CGI (GIB) Q4 2026 earnings review
CGI's contract signings rebound, but its underlying profit stands still
CGI, the Canadian IT and business consulting group, signed more long-term contracts this quarter while its underlying profit stood still. Constant-currency sales grew 2.5%, and chief executive Tim Hurlebaus pointed to a 122% book-to-bill ratio in AI-embedded managed services as total contract signings rebounded from three quarterly drops. Excluding one-offs, net profit edged up 1%, yet per-share profit climbed 8% because earlier buybacks shrank the share count.
| Revenue in constant currency | +2.5% +1.3% last quarter |
|---|---|
| Diluted EPS, excluding one-offs | $2.31 +8.5% from a year ago |
| Quarterly book-to-bill ratio | 109.2% 122% in AI-embedded managed services |
| Quarterly cash dividend | Raised 8.8% to $0.185 per share for Q1 |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because rebounding contract signings in managed services balanced out flat underlying earnings and slower share buybacks. Ending last year's European restructuring lifted reported profit, and fourth-quarter bookings rose from the third quarter. The caution: total bookings still fell 5% from a year ago, contracted backlog grew only 2%, and CGI cut its quarterly buyback spending by 60%.
The question now is whether rising AI contract proposals will lift revenue from businesses owned a year ago or merely offset price cuts on renewals and weak consulting demand. If the new contracts add net spending, backlog growth will outpace revenue; if they only replace older work, underlying sales will stay sluggish. The segment and backlog conversion tables in the full annual report will tell.
🐂 Bull Case
Managed Services Bookings Rebounded on AI Demand
CGI signs two kinds of contracts: short-term consulting projects and multi-year managed services deals where it runs a client's computer systems. Total bookings, the value of new contracts signed in the quarter, rose 7.8% from the third quarter to $4.53 billion after falling for three straight quarters.
"We continued to deliver revenue growth, earnings expansion and strong bookings which were driven by a 122% quarterly book-to-bill ratio for our AI-embedded managed services," chief executive Tim Hurlebaus said. A book-to-bill ratio compares new contract signings to revenue billed, so 122% means CGI signed $1.22 of new managed services work for every dollar it billed. That lifted the company's overall ratio to 109.2%, up from 100.1% last quarter.
What to watch: the revenue split between managed services and consulting in the full annual report. If consulting bookings stayed below 100% while managed services hit 122%, clients are still holding back on short-term projects that turn into revenue right away.
Completed Restructuring Lifted Reported Profit
Last year CGI spent $196.8 million on a restructuring programme to cut staff and close offices in Continental Europe. With that programme finished, restructuring charges dropped to zero this quarter from $98.8 million, or 2.5% of revenue, a year ago. Acquisition and integration costs also dipped from 0.6% of revenue to 0.5%, lifting the pre-tax profit margin by 2.3 percentage points to 15.2%.
Excluding those one-off charges and interest costs, operating profit grew 1.6% to $678.0 million. The corresponding operating margin slipped 0.2 percentage points to 16.4%, because everyday operating expenses rose from 83.4% of revenue to 83.6%. What to watch: European segment profit margins in the annual filing. A rebound in Germany from last quarter's 6.2% margin would show the restructuring savings are finally sticking.
Positives this quarter didn't test
Three drivers from earlier in the year got no new numbers in the fourth-quarter earnings release because the release omits segment tables and headcount detail.
- Vendor consolidation wins: whether the three U.S. consolidation deals from last quarter lifted U.S. Commercial revenue awaits the geographic tables in the annual report.
- Sovereign AI and local delivery: whether government clients in Canada and Europe increased spending on local data and AI rules will show up in the vertical market breakdown.
- Hiring rebound: total headcount held steady at about 94,000 for a fourth straight quarter, so only the conference call can show whether gross hiring kept growing.
🐻 Bear Case
Buybacks Carry Earnings While Underlying Profit Stalls
Hurlebaus highlighted "earnings expansion" in the fourth quarter, and reported diluted profit per share jumped 30.2% to $2.24 as restructuring charges ended. Excluding one-offs, however, CGI's net profit barely moved, inching up 0.8% from a year ago to $475.4 million while the net profit margin slipped 0.3 percentage points to 11.5%.
- Net profit excluding one-offs: $475.4 million, up 0.8% from a year ago
- Diluted share count: 205.5 million, down 7.4% after $1.55 billion of full-year buybacks
- Diluted profit per share excluding one-offs: $2.31, up 8.5%
- Fourth-quarter buyback spending: $166.7 million, down 60% from the third quarter
Shrinking the share count created almost all of the per-share profit growth for a fourth straight quarter. Meanwhile, CGI slowed its buybacks to $166.7 million after spending about $400 million to $577 million a quarter earlier in the year, as Hurlebaus prepares for "both build and buy growth". What to watch: first-quarter buyback spending and acquisition announcements. If CGI saves cash for large acquisitions while underlying profit stays flat, per-share earnings growth will slow.
Bookings and Backlog Lag the Pipeline Pitch
Hurlebaus said "Advanced AI at enterprise scale is now routinely part of client conversations and proposals, and we see growing client interest in practical applications of quantum computing." Even with the fourth-quarter bounce, total bookings of $4.53 billion fell 5.4% from $4.79 billion a year ago. That pulled the 12-month book-to-bill ratio down from 108.1% in the third quarter to 105.6%.
CGI's contracted backlog, the total value of signed work not yet delivered, ended the year at $32.07 billion, up 2.0% from a year ago. By our math, backlog rose $280 million during the fourth quarter, less than a third of the $871 million added in the same quarter last year. What to watch: how much of the $32.07 billion backlog CGI expects to turn into revenue over the next 12 months, disclosed in the annual filing. A figure near last quarter's $12.1 billion would point to another year of low-single-digit growth.
Risks this quarter didn't answer
Six standing concerns remain open because the earnings release gives only company-wide totals.
- Sales from businesses owned a year ago: constant-currency revenue grew 2.5%, up from 1.3% in Q3, but the release does not state how much came from recent acquisitions.
- Consulting and systems integration demand: revenue for project-based IT work grew 0.1% last quarter; the annual report will show if it shrank in Q4.
- Germany and manufacturing margins: whether Germany's operating margin recovered from 6.2% in Q3 requires the segment tables in the annual filing.
- AI pricing pressure on renewals: the release gives no data on how much price CGI concedes when renewing managed services contracts.
- Large acquisition risk: CGI spent only $34.6 million on deals in Q4, leaving the timing and debt load of any multibillion-dollar target open.
- Shareholder lawsuit and CEO change: the release makes no mention of the July 2026 Quebec class-action application.
💲 Other KPIs
Cash generated from operations fell 16.8% from a year ago and dropped from $604.5 million in the third quarter, representing 13.3% of revenue against 16.5% a year earlier. For the full fiscal year, operating cash flow still rose 11.0% to $2.48 billion, or 15.0% of revenue, while days sales outstanding — the average time clients take to pay bills — improved by two days from a year ago to 43 days.
Net debt — total debt and lease liabilities minus cash and investments — dropped 7.1% from $3.68 billion in the third quarter and sits slightly below $3.45 billion a year ago. In September, the IT services group repaid $834.9 million of maturing U.S.-dollar senior notes and issued $498.6 million of new notes, lowering net debt to 24.7% of total capitalization from 26.6% last quarter.
Return on invested capital, which measures how efficiently CGI turns debt and equity into after-tax operating profit, ticked up 0.3 percentage points from 13.6% a year ago. It also improved from 13.1% in the second quarter and 13.4% in the third quarter as the company finished integrating last year's acquisitions and stopped recording restructuring charges.
🔮 Guidance
New. The board approved a quarterly dividend of $0.185 per share payable in December, an 8.8% increase from the $0.17 paid in each quarter of fiscal 2026. The IT consulting firm does not issue revenue or earnings targets inside its quarterly press releases.
❓ Key Questions
How much of Q4's 2.5% constant-currency growth was organic?
CGI bought three businesses between December 2025 and April 2026 that added about 2.5 percentage points to growth last quarter. Without the acquisition contribution figure from the call or annual report, investors cannot tell if underlying sales stopped shrinking.
Did Germany's operating margin recover from 6.2% in Q3?
Germany's margin halved in the third quarter even after CGI spent $196.8 million restructuring its Continental European operations. The segment tables in the annual filing will show whether the drop was a one-quarter blip or a deeper downturn in manufacturing demand.
Why did share buybacks drop by 60% in Q4?
Repurchases fell to $166.7 million from $412.9 million in the third quarter, even with over 11 million shares still authorized under the current buyback plan. Management needs to clarify if it is conserving cash for a large acquisition.
Did the delayed Nordic contracts close in the fourth quarter?
Last quarter, chief executive Tim Hurlebaus said a couple of delayed deals in the Nordics should close in the fourth quarter. Confirming whether they contributed to the $4.53 billion bookings total will test how reliably the sales pipeline converts.