Ladies and gentlemen, welcome to Capgemini Q3 2022 Revenue Conference Call. I will now hand over to Mr. Aiman Ezzat, CEO. Sir, please go ahead. Thank you. Good morning, and thank you for joining us for this Q3 revenue call. I have today with me Carole Ferrand, our Group CFO, and Olivier Sevillia, our Group COO. I'm pleased to share with you our continued strong performance in Q3. With more than EUR 5.5 billion of revenue, we have added EUR 1 billion in this quarter alone. That represents, in organic growth, 22% year-on-year and 15.7% in constant currency. Worth noting, this is the sixth consecutive quarter of double-digit growth, double-digit organic growth. The underlying growth momentum is definitely there. Bookings totaled EUR 5.4 billion, 13% increase at constant currency. That represent a book-to-bill of 0.98, which remains well above the pre-COVID average for Q3. The funnel remains strong, and we continue to have quite a few additions of new deals. It's happening at a healthy rate, so we continue to feel comfortable about the direction of the business. Digital transformation remains our client's priority, be it to fuel top line, but also to reduce costs or increase agility and scalability of their operations. Cloud and data are therefore remain the top, in top of mind for our, in the market. We continue to expand our talent base and gain market share, reaping the benefits of the strategy and the market positioning we have achieved with unique capability mix combined with deep industry expertise. When you look at the performance across the group, it remains quite strong, be it by geography, by sector, or by business. Our Q3 is an extension actually of Q2, taking into account the more demanding comparison basis. All regions reported strong double-digit growth in constant currency, extending the robust momentum that we have seen since the beginning of the year. All businesses also achieved double-digit growth, which was highlighting the 30% growth of Strategy and Transformation, which continued to be driven by the strong appetite for new digital transformation initiatives. Finally, in terms of sectors, top performers in Q3 are manufacturing, services, public sector and financial services. As you can see, the mix is quite diversified and this provides resilience. We continue to gain market share and strengthen our position in key industries and markets. Now, looking at the diversity of projects signed in Q3, we can see the appetite for technology remains strong and remains quite diverse, powered by cloud, data and AI. Our clients are engaging more and more in large-scale deployments to be able to accelerate the ROI from their digital investments. Let me highlight three deals which are quite interesting. First, for Alstom, we will deliver the client's first SaaS platform to enable digital rail services for their customers. Now, this platform will be cloud-based, of course, cyber-secure, data-driven, and delivered in partnership with Microsoft. This project will support the transformation of Alstom towards being a smart and sustainable mobility leader, accelerating therefore their move from product to digital services in alignment with their 2025 strategic positioning. I mean, this is a good example because this is exactly what everybody's trying to do in the manufacturing sector, you know. Notably here on the mobility, so that is true for rail, it's true for airlines, for aero, it's also true for automotive. You know? The same drive towards the digital services. Another example is for US Automotive Company, where we're developing embedded systems to accelerate their product development cycle in terms of software and edge technology. Here we are clearly positioned as a strategic partner in their product roadmap in terms of how they're gonna drive their top line in the future. Finally, for luxury brand, for Breitling, that you all know, we are supporting their journey to net zero. We are driving their global carbon accounting, combining expertise in sustainability measurement with the Salesforce Net Zero Cloud. In other words, we contribute to the digital backbone of Breitling transformation towards a sustainable business. On sustainability, just to continue on that, there's an ever-increasing client interest in our services, which remains one of our focus investment areas. We currently have 14 offerings in our sustainability portfolio. We are the business and technology partner of our clients. We bring sector-specific solution to drive concrete business outcomes across the whole value chain of our clients' organization. Now, what does it mean to be the business and technology partner of our clients? It means three things. First, it's about value creation. We successfully built a client-centric organization aligned by industry and focused on value creation. We have become a lot more proactive in terms of shaping transformational deals to enable the clients to leverage the full power of technology, but with industry-specific solutions to deliver tangible business outcomes. The intimacy we have developed with CXOs now across the organizations allow us to participate in some of the strategic discussions and therefore to be present at project inception. The second thing is it's about offering a broad portfolio of capabilities and solutions. We have a wide business mix. You know, we go from consulting to engineering, IT, digital, and we are global leaders in cloud data and AI technology, which you understand are the core of digital transformation projects. Again, either supporting growth initiatives or cost optimization. We are also recognized as leader in areas like Intelligent Industry, Customer First, Enterprise Management, or and sustainability. Finally, this is about acquiring and retaining the best talent. In spite of a very challenging environment, we have added close to 50,000 people in the last 12 months. This has required over the last few years to redevelop a state-of-the-art talent management approach. Be it global hybrid working policies, progressing diversity and inclusion, world-class digital training, accelerated promotions, employee mobility, they all contribute to make us an employer of choice. Excuse me. Talent is being attracted by the leading-edge transformation we deliver for our clients. Basically, the attractiveness of our projects, the interest that people see in terms of getting associated with some of this transformation. Focusing on value creation, building a broad portfolio, and attracting the best talent, these are really three of the engines that make us a business and technology partner. Coming to the outlook. In this context of continued performance and strong positioning, we clearly feel comfortable with the top end of our growth outlook for 2024, which was, as you remember, significantly raised to 14%-15% in July. We confirm the operating margin target of 12.9%-13.1%. We have enough levers to sustain our margin in this inflationary environment. Finally, our target for organic free cash flow remain EUR 1.7 billion. However, we see a tighter cash environment linked to increasing interest rates and a more demanding working capital due to the growth, which will be much higher than anticipated at the beginning of the year. Looking into 2023, I remain confident in our capacity to grow and demonstrate our resilience in what is expected to be a more challenging environment. Thank you. I now leave the floor to Carole, our CFO. Thank you, Aiman Ezzat. Let's first review the key trends of this third quarter of 2022. As Aiman Ezzat just pointed out, Capgemini achieved another strong quarter with very solid growth across all our regions and business lines. With revenues of EUR 5.553 billion in Q3, our growth at constant currency rates reached 15.7% compared to the same period last year. Given the higher comparison basis, this means that we managed to maintain in Q3 the strong traction we have been experiencing since the beginning of 2022. Considering a scope impact of 1.4 points, organic growth stands at 14.3% in Q3. FX proved to be particularly strong tailwind in Q3, with a positive impact of 6.3 points due to the appreciation of the US dollar against all other major currencies. Consequently, the group's reported growth stands at 22% in Q3 and 22.5% for the first nine months of the year. For the full year, M&A is expected to contribute around 1.5 points to the group growth, and FX should add a little more than four points. Let's now look at our revenues by regions. All group regions reported again this quarter strong double-digit growth at constant currency rates. Restated from the higher comparison basis, every region has essentially continued on the same strong momentum than in the previous quarters. Revenues in North America grew by 14.7% at constant currency rates, driven mainly by the financial services, manufacturing, and TMT sectors. The United Kingdom and Ireland region continued to report strong momentum with growth of 17.2% at constant currency rates, boosted by the public sectors as well as the financial services and energy and utility sectors. France reported revenue growth of 12.7% at constant exchange rates, with a particularly strong performance in the manufacturing and consumer goods and retail sectors. The rest of Europe region grew at 15.5% at constant currency rates, with the manufacturing and consumer goods and retail sectors remaining the top drivers. Finally, revenues in the Asia, Pacific, and Latin America region increased sharply by 24.1% at constant currency rates. Please keep in mind that the scope impact of the acquisition is lower than in H2. Underlying momentum was particularly robust in the financial services and manufacturing sectors. Moving now to our revenues by sectors. We maintain our strong momentum in Q3 with double-digit growth at constant currency in almost all sectors. Similarly to regions, most of sectors have maintained same strong dynamics than in previous quarters when restated for the higher comparison basis. While it may appear somehow muted when compared to other sectors, the energy and utility sectors has nonetheless delivered a decent growth in Q3. Moving on to our revenue by business lines. All the group's business lines maintained double-digit growth rates in Q3, continuing the trends observed in H1. Strategy and Transformation recorded constant currency growth at 28.5%, demonstrating the continued strength of the client demand for new digital transformation initiatives, whether to support their top-line growth or to optimize their cost base. Application and technology reported constant currency growth of 15.9% restated for the stronger comparison basis. The underlying momentum is even slightly stronger than in Q2. This reflects the broad-based demand for group clients for deploying large-scale digital transformation projects. Services in engineering and operations also maintained a solid traction with double-digit growth. As in H1, this performance was driven by mid-teen growth in engineering services as well as in cloud infrastructure services, while business services recorded a moderate growth. A quick look at the bookings evolution now. Bookings amounted to EUR 5.4 billion in Q3, up 13% at constant currency. The book-to-bill for Q3 stands at 0.98. Another strong quarter, eight points above the pre-COVID average for a Q3. Year to date, our bookings amount to EUR 17 billion, up 19% year on year at constant currency. Finally, a few comments on the headcount evolution. The total headcount reached 358,000 employees at the end of September, up 16% year on year. The offshore ratio is stable at 59%. Lastly, attrition amounts to 26.8% on the last twelve months basis. While still high in absolute terms, this is slightly down compared to the end of June. We expect attrition to moderate further going forward as the demand environment and talent market are normalizing progressively. With this, I hand over back to Aiman to open the Q&A session. Thank you, Carole. Operator, can you please have the message for the Q&A? Yes, thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. In order to allow as many participants as possible to ask a question, we would kindly request that you keep it to one question to which you may then add one follow-up. The first question comes from Amit Harchandani from Citi. Sir, please go ahead. Thank you. Good morning, all. Amit Harchandani from Citi. Morning. As a first question, if I may, if you listen to comments made by some of your peers who have reported in the earnings season so far, they have commented about client budgets looking to factor in macro, talking about more downside than upside scenarios. Others talking about, you know, potentially slowdown in discretionary spends, greater step-up in cost-centric deals in addition to digital transformation deals. Therefore, could you kindly share your perspective on what are you seeing out there in terms of customer behavior and conversations? And then I have a follow-up. First I'll comment a bit on the nature of what we see, yeah, before I comment on the volume aspect, if you want. On the nature, we continue to see quite a bit of balance in terms of both projects, project work, some people call consulting and outsourcing or managed services deals. We haven't seen a fundamental change in these trends. I think there might be some trends in some industries, but for us, when I look overall at the group level, there hasn't been any significant change from that perspective. It's been the appetite for new projects around digital transformation continues to be quite strong. In terms of discretionary spend, again, so far we haven't seen, to be frank, a reduction at this level. Now, looking forward, we don't see a deceleration for the moment, okay? I'm saying for the moment on purpose. We have seen a few deals shift, you know, from Q3 to Q4, but nothing material. But definitely a bit more than we had seen, for example, from Q2 to Q3. So I do expect there will be a deceleration. But again, I remain confident about the growth in 2023. Will clients react to the macro by prioritizing some investment? For sure. I do expect, for example, you know, in the digital side, investment that will have a higher level of ROI or basically especially quicker ROI will be prioritized compared to other. So, you know, it's clear that we do expect to see clients start moderating some of the spend. When I discuss with CEOs and everyone I interact with and have been, the willingness to continue to invest significantly around technology to drive the digital transformation is structural and continues to be there, so they will continue to do it. Now, will we see some prioritization and some moderation around the pace in 2023? For sure. The structural demand remains strong. Thank you, Aiman Ezzat. Your follow-up. Yes, please. As a follow-up, very quickly, Carole, if I may, with regards to free cash flow generation this year, could you kindly reconfirm your confidence in the outlook and any puts and takes to keep in mind, given the broader macro environment? Thank you. Thank you, Amit. Hello. So we continue indeed to target EUR 1.7 billion. However, since the beginning of the year, we see two visible headwinds. The first one had been already commented by Aiman. It's the financing of the growth. We have a reported growth year to date of 22.5%, so the growth is much higher than what we initially anticipate. To me, that's a good problem to have. The second one is, the macro environment. No surprise on that. The interest rates have increased sharply and, you know, where clients didn't want, in prior years to have excess cash on the balance sheet, it's not anymore valid. The environment has clearly changed, but we are fully mobilized, you know, to offset, those headwinds, and we will continue to work, sharply on that. This does not affect our future cash flow generation. Thank you, Carole. The next question comes from Laurent Daure from Kepler Cheuvreux. Sir, please go ahead. Yes, thank you. Morning, Carole. Good morning, Aiman. One question and a follow-up. The first question is regarding your target for the year in revenue. You now expect the high end of the guidance. It implies quite a deceleration for the first quarter. I know the comps are getting even a bit tougher, but is it just being cautious or do you see uncertainties for the very end of the year? My follow-up is on the financial sector. We're hearing diverging tones from different players in the field. What is your view on this vertical for the near to medium term? Thank you. Yes. The question on the growth, I say we are confident with the high end of the guidance. We expect to be close to 10% organically in Q4 today. Okay. There is some deceleration compared to Q3 coming from base effect as well. That's where we expect to be around 10% for Q4. Regarding FS, listen, right now, as you see, I mean, our FS numbers actually are pretty good, so it's holding pretty well. Of course, we have to see what happens in the banking sector in the case of a strong macro deceleration. You know, as usual in the banking, we can see fluctuation and some volatility. Right now, we remain confident on the growth on Q4 at the beginning of the year, but we have to see how things evolve, of course, as we go into the rest of 2023. Thank you. The next question comes from Michael Briest from UBS. Sir, please go ahead. Yes. Good morning. Thanks. Just in terms of the visibility you have into 2023, can you just try and give investors some assurances or sort of some comment on how much certainty you have over revenue in maybe the first half of the year and the second half? In terms of hiring, you know, net hiring obviously come down. To what extent is that, you know, setting a new sort of trend that we should expect for fiscal 2023? You know, how important is the hiring number coming down sort of almost 50% from Q4 level? Thanks. Yeah. Thank you, Michael. First, visibility on 2023. We have as much visibility as we'd expect at this time of the year. If I look compared to what we saw in Q3 last year at the same time, or October last year, it's the same kind of visibility. We don't have a reduced visibility. Continues to be good. Remember, our bookings continue to be strong. We have a pretty good book-to-bill for Q4. Overall for me, we remain pretty confident around the growth going into 2023. Again, slower growth, but still positive growth. On the net hiring side, it's expected. It's coming from two things. One, we're not gonna grow as much, so we're gonna hire less people, okay? That's normal. It's not that we mean we're sustaining growth above double-digit for several quarters. The second thing is we have less attrition, you know, coming up. When I look at our, for example, attrition in India forward-looking, attrition in India for Q4, based on the resignation we had in Q3, it's coming down quite a bit. So we don't need to be able to to hire as much to be able to do shadowing, et cetera, because attrition is coming down. We don't need to over-hire and start looking of course at some operational optimization in utilization and others. So it's an opportunity to tighten operationally. We're not the only one. You have seen across the industry, most people have reduced significantly the hiring now because of expected somewhat lower growth and of course reduced attrition. Thank you. The next question comes from Charles Brennan from Jefferies. Please go ahead. Good morning, guys. Thanks for taking my question. Aiman, I think you're being very realistic about the way in which you're communicating the outlook, which is you're not seeing any signs of it yet, but equally, you're not immune. Just from our point of view, what do you think the best metrics are to track the momentum in the business, and where do you think we're gonna see it first? Is it just simply in the bookings performance that's gonna be the leading indicator? Is Is it gonna be a slowdown in Strategy and Transformation? Or to Michael's point, is it in the hiring trends? Like, what's the best leading indicator at this point for us to look at? Thank you. No, the whole point is they're all pointing wrongly, you know, sharply and basically to end up having an impact, but you know, for us, you know, our best thing is we look is our forecast. This is, for me, the best indicator. We drive everything else after that. Overall, you know, the bookings remain pretty good, so that's a good indication. The Strategy and Transformation one, I think I pointed out it's an important number because it shows that the appetite is still there. The Strategy and Transformation is what is front-ending a lot of the digital transformation, and this is showing that the appetite for clients remain there. I mean, I have to be honest with you. I continue to find it surprising that we're able to drive close to 30% there. That, for me, what gave me the confidence about the appetite for clients to do that. Now, out of the work we do on Strategy and Transformation, they might prioritize in implementation for 2023 the pieces that will have a quicker ROI. It's gonna be more around priority in terms of what they implement. That's also what gives the confidence around the structural demand and the fact that it's gonna last four years. Because some of the work that might not happen in 2023 will definitely happen in 2024. Just elsewhere, are you seeing any signs of vendor consolidation picking up and customers striving for additional efficiencies? No. There start to be some more cost-related thing, but we don't see a fundamental shift in the portfolio. No, we had, again, the discussion. We probed again our head of sales not long ago about the same thing, asking, "Do you see changes," et cetera. There's nothing. Yes, you will see there is more deals around cost efficiency than we have seen in Q1 and Q2. It means, it's not a fundamental shift. Perfect. Thank you. Good luck for the rest of the year. Thank you. The next question comes from Nicolas David from ODDO BHF. Sir, please go ahead. Yes. Good morning, Aiman. Good morning, Carole. I have two question from my side as well. Q4 usually could be more volatile than other quarters, given that clients may decide on not to use the extra budget they have. Have you done a particular job to analyze that across your client base? Or do you think you have a better visibility than other years regarding Q4? When you look at the kind of guidance you had for Q4 now, should we understand that you are on the safe side regarding this maybe more discretionary part of budget for Q4? My other question is also regarding visibility, but more compared to other cycle. Do you think that you have more visibility now than you had in the previous cycle? Is it because the context of the work you are delivering has changed, notably I think about cloud transformation or because also your relationship with the client is now at a higher level regarding management? Nicolas would be helpful. Thank you. Of course. I mean, for me, in Q4, we have our forecast. We have pretty good visibility. I feel quite comfortable with what we're saying. You know, I don't see something that will be increased volatility or something will fundamentally change in Q4 that will make us review our view. I mean, we are quite comfortable. I told you that we feel comfortable about the fact now we're gonna have close to 10% organic growth in Q4, and that's something we're comfortable with. In terms of visibility, you know, we have better visibility. I mean, we have better confidence in our relationship with our clients, sustainability of our business, resilience of the business based on the nature of what we do, and the relationship we have with our clients. We're not on transactional deals and RFPs that can come or might not come, and volatility basically coming from that. Yes, definitely we're feeling more comfortable. Over the last, you know, the last decade, year after year after year, we have been increasing the resilience of the business. Remember, our comfort as well is coming from the structural nature of the demand, you know. Don't forget that. It's not, it's not business as usual. We have a structural shift to digital economy that's driving fundamental transformation in many companies. It can slow down, but it cannot stop, you know. We don't see aerospace manufacturers or car manufacturers or life science companies or banks or insurance companies or telcos, you know, stopping what they are doing because suddenly we're gonna have a slowdown in the economy. They cannot stop it. They can slow it down, but they cannot stop it. Perfect. Thank you very much. The next question comes from Stefan Slowinski from BNP Paribas. Sir, please go ahead. Great. Thank you, and good morning, Aiman and Carole. Just wanted to ask about your commentary around the deals shifting from Q3 to Q4. I think it's first time you've talked about that. Can you tell us what kind of deals you're seeing that are shifting? Is that consulting? Is that front office spend? Just thinking about what Microsoft said the other day around some of the delays they're seeing with some cloud workload migrations, just wondering if that's what you're starting to see as well. Just a quick follow-up would just be on pricing. Over the last couple of quarters, you've talked about how pricing has been increasing. Just wondering if you're still seeing that or is price increases becoming any harder to push through? Thank you. Yeah. Hello, Stefan. This is Olivier. When it comes to deals shifting, my first observation would be that it's not material yet. I would say it's at this point, yes, we had a few more deals shifting from Q3 to Q4 than we had from Q2 to Q3, but to frankly conclude on the trends about what are those categories of deals shifting, honestly, it's difficult to answer to this question. Again, what I see, and I alluded to it in the market, is that digital transformation is still extremely strong. Of course, you have a bit of a shift towards, you know, intelligent business processes, automation, which is also part of digital transformation that calls for business efficiencies enabled by cloud, AI, and so on, which will bring faster ROI for clients. It's more, what I see is more a bit of a shift that doesn't affect the overall volume of digital transformation opportunity we have in the pipe. Pricing, I would say, of course, it's a street fight. It's been very tight. So far, you've seen, we've demonstrated pretty strongly that we can somewhat deliver on our pricing power and adjust our costs on levers about pyramid offshore pretty strongly. Our contribution margin holds pretty well. I would say at the moment, I'm still pretty optimistic we can handle it as we enter next year from what I can see. Because of the value added of what we do. In fact, in other terms, if you think about the positioning, in fact, the pricing power you have in this industry is really proportional to the value you can demonstrate to your clients. If you're engaged on providing, you know, a bunch of resources, it's more difficult than if you are engaged with business CXO delivering business outcomes. Okay. Thank you, Olivier. The next question comes from Toby Ogg from JP Morgan. Sir, please go ahead. Yeah. Hey, good morning, Aiman and Carole. Yeah, perhaps just firstly, on the demand versus supply balance. I know you've talked historically about having a surplus level of demand, and therefore, even if demand, you know, was to fall- Mm-hmm. That could actually be absorbed. Could you perhaps just talk a little bit about how that surplus and demand has evolved over the last couple of quarters? How much of a slowdown you could actually absorb before that surplus actually started to diminish? Thank you. It's a bit challenging as a question to answer, I have to say. No, if I look in terms of trend, the demand versus supply, I mean, you see it in the tension on the resources. I mean, that's what's driving the tension on resources. There's less tension on resources I see going into Q4 and probably into Q1 next year, which mean we start to have, because of the slowdown, a bit more closer to an equilibrium between demand and supply. Again, this is in general. This is the volume side. When you go to specific technology, I can tell you, we see plenty of tension in terms of finding good cloud architects or finding a great data scientist, finding people with strong industry expertise, you know, around smart industry. There is still tension on a lot of these resources. On the volume side, you know, the macro volume side, I think the tension will come down. You know, we see, for example, reduction in attrition in India notably as one example in Q4, but it still remains too high, you know. It's significant reduction compared to what we have seen, but it's still a bit higher than what we would like still for the moment, which means that the demand continues to be strong and continues to still be higher than the supply of resources. Understood. Thank you. The next question comes from Frederic Boulan from Bank of America. Sir, please go ahead. Hi, good morning, Aiman. Good morning, Carole. Quick question on the margin side. If you can comment a little bit about your thoughts in the coming years, if we have a tougher growth environment or low growth environment next year, can we continue to make progress on the margin side? You mentioned probably a bit of tapering on the hiring side, but what about the overall headcount impact? If you can share with us your thoughts on the ability to grow margins. Thank you. On this one, I'll be a bit blunt, okay? It's a bit early to give guidance. The only thing I say, you know what we'll aim to next year is to prove our resilience in terms of if there is a downturn really around the market, it's really to show that we are resilient. You know, on the growth, confidence around the growth. On the margin, we'll have to prove resilience. We continue to be comfortable about our ability to be resilient on the margin side, you know, going into next year. Thank you. The next question comes from Amit Harchandani from Citi. Sir, please go ahead. Thank you for allowing me a follow-up. A quick clarification, please. When I look at your outlook of 15% constant currency growth at the high end and 1.5 points from M&A, that gets me to 13.5 organic for the full year. But if I factor in the 10% for Q4 organic, it gets me to 14.5 for the full year. Just wanted to double-check which number should we work with in terms of organic growth so that we land at 13.5 or 14.5 for the full year. Amit, I think we were clear on the fact we are comfortable with the high end and that we're targeting close to 10% for Q4 organic. Thank you, Aiman. Okay. Thank you all. It was the last question. Have a great day. Thank you all. Talk to you next time. Bye-bye. Ladies and gentlemen, the conference is over. Thank you all for your participation. You may disconnect.