Chapter 1

Figures converted from Canadian dollars to US dollars at CGI's FY2025 period-end rate (0.7304) to preserve year-over-year comparisons; current market figures use the latest available rate. Ratios, margins, multiples, growth rates and share counts are unitless and unchanged. See data/company.json.fx_rates for the rate table.

The bottom line

CGI is one of the world's largest independent IT and business consulting firms — roughly $11.6 billion of revenue, about 94,000 people, built over five decades by a Montréal founder who still controls the vote. Its record is a decade of near-double-digit per-share earnings growth funded almost entirely by its own cash. This chapter maps what CGI is and how it compounds, then frames the question the rest of this report exists to test.

What CGI is

Founded in 1976 and headquartered in Montréal, CGI sells information-technology and business-consulting services to large organizations, with approximately 94,000 consultants and professionals worldwide [1]. It is a people business: revenue comes from billing that workforce out to design, build, run and maintain the technology its clients depend on. CGI organizes delivery around a "proximity" model — teams that sit where the client lives and works — backed by lower-cost global delivery centers [2].

The work splits into two streams. Roughly 55% of revenue is managed services — multi-year contracts to run a client's IT or business processes, which produce recurring, visible revenue. The other 45% is systems integration and consulting (SI&C) — shorter, project-based work that rises and falls with discretionary technology budgets [3]. Government is the single largest end-market at about 38% of revenue, followed by financial services and manufacturing/retail/distribution — a demand base skewed toward long-cycle, non-discretionary buyers [4].

Source: FY2025 Annual Report, MD&A 3.4 Revenue by Segment [5].

No single geography dominates. CGI delivers through nine geographic segments spanning the U.S., Canada, the U.K. and Australia, France, the Nordics, Germany and Central Europe — a footprint that spreads risk but also means reported growth carries a large foreign-currency component, a point that matters below.

How it compounds — Build and Buy

CGI describes its playbook as a "Build and Buy" profitable-growth strategy, and it is central to understanding how the company creates value. It has four pillars: win, renew and extend contracts, and land new large managed-services deals (the Build, or organic, half); plus "metro market" acquisitions of local and niche firms and larger "transformational" acquisitions (the Buy half) [6]. Management is explicit that it intends to remain "a consolidator in the IT and business consulting services industry" [7].

The mechanics are what make it a compounding machine rather than an ordinary roll-up. CGI is asset-light — capital expenditure ran just 0.7% of revenue in FY2025 — and converts more than 100% of net earnings into free cash flow [8]. That cash funds acquisitions of smaller IT-services firms, which are integrated onto CGI's common operating framework, and the enlarged base then throws off more cash to fund the next deal. Over the last twelve months to April 2026, CGI announced the purchases of Daugherty, BJSS, Novatec, Momentum, Apside and a Comarch subsidiary — the BJSS deal alone lifting reported U.K. and Australia revenue by 27.5% in FY2025 [9].

The record: cash-funded compounding

The output of that engine is a decade of steady per-share growth. Diluted earnings per share rose from $3.95 in FY2021 to $5.37 in FY2025, compounding near 12% a year across the five years, while free cash flow held around $1.5 billion annually and return on invested capital ran in the mid-to-high teens [10].

Source: FY2025 Annual Report, MD&A 2.1 Selected Yearly Information & Key Performance Measures [11].

Source: FY2025 Annual Report, MD&A 2.1 Selected Yearly Information [12].

Two features stand out. Cash generation is exceptional and consistent: free cash flow was $1.55 billion in FY2025, or 1.28 times reported net earnings, a conversion rate above one that CGI has sustained for years [13]. And the order book is large and visible: backlog stood at $23.0 billion — roughly two years of revenue — with a book-to-bill ratio of 110.4% in FY2025, meaning new bookings outpaced revenue recognized [14]. For a cold reader, this is the shape of the business: unglamorous, cash-rich, defensively positioned, and run for per-share compounding.

What changed in FY2025

The chart above hints at the tension. Revenue grew 8.4% in FY2025, but net earnings fell about 2%, and reported diluted EPS was essentially flat — $5.37 against $5.34 [15]. Two things drove the gap between top-line growth and per-share progress.

First, the growth was flattered by currency and acquisitions rather than underlying demand. Of the 8.4% reported growth, 3.8 percentage points came from a weaker Canadian dollar; constant-currency growth was 4.6%, and much of that came from acquired revenue [16]. The organic reality is starker one year back: in FY2024, constant-currency growth was just 0.9% [17]. Western and Southern Europe, CGI's largest segment, actually shrank 1.7% before currency in FY2025 [18].

Source: FY2025 Annual Report, MD&A 2.1 Selected Yearly Information [19].

Second, profitability slipped as CGI absorbed newly bought businesses. The pre-tax margin fell to 14.1% from 15.6%, and return on invested capital dropped to 13.6% from 16.0% as freshly deployed acquisition capital had not yet earned its keep [20].

Management prefers an adjusted lens: on that basis, adjusted diluted EPS rose 8.9% to $6.06, stripping out acquisition and integration costs [21]. The gap between reported EPS of $5.37 and adjusted EPS of $6.06 — about $0.69, or roughly 11% of the adjusted figure — is itself worth watching, because the add-backs are largely the cost of the acquisition strategy that is now carrying growth. The chart below shows both lines, and the deceleration underneath them.

Source: FY2025 Annual Report, MD&A 2.1 Selected Yearly Information; adjusted EPS disclosed from FY2023 [22].

The market has noticed. The shares traded at C$131.51 (about $96) in mid-January 2026 and sit at C$94.85 (about $67) in early July — near the low end of a 52-week range of roughly $59 to $93 — which puts CGI at about 12.9 times reported trailing earnings, 11.4 times adjusted earnings, and 10.7 times the FY2026 consensus EPS of $6.29. Sell-side analysts carry a consensus target near $89.

Source: market data as of July 2026 and consensus estimates, as reported.

Capital and control

Two facts frame how value reaches — and stays with — shareholders. First, capital allocation. CGI has historically returned cash through buybacks, repurchasing 8.86 million Class A shares in FY2025 for $919.2 million at an average price of $103.72 [23]. That average sits well above today's $67, a reminder that even a disciplined buyer can repurchase into a de-rating. In a notable shift, CGI also initiated a quarterly dividend in FY2025 — nil the prior year — and raised it to $0.12 per share in November 2025 [24].

Second, control. CGI has a dual-class structure: about 195 million Class A subordinate voting shares carry one vote each, while 24.1 million Class B multiple voting shares carry ten votes each [25]. Founder Serge Godin holds 100% of the Class B shares, giving him about 55.6% of the votes on roughly 11.25% of the equity [26]. Public Class A holders own the economics but do not control the outcome; the founder does. That has coincided with a long record of disciplined execution, and it concentrates key decisions — succession, capital allocation, the pace of acquisition — in one family's hands.

The through-line

CGI's appeal to long-term owners is a decade of compounding per-share earnings at a near-double-digit rate, built by pairing steady organic growth with disciplined, self-funded acquisitions. The question this report exists to answer is whether that engine keeps running now that organic growth has slowed to low-single digits, reported growth leans increasingly on acquisitions and currency, margins and returns on capital have dipped as deals are digested, and the shares have de-rated to roughly 11 times forward earnings. The chapters that follow test the pieces of that question — the durability of the moat and the order book, the true economics of the acquisition machine, the gap between reported and adjusted earnings, what artificial intelligence does to a labor-based services model, and what the current price implies.