Capgemini Q3 2024 revenues decline amid sectoral challenges
PARIS, FRANCE — IT services and consulting company Capgemini reported consolidated revenues of €5.38 billion (US$5.82 billion) for Q3 2024, marking a year-on-year decline of 1.9% on a reported basis and 1.6% at constant exchange rates.
The decline reflects ongoing challenges in key sectors, particularly manufacturing, despite some recovery in financial services.
Modest growth improvement vs. Q2 2024
Capgemini CEO Aiman Ezzat acknowledged the slight improvement in growth compared to Q2 2024 but highlighted persistent challenges in certain sectors.
“Our growth improved marginally in Q3 compared to Q2, despite stronger headwinds than anticipated in some sectors, primarily in Manufacturing,” said Ezzat.
He also noted that financial services showed signs of recovery, while the telecom and technology sectors faced fewer headwinds.
Regional performance: Mixed results across key markets
Capgemini’s performance varied across its major regions:
- North America (28% of group revenues) saw a 3.9% year-on-year decline, driven by challenges in the consumer goods and retail, energy and utilities, and public sectors.
- The United Kingdom and Ireland (13% of revenues) returned to positive growth at 0.4%, supported by strong performance in the energy and utilities sector.
- France (19% of revenues) experienced a 2.5% decline, with weakness in the manufacturing sector offsetting growth in the public sector and telecoms, media, and technology (TMT).
- The rest of Europe (31% of revenues) posted modest 0.6% growth, buoyed by financial services and energy and utilities.
- Asia-Pacific and Latin America (9% of revenues) declined by 2.2%, with underperformance in the consumer goods, retail, and manufacturing sectors.
AI and digital transformation drive client demand
Despite overall market softness, Capgemini continues to benefit from strong demand for digital transformation services. Clients are increasingly focused on operational efficiencies and cost reductions through large-scale digital programs, which has fueled demand for Capgemini’s Cloud, Data, and AI/GenAI services.
Over the last nine months, generative AI bookings have amounted to €600 million (US$643 million), representing approximately 3.5% of total bookings.
In terms of business segments:
- Strategy & transformation services grew by 6.5%, reflecting strong demand for consulting on digital transitions.
- Applications & technology services, which make up 63% of the Group’s revenues, saw a slight improvement with a 1.2% decline.
- Operations & engineering services decreased by 3.4%, primarily driven by weakness in Infrastructure Services.
Outlook: Capgemini adjusts full-year targets for 2024
Looking ahead to Q4 2024, Capgemini expects similar growth patterns while maintaining resilience in its operating margin and free cash flow targets.
The company has revised its full-year revenue growth forecast to between 2.0% and 2.4%, down from an earlier projection of 0.5% to 1.5%. The operating margin target has been narrowed to 13.3%-13.4%, while the organic free cash flow target remains unchanged at around €1.9 billion (US$2.04 billion).
Capgemini remains optimistic about its long-term positioning as a business transformation partner, driven by client demand for AI and digital modernization services.
