Capgemini Se Ord

Good day and thank you for standing by. Welcome to the Capgemini 2024 Full GL Results webcast and conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference has been recorded. I would now like to hand the conference over to your speaker today, Ayman Ezzat, CEO. Sir, please go ahead.

Thank you. Good morning, and thank you for joining us for the 2024 full-year results call. And I'm joined today by our CFO, Nivi Bhagat. In 2024, the market proved weaker than we anticipated at the beginning of the year. Clients did not increase their discretionary spend. And as we discussed before, Capgemini faced some unexpectedly strong headwinds in the second half, notably in manufacturing and in France. In this challenging environment, the group demonstrated a strong resilience of the operating model while sustaining investment in cloud, in data and AI, in digital core, in intelligence industry, notably. We made significant strides in developing our leadership in AI and GenAI during the year. For the full year, the revenues stand at €22.96 billion, down 2% year-on-year at constant currency. And after bottoming up out in Q1 at minus 3.3, growth rate improved slightly through the year. We end the year at minus 1.1 in Q4, which is in line with our revised expectations in October. reflecting the challenging environment we continue to operate into. Our bookings are solid and total 23,821,000,000 euros. This represents a robust book-to-bill of 1.08 and demonstrates a strong commercial momentum despite client decision cycles that remain lengthy in this environment. The operating margin is within the target set for 2024 at 13.3% of revenue. It is stable year on year despite the revenue decline. And this is a result of continuous shift towards higher value services combined with improved operational efficiency. Organic free cash flow remains strong in spite of the revenue decline at 1,961,000,000 euros in line with the 2024 target and the previous year. Our normalized EPS standard, 12.23 euros, in accordance with our dividend policy, the Board of Directors is proposing a payment of 3.4 euro per share dividend at the annual general meeting. I'll highlight a bit on the environment remain challenging at the end of the year. The trends observed in Q4 are consistent with what we had anticipated. The manufacturing sector continues to experience strong headwinds, whereas we see an improvement in financial services and consumer goods and retail. And a robust public sector throughout the year. From a geographic perspective, growth rates improved in North America, but also in the UK, Asia Pacific, and Latin America. However, as anticipated, France experienced a noticeable slowdown. Finally, on business, both application and technology and operations and engineering improves again this quarter. It is also worth highlighting our plus 3.2% growth for the full year in strategy and transformation, and this continued momentum illustrates the strength of the group's positioning as a strategic partner to its clients. Overall, discretionary spend remains subdued across the market with only green shoots in financial services, Clients continue to be focused on efficiency, prioritizing operational agility and optimizing costs. And this has driven a strong demand for transformation programs, leading to sustained traction for our cloud data and AI services, as well as our innovative offerings in intelligent supply chain, digital core, and generative AI. Let me highlight a few deals of Q4. In collaboration with NVIDIA, we are helping Telenor in the Nordics to develop an energy-efficient GPU as a service. It's a data center offering design for energy efficiency. This compute service will run entirely on 100% renewable energy, and the plan is to scale it into state-of-the-art data center, where the excess heat generated by workload is planned to be reused in Oslo's local heating system. For US utilities provider, we are upgrading and deploying an advanced metering infrastructure to support the electrical grid modernization. The system will utilize intelligent LG devices and distributed energy resources control over a common digital communication network. Advanced analytics with machine learning will enable a real-time grid model with Power Flow providing proactive alerts to disruptive grid events from storms or in-service infrastructure failures, power flow demand balance, ultimately enabling customer to better manage energy efficiency. And from global technology company, we are currently delivering a highly complex digital core program with a large-scale SCPS4 transformation. This milestone has been achieved jointly with our recently acquired data platform company, Cinity, who was in charge of the data transformation. This illustrates what the synergies that the acquisition of CineT can deliver. CineT is truly a unique asset on the market around corporate data. Data is the fuel to create value with digital transformation, and CineT has a global team of over 1,200 data-focused experts with unique track record on data-driven digital core business transformation, particularly around SAP. We already see good synergies and target substantial growth opportunities. As we can see from some of the bookings we achieved with Synity in Q4, and of course, given the critical role of high quality data and AI and GenAI in client projects. So looking at generative AI, we are recognized for our leadership and the quality of our services. Demand from clients remains dynamic and has supported strong GenAI bookings that accounted for around 5% of Q4 bookings and close to 4% full year. We delivered hundreds of projects from proof of concept to larger programs to deploy use cases at scale. We deliver value, bringing the best solutions supported by a large ecosystem of technology partners. It is also the result of continuous investment we have been making in our capability and in our assets. More now than 150,000 talents have been fully trained to leverage the benefits of Gen-EI tools in the projects we deliver. And with the rise of agentic AI, we are accelerating value creation. With hyper automation enabled by AI agents, we are able to automate highly variable processes that could not just be automated by data, RPA, or traditional AI. And there is attraction, as you might have heard, in the market for AI agents. And we are positioned to catch the growth thanks to our investment and assets. We strengthened our set of offerings to infuse them with AI agents. For example, it's the case for our RACE platform that was upgraded with AI agent framework to propose solution at scale involving custom AI agents. So it may be interesting to look at some of the example of agent's deployment. So we're helping a global logistics company enhance its finance and accounting process operation with AI agents to assist and empower human workers. Billing analysts are supported in detecting anomalies on invoices to finalize the booking processes. And dispute managers are empowered by AI agents to manage the case in less than one minute compared to previously 10 to 20 minutes. For European utility, we are building agentic application for the procurement department. AI agents retrieve, scan, and verify documents within the digital core of the company, streamlining approvals and reducing significantly errors. And for global consumer goods company, we are leveraging agentic AI technologies to transform end-to-end marketing value chain, creating personalized consumer experiences, providing tailored interaction and streamlining marketing operations. In 2024, we also demonstrated continuous leadership in corporate responsibility. We achieved major progress in our ESG roadmap. From an environmental standpoint, we reduced our absolute emission scope 1, 2, and 3 by 35% compared to 2019. The share of renewable energy in the group's electricity consumption reached 98%, up from 96% in 2023. And the group was also confirmed as a constituent of the Dow Jones Sustainability Index Europe and maintained its position on the A-list in the 2024 CDP assessment. We also made notable progress on gender balance. Proportion of women in the group reached 39.7%, up by almost one point year-on-year and up seven points since 2019. The proportion of women among the executive leadership position reached 29%, up by almost three points year-on-year and more than 12 points since 2019. And we continue to invest in our talent. The average number of learning hours per employee trained reached 77 hours last year, significantly up, notably with the expansion of our Gen AI training program. We also extended our impact on digital inclusion. Our various programs and partnerships with leading nonprofit organizations benefited directly or indirectly almost 3.2 million individuals in 2024. Finally, on governance, we made good progress around cybersecurity and ethics.

Now, as you know, we are focused on the top-line growth.