CGI Inc.

Good morning, ladies and gentlemen. Welcome to CGI's third quarter fiscal 2025 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Go ahead, Mr. Linder.

Thank you, Joelle, and good morning. With me to discuss CGI's third quarter fiscal 2025 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 a.m. Eastern time on Wednesday, July 30th, 2025. Supplemental slides as well as a press release we've issued earlier this morning are available for download along with our Q3 MD&A financial statements and accompanying notes, all of which have been filed with both Cedar Plus 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, 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. Now I'll turn the call over to Steve to review our Q3 financial results. Steve.

Thank you, Kevin, and good day, everyone. In our third quarter of Cisco 2025, we continued to demonstrate discipline in managing our operations. We delivered $4.1 billion of revenue, up .4% -over-year, or up 7% when excluding the impact of foreign exchange. Growth was mainly driven by recent business acquisitions and continued momentum in the financial services sector. In constant currency, the CGI client proximity segments with the strongest growth were UK and Australia at 37%, which incorporates a full quarter's revenue of BJSS. And across our U.S. segments, combined growth was 9%, primarily driven by our Aon and Aon. Geographically, our growth was balanced with North American operations at .4% and growth in our European segments at 6.6%. And demand remained strong for our Asia-Pacific offshore delivery, with revenue up 6.4%. From an industry perspective, constant currency revenue growth was led by financial services at .6% and government at 8.7%, partially offset by continued softness in continental Europe, particularly in the MRD sector. IP revenue grew in six of our eight proximity segments on the strength of continued client interests for our business solutions, especially with our financial services and energy and utilities clients. IP represented .6% of our total revenue, impacted by the dilutive effect of recent business acquisition and lower volumes in our U.S. federal IP-enabled business process services. Bookings in the quarter were again over $4 billion for a -to-bill ratio of 101%, led by U.S. commercial and state government at 121%, Finland, Poland, and Baltics at 113%, and Scandinavia, Northwest, and Central East Europe at 106%. When looking at service type, -to-bill ratios were 106% for managed services and 96% for business and strategic IT consulting and systems integration. IP also had another strong quarter with a -to-bill ratio of 127%, driven by significant demand in the financial services at 195% and government at 134%. On a trading 12-month basis, -to-bill was 107%, with North America at 106% and Europe at 108%. On the same basis, managed services had a -to-bill ratio of 114%, and the SINC -to-bill ratio was 98%. On a trading 12-month basis, IP -to-bill was 113%. Our global backlog reached $30.6 billion, or two times revenue. Turning to profitability, adjusted EBIT in the quarter was $666 million, up .5% -over-year, for a margin of 16.3%, down 10 basis points due to the impact of recent mergers, which are in the process of being integrated. Including restructuring and acquisition-related costs of $84 million, earnings before income taxes were $552 million, for a margin of 13.5%. Our effective tax rate in the quarter was .9% stable compared to last year, and we expect our tax rate for future quarters to be in the range of .5% to 26.5%. Adjusted net earnings were $470 million, up $30 million -over-year, for a margin of 11.5%. On the same basis, diluted EPS was $2.10, an accretion of 10% when compared to Q3 last year. Net earnings were $409 million, for a margin of 10%, and diluted EPS was $1.82, impacted by restructuring and acquisition-related costs in the quarter. We expect to incur approximately $100 million to complete our restructuring program over the remainder of calendar 2025. Turning to cash. We generated $487 million in our cash from operations, representing .9% of total revenue, impacted by $97 million in restructuring, acquisition, and related integration payments. The SO was 43 days in the quarter, two days better than our target. This compared to 42 days in the prior year. In Q3, we invested $105 million into our business, including in Gen. AI, $286 million to buy back our stock, and returned $34 million to our shareholders under our dividend program. On a -to-date basis, we invested $288 million into our business, including in Gen. AI, $1.6 billion in business acquisitions, $784 million to buy back our stock, and returned $102 million to our shareholders under our dividend program. Yesterday, our Board of Directors approved a quarterly cash dividend of $0.15 per share. This dividend is payable on September 19, 2025, to shareholder of records as of the close of business on August 15, 2025. CGI has $2.7 billion in capital resources readily available, with access to more if needed to deliver on our profitable growth strategy. CGI's capital allocation priorities remain consistent, focused on investing back in the business and pursuing accretive acquisitions. Now, I will turn the call over to François to further discuss insights on the quarter and the outlook for our business and markets. François?

Thank you, Steve, and good morning, everyone. CGI's performance in the third quarter again demonstrated the value of our resilient mix of services, industry sectors, and global footprint, as well as our ability to proactively manage the fundamentals of our business. Our strategic deployment of capital in line with CGI's build and buy profitable growth strategy drove our performance in the quarter. CGI's results in the quarter place us in the top quartile of our IT services peer group. Today, I will focus on the first nine months of fiscal 2025, their current market environment, and the outlook. For the first three quarters, revenue was up 8% or .4% on a constant currency basis to $11.9 billion. Adjusted EBIT was up 7% to $1.9 billion. Adjusted EPS was up .4% to $6.18. And on a trailing 12-month basis, cash from operations totaled $2.2 billion, continuing to reinforce our financial position to execute on our profitable growth strategy. Delivering quality remained high, and client satisfaction again increased across every dimension we measure. Clients continue to partner with CGI to address their most complex enterprise and ecosystem-wide digitization initiatives. This client trust has driven bookings of nearly $12.8 billion over the first three quarters of the fiscal year, up by more than $560 million compared to the same period a year ago. Backlog also grew, representing two years of annual revenue. On a trailing 12-month basis, CGI's book to build stands at 107%, driven by sustained demand to help clients realize operational efficiencies, notably through managed services and RIP. In the quarter, we continue to see signs of renewed clients' spending in banking and the broader financial services sector, with -over-year bookings up by more than $400 million. On a trailing 12-month basis, bookings in this sector increased by more than $1 billion as clients turned to CGI to help modernize core systems and processes. Government sector demand remains strong, with a Q3 book to build of 112% led by strong wins in U.S. local government. Agencies around the world continue to turn to CGI to help them transform mission-critical applications to more efficiently and effectively deliver government services, including through exploration of commercial best practices. Specific to our U.S. federal operations, while overall procurement volumes and contract values are down compared to historical levels, we are seeing early signs of stabilization. On a sequential basis, bookings in this segment increased by nearly $250 million. CGI remains well positioned to support a wide range of government missions through our -to-end offering, notably RIP, which embeds generative AI, data protection, and cybersecurity. In the third quarter, representative awards of our strong financial services and government bookings included the state of California awarded CGI a $200 million U.S. contract extension for the delivery of -to-end managed services for its case management, information, and payroll system. The European Space Agency named CGI to support its new climate monitoring initiative, leveraging CGI's expertise in scientific data systems and large-scale processing to enable high-precision traceable curve observation data. A premier U.S. financial services company selected CGI to lead the organization of its core IT systems, including integration of AI-driven automation to drive IT efficiency, system resilience, and enhance cybersecurity. Finnish Customs extended its partnership with CGI to monetize customs operations and advance their goals for trade facilitation through CGI's expertise in cybersecurity, data analytics, and regulatory compliance. A prominent Canadian bank extended its commitment to CGI's Wealth 360 platform to streamline its advanced portfolio management and trading, allowing advisors to spend more time engaging with customers. The states of Texas office selected CGI to monetize and unify its core financial systems through the implementation of our cloud-based advantage platform. NHS Scotland engaged CGI to deliver a user-centric digital platform that will help patients connect more easily with care services while also driving efficiency through innovation. And the Federal Aviation Administration selected CGI to develop, deliver, and operate a modernized notice to airman system to help improve aviation safety in the U.S. For this mission critical FAA project, we are collaborating with Google Public Sector, one of CGI's global alliance relationships. During the first nine months of fiscal 2025, our new bookings from these -to-market partnerships total more than $2.6 billion, up over 120 percent compared to last year. In the quarter, we continue to see macroeconomic uncertainty impacting the timing of client decisions, notably for larger enterprise engagements. For example, subsequent to the quarter end, one of the largest banks in Europe selected CGI as one of its strategic IT partners through its vendor consolidation exercise, a buying trend we see globally. Under the five-year agreement, up to 700 CGI consultants will deliver a wide range of IT services to manage the bank's in-country IT operations and prepare for future international digital transformation. Across all buying trends, CGI's -to-end offerings continue to position us well as a partner of choice. Specifically, CGI's outcome-based value proposition for managed services and IP help clients generate cost savings and accelerate transformation at scale with lower capital costs and continuous innovation. This focus on realizing business value from digital is front and center in client conversations. In short, they expect partners like us to take accountability for outcomes. This expectation aligns well with CGI's delivery track record and our ability to bridge strategy with execution through deep domain understanding, application of emerging technologies and flexible delivery models, including global capability centers. Looking ahead, client priorities and public sector globally are centered on cybersecurity, sovereign cloud solutions, and the modernization of mission critical applications and systems. Within our CGI federal segment, agencies are looking to the future and want to engage in discussions about how technology can more cost-effectively enable their missions. Our team is fully engaged in productive discussions to propose bold, outcome-driven ideas. This includes our Momentum ERP, one of two approved government ERP solutions as it blends commercial application with government mission requirements. Across commercial sectors, demand remains high for cloud-enabled migration, platform organization, traditional and generative AI, with clients seeking practical use cases grounded in business reality. CGI's strong market positioning is validated by our growing pipeline. The managed services pipeline is up by more than 20% over a year, with increases across all major industry sectors. The pipeline of SINC opportunities is up by more than 20% across government, the space sector, and several commercial industries compared this time last year. And the IP pipeline is up more than 10% over a year, with significant increases in solutions that accelerate AI-based automation, application modernization, and cloud migration. To capture this demand, CGI continues to make targeted investment in our talent and offerings. This includes integrating AI and generative AI into our offerings and delivery. Across industries and geographies, AI remains a powerful enabler for modernization, optimization, and transformation. For example, in Canada, CGI partnered with a large insurance firm to use AI to accelerate quality engineering, resolve and document help desk queries using agentic AI, and advance the development of a client portal. In Germany, CGI is serving as one of the partners for the European Space Agency AI for Ops program, delivering AI-based software to optimize satellite mission planning and execution. In the U.S., we are working with a manufacturer to help accelerate their modernization with AI-powered processes and agentic automation. In Finland, CGI's Omni360 platform integrates AI directly into health clinician workflows with expansion planned with three of the largest social and health regions in the country. In the Netherlands, CGI is providing AI expertise for our gas and electricity network operator to develop new solutions in the area of energy grids, energy technology, and digital transformation. And in India, we are leveraging CGI's agentic AI solution for IT services management and automated ticket management for multiple clients. In the third quarter, CGI continues to see strong momentum in AI-related wins, demonstrating the depth of our expertise globally. Our pipeline of qualified AI opportunities also remains robust, reflecting the continuing strong demand to embed these capabilities within core client systems and operations. Given ongoing client demand, we continue to integrate AI in our IP, now driving 40% of our overall IP-based revenue. We also continue to launch new solutions to help client operations run faster, smarter, and more efficiently. In fact, we announced this week the global launch of CGI to speed up a new platform to digitize and optimize business processes for commercial clients and governments. Importantly, when combined with CGI's managed services and broader process automation initiatives, such as those enabled by CGI DigiOps, the platform can deliver sustainable double-digit improvements for clients. CGI also continues to lead in responsible AI governance, including through the European AI Act pledge and the collaboration with government and industry programs in the U.S., Canada, and the U.K. Turning now to the buy side, which remains an integral element of our profitable growth strategy. Integrating equities of mergers to create long-term value for all stakeholders requires rigor and discipline. Our teams continue to finalize recent integrations. In addition, we continue to work through the regulatory and compliance processes to close a merger with APSID headquarter in France. Our pipeline of additional merger targets remains robust. We have a very active program in terms of outsourcing, interactive dialogues, and due diligence assessments. We are committed to making sure that we acquire the right companies for the right price at the right time, all three without exception. CGI's operational strength, stability, and financial capacity will continue to enable us to move quickly with discipline on the right opportunities of all sizes. In closing, we will continue to proactively manage the fundamentals of our business and invest in our build and buy profitable growth strategy to further deepen our proximity model, our industry knowledge and technology expertise, our -to-end offerings, and our global network and scale. We are confident in resilience of our model, the depth of our client relationships, and the dedication of our talented consultants and professionals around the world. Thank you for your interest and support. Let's go

to the questions now, Kevin. Thanks, Francois and Joël. We can now cue for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 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 the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from SurrenderFind with Jeffreys. Your line is now open.

Surrender.

Hello. Hi, Surrender. You're up.

Oh, I apologize. Thank you. The line went out of key for about the last two minutes. I guess where I'd like to start with is, can you talk a little bit about organic growth and organic growth in the two different segments and what you're seeing there just to provide some context given all of the FX noise as well as the acquisitions?

Okay. I won't talk about the numbers by itself. As you know, we are presenting constant currency growth because again, it's difficult to split from acquisition and then organic. If I'm talking about the environment in general, we're still seeing some challenges. An example, still with the tariffs, we have still some clients waiting a bit before investing to understand where a terrorist will finish with. We see that a lot in Europe. At the same time, it's bringing a lot of opportunities on the managed services side, but on the SI&C side, it's still a bit slow, including business consulting also. We see that especially in the manufacturing side. On the other side, if I'm taking example, the financial sector, we are seeing good growth on the organic side in that industry, especially in North America. I was talking about booking just after quarter end with large banks in Europe. We are seeing good momentum in the banking side of the business. We saw organic growth in the past and we will see that also in the future.

That's helpful. Then can you talk a little bit about switching gears here, a little bit about the partnership strategy? It sounded like maybe a bit more revenues are coming through that channel. Any color there in any evolution in that part of the strategy?

It's something that we invest in the last

couple of years to promote more our partnership with a large technology company. It's paying off. We're investing in the training of these technologies and certification of these technologies. We are talking with them to see how we can better team together in front of clients. It's paying off and will continue, I think, to pay off in the future. It's a good initiative that we did in the past and it will give us more dividend even in the future.

Any color you can provide in terms of the percentage of bookings or any metric or quantitative measure of that strategy would be helpful if at all possible.

I think that's the number we gave to you, Bright. Together and again, we just need to be clear that's not what we're doing with these technology companies, but it's really what we are working together on winning a deal. So if I'm going back, what was the number? We did say that we booked for $2.6 billion to go to market with them. That's an increase of 120% over the year. That's really the payoff investing in these relationships.

Thank you.

Your next question comes from Divya Goyal with Scotiabank. Your line is now open.

Good morning, everyone. Good quarter here.

If you

could provide us a little bit more color in terms of your margins broadly, like what are some of the margin expansion strategies other than restructuring that you're deploying? You made a ton of acquisitions recently. How do you expect those as they get integrated to help with upliftment of the margins? In the same vein, I want to ask, US federal margins, I did notice they are back to Q3-24 levels. Is there seasonality in those as well?

Yeah. So thanks, Divya, for the question. And Steve, you can comment also if you want. But on the margin, for sure, the integrations of our latest acquisition, especially BJSS, will help to increase the margin. So it's the first full quarter of BJSS. We close it at the end of the last quarter. And the integration only started. The idea is that when it will be fully integrated, it will improve the margin in our UK environment. Same thing for the US. We still see, yes, we see some improvement in the US margin. But we still have some work to do on finalizing some of the integration authority. And that will also, again, improve the margin. So the idea is that when these companies will be fully integrated, we are expecting the margin to go up.

Yeah. And the effect also of the restructuring, we are, as you know, we're quite disciplined and making sure that availability is there. And so we are taking action currently in order to improve some of the continental Europe SBUs and reporting segments.

That's very helpful. One more question that I have is on the vendor consolidation trend. You noted some wins that you have observed across Europe and broadly on a global basis. And we've been hearing about these trends. Could you help us understand what is it about CGI that is much more differentiated than the global IT players that is helping you with this vendor consolidation trend? And how should we expect you to stay differentiated and continue to win this race?

Thank you. I think it's our client-centric approach. I think we are very close to the clients and that's what we're trying always to be, understanding their challenges. And when we're delivering, we're delivering with a client approach. And for us, it's making a big, big difference. And again, you'll see more of this. I was in Europe meeting with a client with a good business and they have 1,200 suppliers and they're feeling it's too much. They are saying that it's difficult to bring synergy when you have that much of suppliers. And so they want to reduce it. And they like our approach. They like the fact that we are client-centric. They like also the in some of these processes with them and bring innovation. So on the business side. So that's really what it's helping us to win in these vendor consolidation deals.

That's very helpful. I'll come back to questions. Thanks a lot.

Thank you. Your next question comes from Jérôme Dubreuil with Your line is now open.

Thanks for taking my question. The first one is kind of a two-prong question on capital allocation. Accenture recently characterized the M&A environment as being a bit more difficult. So I wonder if you agree. And if you do, wondering what we should be expecting on the buyback side with results improving and the share price lagging the index?

I don't know with Accenture, but I would say I'm not in that same path. I think contrary. I think acquisition is still something that we're looking very closely. I think with evaluations that are I would say lower than before. And you have a lot of targets that are at a point now that they need to do taking again decision on their future. I think it's still a pretty active. We have a pretty active pipeline, very good discussion. And I think that will continue. And no, I'm more, I would say bullish on that side on the acquisition. I'm not saying that we won't continue to do some share buyback. We have the capacity and capabilities to do both. I don't know if Steve you want to say a bit more? Yeah, and

look, if you look at just the recent quarters, there was no cash out for business acquisition. And we invested close to 300 million in share buyback. So obviously, it's all is our first priority is to invest in the business after that to invest in accretive M&A. And following that is the share buyback.

Great. And second question, like an update on those if possible, there's a big period reported last week saying there's a bit of a shift from cost cutting to modernization initiatives in the US federal government. I'm if you're seeing the same thing, or if it's still very much 100% focused on cost cutting.

But for sure, you know, at least all the demand of information, what are we delivering for the clients, buy agency, what type of contract we're doing, that's mostly finished. And, you know, no more question on that side. And so we're back to, you know, having good discussion with our agencies and our clients on a daily basis. Like I said in the past, right, you know, to do some cost saving on their side, they will need new system, they will need more automations. And to do that, they'll need services like us to help them to achieve these targets. So that's where you're right. That's where we are now. We have good discussion with them. How can we help them on the cost saving? What type of automation we can do with them? That's the kind of conversation we have with them. And you see, you know, the booking did pick up on a sequential basis. We're a year and a half ago. But these discussions are now happening. And my expectation is that we will see some improvement in the future. Awesome.

Your next question comes from Thanos with BMO markets. Your line is now open.

Good morning. Your APAC BU continues to grow faster organically than the rest of the business. Can you speak to the key client geographies that are driving that? Is that heavily weighted to North America or other parts as well?

For sure, North America is big. And, you know, we're moving a lot of activities, GCCs. We want a big contract to create GCCs from in the US. So that's bringing some growth. I would say also Germany is another place where we're starting to see momentum on India. They have pressure. As you know, we have a lot of manufacturing clients in Germany, for example. And they, you know, we are talking about services and we're showing them our capabilities in India. And they have a lot of interest. And so that's also good momentum on that side.

Great. And then on US federal, it seems like revenues were down a bit organically on sequential and a -over-year basis. Just to clarify, would the lower BPO volumes be far and away the biggest reason for that? Or were they other factors? Yes.

No, for sure. You know, as you know, we have a large contract, visa contract, where for 15-ish countries, we are producing a visa for people who want to come to US. And as we know, right, a lot less traveling in the US in general. And so that has an impact on the visa process as well.

That's fine. Thank you.

Thanks, Nathaniel.

Your next question comes from Richard C. with National Bank Financial. Your line is now open.

Yes. Thank you. With respect to acquisitions, can you maybe talk about whether you have any sort of targets on that over the next 12 months? And I guess related, how do you rank transformational deals against the natural market deals?

I'll start with the second, the rank. I don't know what you mean by ranking. We are looking at all of them, small and big. And it's like I'm always saying, it needs to be the right target at the price at the right time. So large or small, we'll look at them. And we are looking at large and small and smaller. And that will continue. So that's something. And again, as for an outlook, and I'm not sure if your first question was an outlook on this. It's difficult to say how many we'll close in the future. Again, we need to to to dance and we need to have come to right agreement. But we have a good funnel, a lot of discussions. And so we'll see how much we can close them in the future.

Okay, that's helpful. Thanks. With respect to sort of AI, there's been a lot of discussions as to how CGI is applying this internally. And from that perspective, how do you think it impacts your headcount growth and also implications for your margins as we look ahead here?

We are using AI. We were using AI in the past. And we continue to use AI in the future and Gen AI. And we are using it in our managed services to know already, we signed deals in the past where we're saying to the clients, we'll give you savings, we'll give you X percent of saving, and we need to produce that saving. Some of it is produced by example, offshore ring or some activities to India. But some of it is also to apply automation tools, including AI. And so we are using these tools today, and we'll continue in the future to produce savings that we promise to clients. And also naturally to help us of improving and doing also a profit on this delivery. So we are doing it today and we'll continue and even doing some acceleration of it in the future. So the impact of a headcount, you can expect that you'll see dollars or revenue by headcount going up. That will continue to increase in the future. And it's normal because our people will become more and more productive using more and more of clients will need expert to implement these tools. And we are the right expert to help them on this.

Okay, great. Thank you.

Your next question comes from Sufyan Sukumar with Stiefel. Your line is now open.

Thank you. Good morning, gents. And thank you for taking my question. From the first one, I wanted to touch on your IP strategy and the investments that you're making in this category. How much of your focus here will be on direct sort of in-house R&D versus co-development with clients? And I think you mentioned about 40% of your IP is now being driven by AI. From a roadmap perspective, what are some of the other IP product priorities you have beyond AI?

First of all, on the second question, really the idea was to say 40% of our IP is now, you have AI embedded in these IPs. So that's really what we're saying. And our large IP where we have success, I'll tell you, is like our ERP systems. And we have embedded AI in our ERP systems. We have embedded AI in several of our financial sectors, like our trade platform, our wealth platform, wealth 360 platform. We are implementing AI functionality to help clients to gain even more savings by using some of these AI functionality. So that's really what we were talking about, AI. And overall on the IP side, a bit the same answer, government sector IP is going very well. You saw a couple of announcements we did, the example with last quarter with state of California. And this quarter, again, another one with state California. I talked about a wealth 360 deal or extension that we did in Canada. It's really in these two sectors that we're seeing very good momentum on our IP solutions.

Great. Thank you. On my second question, I wanted to touch on some of the integration progress with the recent deals that you've done. Is there anything that may have stood out to you with respect to the ongoing integration or rather the growth opportunity with some of these recent deals relative to some of your initial assumptions going into them?

For sure. What we're seeing is that, I'll take examples, 41 US. We are seeing a good momentum on how we can integrate the CGI capabilities with the door T relationship that they have with their clients. And we have good discussions with some of these door T clients to show to them our expertise that we have example in India. So some of them did visit India and seeing what we have and what we can bring to the table. Same thing with BJSS. We had the start of this, but still again already very good discussion with clients and really to show to them, yes, BJSS, you'll still have the great relationship and the great delivery from them. But here's what you can also have from the larger CGI. And for now, clients are very, very happy or very impressed about what they're

seeing. Great. Thank you for taking my questions. I'll pass one.

Thank you. Thank you. Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open.

Thanks, and good morning. There's a couple of questions here on AI, further on AI. How do you see CGI's competitive position within AI in the IT services market? Meaning, do you see AI is increasing overall competition? Or do you think that AI raises the barriers to enter and then that would strengthen CGI's position versus competitors?

Well, I think AI, to use it right and to help the clients, you need to have expertise. And I think that's what we're bringing at the table. And I think that's why we are doing investment in AI. That's why we're training our people in AI. And I'm a strong believer that clients, to be able to implement these tools and use these tools the right way, they'll need experts like us. So I think that will bring a lot of new opportunities for us and solutions to our clients.

And in terms of the economics of AI and the potential productivity gains, are your clients starting to see productivity gains from AI? And then have they been reinvesting those gains back into other projects? Or have they just been using those gains to drive just higher ROI on those projects?

I would say that clients will have budget, and yes, some you'll have, and that's more on the environment side, will have sometimes a request from their CEOs to reduce some of the budget. But at the same time, they want to spend the money. And now with AI, they can do more with less. So it's really what's happening is that some of these, like you're saying, Paul, some of the savings that we can produce by delivering faster, they're turning around and saying, finally, I can do more, and let's accelerate some transformation, for example, that we were not able to do in the past, because I still have the run side of the business to happen. So now we're coming in, we're showing them how we can reduce the run, and they're taking that run saving and investing it back in the transformation side.

Okay, thanks for taking the questions, for example. Thanks. Thanks,

Paul.

Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Stephanie Price with CIBC. Your line is now open.

Good morning. Thanks. Hi, Stephanie. Hi. As you look into the second half of the calendar year here, it sounds like you've definitely seen some green shoots out there. Just curious about how you think about overall constant currency organic growth as you look into the back half of the year. Do you think we could have seen a floor already, or do you think that things are starting to turn, but it could take a few more quarters for the bottom?

Yeah, I think we're at the floor, right? But again, the environment, we'll see where the environment is finishing, especially on that rip. I think we're starting to see an end to it, or some agreement across the world. And I think when these agreements will be finalized, that will bring to the clients certain certainty of how much they need to pay and stuff like that, and what will be the impact on the economy. And when that will be digest, I think that's where we'll see some momentum coming back. So I think it will take a couple, still a couple of quarters to arrive to that. But again, I was in Germany and Europe a couple of weeks ago. Like I'm saying, I went to see a bank, and banks were very positive and doing some larger investments. But on the manufacturing side, they were there and saying, okay, we're looking at the tariffs, we're trying to understand where we'll finish to. And after that, we'll be able to adjust our budgets and investments budget. So that's where we are. And like I'm saying, I think it will, it can take still a couple of quarters.

That makes sense. And then you mentioned in your prepared remarks that momentum is one of two approved government systems. What if you could talk a bit about your approach to winning share here? And if there's any key contracts that are up for renewal, or how you think about momentum going forward in this environment?

Momentum is a great tool. Our clients like it. It's a tool that is specific. Let's be clear, momentum is only for government, only for the federal government. So when the clients are looking at it, they're seeing it's really answering all their needs. So I'm very, if they are really pushing to go to only two, I think that will create a lot of new opportunities for us in the future. That's for sure.

Great. Thank you very much.

Thanks, Tiffany.

There are no further questions at this time. I will now turn the call over to Kevin for closing remarks.

Thanks, everyone for participating. As a reminder, a replay of this call will be available either via our website or by dialing -660-6264 and using the passcode 28135. As well, a podcast of this call will be available for download within a few hours. Follow-up questions can be directed to me at -973-8363. Thanks again, everyone, and look forward to speaking soon. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.