Capgemini's AI Strategy Boosts Bookings Despite Profit Dip in H1 2025

Capgemini Reports Over 7% AI Bookings in Q2 Despite Profit Dip | AIM

Despite a slight dip in revenue, Capgemini's growing pipeline in generative and agentic AI offerings helped offset broader softness in discretionary IT spending as reported in H1 2025. "Our performance in H1 demonstrates the resilience of the Group's operating model," said Aiman Ezzat, chief executive officer, Capgemini Group. "We've built a strong pipeline in generative and agentic AI, which accounted for more than 7% of Group bookings in Q2. Client demand continues to be driven by efficiency and cost optimisation." Revenues for H1 2025 stood at €11,107 million, down 0.3% year-on-year on a reported basis, but up 0.2% at constant currency. Operating margin remained stable at 12.4%, while net profit dropped 13% to €724 million. However, bookings rose 2.1% to €11,993 million, yielding a healthy book-to-bill ratio of 1.08. Capgemini's AI investments gained momentum with the launch of the Resonance AI Framework and new partnerships, including with Mistral AI and SAP, signaling a clear pivot toward future-ready digital solutions. "We benefit from good traction in cloud, data & AI, and digital core," Ezzat added. The group also emphasised growing demand for digital business process services driven by intelligent operations. Capgemini's acquisition of WNS, announced earlier this month for $76.50 per share, further cements its strategy to become a global leader in agentic AI-powered intelligent operations. By region, Asia-Pacific and Latin America led with 8.7% growth, while North America and the UK also posted positive figures. France and the rest of Europe continued to see softness, particularly in manufacturing and consumer goods sectors. As of June 30, 2025, Capgemini employed 349,400 people globally, up 12,500 from the previous year. Offshore headcount made up 59% of the total. Looking ahead, Capgemini narrowed its 2025 revenue forecast to between -1% and +1% at constant currency, citing a cautiously optimistic view amid geopolitical uncertainties. Operating margin guidance remains unchanged at 13.3% to 13.5%, and organic free cash flow is projected at around €1.9 billion.

Capgemini's AI strategy wins over investors despite 13% profit drop

Sometimes Wall Street has a funny way of rewarding companies - and it seems that as long as AI is at the forefront, your share price will be protected. This week Capgemini's shares surged 6 percent following earnings that showed a steep 13% decline in net profit, but investors were clearly focused on something else: the French IT services giant's growing traction in Artificial Intelligence (AI). The earnings themselves painted a mixed picture. Net profit fell to €724 million in the first half of 2025, down from €835 million a year earlier. Revenue, however, managed to edge slightly ahead of internal expectations at €11.1 billion - a modest 0.2 percent increase at constant currency that suggests the company's sales execution remains solid even as profitability takes a hit. What caught the market's attention was CEO Aiman Ezzat saying that generative AI and agentic AI contributed to more than 7 percent of Q2 bookings. In an environment where most IT services firms are struggling to find growth, that figure represents promise. Capgemini has been betting heavily on AI capabilities, rolling out its Resonance AI Framework and enhancing platforms with new AI agent functionality. The investments appear to be translating into real client wins, with Ezzat citing projects that have delivered measurable outcomes - including one engagement that helped a global life sciences client reduce compliance reporting time "from several weeks to minutes." However, interestingly, clients are also increasingly expecting to share in AI-driven productivity gains through reduced pricing rather than allowing providers to capture all those efficiencies as improved margins. As Ezzat acknowledges: "New clients embed or ask for some of the [savings], of course. It's an interesting dynamic and one that could have consequences for how these services firms price themselves - customers clearly believe that if the AI is good enough, some of the operational savings should be passed on to them too. The geographic breakdown reveals just how uneven the current business environment remains. North America showed improvement with 1.6 percent growth, driven primarily by financial services and telecommunications spending. The UK and Ireland region delivered particularly strong performance with 6 percent growth. France proved more challenging, declining 5 percent year-over-year despite representing 20% of group revenues. Ezzat characterized the weakness as broader than sector-specific issues, pointing to reduced business confidence and activity levels that have dampened client spending patterns. Highlighting what he described as "a very competitive pricing environment", Ezzat notes: We have some of our Indian peers who are shrinking year on year. Operating margins held steady at 12.4% of revenues, though the profit decline was driven largely by increased restructuring costs, which nearly tripled to €136 million from €53 million in the prior year. Despite the near-term headwinds, Capgemini's board approved a substantial $2 billion multi-year share buyback program, signaling confidence in the company's cash generation capabilities. The program will be funded primarily through organic free cash flow, suggesting management believes the current challenges are manageable. The company has narrowed its full-year revenue guidance to between -1% and +1% at constant currency, tightening the range from the previous -2% to +2%. Management maintained its operating margin target of 13.3% to 13.5% and organic free cash flow objective of around €1.9 billion. Ezzat struck a measured tone about the outlook: Going into Q3, we see some stability in the environment, while we retain our cautious stance to account for the uncertainty created by geopolitical tensions and a slow economy. The market's response to Capgemini's results underscores a broader shift in how investors evaluate enterprise technology companies. Traditional financial metrics still matter, but strategic positioning in emerging technologies like AI has become equally important for valuation. For Capgemini, the challenge now lies in sustaining its AI momentum while competitors including IBM, Accenture, and major Indian service providers pour resources into similar capabilities. The company's 7 percent AI contribution to bookings represents early validation of its strategy, but maintaining that edge will require continued investment and execution.