Earnings Routine +

CGI reports second quarter Fiscal 2026 results

CGI Q2 Earnings Beat on Margin Expansion as Revenue Growth Decelerates; Stock Stabilizes Near Support

By The Northwire Desk — AI Analysis Apr 29, 2026 · 06:30 GIB · 100.64

Executive Summary

CGI reported second quarter Fiscal 2026 revenue of $4.16 billion, a 3.3% increase year-over-year, slowing from the 7.7% growth seen in Q1 FY26.
Diluted EPS increased by 10.6% to $2.09, outpacing revenue growth and indicating margin expansion.
Adjusted EBIT margin improved to 16.6%, up from 16.1% in the first quarter.
Backlog stands at $31.50 billion (1.9x annual revenue), slightly up from Q1's $31.32 billion.
Book-to-bill ratio dropped to 103.8% for the quarter, down significantly from 109.5% in Q1 FY26.
Net debt increased to $3.57 billion (up from $3.45 billion in Q1), with a net-debt-to-capitalization ratio of 26.3%.
Credit facility was increased to $2.50 billion, providing additional liquidity flexibility.
Acquisition costs recorded at $40.9 million during the period.

Material Impact

Earnings Quality: The 10.6% EPS growth on slower revenue (3.3%) suggests effective cost management and margin improvement, which is positive for profitability but does not offset top-line deceleration concerns.
Growth Trajectory: The slowdown in revenue growth from 7.7% to 3.3% year-over-year indicates a potential headwind in organic demand or project timing delays, particularly given the US Federal shutdown impact noted in historical context.
Booking Health: The decline in book-to-bill ratio from 109.5% (Q1) to 103.8% (Q2) is a key warning sign; while still above breakeven, it suggests less aggressive pipeline growth compared to the previous quarter.
Debt Profile: Net debt increased by $120 million sequentially, and the leverage ratio rose to 26.3%. While manageable given cash flow ($451M operating cash in Q2), this trend requires monitoring alongside acquisition activity.
Market Context: The stock has already declined approximately 33% from its May 2025 highs ($109) to current levels ($73). This earnings release stabilizes the narrative but does not fundamentally alter the valuation thesis given the growth slowdown.

GIB · Price

Company Overview

Company: CGI Inc. is one of the world's largest independent technology and professional services firms, listed on TSX (GIB.A) and NYSE (GIB).
Flagship Project/Strategy: The company's core strategy revolves around "AI-first" transformation, leveraging partnerships with OpenAI, Google Cloud, and AWS to deliver Agentic AI solutions.
Key Platforms: CGI Advantage (SaaS ERP), CGI DigiOps (Agentic AI platform), and Momentum Enterprise Suite are central to their managed services offering.
Global Footprint: Approximately 94,000 consultants worldwide with a focus on government, financial services, and healthcare sectors.

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