue growth was solid in H1 19 (+4.9%, o/w +4.7% in Q2 19 and +5% in Q1 19). Capgemini benefited from a strong development in Europe, driven by the UK and France which offset the slowdown in North America. The operating margin rate improved by 0.5pt to 11.4% of revenue. 2019 guidance is confirmed. Recently, the activist investor Elliott Management has built up a position in Altran Technologies. Capgemini said it does not intend to increase the offer price.
The proposed acquisition of Altran Technologies is a very positive operation for Capgemini. It brings highly-skilled consultants in R&D and high-tech engineering services in various sectors. The cash offer is not at an exorbitant price considering the market growth potential (+9%/year on average in 2017-22) and Altran Technologies’ operating margin is similar to that of Capgemini’s. The acquisition should be funded by cash and new debt (very probably at low cost). There are significant synergies
Organic revenue increased by +5% in Q1 19 (vs +6.1% in Q1 18 and +5.7% in Q4 18). In the US, organic revenue growth was softer than expected and the group is anticipating an acceleration in H2 19 thanks to some positive developments assumed in the insurance, retail and manufacturing sectors. All in all, Capgemini maintained its 2019 guidance.
Capgemini met expectations in FY2018. Organic revenue grew by 6.2% thanks to the development of digital and cloud services (>+20% at constant currency, c.45% of total revenue) and the operating margin improved by 0.2pt to 12.1% of revenue thanks to France, the Rest of Europe and Asia Pacific/Latin America. Capgemini is confident for FY2019. Guidance includes strong revenue growth (+5.5-8% at constant currency including acquisitions for 1-2pts) and an improvement in the operating margin to 12.3-1
Capgemini’s achievements were very satisfactory in Q3 18. At constant currency, revenue growth was substantial, +6.3%, in line with the trend seen in H1 18. Digital & cloud services (>+20%, 45% of group revenue) continued to be a strong growth driver as expected. Capgemini is confident for Q4 18 and revised upwards its 2018 revenue growth guidance at constant currency (>+7.5% vs >+7% including acquisitions).
Organic revenue growth accelerated in Q2 18 (+6.7% vs +6.1% in Q1 18) still driven by the cloud and digital revenue. The North American activities were the most dynamic and benefited from the integration of LiquidHub and Advance Lab. The operating margin improved in H1 18 thanks to Continental Europe. 2018 guidance was revised upwards at the top-line and unchanged at the operating margin level.
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The company has not put a foot wrong since IPO. We believe that TM17 has a differentiated business model, which combines premium independent gaming and Edutainment. The company is the partner of choice for independent developers; however, this strategy results in low-ish gross margins. TM17 is perhaps the most cautious of the UK stocks, in terms of near-term outlook. Buy
Companies: Team17 Group PLC
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Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov.
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ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation.
Devolver Digital to join AIM, an award-winning digital video games pu
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SMRT has delivered strong H1 results, achieving 53% ARR growth to £3.8m, while recurring revenue is up a similar amount (+52% y/y). In the case of SwipedOn (84%/Group ARR) this success reflects an efficient business model, combined with an effective solution, in an area seeing rapid growth. Considering this on-going highly favourable backdrop, as well as specific growth initiatives around pricing, cross-selling and geographic expansion we consider further success is highly likely. Indeed we mode
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Arrow Exploration Corp. (AIM: AXL ; TSXV: AXL) , the oil and gas exploration and production company, has conditionally raised approximately £8.8m and is due to complete its dual listing on AIM on 25 Oct. Market cap c£13.1m.
Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz.
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ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas com
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FYJun 21 revenues have come in 4% ahead of our forecasts at £58.1m and we adjust FYJun21 adj. PBT 6% upwards to £13.5m. We hike FY22 revs and adj. PBT by 2%. FY21 revenue growth of 23% (organic) is the strongest since 2016 and a marked hike from last year’s CV19 impacted 12%. The consistently remarkable figure is monthly ARPC, which has risen 16% yoy to £1,251. As DOTD continues to add functionality we believe that figure will head towards £2,000 over the coming years – that’s an awful lot of up
Companies: dotDigital Group plc
SAP, in Q3, built up on the traction seen in cloud transition in the previous quarter. SAP posted encouraging numbers as ‘Rise with SAP’ gathered further momentum and attracted new customers as well. S/4HANA also continued to attract customers as demand remained solid. Consequently, licence revenues declined. Similar to the previous quarter, the group once again raised its outlook up a notch. However, we see no monumental change to our estimates.
Companies: SAP SE