Capgemini SE (NYSE:CAP) Q2 2019 Earnings Conference Call - Final Transcript

Jul 30, 2019 • 02:00 am ET


Capgemini SE (NYSE:CAP) Q2 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, welcome to Capgemini 2019 H1 Results Conference Call. I now hand over to Mr. Paul Hermelin, Chairman and CEO. Sir, please go ahead.

Paul Hermelin

Thank you. Good morning, everyone. Thank you for attending this call. I will start with the headlines of the first semester of 2019. I will hand over to Rosemary Stark, our Chief Sales Officer and then to Carole Ferrand, our Chief Finance Officer. And of course we are here with Aiman and Thierry, the two COO's of the group. Let's start with the performance of good momentum at the beginning of the year is now confirm. First, our revenue growth is 6.2% at constant currency and 8.4% at current rates. Our revenue amounted to EUR7 billion this semester and this growth momentum continues since many quarters. We see a dynamic sales momentum in the second quarter, leading to a total H1 bookings of EUR7.1 billion, up 4.8% compared to last year. For the 17th time in a row, we publish an improvement on -- of our profitability.

We delivered another 50 bps of margin expansion compared to H1 2018, driven by good progression of our gross margin. Notably, thanks to the increasing part of digital and cloud in our revenue. I will come back to that later. Our operating margin reaches 11.4% in this first half. Our net profit group share stands at EUR388 million for the first semester, up 23% compared to last year. Finally, we have a healthy organic free cash flow generation reaching EUR90 million.

Let's look at the highlights of the semester. The Group has a clear ambition to be what we call leader for leaders. To achieve this, we notably decided to reinforce our portfolio of offers and our partnerships and we made significant progresses, I want to share with you. First, we selected specific offers and build a global network of competence centers focus on two things, improving our win rates and upgrading the quality of our delivery.

We have deployed Center of Excellence for offers such as customer experience, AI and analytics, digital manufacturing, next application development and maintenance and digital cloud with SAP S/4 . There are currently 1,800 dedicated people both onshore and offshore working in these centers of excellence. And it works, for the first time digital and cloud represent half of our revenue. In particular during this first semester, we see an increase of our revenue of more than 40% in cloud related activities and 70% in artificial intelligence.

Second point, we decided to manage our portfolio in close collaboration with our ecosystem of partners. Among them we choose four strategic partners, AWS, Salesforce, Microsoft and SAP and we made outstanding progresses this semester. Year-on-year, we doubled our bookings with Amazon Web Services. Our bookings with Microsoft increased by more than 70% and we won the 2019 Microsoft SAP on Azure Partner of the Year, for demonstrating excellence, innovation and implementation of customer solution based on Microsoft technology.

Capgemini was also recognized for having