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Ladies and gentlemen, welcome to CGI's second quarter fiscal 2026 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, Mr. Linder.

Thank you, Sylvie. Good morning. With me to discuss CGI's second quarter fiscal 2026 results are François Boulanger, our President and CEO, and Steve Perron, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9:00 A.M. Eastern Time on Wednesday, April 29th, 2026. Supplemental slides, as well as a press release we issued earlier this morning are available for download along with our MD&A financial statements and accompanying notes, all of which have been filed with both SEDAR+ and EDGAR. Please note that some statements made on the call may be forward-looking, actual events or results may differ materially from those expressed or implied. CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The complete Safe Harbor Statement is available in both our MD&A and press release, as well as on cgi.com. We recommend our investors read it in its entirety. We're reporting our financial results in accordance with International Financial Reporting Standards, or IFRS. As always, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed on this call are Canadian unless otherwise noted. I'll turn the call over to Steve to review our Q2 financials. François will comment on business and market outlook. Steve.

Thank you, Kevin, and good day, everyone. In our second quarter of fiscal 2026, we continued to create value for our shareholders while executing on our AI strategy. In the quarter, we delivered CAD 4.2 billion of revenue, up 3.3% year-over-year, or up 1.6% when excluding the impact of foreign exchange. Growth was driven by our recent business acquisitions and continued demand for our APAC delivery center, especially from our North American clients. APAC reported growth of 7.2%, supported by DigiOps, our award-winning AI-powered offering for the delivery of managed services. In our U.K. and Australia segment, with our acquisition of BJSS, growth was 16.5%. In our Western and Southern Europe segment, growth was 8.3%, led by our acquisition of Apside, which added scale for our software engineering services.

Our U.S. Federal unit took a bit longer to recover from delays in decision-making and the ramp-up of new contracted work following the fall U.S. government shutdown. This segment improved sequentially, and based on what we see in the pipeline and our booking strength in Q2, we expect that CGI Federal will return to positive organic growth in Q3. We also were impacted by delays in decision-making across Europe, mainly with the Nordic countries. Bookings in the quarter were CAD 4.3 billion, or a book-to-bill ratio of 104%, led by a strong return in our U.S. Federal segment at 122%. Other notable segments were concentrated in Europe, with Germany at 114% and Scandinavia, Northwest and Central East Europe, and WSE both at 111%.

Managed Services and SI&C each had a book-to-bill ratio of 104% in the quarter. For SI&C, this represented a continued sequential improvement over the last 3 quarters. SI&C projects are shorter in duration relative to managed services, but realize revenue much sooner after their booking. On a trailing 12-month basis, bookings reached a record high of CAD 18 billion, up 6% or nearly CAD 1 billion. Book-to-bill ratio was 108%, with North America at 117%, and Europe at 102%. On the same basis, Managed Services had a book-to-bill ratio of 118%, and the SI&C book-to-bill ratio was 98%. Our contracted backlog stands at CAD 31.5 billion or 1.9x revenue.

Of the CAD 31.5 billion, we have almost CAD 12 billion in already contracted revenue to be realized over the next 12 months. Turning to profitability, adjusted EBIT in the quarter was CAD 692 million, up 3.9% year-over-year for a very strong margin of 16.6%, up 10 basis points. Including acquisition and related integration costs of CAD 41 million, earnings before income taxes were CAD 618 million for a margin of 14.9%. Our effective tax rate in the quarter was 26.6%, an increase from the 25.9% in the prior year when excluding the tax impacts from acquisition and related integration costs.

The increase is mainly explained by the new corporate tax surcharge in France. Based on enacted rates at the end of the quarter and our current profitability mix, we expect our tax rate for future quarters to be in the range of 26%–27%. Adjusted net earnings were CAD 483 million for a margin of 11.6%. On the same basis, diluted EPS was CAD 2.27, an accretion of 7.1% when compared to Q2 last year. Net earnings were CAD 445 million for a margin of 10.7%. Diluted EPS was CAD 2.09, an accretion of 10.6% when compared to Q2 last year. Turning to cash.

On the back of strong cash generation in our first quarter with CAD 180 million of prepayments from clients, in Q2, we generated CAD 451 million, representing 11% of total revenue. Our cash on a trailing 12-month basis was CAD 2.5 billion, representing 15% of revenue. DSO was 40 days, unchanged when compared to the prior year. In Q2, we continued to deploy our capital and invested CAD 105 million back into our business, which includes strategic investment in advanced AI, CAD 397 million to buy back our stock, and in addition, we returned CAD 36 million to our shareholders under our dividend program. Yesterday, our board of directors approved a quarterly cash dividend of CAD 0.17 per share.

This dividend is payable on June 19th, 2026 to shareholders of records as of the close of business on May 15th, 2026. At quarter end, CGI had over CAD 2.2 billion in capital resources readily available and a net debt leverage ratio of just over 1. Yesterday, we increased our credit facility by CAD 1 billion, now totaling CAD 2.5 billion, providing additional financial capacity for our build and buy growth plans. Our capital allocation priorities have always remained consistent to deliver shareholder value. Investing back in the business, pursuing accretive acquisitions, and share buybacks. Now, I will turn the call over to François to further discuss insights on the quarter, the progress on our AI strategy, and the outlook for our business and markets. François?

Thank you, Steve. Good morning, everyone. Today, I will focus on our first half performance, the demand outlook for the second half, and our enterprise AI growth strategy. Year-over-year, for the first half of 2026, revenue was up 5.5% or 2.5% in constant currency to more than CAD 8.2 billion. Adjusted EBIT was up 5.4% to CAD 1.35 billion. Adjusted EPS was up 7.4% to CAD 4.38. Cash from operations total over CAD 1.3 billion, up by more than CAD 238 million, representing 16.1% of revenues. Each of these results represent a record high for half year performance, demonstrating CGI's proven discipline and agility to deliver shareholder value.

Importantly, these results also underscore our financial strength and our ongoing capacity to invest in profitable growth to position CGI for the future. CGI's financial health remains a differentiator in the current market for shareholders and for clients. Thank you to our experts, engineers, and consultants around the world for earning the trust of our clients every day. Your expertise, insights, and commitment made these results possible. During Q2, many clients again faced an unpredictable business environment. To help them navigate these conditions, many turn to CGI as a trusted, steadfast partner to help them consider new strategies and delivery approaches, notably to address the opportunity to integrate advanced AI at the enterprise level.

Our positioning contributed to strong first half bookings of nearly CAD 8.8 billion, up CAD 141 million year-over-year, even with temporary decision delays impacting some larger agreements, mainly in Finland. Specific to government sector bookings, we saw a return to strong awards in the quarter with a book-to-bill of 111%. This was led by our U.S. Federal segment at 122% as our team closed a combination of large managed services wins, as well as IP and AI-led monetization engagements. The strong quarter raised the U.S. Federal's trailing 12-month book-to-bill to 111%, the first time this metric has been above 110% since Q4 of fiscal 2024. With these new projects in U.S. Federal, we expect this segment to grow organically in Q3, as Steve indicated.

From a services perspective, bookings were driven by robust demand for our AI and IP integrated managed services, which totaled CAD 10.5 billion on a trailing 12-month basis for a book-to-bill of 118%. Clients continue to expand core system modernization to drive operational efficiencies and generate savings to reinvest in new priorities, requiring more systems integration and consulting services such as AI advisory and change management. Continuing the trend we signaled last quarter, demand for SI&C rose in Q2 with a book-to-bill of 104%. This also represents a sequential quarter improvement of 5.5%. Strong SI&C wins in H1 contributed to a trailing 12-month increase of more than CAD 800 million compared to the previous period. Representative Q2 wins included: The U.S. Social Security Administration expanded its relationships with CGI through a $188.98 million contract to provide 24/7 support of mission-critical infrastructure, serving more than 75 million beneficiaries. This reinforces CGI's role in operating large-scale secure government systems. The U.S. Department of Veterans Affairs extended its partnership with CGI to advance financial management's transformation using CGI's Momentum Enterprise Suite. In Germany, Schneider Electric expanded its agreement with CGI to deliver end-to-end AI-enabled solutions for energy providers across three countries, combining consulting, integration, and managed services to help utilities optimize operations and navigate regulatory complexity. A subsidiary of the Saint-Gobain Group in France selected CGI's Retail Suite IP to modernize point-of-sale systems across 68 locations, improving checkout efficiency, transaction security, and real-time operational visibility.

CGI's global alliance relationships are also contributing to our bookings. Our pipeline of opportunities is up more than 180%. Recently, we expanded our joint go-to-market collaboration with AWS, OpenAI, and Google Cloud. We also continue to deepen our existing partnerships with firms like Microsoft, SAP, Databricks, and Salesforce through advanced certifications and recognitions. These developments reinforce CGI's position as a preferred global integrator. Throughout the first half, our financial strength enabled us to continue strategic investments in our business, including M&A. In the quarter, we announced the acquisition of Stratfield Consulting, further strengthening CGI's position in Atlanta, a key U.S. growth market. The consultants who joined CGI bring expertise in areas critical to embedding AI at enterprise scale, including digital engineering and technology strategy. I would like to warmly welcome the new consultants who joined CGI from Stratfield.

CGI's buy strategy remains a critical element of our growth plan, ensuring we are in proximity with existing and new clients to understand and adapt to their needs. We remain in dialogue with a number of firms, from metro market to transformational opportunities. All opportunities we consider are in line with the evolving skills needed for the future, as well as client relationships where we can bring CGI scales and global offerings. As always, we will be disciplined to ensure that mergers will be accretive to each of our stakeholders. I will now turn to the market dynamics, how these shape the outlook and our positioning to drive growth, notably through the continued progression of embedding AI across client enterprises. Throughout Q2, we met with more than 1,800 current and prospective clients, mainly C-level business and IT executives, as part of our annual strategic planning.

In discussion about their budgets for the next year, two-thirds of executives indicated they plan to sustain or increase their IT budgets. Our pipeline over the next year validates this as the value of new opportunities grew by over 40%. Executives we spoke with also noted that the alignment gap between business and IT within their organization is starting to expand again, making it more challenging to achieve the expected ROI. Over the years, we have measured this ROI metric, and this year the results show a plateau. To jumpstart their results for modernization, clients are increasingly turning to AI and managed services, particularly at the C-suite level. Enterprise AI adoption rose compared to last year, with one-third of organizations now at the implementation stage, notably for Generative AI, and a top emerging priority remains Agentic AI integrations.

These findings, a growing alignment gap, stalled ROI, and accelerating use of emerging technologies are a natural effect of earlier-stage AI adoption. All of these findings create new opportunities for CGI to deliver a wide range of end-to-end services. To understand these shifts and what they mean for CGI growth, it is important to recognize the complex systems underpinning our clients' operations. Introducing AI doesn't simplify this complexity overnight. It increases the need to manage and integrate it properly. As a result, standalone AI tools are not a substitute for enterprise IT. They accelerate tasks and processes but don't solve integration at scale. This complexity is driving new clients' behaviors. For example, organizations continue to move toward fewer trusted IT partners who can deliver end-to-end outcomes. These shifts play directly to CGI's strength.

We are positioned at the center of this change because of how we operate, our enduring client relationships, industry expertise, and end-to-end value proposition. This enables us to meaningfully embed AI directly into the systems and processes that run our clients' organizations. CGI's AI-first approach is based on two core tenets: we make AI real and outcome-focused. At the core of every enterprise, including our own, we transform how value is created, how work gets done, and how the future is built. We remain well-positioned to drive new growth leveraging this AI-first approach in four ways. We help clients operate more efficiently, we transform their legacy technology estate, we launch new services and solutions to capture net new areas of spend and growth, and across all of these areas, we deliver consulting services.

These four areas are closely integrated, and together, they offer significant opportunities for CGI to grow in this market environment. I will now go deeper in each of these elements. Clients continue to focus on driving efficiency as a top business priority. Through our managed services and IP solutions, we embed AI into IT operations, software delivery, and business workflows, reducing manual effort and improving performance. For example, CGI transformed customer service for a global financial institution by deploying an AI-driven operations platform integrated with core systems to handle and self-resolve over 500,000 interactions annually. For a healthcare organization, we implemented an enterprise AI platform to automate workflows and optimize claims, driving higher efficiency, increased savings, and establishing a scalable foundation for broader AI-driven transformation. Today, every new CGI managed services proposal embeds advanced AI as the rule, not the exception.

The majority of our contracts are outcome-based, where the margin gains translate into benefits for both clients and CGI shareholders. As Steve mentioned, our AI-powered managed services platform, DigiOps, was recently recognized with the top innovation honor for helping clients drive practical agentic AI adoption. DigiOps integrates CGI IP, accelerators, and alliance technologies, spans nearly 200 agents and 400 workflows to automate and improve enterprise operations. As clients realize operational efficiencies, those savings are not all removed from IT budgets. They are often reinvested. Clients have significant backlogs of modernization programs, AI is now enabling them to tackle those programs faster. This creates a continuous loop to drive growth where efficiency creates new demand for transformation of clients' legacy technology estates. AI cannot be scaled on fragmented data and outdated systems, we are focused on the foundation: preparing data, simplifying architectures, and modernizing applications.

This is core to what CGI delivers as it relies on high-end engineering that is designed and scaled for mission-critical complexity. For example, CGI embedded AI across a utility serving nine million customers, replacing rule-based audits, forecasting to improve grid reliability, faster technician onboarding, and enabling self-service analytics. A leading financial institution partnered with CGI to modernize legacy systems using CGI InstaCode, our production-grade Generative AI platform for code conversion. The project is accelerating the transition to a cloud-native architecture, reducing development and testing effort by at least 50% and improving system scalability. As clients modernize, they typically invest in new areas to drive their growth and improve stakeholder values. This requires new services and capabilities from CGI, which helps them address emerging priorities that cannot be resolved without new technologies like AI.

For example, CGI developed and deployed the AI FELIX platform for NATO to modernize large-scale document processing and task management across secure air-gapped environments. The system reduced processing time from an average of seven minutes to 27 seconds. CGI launched a Finnish national security compliant sovereign AI platform, enabling enterprise and public sector clients to develop and deploy scalable AI solutions with full data sovereignty, regulatory compliance, and secure integration within a locally hosted environment. These new services and solutions are not examples of isolated pilots. They are scale AI offerings built for complex enterprises to achieve measurable outcomes. Across these areas, consulting plays a critical role as clients seek guidance on where to apply AI, how to structure their operating models, and how to embed new ways of working. This is why we are seeing strong demand for consulting services.

In fact, Q2 booking for our consulting services were up 16% year-over-year. This performance and a double-digit pipeline increase is led by our signature consulting offerings, notably advisory services and AI, change management, and risk and cybersecurity. For example, a leading telecom operator partnered with CGI to scale Agentic AI in a secure, on-premise environment by defining and deploying a roadmap, framework, and use cases. CGI partnered with a large European bank to translate its AI strategy into operational governance aligned with regulatory requirements. This created structured processes, improved compliance, and enabled faster, more consistent adoption of AI across the organization. In closing, we continue to see indicators of gradual improvement for the rest of the year. Our positioning as the AI-to-ROI partner for our clients is deliberate. It reflects how we help clients move from potential to performance, and it enables our future growth.

Clients today are not looking for generic AI capabilities. They want solutions tailored to their industries and that operate within their constraints, all with a trusted partner who has the capabilities and longevity to be part of their transformation journey. We combine expertise and domains plus technology, including AI. We work inside complex mission-critical environments. We have the proximity and sovereign services and solutions. We deliver results that are measurable, repeatable, and tied to business outcomes. While the headlines may focus on how easy AI has become, the reality for large enterprises is very different. The real challenge is mastering complexity, and that is exactly where CGI is built to lead and to grow. Thank you for your continued interest and support. Let's go to the questions now, Kevin.

Thank you, François. Sylvie, we can now poll for questions. I would ask that each participant hold to one question in light of the time we have remaining.

Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. Thank you. First, we will hear from Suthan Sukumar at Stifel. Please go ahead. Please unmute, Suthan.

Hello, Suthan.

Thank you, gents, and apologies, I was on mute. Yeah, got to my first question. Just wanted to talk about AI and, you know, you guys have announced some recent partnerships with folks like OpenAI and Google. What would you call out as being different about these partnerships, relative to, you know, what your, you know, some of the more traditional tech partnerships that you have today?

I don't necessarily see some differences. You know, it's, you know, for sure, you know, we are close to them. They want us to use their tools and to create platforms that are relevant by industries. That's really what we're working, especially with Google and OpenAI. It's really to help them. We had our CTO that went to the Google event last week in Vegas, and that's exactly what he was working with the team of Google, is to work on platforms and solutions that are relevant to industries.

Great. Thank you.

Next question will be from Jérome Dubreuil at Desjardins Capital Markets. Please go ahead, Jérome.

Hello, Jérome.

[Foreign language] Thanks for taking my question. On the SAP call last week, their management team said that the adoption of AI migration tools could possibly reduce system integration budget. Maybe it puts a bit of pressure on integrators to adapt quickly and be nimble. If this materializes, what would be the net impact of the introduction of AI migration tools in terms of absolute margin per project in the long term? Maybe does it change the total addressable market of tech adoption in general? Thanks.

Thanks, Jérome, for the question. For sure, and I did indicate it at the last call that, you know, on the life cycle of a project, we are seeing some saving by using AI. You know, we were talking about, you know, close to 50% of a project where we can use AI to reduce, and we see some saving between 20% easily to 40% and sometimes 50% on that, on these portions. For sure, it's reducing the number or the cost of doing these implementation. The good news on that, it's creating, you know, the funnel to do more.

You know, some of these clients then, you know, when I'm talking to some of these clients doing these SAP implementation are costly, and some people are postponing or trying to delay. This will just create new demand to go faster on these implementation. We're seeing that as potential new projects for the future.

Great. [Foreign language]

Next question will be from Kevin Krishnaratne at Scotiabank. Please go ahead, Kevin.

Hey, hey, good morning. François, you talked about, you know, your clients are expressing new behaviors, you know, with the, with the, this new technology, AI. They're talking to fewer IT providers. I'm wondering, could you talk about maybe your win rates when it comes to some of these AI projects? Where do you feel you may be better positioned than some of your competitors? It seems like everyone, is signing a partnership with, whether it's Anthropic or OpenAI. I'm just curious as to like what you what you bring relative to the others in the industry. Thanks.

Thanks for the question. First of all, it's our model, proximity model, right? We are close to our client. We know our clients. We understand their complexity, so we're the best-suited people for our existing clients to apply and help them with their AI implementation. We, you know, we're also built by industry, so we have the capability and the understanding of the industries. Again, bringing that expertise to new clients also is a way to showcase that, you know, you cannot just use a tool for the tool. You need people and expertise to implement that. Again, we are also very good in complex environment. We know we are working with big companies.

We're understand how to manage complexity. All that together, you know, I feel that it's giving us, you know, a advantage to win and grow in that, in that area.

Thank you.

Next question will be from Stephanie Price at CIBC. Please go ahead, Stephanie.

Hi, good morning. Maybe a broader question for you, just characterizing the macro backdrop here. You mentioned the contract signing delays in Europe, but it sounds like U.S. Federal is expected to return to growth next quarter. Just curious macro-wise what you're hearing from clients and how that varies by geography.

Yeah. Well, I would say, you know, first of all, in North America, demand is still good, very good. You know, very happy about the U.S. Federal turning back. We are seeing, you know, a lot more momentum on the procurement side, on the federal side. We saw it in the bookings, and we're seeing it in the pipeline, and that's why we're pretty comfortable to say that they'll come back to organic growth. That's still very relevant. Government, I would say across the world, is still a growth factor with all the investment that they want to do in the defense, for example, is potential growth for us in the future.

I would say the financial sector are still, you know, as we know, a lot of AI and investment, also very, you know, GCCs managed services is still a lot of discussion on that side. We're seeing a lot of momentum. I would say, you know, the one that is still in flux is the manufacturing, especially in France and in Germany. As we know, Germany, it's a tough economy for now. That's where we're seeing some softness on that side. Like I'm saying, government and financial sector, we're still seeing some good momentum on that side.

Thank you for the color.

Next question will be from Richard Tse at National Bank Capital Markets. Please go ahead, Richard.

Yes, thank you. In your comments you talked about continuing on sort of both the, the build and buy strategy. You know, with AI in the backdrop, how does that impact how you assess and then sort of value these prospects? You know, has anything sort of changed in terms of that process, you know, given sort of the potential disintermediation in the market? Just kinda wanna understand how you're thinking about that now.

Well, for sure, you know, like any other merger and acquisition that we looked at, you know, expertise is something that we're always looking at also. It needs to be, you know, yes, we're buying client relationships, where, yes, it's important, but we need also to be sure that we have the right expertise. For sure, when we're looking at these companies, AI and how much they are advanced in AI technology and AI expertise is a criteria when we're looking at them. That's for sure, one. As you know, evaluations are down, so it's a pretty very good market for now.

You know, we're there for long term, so we are always strong still believers that this industry will grow in the future, if you have naturally the right relationship and the right technology. That's what we're looking when we're doing, we're doing M&A.

Okay, great. Thank you.

Next question is from Paul Treiber at RBC Capital Markets. Please go ahead, Paul.

Hi, good morning. You mentioned earlier, you know, AI is driving productivity and cost savings for managed services. Can you speak to the pricing, how you're pricing those productivity gains in terms of, you know, either how much you're passing along to customers? Also, you know, is there an opportunity for you to capture some of those savings with higher margin as a result?

Oh, clearly. You know, I would say two-part. You know, we have our existing one that we signed, right? Where we promise, you know, a percentage of saving. Because again, like, I'm always saying, we're mostly all outcome-based pricing, especially in the managed services. We promise a saving percentage and, you know, having AI now, it's helping us in accelerating that production of savings. That's our way of giving it back to clients, but naturally producing our gross margin and our EBIT margin for us. For new ones, but naturally, you know, we will take that and put that also in the pricing.

With always the goal to produce our EBIT margin of 16% and up, that won't change. We are capable of doing both, and that's how we-- and that's why also it will create new demand, I'm convinced, new demand for managed services because people will see that, you know, they can achieve these savings. And it's not everybody who wants to do it by themselves. They'll need experts. And so that's why, yes, it will create new savings and cost reduction, but it will create brand new demand in managed services.

Thank you for taking the question.

Next question will be from Thanos Moschopoulos at BMO Capital Markets. Please go ahead, Thanos.

Hi. Can you update us with respect to AI in the context of your IP portfolio? To what extent is that helping accelerate development cycles, helping to bring maybe new offerings to markets, creating some upsell opportunities with your existing base, just with respect to your IP solutions? Thanks.

Yeah, for sure. Thanks for the question. You know, most of our development of IP is done in India. For sure, you know, we deployed all these tools in India to help them to go faster on these upgrade or new version of our tools. For sure, the cost of producing these new version of IP is going down big time. We are also naturally putting agents in our IPs for clients, so that's another big focus. You know, we were talking about, you know, agents, so we have more than 400 agents that is included in our IP, included in our service delivery, like I was saying, like DigiOps. So, we continue to implement these agents for clients and naturally using them for our own development.

Great. Thank you.

Ladies and gentlemen, a reminder to press star one should you have any questions. Thank you. Next is David Kwan at TD Cowen. Please go ahead, David.

Good morning. I was wondering, you talked about customers likely using some of the savings that you'd help generate from the AI as it relates to, on the managed services side. Do you see that as, I guess, as a net neutral or maybe even a net positive in terms of the managed services trajectory? Obviously, it's been, the growth has come down here, but I was wondering when you could see that potentially reverse and to what extent, you know, customers spending savings on new projects could be either neutral or net positive for you.

Yeah. I'm seeing it for the future as a net positive. You know, again, today, you know, when you're meeting with a CIO, most of the time he'll say that, or she'll say that they don't have enough budget. You know, maintenance is, what, 70%–80% of their budget. You know, it's giving them 20%–30% for new projects. It's never enough. When they are capable of reducing the maintenance or the running costs of their application, they'll use these savings to invest in new product and new services for their own clients. That's, you know, when I'm meeting CEOs and meeting business people, that's what they're expecting and want from their CIO department.

We see that as future growth. Like I was saying before, it will increase also the demand for managed services. Because I am saying it's not every company who will try to do it by themselves. It's complex, it's not easy tools to implement, and they'll need experts like us to help them to achieve their goals.

Just everyone, my apologies. It's Kevin here. I know it's 9:42, and I thought we'd run out of time, but it looks like we have more time. If folks on the line have other questions, please feel free to pick up in the queue.

Yeah.

Thank you. Next question will be from Robert Young at Canaccord Genuity. Please go ahead, Robert.

Hi, good morning. Revenue per employee looks like it's still going higher, and I guess AI will help that. Then you said you target 16% plus EBIT margins going forward. Looking back to a target you, I haven't heard you mention it in a while, but the double-digit earnings per share growth that was a target in the past, is that something that you can get to, or is that, you know, a function of the top line growth today? Are there other tools you have, operating margin expansion or, you know, buyback, et cetera, that could get you back to that double-digit earnings per share growth? Thanks.

Thanks for the questions, Robert. Yes, it's still our aspiration to do double-digit EPS growth, and that will always be the aspiration. You know, on that end, you touch all these levers. I think the first one naturally is growth. Like I was saying, we are seeing a gradual improvement on that growth side. Acquisition is also very active on that side. You know, evaluations are down, so that will help on the accretion, buyback. You know, we are producing excess cash. We are producing, you know, CAD 2.4 billion-CAD 2.5 billion with free cash flow is close to CAD 2 billion.

Before acquisition, when, you know, we can do both acquisitions and share buyback. For sure, you know, the EBIT margin will continue. We have some levers, at least on the long-term basis. It's not all the segments that are at 16%. We have segments of the business at 20%, 21% and 18%, but we have other ones that are still in the low teens. If we can improve these segments and bring them back to a 15%, 16%, you know, we would be able to come back to an accretion of 10%–15% in the future.

Okay. Thank you. Can I ask a second one? The seems to be a little more focused on cybersecurity. I mean, there's some, you know, worry around Mythos, et cetera. Can you just touch on, you know, where you're seeing opportunities related to that in your business, and then I'll pass the line.

That's a very good question for sure. A lot of the conversation on cybersecurity, you know, and when we were saying that consulting is picking up, a lot of it is on the cybersecurity side, like you said, with Mythos and all that. For sure, a lot of, even when I met the CEOs lately, that's top of the mind, on their mind. That's a source of future growth for us for sure, because of this.

Thank you.

Next question will be from Jérome Dubreuil at Desjardins. Please go ahead, Jérome.

Yeah, thanks, Kevin. You know I can ask questions all day. Two more for me. You touched on the buybacks on a previous answer, but you did a lot of it over the last year, but you did slow down in March. Still doing a lot, but still a material slowdown there, despite the share price being depressed. I'm wondering if there's a particular reason. Then the second follow-up I have, you for sure heard about the Forward Deployed Engineering, where it seems like software companies' model may be evolving a bit closer to an IT service model. How do you compete with those software companies, and have you seen this trend materialize so far? Thank you.

Yeah. I'll ask Steve to answer the first one, and I'll answer the second one. Steve?

Thank you, Jérome. On the first one, on the NCIB, look, what you're looking. Each quarter we're looking at the cash, the free cash flow that we're generating. It's really based on that, first of all, as you know, we want to grow with good M&A. We are making sure that we deploy our cash with M&A. In a quarter, if there is no cash outflow coming from the M&A, we'll look at our free cash flow and we'll purchase some shares. We did, yes, less than Q1, but the free cash flow was less, so it was done really by design. That's really it. We are really looking at our cash generation in a quarter, and based on that, we are adjusting our NCIB program.

Jérome, for your second question, I would say, you know, we are a company of forward deployed engineers. Again, you know, our model, you know, with the proximity, you know, what we will do better than all of these companies is that because of the proximity, we know our clients, we know their complexity, we know their industries. That's what we're bringing. You know, I think that's something that it's harder for these software companies to do. Again, it's not the first time. I'm a little bit older than you, Jérome.

You know, it's not the first time that these technology companies try to go into services, and it was always never happened because it's a tough, you know, they're good in their tools, and they're fantastic to know their tools, but it's not the expertise to manage complexity and manage understanding these industries.

Absolutely. Makes sense. [Foreign language]

Next question will be from Steven Lee at Raymond James. Please go ahead, Steven.

Hey, François and Steve. François, I heard you on the green shoots. Do you have enough visibility to see positive organic growth exiting the year? Thanks.

Again, as you know, I'm not giving guidance, Steve, but, you know, we are seeing improvement and a gradual improvement. I think the fact that, you know, example, you had federal government that was pretty tough two quarters ago at -12%, this quarter at -7%. The fact that, you know, no acquisition on their side, so it's all organic. The fact now that we, they were pretty convinced that they'll be able to come back to organic growth this quarter, for sure that's helping the overall results of the company. We are seeing these improvement, coming back and so that's why we're positive to say that, these improvement will continue in the next, several quarters.

Perfect. Thank you.

Next question is from Suthan Sukumar at Stifel. Please go ahead, Suthan.

Hi, guys. Just a follow-up from me. On the discretionary spending segment here, sorry, SI&C and more so discretionary spending, what changes in priorities have you guys been seeing from clients compared to recent quarters? The second part is, you know, some of your offshore peers have been talking about pricing compression. What are you seeing in the pricing environment and, you know, where are you seeing pressure specifically? Is that more of a function of kind of the softer discretionary spending backdrop, or is it more structural from AI or the shift to kind of outcome-based pricing?

You know, yeah, for sure, clients are asking more and more on outcome-based pricing. You know, already us, and I did state in the, in the past, you know, we're more than 60% of our business, close to 65% of our business, is outcome-based pricing. I would say to you that in India, we have, there also, the majority of our business is outcome-based pricing. That's, that's naturally, we're different than these very large Indian firms where they are input-based pricing. That's, that's helping on our side. You see still good growth in the, in the quarter, in India and Asia Pac.

A lot of demand still for Asia Pac, and I don't see that demand to reduce in the future. That's where we have also a lot of talents. That's why we are happy with where our position of our Indian region. We are seeing that as a growth lever for the future.

Thank you.

Next question is from Stephanie Price at CIBC. Please go ahead, Stephanie.

Hi. Follow-up for me just is on the Canadian region. Curious if you could talk a little bit about the environment there. Is Canada one of the regions where you're seeing a solid government pipeline, just given the push to buy Canadian? How should investors think about potential upside in Canada?

Thanks, Stephanie. For sure, Canada, we are seeing a very good pipeline for government. I think it's just, you know, they need to produce these RFP and going to the market. We have good discussion with clients on the government side and they want and they need to invest. You know, example on the defense side, we have very good defense capabilities across the world. As you know, in the U.S., but also in Europe with NATO. NATO is a good client of ours. In U.K., we have a lot of defense projects there. The fact that Canada wants to be closer to Europe, we see that as a great opportunity for us to help them to achieve their objectives.

Thank you.

Next question will be from Richard Tse at National Bank. Please go ahead, Richard.

Yes. Thank you. You know, you did have this nice rebound in terms of the U.S. Federal bookings. Have the type of services of those sort of new bookings changed at all in terms of like the profile or are they pretty much like a continuation of the stuff that was kind of held off, you know, given what's happened in the past year?

You're talking on the federal side or overall?

Yeah, yeah. On the federal side. Yeah.

Okay. On the federal side, I think, you know, as we know, last year, you know, a lot of slowdown in the procurement in general. A lot of agency put their projects on the side and waiting a bit how it would resolve with DOGE and everything else that was happening. You know, now it's a little bit back, I would not say to normal, but at least procurement is now going out with RFPs. You know, that's helping to improve the pipeline and naturally the bookings. Like I said, it's now close to two years that we didn't have the booking of that level in the federal government.

We are seeing, you know, RFPs going out, so continue to go out. That's why I'm saying, on the federal side, and some agencies are even hiring now. I think you'll see that continue in the future, and that's why we're positive on the federal side.

Okay. I just have one other question. Like recently you had a kind of a local sort of, call it AI data sort of sovereign win locally. Do you think CGI is in a position to kind of, you know, compete globally in that sort of sovereign AI data market, you know, looking ahead here as more and more countries and regions look to that?

For sure. Again, you know, when you're talking especially in Europe, everybody is talking about sovereignty. Again, it's not saying bring everything back, but naturally they're looking at their data. The most important data, that's where they're saying, "Perhaps I need to, you know, change a bit where we are with that and coming more with the sovereign solutions." The fact that we are in these in each of these regions, the fact that we know these clients, we are well-positioned to help them to achieve that. Again, the idea is not to compete anybody, it's to help them to put that in like the Finnish one that we announced yesterday.

It's really to help the Finnish Government to help them to bring back some of that data back on, in the country and having some of these solution running in their environment instead of having it in the public cloud.

Okay. Thank you.

Sylvie...

Next question.

we have time for one question, please.

Certainly, sir. Our last question is from David Kwan at TD Cowen. Please go ahead.

Hi. I'm just wondering if you've had conversations with clients and kind of what they're thinking about as it relates to the Iran conflict, and how that's impacting their business and their intentions on doing more business with you.

Well, you know, for sure, Iran, it's giving some pressure on the manufacturing side. It's putting pressure some in the airlines side. It's putting pressure also a bit even on the supply chain for hardware, for example. We are seeing some of that pressure and slow down because of the hardware. Naturally again, it's giving us the opportunity to see how we can help them on the cost reduction side, especially on the manufacturing side, and even on the airline side because, you know, it's putting pressure, and they need to increase costs and increase price. That's really, you know, the opportunity for us to go and see these clients and showing how we can help them in the cost reduction side.

Are you seeing any slowdown in sales cycles?

Not for now. I would not say that I'm seeing a slowdown on the sales cycle because of it, no.

Great. Thank you.

Yeah.

At this time...

Thanks, Sylvie.

we have no other questions.

Okay. Thank you, Sylvie, thanks everyone for participating. As a reminder, a replay of the call will be available either via our website or by dialing 1-888-660-6264 and using the pass code 74539. A podcast of this call will be available for download within a few hours. Follow-up questions can be directed to me at 1-905-973-8363. Thanks again everyone. I look forward to speaking soon.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Enjoy the rest of...

Good morning, ladies and gentlemen. Welcome to CGI's First Quarter Fiscal 2026 Conference Call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, Mr. Linder.

Thank you, Julie, and good morning. With me to discuss CGI's first quarter fiscal 2026 results are Francois Boulanger, our President and CEO; and Steve Perron, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9:00 a.m. Eastern Time on Wednesday, January 28, 2026. Supplemental slides as well as the press release we issued earlier this morning are available for download, along with our MD&A, financial statements and accompanying notes, all of which have been filed with both SEDAR+ and EDGAR. Please note that some statements made on the call may be forward-looking. Actual events or results may differ materially from those that are expressed or implied, and CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete safe harbor statement is available in both our MD&A and press release as well as on cgi.com. We recommend our investors read it in its entirety. We are reporting our financial results in accordance with International Financial Reporting Standards or IFRS. As always, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed on this call are Canadian, unless otherwise noted. We are also hosting our Annual General Meeting this morning, so we hope you will join us live via the broadcast at 11 a.m. Now I'll turn the call over to Steve to review our Q1 financials, and then Francois will comment on our business and market outlook. Steve?

Thank you, Kevin, and good day, everyone. In our first quarter of fiscal 2026, we demonstrated discipline in the management of our operations while continuing to make the necessary investment guided by our AI strategy. In the quarter, we delivered $4.1 billion of revenue, up 7.7% year-over-year or up 3.4% when excluding the impact of foreign exchange. Growth was driven by our recent business acquisitions and continued demand for our APAC delivery center, with this segment reporting growth of 5.8%, mainly through delivery of managed services. In our U.K. and Australia segment with our acquisition of BJSS, growth was 31%. This acquisition is transformative to our U.K. operation, adding significant scale, and we can now showcase the breadth of CGI's end-to-end services to our new clients. In our Western and Southern Europe segment, growth was 9%, led by our acquisition of Apside, which includes engineering services. As we indicated last quarter, our U.S. operations were impacted by the federal shutdown in the quarter. The timing and related impacts were in line with what we communicated last quarter. While a sequential improvement is expected in the next quarter, our U.S. Federal segment is still operating in a very dynamic environment. Bookings in the quarter were $4.5 billion for a book-to-bill ratio of 110% led by U.S. commercial and state government at 169%; Finland, Poland and Baltics at 124%, and Scandinavia, Northwest and Central East Europe at 113%. Bookings continue to be led by our managed services at a 117% book-to-bill. SI&C book-to-bill was 100%, last reached in our first quarter of fiscal 2025. With the U.S. federal shutdown, we had previously called out that our bookings would be impacted in the quarter. This was indeed the case and excluding U.S. Federal, our teams delivered a combined book-to-bill of 118%. On a trailing 12-month basis, book-to-bill was 110% with North America at 122% and Europe at 101%. On the same basis, Managed Services had a book-to-bill ratio of 122% and the SI&C book-to-bill ratio was 96%. Our contracted backlog reached $31.3 billion or 1.9x revenue. Turning to profitability. Adjusted EBIT in the quarter was $655 million, up 7.1% year-over-year for a margin of 16.1%, down 10 basis points. In the quarter, our results were impacted by the U.S. federal shutdown and an $8 million onetime impact of past service costs related to statutory employee benefits in India due to a change of regulation. Including acquisition and related integration costs of $26 million, earnings before income taxes were $600 million for a margin of 14.7%. Our effective tax rate in the quarter was 26.3%, 40 basis points higher than last year, mainly explained by the statutory tax increase in France. We expect our tax rate for future quarters to be in the range of 26% to 27%. Adjusted net earnings were $461 million for a margin of 11.3%. On the same basis, diluted EPS was $2.12, an accretion of 8% when compared to Q1 last year. Net earnings were $442 million for a margin of 10.8% and diluted EPS was $2.03, an accretion of 6% when compared to Q1 last year. Turning to cash. We generated a strong $872 million in our cash from operations, representing 21.4% of total revenue due to the strength of our collection efforts. DSO was 37 days in the quarter, an 8-day improvement sequentially and a 1-day improvement when compared to the prior year. As a reminder, in general, our first quarter has the lowest DSO due mainly to higher levels of client prepayments or annual IT maintenance fees. In Q1, we continue to deploy our capital and invested $87 million back into the business, including strategic investment in advanced AI, $106 million on business acquisitions, $577 million to buy back our stock, and in addition, we returned $37 million to our shareholders under our dividend program. Yesterday, our Board of Directors approved the renewal of our NCIB program until February 2027 authorizing us to repurchase for cancellation up to 19 million shares over the next 12 months. At current share price levels, we expect to remain very active in our repurchase program. In addition, our Board of Directors approved a quarterly cash dividend of $0.17 per share. This dividend is payable on March 20, 2026 to shareholders of records as of the close of business on February 18, 2026. With $2.4 billion in capital resources readily available and a net debt leverage ratio of 1, CGI has a balance sheet strength and capacity to deliver on our profitable growth strategy. CGI's capital allocation priorities have remained consistent, focused on investing back in the business, pursuing accretive acquisition and share buybacks. Now I will turn the call over to Francois to further discuss insights on the quarter, the progress on our AI strategy and the outlook for our business and markets. Francois?

Thank you, Steve, and good morning, everyone. We started the year with positive momentum that deepen our position as one of the few firms with a local presence, global scale, capabilities and commitment to be a partner of choice for our clients, an employer of choice for our people, and an investment of choice for you, our shareholders. In Q1, we delivered year-over-year revenue growth, strong profitability and record high cash of $872 million. This further expands our capacity to fuel our Build and Buy profitable growth strategy, in line with our capital allocation priorities. The trust clients have in CGI as a partner for delivering on their priorities, including for advanced AI is evident in our results. This extends to bookings, which reached nearly $4.5 billion in the quarter, up by more than $300 million year-over-year. Plus over half of bookings were comprised of new awards and add-ons, which typically expand our delivery scope with clients. In addition, our win rate on renewals was over 95%, demonstrating the confidence clients have in CGI's ability to continuously innovate. On a trailing 12-month basis, total bookings were up 12%, reaching a high of nearly $18 billion. This was led by managed services, up 16% compared to the previous year. Systems integration and consulting bookings were also up on a sequential quarter year-over-year and trailing 12-month basis. Compared to this time last year, the Q1 SI&C wins were up by more than $360 million. From an industry perspective, all commercial segments closed a quarter with a book-to-bill above 100%, led by manufacturing, retail and distribution, which was up more than $530 million or 65% year-over-year. Representative awards in the quarter included a European-based global manufacturer, initiated a new strategic partnership with CGI to modernize critical IT services, including the integration of advanced AI solutions into their operations. A leading global luxury group in France, renewed its relationship with CGI to deliver SAP services in support of their retail and manufacturing operations. CGI will also expand the integration of AI to our IT to optimize service quality and productivity in IT management. The Swedish Board of agriculture expanded its relationship with CGI through a multiyear framework agreement, supporting the agency's digital transformation and expansion of trusted AI capabilities across systems development and operations. Highmark, a U.S. health insurer renewed and expanded its partnership with CGI to accelerate innovation in claims payment accuracy and integrity. Through the engagement, CGI will deliver a range of AI-enabled services through our ProperPay IP, which helps identify potential risk earlier, improves efficiency and reduces billing errors at scale. As shared last quarter, government sector bookings were impacted by the Q1 U.S. government shutdown. On a trailing 12-month basis, our government wins were 104% or 113% when excluding our U.S. Federal segment. Globally, the pipeline of government sector opportunities continues to increase, up 30% compared to this time last year, as agencies continue to prioritize modernization, cybersecurity and cost efficiency. Now I will summarize our progress against CGI AI strategy. Starting with embedding AI into our end-to-end services. In Q1, the rollout of our AI-enabled software delivery life cycle is improving engineering speed and quality with strong adoption of AI development assistance and advanced tooling. We are reinforcing trust and compliance through CGI's responsible use of technology framework, embedding AI risk governance directly into cells and delivery life cycles. In terms of client adoption, we continue to see an evolution from experimentation to enterprise integration. The transition is not a fast or a direct one, our success depends on strong foundation for data quality, platform modernization and governance, all of it -- all of which are strength for our team. Recent examples of AI projects include launching an Agentic AI strategy for our Canadian financial institution to guide their outcome-oriented AI adoption, delivering AI-driven application reverse engineering for U.S. federal agency to support faster monetization decisions, applying deep learning AI for a U.K. health care provider to improve IVF embryo selection and patient outcomes, implementing AI Ops at a Canadian retailer to help improve IT reliability, efficiency and cost optimization, and deploying an AI-enabled developer assistant for our U.S. utility to simplify system integrations and accelerate customer billing implementations. Recognition of CGI as a AI to ROI client partner continues to be recognized by leading industry analyst firms. For example, in Q1, CGI was positioned as a leader in the IDC MarketScape for worldwide AI services for state and local government. Moving to how we are leading with AI integrated platforms and alliances, 65% of CGI's IT solutions incorporate AI-enabled intelligent automation. Our industry-leading solutions are relied on the enabled mission-critical business operations, delivering direct value to clients every day. Our technology alliance partner program also continues to expand introducing new channels to market and growing our relationships with the hyperscalers and AI-native firms. We recently announced a multiyear agreement with Google Cloud to help clients accelerate Agentic AI outcomes with Gemini enterprise and a global go-to-market alliance with open AI to help clients deploy advanced AI capabilities securely, responsibly and at enterprise scale. Turning to how we are uniting talent and AI technologies. While our CGI partners are naturally using AI as part of their everyday work, approximately 40% of our consultants have expertise in advanced AI and data, more than double the number since this time last year. Given this, AI-related training continues to dominate the learning and development courses, our experts are completing through our CGI academia platform. Our learning and hiring investments also contributed to CGI earning new alliance certifications and partner tier status. Over the past quarter, this included progress with AWS, Snowflake, ServiceNow and UiPath, all of which expand our capabilities and create new business development opportunities in advanced AI, cloud and data. Lastly, we also progressed CGI's internal AI adoption. Through the new engagements with Google Cloud and Open AI, we are expanding our current use of these platforms by equipping an additional tens of thousands of consultants and experts. We also launched our internal AI exchange platform with widespread engagement as our teams contribute and reuse proven code assets and best practices, delivery processes and playbooks. CGI's AI exchange is designed to help us scale and industrialize AI delivery globally while maintaining quality, speed and cost effectiveness. As we reflect on the past 50 years in business and more importantly, our future, I will now outline CGI's value creation strategy for our 3 stakeholders and namely you, our shareholders. Our value creation strategy is built on 4 streams: systems, integration and consulting, including the services related to IP, managed services, including our IP solutions, accretive acquisitions and share buyback and dividend programs. By design, these streams are complementary and countercyclical to external market dynamics in order to foster continuous revenue growth and EPS accretion for the benefit of our shareholders. This positions CGI to deliver results even as the global business environment remains complex and uneven. Starting with our first value stream, SI&C. In stronger economic markets, client priorities tend to expand to innovation, experimentation and growth. As clients spend on more discretionary initiatives, our SI&C capabilities support them in business evolution, integrating core systems, and creating and scaling new platforms and applications, regularly including consulting on our IP solutions. Today, we are seeing early indication of an uptick in demand in the market as the pipeline of new opportunities is strong, including for AI advisory and AI integration services related to CGI IP and alliance platforms. In fact, our pipeline of SI&C opportunities in advanced stages is up by more than 40% year-over-year. Additionally, in Q1, SI&C revenue grew 9.8% year-over-year in constant currency. As Steve mentioned, the ASI and sea bookings in the quarter reached 100% of revenue. Turning now to our second stream, CGI's managed services, which fully embed advanced AI as a standard practice, making them especially attractive for clients. When they are market uncertainties, clients typically want to reduce spending to increase their financial flexibility with the goal to reinvest in digitization. This is why we see demand rise for CGI's managed services which allow clients to benefit from longer-term, outcome-based partnerships with clear cost structures and commitments for productivity improvements and innovation. CGI's global delivery capabilities also play a critical role in our managed services, including our global capability center expertise, which was recently recognized by Everest Group through our managed services, including those delivered with our IP solutions, we become a core extension of the client teams. This drives longer-term recurring revenue with higher margins for CGI. From a revenue perspective, over the past 12 months, our Managed Services business increased more than $600 million or 8% compared to the previous year. In Q1, Managed Services bookings were up on both a year-over-year and trailing 12-month basis. Notably, since Q1 last year, 40% of our managed services wins were new business. And the pipeline of new opportunities reflects this uptick increasing by more than 20% over this quarter last year. Regarding our third stream, CGI's business -- CGI's buy strategy. Given the ongoing strength of CGI's balance sheet and current market conditions, we continue to pursue accretive acquisitions at pace. In the quarter, we closed 2 mergers. In Europe, we completed the merger with a division of Comarch, which expands our presence in Poland and the Baltic states and deepens our public sector expertise and IP portfolio across social security, health, agriculture and other mission areas. In North America, we expanded our Canadian footprint through the merger with Online Business Systems, an established IT consulting firm based in Winnipeg. Through this agreement, we enhanced our capabilities in AI, digital transformation, and cybersecurity with enterprise clients in Canada and the U.S. I would like to warmly welcome the more than 800 new consultants who have joined CGI from these mergers. Our pipeline of additional merger targets remain robust. We are committed to making sure that we acquire the right companies at the right time and at the right price, all 3 without exception. And the final stream, share buybacks and dividends provide additional value creation to our shareholders, especially now given that we believe CGI stock is undervalued. So we plan to remain very active in our share repurchase program, while these conditions persist. As we look ahead across the markets we serve, economic conditions and client priorities continue to vary by region and industry. These priorities are influenced by geopolitical uncertainty shifting regulatory requirements and the growing importance of IT systems to national resilience, sovereignty, competitiveness and everyday operations. At the same time, interest in AI remain high making it more, even more important for organization to separate the height from practical impact. In this environment, trust, deep industry knowledge and proximately to the client matter more than ever. To address their priorities successfully, clients need partners like CGI who have the end-to-end capabilities and industry expertise necessarily to modernize core systems, strengthen cybersecurity and sustainably integrate AI-led digital capabilities into their operations. In closing, while the environment is still uncertain, we are observing gradual improvement in some industries and geographies. As such, we anticipate continuing improvement for the rest of the year. CGI has been built to grow and last. For 50 years, we've been at the heart of continuous technology innovation and business transformation. Combining human ingenuity with the power of technology to help our clients achieve meaningful outcomes. As the pace of change accelerates, we remain focused on what matters most, helping our stakeholders succeed. Thank you for your continued interest and support. Let's go to the question now, Kevin.

Thanks, Francois. Julie, we can now poll for questions.

[Operator Instructions] Your first question comes from Richard Tse from National Bank Canada.

Yes. Thank you. With respect to acquisitions, does the volatility and uncertainty around AI, has that sort of changed the way you evaluate these transactions kind of given that sort of uncertain future?

No, not at all. Thanks, Richard, for the question. Now we continue to see anyway AI as an enabler for the future. So when it's time to look at acquisition and merger, we're still looking at how we can improve our footprint in our several metro markets, where we're lacking presence. And naturally looking also at the larger ones and the transformational one that can help CGI in the future. So it's not changing anything in our policy or politics or view of merger and acquisition. We are looking at relationships. We are looking at places where we can continue to grow. And so AI is actually an enabler and not something that is asking us to change our philosophy on M&A.

Okay. And just my second question has to do with the U.S. Federal government. Obviously, last quarter, we had that sort of a government shutdown. But as you step back, do you think that there's some things that are maybe happening in the background that structurally sort of resets that business? And I guess related to that, at what point and how quickly could you sort of restructure if needed if that was the case?

Again, we still think that Federal government is a very good client of ours. It's more than 30 years that we're dealing with the Federal government. So -- and they need IT to support their operations. So we still think it's a very good market. But sure, we are living in the geopolitical environment that is very dynamic. Yes, we finished -- we had a shutdown. Now we're talking perhaps another shutdown at the end of this week where we'll see. But that's short-term headwinds. We're still thinking on the long-term basis that it's a very good market for us.

Your next question comes from Stephanie Price from CIBC.

Maybe just following up on the U.S. Federal question. Just curious around margins. Obviously, you had messaged the margins were going to be a little bit weaker in the U.S. Federal, just given the shutdown. How should we think about margins in U.S. Federal going forward, just given, as you noted, it's a pretty dynamic environment here? Are you seeing any pricing pressure? What are you seeing out of the government in terms of pricing here?

Yes. For sure, the fact that the revenue and profit was down this quarter was also the fact that we -- our utilization rate went down with this shutdown, some -- we had some people that were not able to build. And so we had the cost and not the revenue. So with -- when the U.S. government did reopen, we were able to redeploy our people in the contract. And so that improved the utilization rate and thus improving their margins. So it's not necessarily cost pressure or rate pressure that we have in the federal was really related to the fact that with the shutdown and the fact that it's temporary, we wanted to keep our workforce. And so that was -- that's why it put a pressure on the utilization rate.

Okay. So going forward, we should expect more in line with historical. And then in terms of SI&C, it was great to see that bookings were solved in the quarter, and you mentioned the pipeline for advanced stages was up. Can you talk a little bit about the regions and industries where you're seeing the improvement in SI&C?

Yes. Thanks for the question. For sure, we're seeing SI&C improvement a bit across every industry, and I'll start with an example on the financial sector, they need some advice, example in AI. So we are helping them to deploy some of these AI tools like I gave some example on that in my script. Same thing in manufacturing, they need consulting again to deploy these tools. So a lot of consulting. Business consulting is still soft, but everything related to CIO consulting and especially with these tools, we're seeing a lot of new demand. And I would say mostly in all industries.

Your next question comes from Suthan Sukumar from Stifel Canada.

For my first question, I wanted to touch on the sort of the industry theme around vendor consolidation. Can you speak a little bit around what clients -- your clients are doing today with their IT partners and roughly, what percentage of some of your new business and existing business expansion today is a function of continued vendor consolidation?

Yes, that's a great question. For sure, we're seeing a lot of that trend across the world. Clients realize that they need to reduce the number of partners and especially using a lot of freelancers in the market. So you'll have a lot of -- they'll deal with very small companies and so because of relationships sometimes with the buyers. So we won several of them, vendor consolidation. We won a big one that I think I announced last quarter, with a large bank in Europe that was actually a vendor consolidation. They went from hundreds of suppliers to 4, 5 suppliers, and we were one of the suppliers. And we're seeing that, especially in the very large companies and clients. Same thing happened in Germany with an automobile company where they had thousands of suppliers, and they wanted to reduce and we were one that gained some activities with this vendor consolidation. So we see that. We will continue to see that in the future. And the fact that we're very close to our clients. I think that's -- it's a tailwind or at least opportunities to us to win new business in our existing clients.

That's helpful. For my second question, I just wanted to touch on sort of the broader theme of enterprise AI adoption. So you guys have recently announced new partnerships with OpenAI, Google Gemini on this front, as did some of your global peers also more recently. From where you sit today, where are we at in the enterprise AI adoption cycle? And is AI spending today, is it -- do you see it being more additive or still displacing existing IT spend budgets? And how resilient is sort of this AI related spending with respect to the macro?

What I would say to you, first of all, as for the tools by themselves. I think a lot of companies already deploy these tools. So all these tools are at least for the large companies, they deploy them. Now what they need to do is to realize the outcome with these tools. And that's where they need companies like us to help them to produce these outcome for them. So that's really where we are today. And that's why we have a lot of consulting with these clients because they don't know what to do to a certain point with these tools. And so that's where we are helping them. Another good example is a lot of these clients will have old solutions or all the applications that they didn't touch for the last 15, 20, 25 years because it's too complicated and it's too -- they don't want to touch it to break it. And now with tools like AI, it's -- they can see it in another way and having these tools helping to do the conversion or the refreshment of these application. So that's brand new demand and services that they were not existing in the past. People were saying, let's not touch that. And that's maintaining them, but let's forget about them. Now they're saying, well, perhaps we can reduce our run cost by changing these applications. And so that's brand new demand that we didn't see in the past. So I think that we will see that to continue. And finally, again, in managed services, that is still very relevant and people want to have savings on their run of application. I know AI is a tool to help, to achieve these savings. And we had the offshoring, but now we have offshoring and AI to help to create these savings for clients. So that's why we still think that, that will open doors to new demand in the managed services side.

Your next question comes from Thanos Moschopoulos from BMO Capital Markets Canada.

First of all, just given the very strong ROI that I presume clients can get from AI, if we just look at the most recent quarter, your trailing numbers and what's been holding back growth. Is it that the CIO understands the value of AI, but the CFO is constraining the budget? Is it that just more education was needed about what I can do for them and now you're starting to see more implementation. Just what's been the holdback in terms of clients putting [indiscernible] the metal on these AI initiatives?

I don't think it's necessarily our holdback. I think like I'm saying, I think people realize that it's a lot more complicated than people thought. And so that's one thing. The other thing also is data quality. It's nice to say that you have AI and you deployed AI, but AI will be as good as your data is good. And I think that's also, again, one of the challenge that a lot of these company has. And so they -- that's where the work needs to be done. And again, they're saying like the CFO seeing the cost coming in of these tools, coming in on a monthly basis, but they don't see necessarily the outcome. And that's where, again, the CIO wants showcase that. But to do that, they need to clean up the quality, clean up some of the quality of the data, clean up some of these applications. And that will take some time. So that's really, I think that's -- I would say, on that specific item. I think overall, the macro is still something that you see in the market. Still, we're restarting to talk about tariff, for example, in some places. So it's -- for sure, it's a concern in some places, especially when I'm talking to some clients in Europe, you still see some concern on that side and that's hurting a bit on the macro side.

Great. And then just in terms of your own internal use of AI, when we look at your margins for this quarter, I mean, would you say that you start to capture some material margin improvement for AI? It’s just -- is it early days on that front? How should we think about kind of the benefits you're already capturing?

I'll start, and I'll ask Steve to continue. But for sure, we are seeing already some savings with AI. For sure, some of it, we are reinvesting in the business. But -- and also in the quarter, it was hidden to a certain point with the onetime cost in India, but you will see the margin picking up in the future. Perhaps you can talk a little bit about some of our sample.

Yes. Look, we are using it, obviously, internally and the team are using it well. It's bringing efficiency, obviously, but we are continuing to invest in it. We want further efficiency. We want further improvement. And -- but in terms of -- as mentioned, the global margin that we had in the quarter, we're pretty proud with some good improvement in many SBUs. Obviously, there was a onetime in India and also what we called out at the last quarter in federal. But if you look at Scandinavia, Northwest and Central East Europe, a clear improvement in terms of margin. You see also the benefit coming in terms of the margin from the integration of BJSS. And also in France, the margin has improved. So Western and Southern Europe also is a good improvement year-over-year. So quite good activities that has strengthened our margin, and it's quite good for the next future quarters.

Your next question comes from Robert Young from Canaccord Canada.

The comments on the government pipeline up 30%. I was hoping you could parse that out between U.S. Federal. You noted that bookings were impacted and the higher volatility. And then I guess on the other side of that, it looks as though governments around the world are looking for more sovereignty, more control over local technology perhaps. Maybe just talk about where those bookings growth -- or the pipeline growth is coming from?

Yes. Thanks, Robert. So yes, government, we are seeing good momentum across the world. I'll start with our home here in Canada, as you know, Canada wants to invest a lot in the defense side, for example. And so defense is including cybersecurity, for example, and so they all need IT to support them. They want to reduce costs on delivering services to their citizens. And again, they'll need to build a new system. And so we are seeing that good potential in the future, and we have some conversation with the client, with the government clients in Canada to understand when and how it will be deployed. Same thing in the rest of the world. We -- the rest of the world, as you know, they want to invest a lot on the defense side and we have already -- some of these defense ministers, ministry example, in Germany, in U.K., already the clients of ours. NATO is a client of ours. So we are seeing momentum and discussion there. So we see good opportunity on that side. Going back in the U.S., I would say, state and local, so everything related to the state and local government in the U.S. We are seeing good momentum. Some -- to a certain point, they are taking the place of the Federal government and some of these investments, so we are seeing also good momentum on that side. On the Federal government, for sure, we are seeing a pickup versus last year when we were talking about those -- and we were talking and we had the U.S., the shutdown. So we are seeing also opportunities in the pipeline on that side. Now that hopefully, we won't have another shutdown, we can see some of these RFP going out and be awarded in the next couple of months.

So it sounds as though you're pretty confident that, that type of pipeline growth is indicative of sustainable top line growth in the future, both in the U.S., U.S. federal, but all around the globe, I guess?

I would say all around the globe, for sure. As for U.S. Federal, again, we just need to be -- it can be lumpiness a bit with everything that's happening there. But at the same time, state and local in the U.S. is going pretty well.

Okay. And then the headcount number was flat quarter-over-quarter, up year-over-year. But I mean the revenue growth is still outpacing your headcount growth. And that's interesting because you highlighted the utilization headwinds in U.S. So just talking a little bit -- if you could talk through the revenue per employee growth and then also, if you could be clear on whether Comarch and OBSS are included in the head count number or -- so are we going to expect to see growth in the next quarter?

Yes. So Comarch and OBSS are in the headcount numbers since they were closed before end of the quarter. As for the revenue per headcount, for sure, it did grow again and will continue. You can expect this to continue to grow. Like I said in the past, most of our managed services are outcome-based. And so with the fact that we're using more and more AI in our delivery of managed services, I don't need necessarily the same head count number or same number of people to deliver the services. So you can still expect this headcount versus revenue or at least the revenue by headcount continue to grow because of the new technologies that we're deploying.

Okay. Last quick question. Last quarter, you talked about outcome-based pricing, and you're talking a lot about outcome-based programs this quarter. One of your competitors was highlighting significant growth in fixed price contracts related to their proprietary platforms. And so I'm just curious if you're seeing that and how that might affect the model and margins going forward? And then I'll pass the line.

Yes. No, an outcome base can be fixed price also, especially when it's shorter duration if we're talking about a managed services of 2, 3 years, a lot of time, we can fix it even for that full 2, 3 years duration, for example. For sure, when it's longer, we need to take on account the volume and it's both sides. It's good for the client, and it's good for us because having linked to the volumes or the outcome is good on both sides. But yes, we'll have more also fixed price project. I think really the input-based model, that's really what's standing to reduce and will continue to reduce to be replaced by these fixed price and outcome based.

Does that have an impact on margins?

I won't have -- because even I would say, a fixed price, we'll be able to improve our margin in the long term because -- and after that it's fixed, every way of reducing the cost would go directly in our margin improvement.

Your next question comes from Kevin Krishnaratne from Scotiabank Canada.

Nice to see the SI&C bookings strength there. You talked about the early indications of uptick in demand and you did talk about more on CIO consulting, less business consulting. I still think the trends look pretty good a little bit maybe different than what some of your peers are talking about recently. So I'm just wondering maybe if you can comment on unpack a little bit further into that, like what what's maybe unique about CGI in this segment relative to some of the peers that is leading to sort of some of those earlier signs that you're seeing relative to the broader industry?

Yes. I don't know for the other companies, but I'll say for us, our model and the fact our proximity model, I think that's really the differentiator with the competition. We are close to our clients. We are building a relationship with them. We know their business. We know their industry. So I think that's helping us to be there and our top of the mind of these clients when it's time to find the right expertise and the people to help them in their deployment of new technology, for example. So I think that's really going back to the model that we have that's helping us to win.

Got it. Second question, just more on the theme of enterprise adoption of AI. Can you maybe talk about any differences you're seeing in this technology and the deployment of enterprise AI versus enterprise software and what that means from a CGI and other IT providers. For example, some of these AI use cases, they seem to come up on the bottom-up individual workers or teams might be different than how an ERP deployment starts from the top. So just any thoughts there now maybe talk about the entry point of AI into the enterprise versus prior cycles and how you see that, what that might mean for your business?

Yes, for sure. It's a tool that is deployed to everyone. So when it's deployed to everyone, everyone is playing for the tool. And so you'll have the business side that we'll take the tool, we'll will use it and try to invent something with it. Sometimes, let's say, it's good, sometimes it's less good. I think like anything else, you'll see some balance on that. I'll give you the analogy also with cloud. I think cloud -- when cloud went out, everybody said, it's way cheaper. It's way easier. Let's deploy it. And you saw that happening and to realize at a certain point in time, the saving we're not there anymore because it was not managed. It was -- everybody was able to buy a cloud computing and so at a certain point, it was even more costly than before. So I think that's the same thing here. If people are leaving it to only the employees and they can do what they want with it, I think it will just create more cost in the machine and we'll need to be careful about that. So I think that's why one way, it's good for innovation and all that. But in the other way, you need still to put some, I would say, processes to be sure that it's well managed. And that's where we can help clients with the definition. And that's what we're doing today. And a lot of these business consulting or the consulting side. is that we're helping them to put some processes so that this approach of bottom-up, like you're saying, is still -- it's not chaos and that we can -- the clients can manage it.

Your next question comes from Surinder Thind from Jefferies USA.

Francois, when we think about just the interest in understanding of how important AI is out there, why isn't there a bigger rush to improve the infrastructure, the data platform modernization efforts at this point in the cycle? Given that if you can get the back end fixed, then you can start to revise the benefits. It just seems like everybody is slow walking this and it's hard to figure out why.

I think because you're saying, yes, the back end can be easily done. But it's again, it's the data itself and the complexity of all that. You have in company so much data that they are managing and people, it's not all necessarily relevant data. And I think that's the hard part that they need to be sure that they're cleaning up that data to use the right one to put it in the machine to have the right outcomes and that's difficult. It's bringing a lot of complexity. And it's same thing for Agentic, right? Because we're talking about data for AI, but when it's time to put AI for processes and Agentic AI, now you're dealing with applications and Big companies are talking about thousands of applications. So it's not that easy to implement and so it's something that people need to deal with. The other thing also, it's everything related to cybersecurity. We have clients today and for good reasons when we're saying, we can put some AI in the delivery of the managed services. Some are ready, other ones are saying, I need to understand the impact on cybersecurity. I need to -- so it's a lot of different -- it's a new technology. Like any new technology, it's not that easy to implement an environment that were built in the last 20, 25 years. So I think it's a journey and that journey will continue. And that's why they need help from companies like ours.

So I guess, as a point of clarification, I think the idea here is that we still need to do a lot of the core work before we even tackle the AI problems. And I guess that's really where my question is why isn't there maybe more core work being done, right, because we need to know that build these data platforms and so forth before we can even get to AI. And I think that's where it is. Is it that companies got burned after maybe the pandemic where there was a lot of investment, and they didn't realize the return on that investment. So they've gone to this mindset of, you know what, I'm going to slow walk this. I want my ROI calc to be an in-year ROI versus I'm going to make these big investments because we can see other parts of the infrastructure there is an incredible amount of investment being made. And there is this big rush to be the first to go out there and get some of this done, but it just doesn't seem to be happening at the corporate level.

I think when you're saying big investment, we're seeing a lot of big investment in the hyperscalers in this company to some point. I think, again, meaning a lot of clients, and all these clients, they invested in the tool itself, and they deploy these tools itself. But like you're saying, they don't necessarily see the returns. And so that's why they're coming back. And that's why we're saying, yes, we're seeing some deployment, a lot of experimentation in the past. Now we're seeing some deployment. But it's true that they are going a bit slower, just to be sure that finally, they will see a return on their investment because for now, they put a lot of money in the tools without necessarily to see the return for now. And so that's why it's a journey, and it will take some time. But people are I'll say, an example in the financial institutions, they are looking very -- and they are doing some very larger use cases in the banks, to see how they can have a return. In some places, they are seeing a return, but it won't happen in a month. That's for sure, Surinder.

Understood. And then could you elaborate on the earlier comment in your prepared remarks around just expecting continued improvement over the rest of the year? Is the idea that things should get sequentially better? And is that on an organic constant currency basis? How should we think about that part of the journey as you kind of talked about this idea of things getting better?

Yes. That's actually what I was saying to some point. Yes, we are expecting to see some improvement quarter after quarter especially in places like in Europe. So we are expecting that for sure, the caveat I have now is the shutdown. I thought it was behind us. We'll see Friday, if we have another shutdown in the U.S. federal government and what can be the potential impact. But if I'm taking that out of the equation, yes, we are seeing some improvement, and we would see improvement on a sequential basis.

Got it. And is the expectation then to get back to positive organic constant currency growth by the end of the fiscal year? Or how are you thinking about that?

The idea is to improve the growth -- overall growth on a constant currency basis, including the organic side of the equation. So that's the goal. That's what the team is working on. And we're seeing some positive movement on that side.

Julie, we have time for one more question, please.

And your last question for today comes from Jerome Dubreuil from Desjardins.

Another one that I want to push a bit more on the contrast that Kevin has highlighted between your comments on SI&C and -- or more discretionary with some of the peers. I'm wondering how reliable are the leading indicators in terms of the bookings and the pipeline for this recovery specifically since we haven't been hearing that from peers? And do you think that we've seen the trough in organic growth this quarter, notwithstanding the shutdown?

At least I won't talk for the other ones, but to us, for us, yes, we're seeing that we perhaps pretty hit the bottom this quarter and that we're expecting some gradual improvement in the future quarters again, and that's a caveat on the shutdown if we have another one. But that's the idea, and that's what we see, at least for now, is that we are seeing some improvement that would happen on a quarter-over-quarter basis.

And Jerome, the SI&C bookings, it's short-term bookings. So that's why when we see that it’s going back to 100% mark, it's quite -- is giving us confidence on the forecast for sure.

So what do you mean by this is that the higher bookings is not like offset by kind of longer-term contracts is what you mean, right?

We're saying that converting SI&C booking and revenue is going -- it's a lot faster and than manageable.

Yes, makes sense. And last one for me. I'm trying to assess maybe the evolution of the industry in this time of AI, are there areas in which you're winning deals where you used to lose or maybe losing deals where you used to win? And maybe what are the explanations that our clients giving on this?

I would not say that we're necessarily losing or more or less in one area than others than before. If you're saying before AI, if that's the ultimate question. So no I don't see it. Like I'm saying, the idea and what we need to be sure is that to stay competitive, example, in Managed Services that we need to embed, and continue to embed this new technology in our delivery to be sure that we are competitive. And that's what we're doing, and we'll continue to do. That's our strategy. And having -- naturally having the talent with the right tool. So that's why we continue to invest in these area. But like I'm saying, in some places, we're not -- for example, where we don't have call centers and find call centers and stuff like that. So -- but even that, it will create demand because in order to replace a call center by AI, it's a lot of investment, it's a lot of changes, and they only need companies like us to help them in these changes. So not necessarily I'm seeing a trend or losing in business in area that we were strong in, I don't see it. But for sure, we need to continue to be relevant and continue to invest, and that's what we will do.

Ladies and gentlemen, this is all the time we had for today's question. I will now turn the call back over to Kevin Linder, for closing remarks.

Thanks, everyone, for participating. As a reminder, a replay of the call will be available either via our website or by dialing 1 (888) 660-6264 and using the passcode 35024. As well, a podcast of this call will be available for download within a few hours. All of questions can be directed to me at 1905-9738363. Thanks again, everyone, and look forward to speaking soon.

This concludes today's conference call. You may now disconnect. Thank you. Have a great day, everyone.