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Operator: Good day, and thank you for standing by. Welcome to the Capgemini Full Year 2025 Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aiman Ezzat, CEO. Sir, Please go ahead.
Aiman Ezzat: Thank you. Good morning. Thank you for joining us for the Full year 2025 results call, and I'm joined, of course, by our CFO, Nive Bhagat. So Capgemini delivered a solid set of results for 2025. Operating margin and organic free cash flow were on target and revenue growth finished above the upgraded guidance. In a demand environment that remained largely unchanged, our underlying performance strengthened quarter after quarter with momentum improving across regions, businesses and sectors. We won where clients invest in cloud, data and AI and digital business process services. We captured where it matters most to clients, the large transformation programs. For the year, revenues were EUR 22.46 billion, representing 3.4% growth at constant currency with around 2.5 points of scope impact. Bookings were EUR 24.36 billion, which represents a solid 1.08 book-to-bill for the year and a strong 1.21 in Q4, which is really an evidence of sustained commercial traction driven by a higher number of large deals. We demonstrated the strong resilience of our operating margin at 13.3% and organic free cash flow at EUR 1.95 billion in spite of cost pressure due to a higher bench in Continental Europe. Normalized EPS stands at EUR 12.95, plus 5.8% year-on-year. In line with our dividend policy, the Board will propose a EUR 3.4 per share dividend at the Annual General Meeting. So in a fast-changing environment, we also took strategic steps to lead in AI, Intelligent Operations and to reinforce our position on Sovereignty, and I will discuss these market trends shortly. So we finished the year on a strong note with another improvement in our underlying growth in Q4. Constant currency growth was 10.6% in Q4, including a scope impact of about 6.5 points, driven primarily by WNS and Cloud4C. Now stepping back and focusing on the underlying trend, we clearly see the benefits from the actions implemented over the last quarter. All regions improved between Q1 and Q4. North America recorded the strongest acceleration, while U.K. and Ireland and APAC and LatAm improved on an already solid performance. France gradually improved, but it remains challenging at year-end. The recovery in the rest of Europe was more pronounced and is now back to growth. The improvement is also visible across sectors, which all have significantly improved since the beginning of the year, even manufacturing is now stable year-on-year, excluding M&A impact. Finally, from a business perspective, Operations and Engineering recorded the strongest acceleration, both at constant currency and organically with double-digit growth in digital BPS across both Capgemini and WNS. One of the highlights of 2025 is the strength of our ecosystem of technology partnerships. Today, more than 2/3 of our bookings are associated with our top 12 technology partners. And in a world driven by cloud data and AI, cyber and sovereignty, clients are looking for solutions combining ecosystem of technology partners and services provided by relevant transformational focus, leveraging industry domain and functional expertise. I also want to highlight specifically the Defense sector, which continues to enjoy double-digit growth in 2025. And as the leading European player, Capgemini is uniquely positioned to capture this structural growth opportunity. I do expect to see further acceleration in the next 2 to 3 years as Europe ramps up its defense programs. So we expect good growth to continue in H1. For Q1, in line with traditional seasonality, constant currency growth should be in the range of 8.5% to 9.5% in constant currency with around 6.5 points of contribution from M&A. So quick words about our 2025 ESG policy achievements. So again, here, we demonstrated continued improvement in corporate responsibility with major progress on our ESG road map. So let me highlight a few points. From an environment standpoint, we accelerated towards our target of being net zero across all scopes by 2040, reaching 100% renewable electricity for all operations. We also made notable progress in gender balance. Proportion of women in the global workforce reached 40.5%, up 7 points since 2019. And for women among executives, leadership position, we reached 30.5%, up 13 points since 2019. Finally, on governance, we made further progress around cybersecurity with a CyberVadis score of 990 out of 1,000, positioning us as the leader in our industry. Now let's focus on our growth engine. And of course, let's start with AI. So AI in the enterprise has become a reality. Maturity is increasing about its possibilities, but also about what it will take to achieve real adoption and measurable results. So 2026 is really the moment of truth for AI, the moment where AI must transition from [indiscernible] to measurable business impact embedded in core operations, delivering value through AI-powered transformation. As we move to transformation, there is a growing awareness that the foundations are not yet in place, whether we're talking about infrastructure, data, standardized governance, risk and compliance frameworks. In practice, clients face siloed legacy systems preventing AI workflow orchestration, poor data availability and quality preventing AI performance and fine-tuning and legacy workloads running on-premise and preventing AI compute at scale. Finally, it's about human AI collaboration and trust. This is where the real complexity lies. This is our playing field. All this complexity, this is where we can drive real transformation requiring strong business acumen, domain knowledge, transformation capabilities, data and AI and technology depth. And in this context, Capgemini has the right capabilities and set up to deliver AI transformation to our clients, leveraging appropriate ecosystem and partnerships. Now let's take a couple of examples to make that more concrete. So just -- the first client example is a client who want to identify its procurement activities end-to-end to be more competitive. So from strategy and sourcing to procure to pay and end-to-end processes. So we are currently building a suite of 7 Agentic products that will provide market intelligence, assist buyers in the sourcing phase, analyze supplier responses to tenders, automate food cost calculations, simulate cost scenarios, analyze cost variances, consolidate forecasting, draft contracts and automate value tracking. As you see, the scope is pretty comprehensive. And the product is targeted to deliver tangible impact in the short term, strengthen working capital by optimizing payment terms, reducing inventory exposure and improving the cash impact of procurement, decrease operational and purchasing costs through automation and smarter decision-making and lower process execution costs and reduce reliance on manual efforts across procurement workflow. We can already document EUR 27 million of savings to date to what has been achieved. Our second client was facing issues of data center reliability with significant financial impact up to hundreds of thousands of dollars per minute of downtime of outage in addition to reputation damage. We developed a physics-informed AI model, identifying abnormal variation to predict and prevent equipment catastrophic failures, and alerting platform integrated with existing order workflow that's not requiring any operator training and a global and unified view of equipment operation, relationship and performance, feeding back operational and design improvement. Implemented and live, our solution has successfully prevented and mitigated catastrophic events, saving our customers millions and millions every year. And just one key metric, we have avoided around 50 critical incidents prevented per year. Now moving on to the second vector of growth, which is Intelligent Operations, which we consider still to be the largest showcase for Agentic AI. WNS was acquired in that context to provide the scale and vertical expertise required to lead in this market. The integration is proceeding as planned and should be operational in H2. I can confirm that the benefits are on track. Let me remind you, annual run rate of revenue synergies of EUR 100 million to EUR 140 million by the end of 2027 and annual run rate of cost synergies of EUR 50 million to EUR 70 million also by the end of 2027. The go-to-market activities as expected, are vibrant, and we have today 100 cross-selling opportunities identified. The Intelligent Operations pipeline of opportunities also growing with some very large deals in pursuit. With Intelligent Operations, we are leveraging AI to reshape and run entire areas of client business operation to achieve end-to-end strategic value creation by combining cost efficiencies and enhanced business outcomes. Happy to report that we closed our first mega deal of over EUR 600 million for a large global company, covering multiple functions and processes based on a true Agentic AI-led transformation solution, delivering significant cost reduction and enhanced business outcome and operating on a non-FTE based commercial model. So this is the largest of several contracts signed in the last 4 months with some potential extensions of scope. And this is a clear proof that the Intelligent Operations strategy is working and will be one of our growth pillars in the coming years. Let me move on now to sovereignty, where we see a significant appetite from clients to help them develop and implement their sovereignty strategy. This has become a huge topic in today's multipolar world. I took this as proof -- I take it as proof, this striking figure. Over 50% of services contracts will include some sovereignty requirements by 2029, up from 5% in 2025 according to Gartner. And sovereignty is not a monolithic framework, but is composed of 4 key dimensions: Data, operations, technology and regulation, and no one can really be sovereign across the full value chain. Now it is clear that as the largest European player, we are the driving force in developing offerings, ecosystems and partnerships to help large organizations implement sovereignty enabling solutions adapted to their needs and environment. We reinforced our solutions portfolio with the acquisition of Cloud4C, providing hyperautomated, AI-ready, locally governed cloud operation with sovereign compliant monitoring, disaster recovery, cybersecurity and continuity and in addition, with specialization across some industries and sovereign compliance frameworks. Now we are leveraging Cloud4C setup to create a European-hosted mirror platform to operate our European customers' sovereign workload. This is a perfect complement to our Bleu SecNumCloud JV with Orange in France. We are also leveraging our core partners, sovereign solution. We made 3 announcements in the past week with Google Cloud, AWS and Microsoft in addition to the sovereign technology partnership signed with SAP in November. Now we are extremely well positioned to capture the growth trend on sovereignty. Now the market is moving fast. And while a few areas have been softer in recent years, the opportunity set ahead of us is really compelling, especially in AI, Intelligent Operations and Sovereignty, as I have outlined earlier. We are executing a clear plan with selective strategic M&A, disciplined investment and a sharper focus on where we lead. Today, we are accelerating also our capability shift in order to deliver on the growth agenda. This will translate in a number of country-specific workforce and skills adaptation initiatives, leading to an estimated EUR 700 million restructuring over the next 2 years. These Fit for Growth local initiatives strengthen our competitive position and support sustained and profitable growth. For 2026, our targets are clear: Constant currency revenue growth of around 6.5% to 8.5%, with inorganic contribution of around 4.5 to 5 points. Operating margin of 13.6% to 13.8%. Organic free cash flow of around EUR 1.8 billion to EUR 1.9 billion, including the estimated year-on-year increase of around EUR 200 million in restructuring cash out. In 2026, we're going to demonstrate our ability to set the group on a new profitable growth agenda around AI, Intelligent Operations and Sovereignty. And this will further reinforce the group's financial profile. We are clearly pivoting the group to be the catalyst for enterprise-wide AI adoption, more to come during the Capital Markets Day in May. Thank you for your attention, and I now hand over to Nive.
Nivedita Bhagat: Thank you, Aiman, and good morning, everyone. Let me start with the headlines for FY '25. We delivered a solid top line at EUR 22,465 million, which is up plus 1.7% on a reported basis and plus 3.4% at constant currency, placing us above the top end of the outlook we upgraded in October. This shows that our growth initiatives put in place over the year yielded results despite a mixed environment. On profitability, we protected the operating margin at 13.3%, stable year-on-year and in line with the guidance we set. Holding the operating margin despite the challenges we have faced in Continental Europe is proof point that our operating model is more resilient than ever before and shows the continued effectiveness of our cost discipline. Net profit group share ended at EUR 1,601 million with basic EPS at EUR 9.46. Normalized EPS, which strips out the other operating income and expense items was EUR 12.95, plus 5.8% year-on-year. Finally, we delivered organic free cash flow of EUR 1,949 million, in line with the around EUR 1.9 billion target we set at the beginning of the year, a strong testament to our financial discipline and focus. Let me take a moment to talk you now through the shape of the year. Growth rates gradually improved quarter after quarter at constant currency, but also ex M&A. Underlying growth strengthened further into Q4 and after taking into account the scope impact of around 6.5 points, our constant currency growth reached 10.6%. I'm happy to confirm that the organic growth in Q4 was therefore around 4%. To this effect, there is an error on Slide 27 of the pack. Now reflecting on the acceleration since the beginning of the year, what gives us confidence is that this wasn't a single sector or single region spike. We saw broad-based improvement across all businesses, regions and sectors. Currency impact was negative at 370 bps, so that's minus 370 bps in Q4 and minus 170 bps for FY '25. Based on current rates, currency headwinds should continue into Q1 2026 at slightly over 4 points and then settle at minus 1 to minus 1.5 points for the full year 2026. In summary, while the demand environment has remained largely unchanged, our current momentum is clearly stronger than it was a year ago. Turning to bookings. This was EUR 24.4 billion for the year with a very solid EUR 7.2 billion in Q4. In constant currency, our bookings are up plus 3.9% for the year and plus 9.1% in Q4, which mirrors the improvement in revenue momentum we just discussed. The book-to-bill of 1.21 in the quarter and 1.08 for the year is strong by historical standards, and this reflects 2 things. We continue to win in clients, new strategic priorities, particularly data and AI, and we won a higher number of large deals, which brings some added visibility. As Aiman said earlier, our portfolio investments from cloud, data and AI to digital core modernization, Sovereignty and Intelligent Operations continues to show good conversion, which sets us up well for the future. From a sector perspective, the improvement extended into Q4 on a like-for-like basis. This is also visible in manufacturing, which was stable in Q4. This solid performance was complemented by the contribution of WNS and Cloud4C acquisitions, which was mostly visible in the services, financial services, energy and utilities and consumer goods and retail sectors. Turning now to the full year, again at constant currency. Financial services and TMT sectors were the most dynamic in 2025, growing plus 9.2% and plus 7.7%, respectively. With the exception of manufacturing, which remained slightly negative, all the other sectors posted low to mid-single-digit revenue growth in 2025. Geographically, Q4 showed a step-up in underlying trends in our largest regions. North America improved and rest of Europe returned to positive growth. Growth rate improved in France, although still negative in Q4. The scope impact from WNS and Cloud4C is most visible in North America, United Kingdom and Ireland and in Asia Pacific and Latin America. In Q4, this is lifting these regions' already solid growth rates to around 20% on a constant currency basis. For the full year at constant currency, revenues in North America increased by plus 7.3% year-on-year. This has been fueled by continued underlying acceleration throughout the year with strong performance of financial services and to a lesser extent, in the TMT and manufacturing sectors. United Kingdom and Ireland region grew plus 10.5%, primarily driven by robust underlying momentum, notably in the financial services, TMT and public sectors. France revenues decreased by minus 4.1% in a challenging environment as illustrated by the persistent weakness of the manufacturing sector and the contraction of the energy utilities and the consumer goods and retail sectors. In the Rest of Europe region, revenues declined by minus 0.7%. The good performance of the public sector and the growth in Energy & Utilities and the services sectors were offset by a weak manufacturing sector. Finally, revenues in the Asia Pacific and Latin America region grew plus 13.8%, driven by financial services as well as the solid traction in the consumer goods and retail and TMT sectors. On profitability, North America operating margin expanded 40 bps, so that's plus 40 bps to 16.9%, while U.K. and Ireland held a strong 18%, which is 170 bps below a record 2024, which remains a very healthy level. Operating margin in France stands at 10.9% compared to 10.2% last year. As commented in H1, this improvement has been driven by one-off items. Excluding these one-offs, there has been no improvement in the underlying margin. Asia Pacific and Latin America was 12.6% at plus 20 bps and the rest of Europe ended at 11.4% at minus 60 bps. Across our businesses, the Q4 sequential uplift was also visible. Growth rates improved across all business lines on a constant currency basis, but also ex M&A. Strategy and operations, which has no M&A impact, improved significantly. This came with some contrast across regions as we have seen during previous quarters. The other highlight is Operations and Engineering. Let me unpack this as both WNS and Cloud4C are reported here. Starting with digital BPS, this is clearly the fastest-growing business. We have double-digit growth on a like-for-like basis across both Capgemini and WNS. Cloud Services and Engineering are also now positive. Moving on to the full year at constant currency. Applications and Technology grew plus 4.6%. Operations and Engineering, plus 4.9% and Strategy and Transformation at plus 2.4%. In terms of head count evolution, head count closed at 423,400, up 24% year-on-year and 19% since end of September, primarily reflecting the WNS integration. WNS is also accretive to our offshore leverage. Offshore leverage moved from 60% in September to 66% at the year-end. This is up plus 8 points year-on-year. Attrition was slightly down to 14.9% on a last 12-month basis before we incorporate WNS data in 2026. Let's now look at the operating margin bridge. Gross margin was 27.1%, down 30 bps year-on-year. This primarily reflects a prolonged soft market in Continental Europe. In this context, I would like to point out that our gross margin has been significantly more resilient than in any other previous down cycle. Additionally, in the current demand environment, we have tightened our selling expenses by 20 bps and our G&A by 10 bps. The net result is operating margin stable at 13.3% within the range guided for the year. Moving on to financial results. With the interest expense of the new bonds and lower interest income on cash, we moved from a net interest income of EUR 13 million last year to a net expense of EUR 30 million this year. On income tax, the effective tax rate is down year-on-year to 24.6% at the back of some noncash positive one-offs, which I did mention in H1. Now looking from operating margins to the bottom line. As anticipated, other operating income and expenses are up year-on-year at EUR 784 million. The restructuring costs amounted to EUR 205 million, in line with our comments in July. And with the acquisition of WNS, our acquisition and integration costs are at EUR 97 million. This takes the operating profit to EUR 2,199 million, which is 9.8% of revenues, down from 10.7% last year, given those noncore items. After financial and tax effects previously discussed, group net profit stands at EUR 1,601 million, down 4.2%. Basic EPS is EUR 9.46, down minus 3.7%, while normalized EPS was EUR 12.95, up plus 5.8% year-on-year. On cash generation and capital allocation, we generated EUR 1,949 million of organic free cash flow, stable year-on-year and in line with our around EUR 1.9 billion target. This year, again, the conversion of our net profit to organic free cash flow is clearly above 1 at 1.2x. In terms of our capital allocation, in 2025, we deployed around EUR 4.9 billion, approximately EUR 3.8 billion on WNS and C4C, EUR 1.1 billion on shareholder returns, which was split between EUR 578 million of dividends and EUR 542 million of buybacks. The employee shareholder program led to a EUR 0.3 billion capital increase, leading to a net outflow of EUR 4.6 billion. On the balance sheet, we redeemed the EUR 0.8 billion bond in June and then successfully completed a EUR 4 billion bond issue in September. We closed the year at EUR 5.3 billion of net debt. And as anticipated, the net debt-to-EBITDA ratio stands at 1.66, and this compares to 0.7x a year ago. And as a reminder, this was 2.8x post the Altron acquisition. In 2026, as we integrate WNS, we expect limited M&A and will accelerate our buybacks, which is consistent with the EUR 2 billion share buyback program announced in July. On that note, Aiman, I hand back to you.
Aiman Ezzat: Thank you, Nive. So before we move on to the Q&A, let me briefly acknowledge the current market volatility that reflects the perception and uncertainty of AI-related impacts. So what matters, however, is unchanged. Capgemini fundamentals are solid. Our strategic priorities are clear, and our teams remain fully focused on our clients' needs. Now listening to our large Global 2000 clients, their needs are rooted in who they are, complex organization that requires end-to-end transformation capabilities, global execution at scale, deep industry expertise, technology-agnostic integration and rigorous regulatory compliance governance. These structural needs do not disappear with AI, they become even more essential. And that makes Capgemini's role integral as organizations navigate the future. The adoption of AI and GenAI will drive sustained profitable growth for the group and value for all our stakeholders. In 2026, we'll affirm our critical role in making AI real for our clients. With that, let's open the Q&A and to allow a maximum number of people in the queue to ask questions, I kindly ask you to restrict yourself to one question and a single follow-up. Operator, could you please share the Q&A instructions.
Operator: [Operator Instructions] And the first question comes from the line of Laurent Daure from Kepler Cheuvreux.
Laurent Daure: Congratulations for the fourth quarter first. So two questions for me. As you can guess, given the increasing scope impact in the fourth quarter, it's a bit tough for us to reconcile the numbers. I know you will not share with us the organic performance by regions, but I was interested to see if you could provide a bit more insight of the underlying organic trends in the main regions between the third and fourth quarter. In other words, if you've seen further improvements in U.S. and U.K. or if the improvement mostly come from a better Europe? And then my follow-up is probably going to talk more during the CMD on that. But when you discuss with clients, their midterm ambition and their potential budget, I would say, 3, 4 years out, when they look at the additional business regarding AI versus the savings that you will bring to them, do you see them having in mind a reduction of their budget? Or what is their stance at the moment?
Aiman Ezzat: Listen, underlying organic and -- Nive can add precision to that. I mean, for me, everything is trending in the positive direction. I mean, definitely in North America, we continue to see further acceleration, which really underlines the recovery. U.K., France has improved and rest of Europe has improved. So -- and on the organic number, just to remind you, Nive said that the organic number is around 4% in Q4 overall for the group.
Nivedita Bhagat: And I think just to add, geographically, Q4 has showed a step-up in underlying trends across all our regions. So North America has improved. Yes, rest of Europe has returned to positive growth. And of course, we have seen some improvements as far as France is concerned as well.
Aiman Ezzat: Okay. On your second question, I don't think clients are thinking this way about reduction, et cetera. Clients are looking at how critical it is for them to adopt AI and where it can have an impact, both from a strategic perspective and from this. They are not thinking about, okay, I'm going to save money, I'm going to reduce my spend, et cetera. They're looking about how can I get real value out of AI, and they're ready to put the money on the table to make it happen because they consider that as being critical to their future in terms of transformation. I don't think we have -- I have seen clients discussing in 3, 4 years down the line, when I do the -- will I reduce my IT cost or will I reduce my spend on AI, et cetera, anything like that. Laurent, I don't think we are there. I think clients are really around where is the value creation. This is moving fast, how I can adopt it, where can I deploy it? How do I get benefit out of it, whether it's savings, time to market, innovation, better customer relationship, et cetera. And this is really what focus is a lot more than predicting what they will do in 3 or 4 years. I mean you see the uncertainty that's creating in many industries, including in ours by AI and really people are dealing with that more than trying to plan, am I going to save money and reduce my IT budgets in 3 or 4 years.
Operator: We will now take the next question. And the question comes from the line of Nicolas David from ODDO BHF.
Nicolas David: Congrats from my side as well for this very strong end of the year. My first question is regarding the Q4 to Q1 trends you are describing. Could you help us understand if in Q4, you saw some kind of exceptional budget flush or elements which prompt you to expect an organic growth at the low to mid-range of your guidance you described for Q1, a bit below what you saw in Q4? Or is it just comps or a bit of caution? And second question is, when you discuss with clients and you are signing contracts about identification of workflows, could you help us understand if those projects are done and those identification projects are done inside the traditional cloud business software with tool provided by the software providers, the legacy software provider? Or are they designed using new entrants tools or tools that you are developing yourself around the historical application layers?
Aiman Ezzat: Okay. Listen, on the Q4 to Q1, it's more, I think, the seasonality that basically that you see that's going to impact thing, okay? I mean we'll always build some caution in what we say around where we head, but we are quite confident around the growth that we see in front of us. I mean, no specific concern that we see in terms of the business going into Q1. On the project, I think it's all of the above. Because, as you know, everybody wants to put their AI agents, their AI models, drive the consumption towards them. So whether you talk about software vendors and the Agentic layer, you talk about the hyperscalers and you talk about all the new entrants like OpenAI, Anthropic, Mistral, et cetera. All of the above work, they're all winning some business. We work with all of them. And the question is what is the pertinent solution for the client based on what he needs and who, at the end of the day, based on the strategy, whether it's short term or medium term, based on who has been the most convincing to them in terms of what they are pitching, and this is really what the clients go. But in a number of cases, they're also experimenting. Many clients have not have a long-term strategy, deciding of saying this is what I will do, this is my line and I will not move from it. And I think -- if people evolve and bring the right solution that are really pertinent to the client, to the client industries and specific environment, that is what they will adopt. What we have the client is navigate through some of that and ensure that they actually get real value because this is not about what solution or what agency going to adopt is how to make it happen in your critical processes, how to ensure that they're enterprise scale, how to ensure that they are safe, how to ensure that you can trust, how to ensure that the human AI model works. That's really where the complexity lies. But at this stage, we don't see clients saying, I will go this way or this way. I think it's still pretty open.
Nicolas David: All right. But based on what you see, you believe that incumbent software player can be relevant in this move.
Aiman Ezzat: Yes. I mean, again, I heard a number of technology CEOs talk about it, including from the hyperscalers recently. I mean, the thing about the death of software, I think, is a bit premature. The question is, what value are you bringing? If you don't evolve, I mean, same thing in our industry. If you don't evolve, software vendors don't evolve, then they will have a lesser role to play in the future. But you have to evolve to be able to embrace and bring the value to clients. At the end of the day, what clients are looking is not should I buy a software, should I buy an [indiscernible], I want value delivered. Who can help me deliver tangible value. That's what they're looking for. And if you play in there, then you have a role to play. If you don't contribute to that, then you get commoditized and basically downplayed over time. Simple.
Operator: Your next question today comes from the line of Sven Merkt from Barclays.
Sven Merkt: Your guidance for 2026 is obviously very solid, but still below the exit rate of Q4 on an organic basis. Can you help us to square this? And was there anything exceptional in Q4? Or have you just baked in significant conservatism into the guide? I noticed you called out still a complex macro environment earlier. And then secondly, a lot of focus, obviously, on helping your clients adopting AI. But can you speak a bit more about your internal road map to adopt AI to drive efficiency and what financial impact that could have over the long term?
Aiman Ezzat: Okay. So listen, the guidance, I mean, when you start the year, I mean, we still have an environment that's basically not the most stable environment. So yes, we're going to have some conservatism as we start the year, and we'll see how the year plays out. But when you see the geopolitics, discussion around tariffs and a number of hot points across the world, you're going to have to be cautious and not just replicate what we see in Q4 of saying this is how the year is going to look out. So we see a solid H1. We have good views on H2, but we know there's still fluctuations that can happen along the year. If I go to your -- to the folks, I think it's a very good question around how we're adopting AI. So first, there is 2 key areas. In addition, we talked a bit about what we're doing with clients, 2 key areas. One is our operations, second thing in our delivery. So in our delivery, we are pushing. And it was slow because some of it is linked to our client environment. We work mainly in our client environment. If they don't provide us the tool, et cetera, we cannot really take advantage of that. And then there is client conservatism about what we use, what impact it's going to have, is it safe, et cetera, before just going for the savings. We start to see some more accelerated benefits in some areas. I cannot -- so it's not across the board still, but we really start to see pockets where we're gaining maturity, clients are gaining maturity and where we see we can progress faster. I mean, typically, if you take our offering in Intelligent Operations, that's what we do. I mean we are basically telling the client, we take this over, we're going to do the Agentic transformation. And of course, by doing that, as you imagine, we go up the experience curve quite quickly because we are adopting internally in our delivery model, how to make that happen. And we have a number of success. I talked about a couple of examples, but there's a number of others. So we are going up that experience curve area by area, business by business to see how we can accelerate the adoption. And of course, we're pushing for a strong acceleration this year, okay? The second part is in our Operations. And here, we have developed and created an internal platform data. So what we push to our clients, we have done it. We have built all the LLM layers above that with one of the technology partners, one of the large technology partners. And we are now -- have started developing the different Agentic layers. HR agent, sales agent, finance agent, proposal agent. So we are deploying internally what we're preaching to our clients. I think we'll probably dive more in detail around the number of these elements at Capital Markets Day and talk about what the impact that we see in terms of the future as we both adopt and deploy more of the solution also at clients.
Operator: Your next question today comes from the line of Frederic Boulan from Bank of America.
Frederic Boulan: If I can just stay on the AI debate. So the bear case on the IT services industry, as you know, is around the negative impact from cutting efficiency, massive simplification in software deployment. Can you share with us what you think the market is missing and how CAP can maintain its relevance in that new ecosystem? And if I can get a follow-up around pricing. I mean, is there any specific area where you do see significant price pressure from more efficient delivery supported by GenAI?
Aiman Ezzat: So listen, again, I recognize the market is looking for clear evidence that AI is already translating into tangible value, whether it's gross margin or both. And for me, shifting the perception is not about making promise, it's really about execution. And that's really what we're focusing on. We're focusing on execution around growth, around margin, on cash flow, also providing more and more visibility and understanding about the trajectory in terms of how AI is progressing. We are embedding AI across all our offerings. So we are redesigning our offering in a certain way. So it's by design, not telling people see how you can use AI to improve things. Basically, we are designing how AI should be used. And I think this is what really where everybody is going and where we're helping our clients to go. You have to redesign your processes, the way you work and everything around the impact of AI. But I can tell you really when I -- besides examples, when I really talk to clients, the level of adoption we're still at the beginning. And because the transformation is complex, this is not easy things to do. And our best response to some of the fears in the market today is on delivering value, delivering value, explaining where we are winning, explaining the partners with whom we're signing who basically talk with them around how we're delivering value and how we need them and some will come in the near future, additional ones. So it's really about proof points. I mean this is our best response is proving that this works, that we're able to create value across the value chain of what we're doing in Capgemini. On the pricing, I don't think there's any change. There's not a specific area of pricing pressure. The environment is competitive. And of course, as you demonstrate more value creation potential, you, of course, can be able to generate better margin in certain areas. And I think this is really what we are focusing on.
Operator: And the next question comes from the line of Mo Moawalla from Goldman Sachs.
Mohammed Moawalla: And it's encouraging to see the revenue inflection. On the revenue growth, first of all, I just wanted to sort of clarify how is the kind of discretionary spending environment? To what extent did you get a bit of sort of budget flush effect? And then looking forward, you talked about some encouraging pipeline on intelligent operations. Is that something that's sort of baked into the guidance in terms of -- or is that sort of going to be as part of the conservatism you talked about? And then secondly, while the kind of growth is inflecting, we are seeing this kind of erosion on the gross margin. Can you sort of just help us understand that dynamic going forward? And that should we sort of anticipate that continuous kind of erosion in gross margin as pricing environment remains tough and you're kind of having to see some deflationary effect from AI? And is that sort of then what can you do on the OpEx side to try to kind of manage that impact on the operating margin?
Aiman Ezzat: So first on the revenue growth. No, I mean, I don't consider there was any budget flush coming into Q4. I think it's really real growth that we have driven and improving across the board, as we said, even manufacturing now is not a headwind anymore because even excluding M&A, manufacturing has become flattish. So it's all trending in the right direction. From Intelligent Ops, we will never bet to include in our forecast some very large deals. So in our guidance, we will never bet on large deals. The other thing, just remember so that we don't get -- we understand the full impact of that. Some of these deals, as we say, these are complex deals. I mean we're talking about clients ending up a chunk of their operation and trusting us to run them and to transform them. So this is not -- it takes time to be able to close some of these deals. And the second thing, it takes time to transition. So the revenue doesn't come immediately. So a deal that we have today in the pipeline will have minimal impact in 2026, will have full impact in 2027, okay, just so that to you have a back of the envelope idea on that. Nive, on the gross margin.
Nivedita Bhagat: Yes. On the gross margin, clearly, of course, this primarily reflects a fairly tough -- prolonged tough market that, of course, we've had in Continental Europe. And I think that's really one of the reasons why the gross margin is where it is. Now having said that, I think the gross margin has been far more resilient in this down cycle than any previous down cycle. And I think if I go back into the past, if I looked at the period of the financial crisis, I think we were down about 180 bps. If I look at COVID, we were down about 120 bps, whereas this time it's 30 bps. So not to sound defensive, but to say, I think we've been pretty resilient through this period of time despite, of course, 7 quarters of negative constant currency growth, just as a reminder. Now coming back, though, to the margin levers, I think, I've always said that the mix and portfolio mix is our biggest area of focus when it comes to that improvement. So that's an area of focus that will continue to happen. And all these investments we've made through our acquisitions, through the portfolio to what we see is going to help with that growth going forward. But additionally, yes, our Fit for Growth initiatives that Aiman just talked about will address some of that and will address some of the margin accretion from that perspective. And we will also, of course, continue to look at everything in terms of our operational parameters. So whether it's SG&A and looking at onshore/offshore, looking at what we do with our pyramid, et cetera, all of those aspects, we will continue to look at very strongly. So the focus is very much an improvement to gross margin as we go ahead, Mo.
Operator: Your next question today comes from the line of Michael Briest from UBS.
Michael Briest: Can you talk a little bit more about the Fit for Growth program? What your ambition is with the EUR 700 million restructuring envelope? And then thinking about head count more broadly, Obviously, you're using AI internally. WNS, there's an opportunity there around automation. Can you talk about how you expect head count to develop through the course of the year? And then just on the follow-up would be that EUR 600 million deal that you announced, Aiman, congratulations. How does that sort of fit into the GBP 100 million to GBP 140 million revenue synergies? It seems early to have won something so soon after the deal closed. But you mentioned the full pipeline. Can you give some more context on that and how quickly you can get to that GBP 100 million plus synergies?
Aiman Ezzat: Okay. For the Fit for Growth program, I mean, listen, recognition that, first, I mean, you have seen that over the last few quarters, we get some -- we had some challenging environments in Europe, okay, across a number of countries. Some of them are linked to sectors. But also, we are anticipating some evolution from the technology and notably from AI in terms of evolution around some capabilities. So I think -- and we have to do quite a bit of reskilling also in some areas to be able to prepare our workforce for the future. So this is really what this Fit for Growth program is about. This is about basically realigning some capabilities with where we see now the opportunities coming up, whether they're Intelligent Operations, AI, Sovereignty or some other pockets which are emerging where we need to invest. So what we did is basically said we have to move fast. The market is moving fast, and this is about basically doing fast, something that we could do over several years is that we don't have time to waste. We really have to act fast, and we took the decision to be able to accelerate what we do traditionally over time to do it at a much faster pace. So that's for the Fit for Growth program. On the head count, you're always going to have both aspects. Growth drives head count. And at the same time, we're pushing very hard on AI and automation. Doing large Intelligent Operations deal adds us head counts. On the other side, we also drive a lot of productivity in some of the existing contracts. So the 2 will change. So think in the specific year, how the account is going to evolve will depend very much on the mix of business that we're going to win, how much is onshore, how much is offshore, et cetera. I think what -- the way I would look at it is I definitely expect that over the midterm, what we will see is an increase of revenue per head count. Right now, basically by embarking a large BPO business from WNS, we reduce effectively that because the revenue per head in this type of business is lower. But over time, I definitely expect a trend where with the leverage of Agentic AI, et cetera, we will be driving the revenue per head up. And on Intelligent Operations, we always said, I remember, since you have been following us for a long time, we did all the accretion in terms of revenue, the synergy of revenue on the IGATE deal on one deal, on one client. And here, basically, yes, we are. We're going to be able to do probably on some of the couple of large deals, a large part of the revenue accretion. It's going to take time for some of this to be able to ramp up. And just in addition to some of these large deals, also don't neglect the cross-selling opportunities. I mentioned 100 cross-selling opportunities. When you see the size of both businesses on our side, on their side, 100 cross-selling opportunities is a lot of deals. Some of them are small, but some of them are pretty large. I think I answered your three questions. So we'll be taking one final question as we're coming almost up to the hour.
Operator: Your final question comes from the line of Balajee Tirupati from Citi.
Balajee Tirupati: Congratulations, Aiman and Nive, on a strong close to 2025, also on winning the mega deal. If I can start with Intelligent Operations, first question there, could you share at this stage, how is the maturity of pipeline of similar mega deals looking at this moment? And also what your thought is about the sustainability of the double-digit growth you're seeing in Intelligent Operations? And if I may also ask a second question on evolution of AI tools and plug-ins. I do appreciate enterprises are still in early stage of adoption and the readiness is probably at nascent stage as well. So are you seeing or expecting the scope of productivity gains possible increasing and broadening the context not limited to, but for example, comment from Palantir around achieving complex for migration in as little as couple of weeks. How you would expect analyst community to reconcile with that?
Aiman Ezzat: So first, I mean, listen, the pipeline, as you know, when you get to large deals, I mean, the closing time is always somewhat difficult to be able to estimate because they can go on for months and months and months before we're able to get to that. But the pipeline is good. We have some very large deals, but we also have some deals which are multi-steps. There's a client with whom we signed the first step around 2 or 3 functions at the end of last year. And now we are basically looking at scope expansion already this year, probably in the first half and maybe another one again later in the year. So they don't all come as one single deal. Sometimes they come as multiple steps in terms of closing some of these deals. But we have good confidence about ability to sustain double-digit growth when we see the pipeline and the deals that we have. I've good confidence for the near future to sustain the double-digit growth around all that business. On the AI tools and productivity gains, the productivity is coming bit by bit. Whenever I talk to clients, everybody has some nice cases when I ask them at scale. I think there have been interviews with CIOs of large banks recently. When you say what they say, we're still at the beginning because the reality is that besides generating code on an LLM and really trying to integrate that into an enterprise that's very complex with legacy systems, siloed data and all the like, it's a lot more complex. So it takes more time. And yes, there is a gap between CEO's expectation, I can tell you and what his team is able to deliver today. So everybody is trying to accelerate, but there is challenges. On things like Palantir, I think, again, people end up with the headline and they don't dig in detail, okay? And whenever we see something else, we take it seriously. We take it seriously about what is happening, are we missing something, et cetera. And we dig in detail, and we really understand what it is. I think you need to get some people maybe in your organization or other to really dig in detail about what it is. It is -- yes, there is advancement in certain areas. When you look really into the detail of what it is and to what it applies, it's not going to make your SAP migration in 2 weeks, okay? So don't stay on the headline, dig a little bit more in detail. As I say, we take things seriously. We did it. And we understand what exactly what is behind. There is advancements in some areas, but it's not stratospheric in terms of suddenly you can do SAP migration in 2 weeks, okay? That's the headline that people took and that headline is significantly wrong. And some of what they do, really the way it shows applies more to an environment of SMB data than it applies to large corporations, okay? I love to go into the detail around that, but I assure you, we are not concerned after digging. Thank you very much. I appreciate, of course, the exchange and all the questions and looking forward to interact with you over the coming days and weeks.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.