Capgemini Se Unsp/Adr

Thank you. Good morning, everyone, and thank you for joining us for this early morning call. I'm joined by Carol Ferrand, our CFO, and Olivier Sevilla, our COO. So I'm happy to share with you our excellent Q3 results. Our revenues reach a record of €4.5 billion, up 12.9% at constant currency, and 13.2% on an organic basis. So slightly higher than Q2 organic growth of 12.9%, in spite of a much more demanding comparison basis. Bookings remain dynamic, up 15% at constant currency. The book-to-bill ratio is over one, which is a record for a third quarter. And digital and cloud continues to progress at a rapid pace. We have recorded a very strong double-digit growth, powered by our constant effort to push innovative offerings to address client expectations. So in this context, And especially since the health crisis continues to be a challenge in certain regions of the world, I would like to take a moment to thank again all our employees and our leadership team for their dedication and for their sustained performance from quarter to quarter. Now diving a bit more in detail, the strong growth we have achieved, of course, is a great satisfaction. It reflects the strengthening of the positive trends of the past few quarters in all sectors and regions. All regions are growing double-digit on a like-for-like basis, which translates in strong constant currency numbers. This is particularly the case in North America, where we finished rolling out the transformation we initiated a couple of years ago. In this region, we start to fully benefit from the strong positioning on both intelligent industry and customer first, following the integration of Altran. We have also increased our investment in North America in terms of assets, senior talent, and ecosystem of partners. to take full advantage of the great digital transformation opportunities in the market. And we have strengthened our brand positioning, so we are very confident around basically perspective moving forward in our North American business. Performance was strong across most sectors as well for the group, with very high growth, as you can see, in the consumer goods and retail, in manufacturing, but also in services. On the business side, all the businesses are performing well in line with Q3. with the second quarter trends. We have meeting growth in application and technology and in engineering. In strategy and transformation, we are growing at 28% fueled by the client appetite for innovation and digital transformation strategies. We fully benefit from a high level of cloud, data, and AI demand. And it's also the demonstration of the relevance of our strategic choices. We're looking a bit at some of the deals. We can see that we are clearly positioned as a strategic partner for the digital transformation of large corporations and organizations, leveraging, of course, the cloud, data, and AI. Our offering covers the entire value chain today, from product and services design to customer experience. We accelerate on intelligent industry and customer first, and we continue to leverage our strengths in enterprise management. We are today recognized by both analysts and the market for the excellence of our offerings and the breadth and the depth of our know-how. But I would like in particular to highlight something exciting we launched recently, the customer first domain. It is what we call the new frog. With renewed ambition and offerings, part of Capgemini Invent, we intend to help our clients reinvent completely their businesses to stay ahead of the curve and orchestrate what I would consider as being fluid customer-centric journeys. The new portfolio of offerings that we have developed under the new frog will support the continued expansion we are aiming for in the C-suite and our successful positioning in customer experience. In the intelligent industry, we continue to refine our positioning industry by industry. We have now finalized specific strategies by industry to address the needs of our clients. And we tirelessly invest in content, industry knowledge, and offerings, as exemplified by the deals you can see. when we design a smart factory or new intelligent products. We have never been so industry focused than today. Cloud data and AIs are the key pillars of our growth and the primary drivers of technology and business evolution. However, we apply them more and more by industry. Whether it's about building data lakes, cloud apps, move to cloud, or smart AIs, we cover the whole spectrum of expectation. We not only provide best-in-class technology, but we also have clear business value to our clients. So this basically brings us that we have a very solid pipeline for Q4, which makes us really confident. The talent front, which is an important subject today. So this quarter, we had a milestone. We passed the 300,000 employee mark. It's a bit symbolic, of course, as a milestone for us. If I take a moment to look in the rearview mirror, I remember that we crossed the 200,000 Mark, just four years ago. So what a long way we have come in such a short period of time. In a fast-growing industry like in the technology industry, it's a priority to attract and retain the best talent. So beyond the symbolic numbers, of course, our constant headcount growth proved that we are indeed one of the most attractive employers in the market, providing opportunities to work on some of the most exciting digital transformation projects. In the third quarter alone, we increased headcount by nearly 20,000 people, bringing the total growth to 17% in the last 12 months. We are recruiting a significant number of young graduates, as you can see, across the world, while expanding also our leadership ranks. We continue to increase our investment in training and reskilling. Since early 2021, our employees have completed almost as many learning hours as they had completed through 2020. I'm also proud of the fact that we have not sacrificed diversity in any way. And despite the immense recruitment needs and the tight labor market, our gender diversity continues to progress. And of course, I'm very proud of this. The new normal is also a revolution. We talked about it before. It's a revolution in the way we work, we commute, we manage, we onboard people. By the end of this year, we'll have rolled out a full flex policy to 80% of our employees. All across the group, we are taking advantage of the new normal to continue to gain in agility and attractiveness. And this growth is also supported by our new brand promise. It's particularly effective in terms of recruitment and allow us to continue to attract the best talent. Finally, in the context of the COP26, which will open later this week, I would like to say a word about the group's commitment to sustainability. The context, of course, is clear. The recent report of the International Energy Agency estimated global CO2 emissions of the world economy in 2021 will be roughly equivalent to those of 2019. Capgemini commitment is strong and results, of course, are already there. Our emissions during the first half of the year have fallen by more than three quarters compared to 2019, held by the limited amount of travel. We are on track to be carbon neutral no later than 2025 and net zero by 2030. This is first and foremost a result of constant work for the group to control the carbon footprint, notably in terms of travel, commute reduction, work, environment transformation, and quality offsets. We are also investing in sustainability to help our clients achieve their targets. And this is where we can even have an even bigger leverage. So in Q3, we launched two important offerings around green IT and net zero strategy. And of course, we have more offerings in the work that we'll be launching in the coming months. On the subject of sustainability, the demand is there from our clients. The pipeline is getting stronger month after month. We really see good traction across all sectors. And it's very diversified in terms of projects. It goes from product design to analytics monitoring through to green IT projects. We really consider that fighting global warming is a challenge of our generation. It's our responsibility as leaders, and it is also a must if we want to meet the expectation of our talents. We are also accelerating on this topic and will notably disclose in the coming weeks our detailed ESG policy, including priorities and specific objectives. It will be a strong and visible signal of our ambition. You will know more about it during an investor event we will organize by the end of the year. Now coming to the outlook. In this promising context, given our excellent performance and our confidence for the rest of the year, we upgrade once again our outlook for the full year. The second upgrade is substantial and across all our targets. We now target a constant currency growth of 14.5% to 15% versus the 12% to 13% previously. Expected M&A impact remains unchanged at five points. And just a reminder, in February, we were targeting seven to nine percent. On the operating margin side, we expect it to be greater than 12.7 percent versus 12.5 to 17 percent to 12.7 previously. This would represent a margin improvement of more than 80 basis points year on year. And we raise again by 200 million euro our organic free cash flow target to above 1.7 billion euros for the full year. Now, this second upgrade demonstrates the quality of our offering portfolio, the strength of our operating model and our ability to grow in a sustainable way and manage our talent pool. Thank you for your attention and now I'll leave the floor to Carole, our CFO.

Thank you, Ayman. Good morning. Let's first review the key trends of the third quarter of 2021. As Ayman already pointed out, Capgemini achieved another strong quarter with very solid growth across all our regions and all our business lines. With revenues of €4,552,000,000 in Q3, our growth at constant currency reached 12.9% compared to the same period last year. As in Q2, scope impact was negative but limited in Q3 to minus 0.3%. The organic growth therefore reached 13.2% in Q3. This is slightly higher than the 12.9% recorded in Q2. This is another meaningful achievement given that the comparison base was much more demanding in Q3. Indeed, you might recall that the four-point acceleration were recorded between the second and the third quarter of last year on an organic basis. FX had a slightly positive impact of 0.7 points in Q3, mainly coming from the British pound. This brings the year-to-date impact to minus 1.7 points. Consequently, the group reported growth stands at 13.6% in Q3 and 14.4% for the first nine months of the year. For the full year, M&A will contribute around 5 points to group growth, while the FX headwind should be limited to around minus one point. Let's now look at our revenues by regions. All the group's regions reported double-digit organic growth in Q3 2021. We are particularly pleased with our sustained traction in North America with accelerated over Q2. The transformation plan launched before the pandemic contributed to the strong performance. UK and Ireland and Asia-Pacific and Latam also further accelerated, reporting growth rates visibly higher than the already very strong Q2 growth rates. France grew double-digit organically but at constant currency. This was partially offset by the scoped impact mainly driven by the sale of Odigo. Taking into account the much more demanding comparison basis, the Q3 underlying growth momentum is even stronger than in the previous quarter. You might indeed remember that France's constant currency growth rebounded by eight points between Q2 and Q3 last year. These geographical trends are fueled by positive dynamics in almost all sectors, which are quite homogeneous across all our regions. Actually, sector growth rates in Q3 are comparable to those achieved in Q2, despite a much more demanding comparison basis. Manufacturing and TMT sectors maintained their strong group momentum of the previous quarter. Same for the public sector, whose strong traction has been remarkably steady since Q2 of last year. The consumer goods and the services sectors even accelerated in Q3. Only the energy and utilities sector remained muted with a slight contraction in activity during the past quarter. Now let's have a look at our revenues by business lines. All the group business lines maintained double-digit growth rates in Q3 2021 on an organic basis, continuing the trend observed in Q2. Services in strategy and transformation and applications and technology fully benefited from the strong demand for digital and cloud services. They recorded constant currency growth of plus 27% and 16% respectively in Q3. Services in engineering and operations also maintained this strong momentum with double-digit organic growth, but at constant currency, this is partially offset by the sale of Odigo. As in Q2, this performance was driven by mid-teens growth in engineering services. Business services and cloud infrastructure services also grew nicely. A quick look at our bookings now. Our bookings continue to grow faster than our revenues. Bookings amounting to 4.6 billion euros in Q3 at 15% at constant currency. The book to be for Q3 stand at 1.01 above of last year and above the average of the past four years. Year to date, our bookings amount to 13.7 billion euros at 18.2% year on year at constant currency. And finally, a few comments on the headcount evolution. The total headcount reached 309,000 employees at the end of September, up 16.9% year-on-year. The offshore leverage is now back to pre-altron levels at 57%, up four points year-on-year. Lastly, as expected, attrition picked up. It now stands at 19.5% on the last 12 months basis, up by five points on September 2020. After the low point reached in 2020 due to the pandemic and given the strong demand environment, this was fully expected. With this, I now move back to Ayman to open the Q&A session.

So, Operator, can you please open the queue for the Q&A? Thank you.