Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors

If you're looking at CGI Inc. (GIB), the full picture from their Fiscal Year 2025 results is one of disciplined, profitable growth, but it's not without complexity. The headline numbers show a strong year, with total revenue hitting $15.91 billion, an 8.4% jump year-over-year, and adjusted diluted earnings per share (EPS) climbing 8.9% to land at $8.30. Here's the quick math: that growth is fueled by a massive, forward-looking commitment from clients, evidenced by a full-year bookings total of $17.57 billion, which gives them a healthy 110.4% book-to-bill ratio. Still, you need to look closer because while the backlog sits at a reassuring $31.45 billion-two times annual revenue-the near-term margin pressure from restructuring and integrating acquisitions is defintely a factor, even as their focus on AI-embedded managed services starts to pay real dividends.

Revenue Analysis

You need to know where CGI Inc. (GIB) is generating its income to gauge the quality of its growth, and the fiscal year 2025 numbers show a clear focus on sticky, high-value services. The company reported annual revenue of approximately $11.53 billion for the year ending September 30, 2025, representing a solid year-over-year increase of 6.85%.

This growth rate, while healthy, is even more compelling when you look at the future visibility: the contracted backlog currently stands at a massive $31.45 billion, which is about 2.0x its annual revenue. [cite: 6 in previous step] That's a defintely strong forward indicator that minimizes near-term revenue risk. The company reports its financials primarily in Canadian Dollars (CAD), where the annual revenue figure is $15.91 billion with an 8.4% growth rate. [cite: 1 in previous step, 6 in previous step]

Primary Revenue Sources: Services and Intellectual Property

CGI Inc. operates with a diversified service model, which is a key strength. The revenue is primarily split between two major categories: IT and Business Consulting/Systems Integration, and Managed IT and Business Process Services, plus a critical third component: Intellectual Property (IP) Solutions.

The IP Solutions segment, which includes proprietary software and products, is a high-margin engine that provides a recurring revenue base. This segment accounted for approximately 21.6% of total revenue in the first quarter of fiscal 2025, which is a significant, stable contribution to the overall mix. The rest of the revenue comes from a full-service portfolio:

• Managed Services: Long-term outsourcing contracts, which provide recurring, predictable revenue. This segment had a trailing twelve-month book-to-bill ratio of 120%, indicating that new business is outpacing revenue recognition. [cite: 9 in previous step]
• Strategic IT and Business Consulting/Systems Integration (SI&C): Project-based work that drives digital transformation, often leading to subsequent managed services contracts.

Geographical Shifts and Growth Drivers

The year-over-year revenue growth was not uniform across all geographies, which points to targeted opportunities and successful M&A integration. Acquisitions played a clear role in boosting growth in certain regions. For example, the UK and Australia segment saw a massive Q4 2025 revenue growth of 28%, largely driven by the acquisition of BJSS. [cite: 3 in previous step, 9 in previous step]

In North America, the US Segments posted a combined Q4 growth of 5.7%, fueled by integrating the Aon and Doherty merger investments. [cite: 3 in previous step] Meanwhile, the Asia Pacific (APAC) segment also showed solid momentum with a Q4 growth of 6.4%. [cite: 9 in previous step] This regional variance is a map of where management is actively investing and seeing immediate returns. You can dive deeper into the implications of these strategic moves in our full analysis: Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors.

Here's the quick math on the recent regional performance:

The biggest near-term opportunity is clearly in those AI-embedded managed services, which the CEO highlighted as a key growth area. [cite: 6 in previous step] The strong book-to-bill ratio in managed services confirms clients are committing to longer-term, recurring contracts for digital and AI transformation. Your next step should be to track the margin profile of that 21.6% IP revenue stream, as that's the real profit lever.

Profitability Metrics

You want to know if CGI Inc. (GIB) is a lean, mean profit machine, and the short answer is yes, but with a caveat on its gross margin. The company's operational efficiency is top-tier, translating strong adjusted operating profit (EBIT) into healthy net earnings, but its gross margin structure is different from many peers, demanding a deeper look.

For Fiscal Year 2025, which concluded in September, CGI Inc. reported total annual revenue of $15.91 billion CAD. This performance shows a steady hand in a volatile market, but the real story is in how much of that revenue makes it to the bottom line.

• Gross Profit Margin: The latest twelve-month (LTM) Gross Profit Margin stands at approximately 20.1%.
• Operating Profit Margin (Adjusted EBIT): The Q4-F2025 Adjusted Operating Margin was a robust 16.6%.
• Net Profit Margin (Adjusted): The Q4-F2025 Adjusted Net Earnings Margin came in at 11.8%.

Here's the quick math: the spread between the gross margin and the operating margin is relatively tight, meaning CGI Inc. runs a very tight ship on its overhead, or selling, general, and administrative expenses (SG&A). This is a sign of disciplined cost management, a core strength of the firm.

Operational Efficiency and Industry Comparison

When we look at operational efficiency, we map the Gross Margin (which shows raw service delivery profitability) to the Operating Margin (which factors in corporate overhead). CGI Inc.'s relatively low gross margin, compared to pure-play consulting or software firms, is a structural element of its business model. It's a high-volume, global IT services firm where a portion of its delivery costs are classified as Cost of Goods Sold (COGS).

To be fair, a direct comparison with the broader 'Professional Services' industry average of 55%-65% Gross Margin is misleading. However, even against direct peers, CGI Inc.'s 20.1% LTM Gross Margin is lower. For instance, competitors like Accenture PLC and Infosys Limited operate with gross margins closer to 31.9% and 29.9%, respectively.

Still, the company's superior cost management kicks in below the gross profit line. The Q4-F2025 Adjusted Operating Margin of 16.6% is competitive, and the Adjusted Net Margin of 11.8% shows that the company is highly effective at converting its operational income into net profit. This is where the company defintely shines.

Near-Term Risks and Opportunities

The trend over time is a story of margin stability at the bottom line, despite global economic pressures. While the gross margin has seen minor fluctuations, the management's focus on maintaining a high adjusted EBIT margin, as evidenced by the 16.6% figure in Q4, is a clear signal of their commitment to operational discipline. The unadjusted Q4 Net Margin of 9.5%, however, highlights the impact of restructuring and acquisition-related costs-a necessary evil for a company focused on growth by acquisition.

The opportunity lies in the company's focus on digitization and AI, which drove strong bookings of $4.8 billion in Q4-F2025. As these higher-value services-often delivered through managed services-scale up, they should help mitigate the lower-margin pressures from traditional outsourcing work, potentially pushing the overall gross margin closer to the 22-23% range over the next two years. This is a critical factor for long-term investors to watch, as discussed further in Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors.

Next Step: Review the company's Q1-F2026 guidance for any explicit changes to the gross margin forecast, paying close attention to the expected impact of the $100 million in restructuring costs planned for 2025.

Debt vs. Equity Structure

You're looking at CGI Inc. (GIB)'s balance sheet to gauge risk, and that's the right move. The company's capital structure is conservative, leaning heavily on equity and maintaining a debt load that is well below the industry average. This signals a strong, defintely resilient financial position for a global IT services firm.

As of the close of its fiscal year on September 30, 2025, CGI Inc. reported total debt and lease liabilities of approximately C$4.33 billion ($4,331.3 million CAD). This is a manageable figure, especially when you look at how it stacks up against their equity base. The core long-term debt (excluding leases) stood at roughly C$3.64 billion. Their strategy prioritizes financial strength over aggressive leverage. That's a bedrock for stability.

• Total Debt (incl. leases, Sep 2025): C$4.33 billion.
• Net Debt (Sep 2025): C$3.45 billion.
• Net Debt-to-Capitalization Ratio: 25.1%.

The most telling metric here is the Debt-to-Equity (D/E) ratio. For the 2025 fiscal year, CGI Inc.'s D/E ratio was approximately 0.44. To put that in perspective, the average D/E ratio for the IT Consulting & Other Services industry is around 0.72. This means CGI Inc. uses significantly less debt to finance its assets compared to its peers. Less leverage equals lower financial risk, period.

The company has been active in managing its debt profile. In March 2025, CGI Inc. priced an offering of 5-year senior unsecured notes totaling US$650 million. This issuance, which bore an interest rate of 4.95% (or 3.7125% CAD equivalent after a currency swap), was primarily intended to repay existing indebtedness and for general corporate purposes. Before that, in September 2024, they issued C$750 million in senior unsecured notes to refinance existing debt, demonstrating a proactive approach to debt maturity management.

The balance between debt financing and equity funding is clear: CGI Inc. uses debt strategically for accretive acquisitions and refinancing, but its primary capital deployment focus is on returning value to shareholders through buybacks. In the fourth quarter of Fiscal 2025 alone, the company invested $490.8 million to purchase and cancel shares under its Normal Course Issuer Bid (NCIB). This consistent share repurchase activity is a strong signal that management views the stock as undervalued and prefers to use excess cash flow to reduce the share count rather than relying on new equity issuances for funding. This is a capital-efficient growth model.

For more on the company's full financial picture, including valuation and strategy, you can read the full report at Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at CGI Inc. (GIB)'s balance sheet to gauge its short-term financial strength-its ability to cover upcoming bills. The quick takeaway is that while the company operates with a tight, even negative, working capital position, its massive and consistent operating cash flow is the true engine of its liquidity, which is a common model for service-based businesses.

Assessing CGI Inc.'s Liquidity: Current and Quick Ratios

The first place we look is the liquidity ratios. For the fiscal year ending September 30, 2025, CGI Inc.'s ratios suggest a very lean immediate position, which is typical for a high-volume professional services firm that collects cash quickly but also has large deferred revenue liabilities.

• The Current Ratio (Current Assets / Current Liabilities) stood at 0.99. This means for every dollar of short-term debt, the company has 99 cents in assets that should convert to cash within a year. You defintely want to see this above 1.0, but for a services company, anything close to 1.0 is manageable when cash flow is strong.
• The Quick Ratio (or Acid-Test Ratio), which strips out inventory, was 0.76. This is the more conservative measure, showing that without relying on selling any inventory, the company has 76 cents to cover each dollar of current liability.

Here's the quick math on the working capital (Current Assets minus Current Liabilities): it was slightly negative at approximately -$36.88 million as of September 2025. This negative figure isn't an immediate red flag here, but it means the company relies heavily on its ability to generate cash from operations, not on a large buffer of liquid assets.

Cash Flow Statements Overview: The Real Liquidity Engine

The cash flow statement is where CGI Inc.'s financial strength truly shines, offsetting the tight balance sheet ratios. This is the company's real liquidity story-the cash it generates from its core business is significant and reliable.

For the full 2025 fiscal year, the Cash Flow from Operating Activities (CFO) was a robust $2,234.2 million. That is a huge, consistent source of liquidity. This cash was then deployed aggressively across the other two cash flow categories:

• Investing Cash Flow: The primary use was for strategic growth, with the company investing $1,830.0 million net of cash acquired in businesses. This shows a strong commitment to growth through acquisition.
• Financing Cash Flow: The company returned significant capital to shareholders, spending $1,274.5 million on share buybacks and paying $135.1 million in dividends.

Liquidity Strengths and Risks: A Trend-Aware Realist's View

The company's liquidity position is strong, but it's built on a specific foundation. The primary strength is the high-quality, recurring nature of its operating cash flow, which is a much more reliable source of liquidity than a large cash hoard.

What this estimate hides is the risk of a sharp, unexpected downturn in client spending, which could slow down Accounts Receivable collection and immediately pressure the working capital. Still, the company's strong cash generation is a powerful cushion.

To get the full picture on the firm's long-term health, you should check out the Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors post.

Here is a summary of the key liquidity metrics for FY2025:

Next Step: Portfolio Manager: Model a 15% reduction in Q1 2026 revenue to stress-test the current negative working capital position and confirm the CFO buffer is sufficient.

Valuation Analysis

You're looking at CGI Inc. (GIB) right now and asking the right question: Is the recent stock price drop a buying opportunity or a sign of deeper trouble? The short answer is that, based on trailing twelve-month (TTM) metrics for the fiscal year ending September 2025, the stock appears to be trading at a discount compared to its historical median, suggesting it is undervalued right now, but you need to understand why the market is punishing it.

Honestly, the stock has taken a beating. Over the last 12 months leading up to November 2025, CGI Inc.'s stock price has fallen by approximately 21.70%. This drop pushed the price from a 52-week high of $122.79 back in February 2025 down to a recent close around $86.07. That's a huge move, and it's what creates the potential opportunity.

Here's the quick math on the key valuation multiples, using the most recent data for the fiscal year 2025:

• Price-to-Earnings (P/E) Ratio: The TTM P/E as of September 2025 is 16.53. This is significantly lower than its five-year average, indicating a cheaper earnings multiple.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple, which is better for comparing companies with different capital structures, sits at 10.42 (TTM Sep 2025). The historical median for CGI Inc. is closer to 12.41, so this is defintely on the low end.
• Price-to-Book (P/B) Ratio: The P/B for fiscal year 2025 is 2.66. This is a healthy ratio for a services firm, showing you are paying a reasonable premium over the company's net asset value.

The low P/E and EV/EBITDA ratios strongly suggest the market is pricing in either slower future growth or increased risk, which is why the stock is trading so close to its 52-week low of $84.00 set on November 10, 2025.

What the Street Thinks: Analyst Consensus

To be fair, the analyst community is cautious but sees upside. The consensus rating for CGI Inc. is currently a Hold. This isn't a ringing endorsement, but it's far from a panic sell. The average price target set by analysts is $117. This target implies a substantial upside of over 35% from the recent stock price, meaning the Street believes the company is indeed undervalued at its current level.

What this estimate hides, however, is the recent downward revision in targets. For example, Jefferies recently lowered their price target to $81.00 on November 10, 2025. This shows a split: some analysts see the current price as a floor, while others are still adjusting their models downward to account for macro pressures or slower bookings growth.

The Dividend Reality

If you're looking for a major income play, CGI Inc. is not it. The company prioritizes share buybacks and strategic M&A over a high dividend payout. For 2025, the dividend yield is a modest 0.57%. The good news is that the dividend is extremely safe, with a low payout ratio of just 8.14%. This low payout ratio means earnings easily cover the dividend, leaving ample cash flow for growth investments and share repurchases.

Finance: Review the Breaking Down CGI Inc. (GIB) Financial Health: Key Insights for Investors article to cross-reference these valuation metrics with the company's cash flow and debt profile before making a move.

Risk Factors

You're looking at CGI Inc. (GIB)'s financial health, and while the Fiscal 2025 results show strong growth-revenue hit $15.91 billion for the year-a seasoned analyst knows you must map the near-term risks. The biggest concerns right now are external market volatility, integration challenges from recent acquisitions, and specific government-related headwinds.

The company's ability to generate cash remains strong, with cash from operations at $2.23 billion for Fiscal 2025, but a few factors are applying pressure. Here's the quick math on what could slow down the momentum.

Near-Term External and Operational Headwinds

The most immediate, quantifiable risk is the political environment in the U.S. The federal government shutdown, a major external risk, is expected to hit CGI Inc. (GIB)'s U.S. operations hard in the next quarter. Management anticipates a revenue impact of approximately $60 million to $75 million, with a corresponding margin impact of $15 million to $22 million. That's a direct hit to the bottom line you need to factor in.

Also, the consulting business is facing ongoing pricing pressure across the industry. This is a perpetual competitive risk, but CGI Inc. (GIB) is mitigating it by shifting towards outcome-based pricing models. This ties their revenue more closely to client success, which is a smart move, but it still means they have to fight for every dollar.

• Government shutdown creates revenue shock.
• Pricing pressure is an industry constant.

Financial and Strategic Integration Risks

On the financial side, the company's aggressive strategy of growth through acquisition-which drove strong revenue in segments like the U.K. and Australia with the BJSS acquisition-introduces two key risks. First, the Days Sales Outstanding (DSO), a measure of how long it takes to collect payments, increased to 45 days at the end of Fiscal 2025, up from 41 days in the prior year. This ties up working capital and is a direct consequence of integrating new businesses.

Second, the strategic decision to shed lower-margin work from those new acquisitions, while ultimately healthy, will cause a planned runoff that impacts short-term profitability. You also need to watch the balance sheet: the net debt-to-capitalization ratio has climbed to 25.1% as of September 30, 2025, a significant jump from 16.2% a year earlier. This rise reflects the capital deployed for acquisitions and the share buyback program, increasing the financial risk profile.

Here's a snapshot of the financial shifts:

Mitigation and Forward Action

The good news is that CGI Inc. (GIB) has a strong buffer. Their contracted backlog is robust at $31.5 billion, which is equivalent to two times their annual revenue. This provides excellent revenue visibility and acts as a defintely solid hedge against economic uncertainty. Management also maintains a strong capital position, with $2.4 billion in capital resources readily available and a net debt leverage ratio of 1. They're not overextending themselves.

Their strategic focus on Mission Statement, Vision, & Core Values of CGI Inc. (GIB). and investing $368 million in Fiscal 2025 back into the business, including strategic investments in Agentic and Generative Artificial Intelligence (Gen AI), shows they are leaning into high-growth, high-margin areas to offset the lower-margin runoff. The high book-to-bill ratio of 119% in Q4 2025 confirms strong client demand for their services, especially in managed services.

Growth Opportunities

You're looking at CGI Inc. (GIB) not just for its past performance, but for its trajectory, and the near-term future looks defintely promising. The company's growth engine is a disciplined mix of strategic acquisitions and a laser focus on high-demand services like Artificial Intelligence (AI) and managed services, so the path to continued revenue expansion is quite clear.

The core of CGI Inc.'s strategy is their 'Build and Buy' approach, which is actively fueling their market expansion. They completed four key acquisitions in 2025, including Apside in France and BJSS in the U.K., which immediately bolstered their geographic footprint and technical depth. Here's the quick math: in the fiscal year ending September 30, 2025, CGI Inc. reported total revenue of $15.91 billion CAD, representing an 8.4% year-over-year increase. That acquisition-driven growth is a huge part of that number.

The market's confidence in this strategy translates to solid near-term projections. Analysts are forecasting CGI Inc.'s revenue to reach approximately $16.68 billion CAD for the 2026 fiscal year. More importantly, the consensus earnings per share (EPS) estimate for fiscal year 2026 is a strong $10.00 CAD, up from the reported adjusted diluted EPS of $8.30 CAD in FY2025. This isn't just top-line growth; it's profitable expansion.

The real competitive advantage for CGI Inc. is the sheer visibility they have on future revenue. They ended fiscal 2025 with a contracted backlog-work that's already signed-of $31.45 billion CAD. That backlog is equivalent to 2.0x their annual revenue, which gives them a massive buffer against economic uncertainty. They also maintain an industry-leading adjusted earnings before interest and taxes (Adjusted EBIT) margin of 16.6% in Q4-F2025, showing their operational discipline.

The key growth drivers are very specific and actionable:

• AI and Innovation: AI is a top client priority, and CGI Inc. is capitalizing; 40% of their Intellectual Property (IP) revenue is now driven by AI-integrated offerings.
• Managed Services: This segment is a powerhouse, with the opportunity pipeline growing by over 15% year-over-year as clients seek operational efficiencies.
• Strategic Acquisitions: The 2025 acquisitions like BJSS drove the UK and Australia segment to see 28% growth in the fourth quarter.
• Government Contracts: A significant win in November 2025 was the £250-million Enterprise Integration Services contract with His Majesty's Revenue and Customs in the UK.

What this estimate hides, of course, is the ongoing integration risk and restructuring costs associated with all those acquisitions. Still, the growth in managed services and the focus on AI-driven solutions positions CGI Inc. to capture the next wave of corporate IT spending. If you want a deeper dive into the institutional money backing this strategy, check out Exploring CGI Inc. (GIB) Investor Profile: Who's Buying and Why?

To summarize the financial outlook, here is a comparison of the reported 2025 results and the analyst consensus for 2026:

The next step is to monitor the Q1-2026 earnings call for updates on the integration of the 2025 acquisitions, specifically looking for margin accretion from those deals, not just revenue. That's where the rubber meets the road.