Shares of Capgemini (EPA:CAPP) surged more than 7% after the IT services provider posted first-quarter revenue that topped expectations, driven by strength in North America and the U.K. and a rebound in key segments like telecom and financial services.
Capgemini reported revenue of €5.55 billion for the first quarter of 2025, reflecting a 0.4% decline at constant exchange rates and a 0.5% increase on a reported basis due to favorable currency effects.
The slight contraction marked a 0.7 percentage-point improvement over the prior quarter, with the company citing stabilization in client spending across several markets.
North America, which accounts for roughly 28% of the group’s revenue, returned to growth with a 0.8% gain, buoyed by demand in telecom, media and technology, as well as financial services.
The U.K. and Ireland delivered a 3.9% increase, led by robust activity in the public sector and energy and utilities.
By contrast, France, which represents 20% of Capgemini’s revenue base, saw a 4.9% decline amid ongoing softness in manufacturing and energy.
The rest of Europe fell 2.3% on similar headwinds in industrial sectors. Asia-Pacific and Latin America stood out as bright spots, climbing 7.6% year-over-year on strength in the public sector, financial services and manufacturing.
Applications and Technology services, Capgemini’s largest business line, rose 1.9%, while Strategy and Transformation services edged up 1.2%.
Operations and Engineering, which has been under pressure from weak industrial demand, contracted 2.6%.
Bookings for the quarter totaled €5.88 billion, up 2.8% at constant exchange rates, with a book-to-bill ratio of 1.06, exceeding the company’s historical first-quarter average.
Capgemini noted that demand for generative and agentic AI solutions accounted for more than 6% of total bookings, highlighting growing interest in emerging technologies.
“We delivered a Q1 slightly better than our expectations in a macro and geopolitical environment that remains challenging,” Chief Executive Aiman Ezzat said in a statement.
Capgemini maintained its full-year guidance, including revenue growth between negative 2% and positive 2% at constant exchange rates, an operating margin between 13.3% and 13.5%, and free cash flow of around €1.9 billion.
Analysts at Jefferies said the performance was “better than feared,” particularly given the muted demand backdrop across the IT services sector.
However, they cautioned that broader uncertainty may limit a sustained shift in investor sentiment.
Source: investing.com