Capgemini sees better-than-expected Q3 as cloud business grows

Paris, France headquartered consulting and information technology services provider Capgemini Group has achieved consolidated revenues of €4,008 million in Q3 2020, up 15.6% year-on-year at current exchange rates and 18.4% year-on-year at constant exchange rates. 

Capgemini’s better-than-expected quarterly revenues came on the back of strong bookings and growth in its digital and cloud offerings. The company expects the fourth quarter to show a further but limited improvement.

The company saw more than 10% growth in digital and cloud, which now account for over 60% of its activities. 

Capgemini, which offers services to industries ranging from telecom to aerospace, confirmed its full-year targets, which include revenue growth between 12.5% and 14.0% (with an estimated contribution from acquisitions of 17%), adding it should exceed the mid-point of the range.

“The quarter, which came in better than expected, brought a significant performance improvement over Q2 across all our regions and businesses. Digital and cloud continues to expand, up more than 10% year-on-year, and bookings remain strong,” Aiman Ezzat, chief executive officer of Capgemini Group said.

Bookings totaled €3,896 million in Q3 2020, a 17.4% year-on-year increase at constant exchange rates. The book-to-bill ratio is 97%, reflecting a high level of client demand.

“We expect Q4 to confirm this favorable trend and record a further but limited improvement, due to recent developments in the health situation. In this framework, our performance for 2020 should exceed the mid-point of the range announced, both for growth and operating margin, and we remain confident in the prospects for further improvement in 2021,” he added.

Read: French IT firm Capgemini expects double digit growth for 2020

In an analysis of its revenue growth across geographies in Q3, it said North America saw the highest with 31% followed by the rest of Europe region at 30%, France at 21%, the United Kingdom and Ireland at 11%, the Asia-Pacific and Latin America region at 7%.

Capgemini said that the sector performance remained highly contrasted in Q3, due to the impact of the pandemic. But all sectors improved on Q2. On an organic basis, the financial services sector was the largest sector generating 25% of group revenues, the public sector grew 13%, the technology, media and telecom sector at 13%, consumer goods and retail  at 11% and energy & utilities at 10%.