Capgemini Se Ord

Thank you. Good morning and thank you for joining us for this Q3 Revenues Call. I have today with me Carol Ferrand, our Group CFO, and Olivier Sevilla, our Group COO. So I'm pleased to share with you our continued strong performance in Q3. With more than €5.5 billion of revenue, we have added €1 billion in this quarter alone. That represents, in published growth, 22% year-on-year, and 15.7% in constant currency. We're noting this is the sixth consecutive quarter of double-digit organic growth. The underlying growth momentum is definitely there. Bookings totaled €5.4 billion, 13% increase at constant rates. That represents a book-to-bill of 0.98, which remains well above the pre-COVID average for Q3. The funnel remains strong and we continue to have quite a few additions of new deals. It's happening at a healthy rate, so we continue to feel comfortable about the direction of the business. Digital transformation remains our clients' priority, be it to fuel top line, but also to reduce costs or increase agility and scalability of their operations. Cloud and data are therefore remain the top, in top of mind for our, in the market. We continue to expand our talent base and gain market share, reaping the benefits of the strategy and the market positioning we have achieved with unique capability mix combined with deep industry expertise. When you look at the performance across the group, it remains quite strong, be it by geography, by sector, or by business. Our Q3 is an extension actually of Q2, taking into account the more demanding comparison basis. All regions reported strong double-digit growth in constant currency, extending the robust momentum that we have seen since the beginning of the year. All businesses also achieved double-digit growth. It was highlighting the 30% growth of strategy and transformation, which continue to be driven by the strong appetite for new digital transformation initiatives. And finally, in terms of sectors, top performers in Q3 are manufacturing, services, public sector, and financial services. As you can see, the mix is quite diversified and this provides resilience. We continue to gain market share and strengthen our position in key industries and markets. Now looking at the diversity of projects signed in Q3, we can see the appetite for technology remains strong and remains quite diverse, powered by cloud, data, and AI. Our clients are engaging more and more in large-scale deployments to be able to accelerate the ROI from their digital investments. But let me highlight three things which are quite interesting. First, for Alstom, we will deliver the client's first SaaS platform to enable digital rail services for their customers. Now, this platform will be cloud-based, of course, cybersecurity, data-driven, and delivered in partnership with Microsoft. This project will support the transformation of Alstom towards being a smart and sustainable mobility leader. accelerating therefore their move from product to digital services in alignment with the 2025 strategic positioning. I mean, this is a good example because this is exactly what everybody is trying to do in the manufacturing sector. So notably here on the mobility, so that is true for rail, it's true for airlines, for aero, it's also true for automotive. The same drive towards the digital services. Another example is for a U.S. automotive company where we're developing embedded systems to accelerate their product development cycle in terms of software and edge technology. And here we are clearly positioned as a strategic partner in their product roadmap in terms of how they're going to drive their top line in the future. And finally, for luxury brands, for Breitling, which you all know, we are supporting their journey to net zero. We are driving their global carbon accounting, combining expertise in sustainability measurement with the Salesforce Net Zero Cloud. In other words, we contribute to the digital backbone of BrickLink, transformation towards a sustainable business. And on sustainability, just to continue on that, there is an ever-increasing client interest in our services, which remains one of our focus investment areas. We currently have 14 offerings in our sustainability portfolio. So we are the business and technology part of our clients. We bring sector-specific solutions to drive concrete business outcomes across the whole value chain of our clients' organizations. Now, what does it mean to be the business and technology part of our clients? It means three things. First, it's about value creation. We successfully built a client-centric organization aligned by industry and focused on value creation. We have become a lot more proactive in terms of shaping transformational deals to enable the clients to leverage the full power of technology but with industry-specific solutions to deliver tangible business outcomes. And the intimacy we have developed with CXOs now across the organizations allow us to participate in some of the strategic discussions and therefore to be present at project inception. The second thing is about offering a broad portfolio of capabilities and solutions. We have a wide business mix. We go from consulting to engineering, IT, digital. And we are global leaders in cloud, data, and AI, technologies which you understand are the core of digital transformation projects. Again, either supporting growth initiatives or cost optimizations. but we are also recognized as leader in areas like intelligent industry, customer first, enterprise management, and sustainability. And finally, this is about acquiring and retaining the best talent. So in spite of a very challenging environment, we have added close to 50,000 people in the last 12 months. This has required over the last few years to really develop a state of the art talent management. So be it global hybrid working policies, progress in diversity and inclusion, world-class digital training, accelerated promotions, employee mobility, they all contribute to make us an employer of choice. And talent is beyond all attracted by the leading edge transformation we deliver for our clients. So basically the attractiveness of our projects, the interest that people see in terms of getting associated with some of these transformations. Now focusing on value creation, building a broad portfolio, and attracting the best talent, these are really three of the engines that make us a business and technology partner. Now coming to the outlook. So in this context of continued performance and strong positioning, we clearly feel comfortable with the top end of our growth outlook for 2022, which was, as you remember, significantly raised to 14% to 15% in July. We confirmed the operating margin target of 12.9 to 13.1. We have enough levers to sustain our margin in this inflationary environment. And finally, our target for organic free cash flows remain 1.7 billion. However, we see a tighter cash environment linked to increased interest rates and a more demanding working capital due to the growth, which will be much higher than anticipated at the beginning of the year. Looking into 2023, I remain confident in our capacity to grow and demonstrate our resilience in what is expected to be a more challenging environment. Thank you. I now leave the floor to Carole, our CFO.

Thank you, Ayman. And let's first review the key trends of the third quarter of 2022. As Ayman just pointed out, Capgemini achieved another strong quarter with very solid growth across all our regions and business lines. With revenues of €5,553,000,000 in Q3, our growth at constant currency rates reached 15.7% compared to the same period last year. Given the higher comparison basis, this means that we managed to maintain in Q3 the strong traction we have been experiencing since the beginning of 2022. Considering a scope impact of 1.4 points, organic growth stands at 14.3% in Q3. Ethics prove to be particularly strong tailwind in Q3 with a positive impact of 6.3 points due to the appreciation of the US dollars against all other major currencies. Consequently, the group's reported growth stands at 22% in Q3 and 22.5% for the first nine months of the year. For the full year, M&A is expected to contribute around 1.5 points to the group growth, and FX should have a little more than 4 points. Let's now look at our revenues by regions. All group regions reported again this quarter strong double-digit growth at constant currency rates. Restated from the higher comparison basis, every region has essentially continued on the same strong momentum than in the previous quarters. Revenues in North America grew by 14.7% at constant currency rates, driven mainly by the financial services, manufacturing and TMT sectors. The United Kingdom and Ireland region continued to report strong momentum with growth of 17.2% at constant currency rates, boosted by the public sectors as well as the financial services and energy and utility sectors. France reported revenue growth of 12.7% at constant exchange rates, with a particularly strong performance in the manufacturing and consumer goods and retail sectors. The rest of Europe region grew at 15.5% at constant currency rates with the manufacturing and consumer goods and retail sectors remaining the top drivers. Finally, revenues in the Asia Pacific and Latin America region increased sharply by 24.1% at constant currency rates. Please keep in mind that the scope impact of the acquisition is lower than in H2. Underlying momentum was particularly robust in the financial services and manufacturing sectors. Moving now to our revenues by sectors. We maintain our strong momentum in Q3, with double-digit growth at constant currency in almost all sectors. Similarly to regions, most of sectors have maintained same strong dynamics than in previous quarters when restated for the higher comparison basis. While it may appear somehow muted when compared to other sectors, the energy and utility sectors have nonetheless delivered a decent growth in Q3. Moving on to our revenue by business lines, all the group's business lines maintain double the trends observed in H1. Strategy and transformation recorded constant currency growth at 28.5%, demonstrating the continued strength of the client demand for new digital transformation initiatives, whether to support their top-line growth or to optimize their cost phase. Application and technology reported constant currency growth of 15.9%, Restated for the stronger comparison basis, the underlying momentum is even slightly stronger than in Q2. This reflects the broad-based demand for group clients for deploying large-scale digital transformation projects. Services in engineering and operations also maintain their solid traction with double-digit growth. As in H1, this performance was driven by mid-teen growth in engineering services as well as in cloud infrastructure services, while business services recorded a moderate growth. A quick look at the bookings evolution now. Bookings amounted to 5.4 billion euros in Q3, up 13% at constant currency. The book-to-bill for Q3 stands at 0.98, another strong quarter, eight points above the pre-COVID average for a Q3. Year-to-date, our bookings amount to 17 billion euros, up 19% year-on-year at constant currency. And finally, a few comments on the headcount evolution. The total headcount reached 308. 58,000 employees at the end of September at 16% year-on-year. The offshore ratio is stable at 59%. Lastly, attrition amounts to 26.8% on the last 12 months basis. While still high in absolute terms, this is slightly down compared to the end of June. We expect attrition to moderate further going forward. as the demand environment and talent market are normalizing progressively. With this, I hand over back to Eman to open the Q&A session.

Thank you, Carol. Operator, can you please have the message for the Q&A?