Capgemini reports Q1 2023 growth above 10%

The Capgemini Group reported Q1 2023 revenues of €5,729 million, up +10.9% year-on-year at current exchange rates and +10.7% at constant exchange rates*.

Aiman Ezzat, Chief Executive Officer of the Capgemini Group, said: “Capgemini has delivered a very good start to the year, above expectations, in an economic environment that remains tense with some clients adopting a ‘wait-and-see’ attitude. The trends observed in our markets are in line with the scenario anticipated for 2023. Our performance demonstrates the agility and resilience of our model, and the relevance of our strategy. We continue to reinforce our role as a strategic partner for our clients’ business and technology transformations, with added-value solutions specific to each industry.

We also continue to invest in upskilling our people and enhancing our portfolio of offers. We are expanding our capabilities in technologies and industries to respond to our clients’ business needs in their transition to a digital and sustainable economy. We are thus accelerating on our Sustainability training on key topics such as net zero strategies, clean tech, circular economy, or biodiversity. We are also exploring the most relevant use cases in Artificial Intelligence, notably through our new Generative AI Lab.

This strong first quarter reinforces our confidence in our growth prospects for the year, which should now reach or exceed the mid-point of the targeted range.“

Momentum remained robust in early 2023, with revenue growth of +10.7% at constant exchange rates^* in Q1 2023. Organic growth (i.e. adjusted for Group scope and exchange rates) was +10.1%, a deceleration that was more limited than expected given the high comparison base.

In an economic environment that remains challenging, this performance was mainly driven by the strength of the Group’s high added value service offerings in the areas of Intelligent Industry and Customer First.

OPERATIONS BY REGION

Most of the Group’s regions continued to grow double-digits at constant exchange rates in Q1 2023.

Revenues in the United Kingdom and Ireland region (12% of Group revenues in Q1 2023) increased +13.9% at constant exchange rates, driven by strong growth in the Manufacturing and Consumer Goods sectors and the solid performance of Financial Services and the Public Sector.

Momentum also remained strong in the Rest of Europe (31% of Group revenues), with growth of +13.8% at constant exchange rates, driven by double-digit growth in the sectors of Manufacturing, the Public Sector and Financial Services – as well as TMT (Telecoms, Media and Technology) and Energy & Utilities.

Activity in France (20% of Group revenues) was dynamic, with growth of +12.4% at constant exchange rates, boosted by strong momentum in the Manufacturing, Financial Services, Consumer Goods and Public sectors.

The North America region (29% of Group revenues) recorded comparatively moderate growth of +6.1% at constant exchange rates. While the Manufacturing and Services sectors were particularly dynamic, the Financial Services and Consumer Goods sectors trailed, with growth rates lagging behind other regions. The TMT sector experienced a slight contraction.

Finally, revenues in the Asia-Pacific and Latin America region (8% of Group revenues) increased by +8.4% at constant exchange rates. In Asia-Pacific, the robust momentum – now essentially organic – was primarily fueled by the Financial Services, Manufacturing and Consumer Goods sectors.

OPERATIONS BY BUSINESS 

All Group business lines reported growth rates of close to or above 10% at constant exchange rates.

Strategy & Transformation services (9% of Group revenues in Q1 2023) and Applications & Technology services (62% of Group revenues and Capgemini’s core business) posted growth in total revenues* at constant exchange rates of +15.6% and +10.7%, respectively. This strong momentum, albeit decelerating compared to 2022 as expected, reflects the priority given by Group clients to their strategic digital transformation projects.

Operations & Engineering total revenues^* (29% of Group revenues) grew +9.2% at constant exchange rates, with sustained activity levels across all the businesses.

HEADCOUNT

At March 31, 2023, the Group’s total headcount stood at 357,000, up +5% year-on-year. 207,300 employees work in offshore centers, or 58% of the total headcount, up +4%.

BOOKINGS

Bookings totaled €5,867 million in Q1 2023, up +6.5% year-on-year at constant exchange rates against a particularly high comparison base, with +26% growth in Q1 2022. The book-to-bill ratio of 1.02 is above the average since 2017.

OUTLOOK

The Group’s financial targets for 2023 are:

• Revenue growth of +4% to +7% at constant currency;
• Operating margin of 13.0% to 13.2%;
• Organic free cash flow of around €1.8 billion.

The inorganic contribution to growth should be 0.5 points at the lower end of the target range and 1.0 point at the upper end.