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27Jul16 07:30 PRN VIDEO: Capgemini H1 2016 Results
27Jul16 07:30 PRN VIDEO: Capgemini H1 2016 Results
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Guidance revised upwards

  • 27 Jul 16

Capgemini had a good H1 16 including growth acceleration in Q2 16, in line with expectations. H1 16 earnings. - New orders were strong (€6,341m), above revenue (book-to-bill ratio: 101%). - Revenue was €6,257m (+11.6%, +14.4% at constant currency). Organic growth was 3.3%, o/w +3.8% in Q2 16. Total growth was driven by the digital/cloud offerings (28% of revenue, +32% at constant currency, including the impact of Igate). - At constant currency, including Igate, Application services (60% of total revenue, +17.2%, o/w +18.3% in Q2 16) continued to benefit from demand for the digital and cloud offerings. The digital transformation also had a positive impact in Consulting services (4% of total revenue, +8.1%, o/w +8.8% in Q2 16, close to organic growth). The Technology & Engineering services revenue (15% of the total revenue) grew by 13.1%, o/w 15% in Q2 16, and Other Managed services (21% of total revenue) had a lower growth rate (+9.3%, o/w +7.5% in Q2 16). By geography (at constant currency, including Igate), revenue growth was dispatched as follows: +36.2% in North America (Igate effect), +8.6% in the UK/Ireland, +4.8% in France, +6.9% in the Rest of Europe, +10.3% in Asia/Pacific and Latin America. - The operating margin surged to €638m (+31%) corresponding to a margin rate of 10.2% of revenue (vs 8.7% of revenue in H1 15), benefiting from the integration of Igate (consolidated in H2 15) and cost synergies but not only (growth in the digital and cloud, further industrialisation). - Operating profit increased to €510m (+14%) after higher acquisition and integration costs (€-38m vs €-9m in H1 15) and amortisation of intangible assets acquired related to Igate (€-35m vs €-9m in H1 15). Conversely, restructuring costs were rather similar yoy (€-31m vs €-35m in H1 15). - Group net income increased to €366m (+26%) after net financial costs (€-62m vs €-41m in H1 15) and lower income tax expense (-31%) due to the recognition of a deferred tax asset of €32m. The operating cash flow was positive at €113m (vs €-40m in H1 15), including higher tax paid (€-94m vs €-39m in H1 15). Free cash flow was €39m (vs €-98m in H1 15). Sigificant out-flows included share buy-backs (€-158m) and the payment of the dividend to shareholders (€-229m). On 30 June 2016, net debt was €2,278m (vs €1,767m at year-end 2015).

Organic growth acceleration driven by digital/cloud

  • 27 Apr 16

Q1 16 revenue Revenue reached €3,092m (+11.8%, +13.9% on constant currency). The change in scope relating to the contribution of Igate was significant (+11%). The Group continued to benefit from its fast-growing Digital and cloud offerings (+28% including a small contribution from Igate). Organic revenue growth was good and accelerated (+2.9% vs +1.5% in Q1 15). The order intake reached €3,128m (+17.6% on constant currency), broadly equivalent to revenue. On constant currency and including Igate, Application services (59% of total revenue, +16.2%) continued to benefit from demand for the digital and cloud offerings. The digital transformation also had a positive impact in Consulting services (4% of total revenue, +7.4% corresponding to organic growth). The Local Professional services and Other Managed services (respectively 15% and 22% of total revenue) enjoyed a similar growth rate (+11.2%) considering Igate’s respective activities. The total workforce increased by 24% yoy and the headcount “offshore” surged by 44% yoy reflecting principally the integration of Igate (c.30,000 employees o/w c.80% “offshore”). On 31 March 2016, there were 182,908 employees, o/w 55% “offshore” (100,000 employees), mainly in India (vs 48% of the headcount on 31 March 2015). The unchanged attrition rate at the Group level (16.7%) included a lower attrition rate in Consulting services (-2.8pts to 16.5%) and a higher attrition rate in Application services (+0.3pt to 16%).

Higher operating margin than expected

  • 19 Feb 16

In 2015, Capgemini integrated Igate (1 July 15) which helped the significant increase in the operating margin rate (1.4pts to 10.6% of revenue). Nevertheless, Capgemini on a standalone basis contributed largely to the margin improvement (+0.8pts to 10% of revenue). 2015 figures: Based on revenue of €11,915m (+12.7%, +1% organically), the operating margin surged to €1,262m (+30%) and the margin rate improved to 10.6% of revenue (vs 9.2% of revenue in 2014), above the 10.3% guidance. New orders reached €11.5bn (+5%), o/w €3.7bn in Q4 15 representing a B2B ratio of 1.14. - Organic revenue increased in all geographic areas (North America: +7.8%, France: +1.2%, Rest of Europe: +7.4%, Asia-Pacific/Lagin America: +6.5%) except for Benelux (+0.1%) and the UK/Ireland (-13.9%), which was penalised by a change in the structure of the Aspire contract. The Application Services and Consulting services were fast-growing (respectively +6.3% and +5.8%) while the Local Professional Services were rather flat (+0.3%) and the Other Managed Services plunged (-10.9%) attributable to the UK. - The improvement in the operating margin at the group level (+1.4pts to 10.6% of revenue) was attributable to the North American operations (+2.3pts to 14.9% of revenue including Igate), the UK/Ireland (+2.1pts to 13.4% of revenue) and the rest of Europe (+1pt to 9.6% of revenue). The operating margin rate decreased in France (-0.3pt to 8.1% of revenue) and Asia-Pacific/Latin America (-1.9pts to 4.2% of revenue). The operating profit was up to €1,022m (+20%) after higher restructuring costs (€-81m vs €-68m in 2014), acquisition-related amortisation of intangibles (€-45m vs €-20m in 2014), acquisition and integration costs (€-55m vs €-5m in 2014) and a goodwill impairment related to the Latin American operations. Group net profit reached €1,124m (+94%) after higher net financial expenses (€-118m, +69%) and a one-off non-cash gain of €476m related to the reassessment of deferred tax assets on US tax loss carry-forwards. Capgemini ended the year with net debt of €1,767m, including the debt brought by Igate (vs net cash of debt of €1,218m in 2014). The operating cash flow increased to €1,004m (+23%) and FCF was €825m (vs €673m in 2014). Cash-out flows included principally significant net investment in shares of €3,392m. Capgemini paid $3,961m for the acquisition of Igate. Share buy-backs of €150m are planned in 2016 (subject to approval at the shareholders' meeting) over a multi-year programme of €600m. The objective is to attenuate the dilution related to the employee share programme and incentive instruments.

A more positive picture than appearances

  • 29 Oct 15

Capgemini had a slight increase in organic revenue in Q3 15, in line with the trend seen in H1 15. The interesting achievement was the strong development in Application services (60% of total revenue). In Q3 15, revenue reached €3,036m (+17.2% and +1.5% organically). There were a positive translation currency effect (+5%) and a change in perimeter with the consolidation of Igate on 1 July 2015. Organic revenue growth was only 1.5% (vs +2.8% in Q3 14) due to the drop in revenue of Other Managed services (-13.7% vs +0.6% in Q3 14) which was affected by the change in the structure of the Aspire contract in the UK and the difficult economic environment in Brazil. Local Professional services were weak (+1.4% vs 0% in Q3 14). Conversely, Application services (60% of total revenue) were buoyant (+8.2% vs +5.1% in Q3 14) and Consulting services (4% of total revenue) performed well (+6.7% vs -3% in Q3 14). New orders reached €2,499m (+20% at constant currency and including Igate). The structure of the order intake tends to change with a higher portion of small-sized projects instead of multi-year managed services contracts. On 30 September 2015, there were 178,045 employees. The strong increase in workforce (+24% ytd) was mainly due to the integration of Igate (c.30,000 employees) which has significant 'offshore' staff in India. Capgemini's workforce in global production centres represented 54% of the total (>96,000, o/w 85,000 people in India). According to management, the integration of Igate is on track. In the short term, the priorities of the new group (Capgemini+Igate) are the implementation of a full vertical model in Financial services, capitalisation on the best practices in North America application services and the creation of a new business unit called Business services that will comprise BPO and the Igate ITOPS (a service that integrates technology and process requirements).

Higher operating margin in all the businesses

  • 31 Jul 15

H1 15 earnings: Revenue reached €5,608m (+9.9%, +1.4% organically vs +2.6% in H1 14). Organic growth was driven by the Application services (systems integration, application maintenance) (58% of group revenue, +5.1% vs +2.2% in H1 14) and the Consulting activities to a lesser extent (4% of the total, +4.4% vs -4.7% in H1 14). The Local Professional services had rather flat organic revenue (+0.5% vs +0.6% in H1 14). Organic revenue in the Other Managed services (-6.7% vs +6.5% in H1 14) was penalised by a change in the structure of the Aspire contract in the UK. The North American activities (26% of group revenue, +11.8% vs +6.1% in H1 14) were fast-growing with double-digit organic growth. The operating margin increased to €486m (+21%) corresponding to 8.7% of revenue (+0.8pt). The operating margin rate improved in all the businesses. The operating result was up to €447m (+26%) after higher restructuring costs (€-35m vs €-19m in H1 14) and other operating income of €35m (vs none in H1 14). Group net income was €290m (+21%) after higher net financial expenses (€-41m vs €-34m in H1 14) and income tax rate (31.2%, +2.6pts). The traditionally negative operating cash flow in H1 was reduced (€-40m vs €-98m in H1 14) reflecting a higher operating earnings level. Capex (net of disposals) was €58m (vs €61m in H1 14). The cash-in included the cash received from the capital increase in June 2015 (€563m) to fund part of the acquisition of Igate. Given the dividend paid to shareholders (€198m, +14%) and lower purchase of treasury shares (€22m vs €103m in H1 14), the net cash situation was €1,464m on 30 June 2015 (vs €205m on 30 June 2014). With the completion of the acquisition of Igate on 1 July 2015, Capgemini had net debt of c.€2.5bn.