Exhibit 99.1

Management’s Discussion and Analysis For the three months ended December 31, 2023 and 2022

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

January 31, 2024

BASIS OF PRESENTATION

This Management’s Discussion and Analysis of the Financial Position and Results of Operations (MD&A) is a responsibility of management and has been reviewed and approved by the Board of Directors. This MD&A has been prepared in accordance with the rules and regulations of the Canadian Securities Administrators. The Board of Directors is ultimately responsible for reviewing and approving the MD&A. The Board of Directors carries out this responsibility mainly through its Audit and Risk Management Committee, which is appointed by the Board of Directors and is comprised entirely of independent and financially literate directors.

Throughout this document, CGI Inc. is referred to as “CGI”, “we”, “us”, “our” or “Company”. This MD&A provides information management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. This document should be read in conjunction with the interim condensed consolidated financial statements and the notes thereto for the three months ended December 31, 2023 and 2022. CGI’s accounting policies are in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). All dollar amounts are in Canadian dollars unless otherwise noted.

MATERIALITY OF DISCLOSURES

This MD&A includes information we believe is material to investors. We consider something to be material if it results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares, or if it is likely that a reasonable investor would consider the information to be important in making an investment decision.

FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbours. All such forward-looking information and statements are made and disclosed in reliance upon the safe harbour provisions of applicable Canadian and United States securities laws. Forward-looking information and statements include all information and statements regarding CGI’s intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as “believe”, “estimate”, “expect”, “intend”, “anticipate”, “foresee”, “plan”, “predict”, “project”, “aim”, “seek”, “strive”, “potential”, “continue”, “target”, “may”, “might”, “could”, “should”, and similar expressions and variations thereof. These information and statements are based on our perception of historic trends, current conditions and expected future developments, as well as other assumptions, both general and specific, that we believe are appropriate in the circumstances. Such information and statements are, however, by their very nature, subject to inherent risks and uncertainties, of which many are beyond the control of the Company, and which give rise to the possibility that actual results could differ materially from our expectations expressed in, or implied by, such forward-looking information or forward-looking statements. These risks and uncertainties include but are not restricted to: risks related to the market such as the level of business activity of our clients, which is affected by economic and political conditions, additional external risks (such as pandemics, armed conflict, climate-related issues and inflation) and our ability to negotiate new contracts; risks related to our industry such as competition and our ability to develop and expand our services, to penetrate new markets, and to protect our intellectual property rights; risks related to our business such as risks associated with our growth strategy, including the integration of new operations, financial and operational risks inherent in worldwide operations, foreign exchange risks, income tax laws and other tax programs, the termination, modification, delay or suspension of our contractual agreements, our expectations regarding future revenue resulting from bookings and backlog, our ability to attract and retain qualified employees, to negotiate favourable contractual terms, to deliver our services and to collect receivables, to disclose, manage and implement environmental, social and governance (ESG) initiatives and standards, and to achieve ESG commitments and targets, including without limitation, our commitment to net-zero carbon emissions by 2030, as well as the reputational and financial risks attendant to cybersecurity breaches and other incidents, and financial risks such as liquidity needs and requirements, maintenance of financial ratios, interest rate fluctuations and the discontinuation of major interest rate benchmarks and changes in creditworthiness and credit

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

ratings; as well as other risks identified or incorporated by reference in this MD&A and in other documents that we make public, including our filings with the Canadian Securities Administrators (on SEDAR+ at www.sedarplus.ca) and the U.S. Securities and Exchange Commission (on EDGAR at www.sec.gov). Unless otherwise stated, the forward-looking information and statements contained in this MD&A are made as of the date hereof and CGI disclaims any intention or obligation to publicly update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. While we believe that our assumptions on which these forward-looking information and forward-looking statements are based were reasonable as at the date of this MD&A, readers are cautioned not to place undue reliance on these forward-looking information or statements. Furthermore, readers are reminded that forward-looking information and statements are presented for the sole purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Further information on the risks that could cause our actual results to differ significantly from our current expectations may be found in section 8 - Risk Environment, which is incorporated by reference in this cautionary statement. We also caution readers that the risks described in the previously mentioned section and in other sections of this MD&A are not the only ones that could affect us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

KEY PERFORMANCE MEASURES

The reader should note that the Company reports its financial results in accordance with IFRS. However, we use a combination of GAAP, non-GAAP and supplementary financial measures and ratios to assess the Company’s performance. The non-GAAP measures used in this MD&A do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS.

The table below summarizes our most relevant key performance measures:

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

REPORTING SEGMENTS

The Company is managed through the following nine operating segments: Western and Southern Europe (primarily France, Spain and Portugal); United States (U.S.) Commercial and State Government; Canada; U.S. Federal; Scandinavia and Central Europe (Germany, Sweden and Norway); United Kingdom (U.K.) and Australia; Finland, Poland and Baltics; Northwest and Central-East Europe (primarily Netherlands, Denmark and Czech Republic); and Asia Pacific Global Delivery Centers of Excellence (mainly India and Philippines) (Asia Pacific).

Effective October 1, 2023, as part of the Cost Optimization Program (see section 3.6.2. of the present document), the Company centralized some internal administrative activities under a corporate function, which were previously presented in revenue under the Asia Pacific segment. The Company has restated the Asia Pacific segmented information for the comparative period to conform with this change.

Please refer to sections 3.4. and 3.7. of the present document and to note 10 of our interim condensed consolidated financial statements for additional information on our segments.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

MD&A OBJECTIVES AND CONTENTS

In this document, we:

In order to achieve these objectives, this MD&A is presented in the following main sections:

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

1.  Corporate Overview

1.1. ABOUT CGI

Founded in 1976 and headquartered in Montréal, Canada, CGI is a leading IT and business consulting services firm with approximately 90,500 consultants and professionals worldwide. We use the power of technology to help clients accelerate their holistic digital transformation.

CGI has a people-centered culture, operating where our clients live and work to build trusted relationships and to advance our shared communities. Our consultants and professionals are committed to providing actionable insights that help clients achieve business outcomes. CGI’s global delivery centers complement our proximity-based teams, offering clients added options that deliver scale, innovation and delivery excellence in every engagement.

End-to-end services and solutions

CGI delivers end-to-end services that help clients achieve the highest returns on their digital investments. We call this ROI-led digitization. Our insights-driven end-to-end services and solutions work together to help clients design, implement, run and operate the technology critical to achieving their business strategies. Our portfolio encompasses:

Deep industry and technology expertise

CGI has long-standing and focused practices in all of its core industries, providing clients with a partner that is not only an expert in IT, but also an expert in their respective industries. This combination of business knowledge and digital technology expertise allows us to help our clients navigate complex challenges and focus on value creation. In the process, we evolve the services and solutions we deliver within our targeted industries and provide thought leadership, blueprints, frameworks and technical accelerators that help client evolve their ecosystems.

Our targeted industries include financial services (including banking and insurance), government (including space), manufacturing, retail and distribution (including consumer services, transportation and logistics), communications and utilities (including energy and media), and health (including life sciences). To help orchestrate our global posture across these industries, our leaders regularly participate in cabinet meetings and councils to advance the strategies, services and solutions we deliver to our clients.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

Helping clients leverage technology to its fullest

Macro trends such as supply chain reconfiguration, climate change and energy transition, and demographic shifts including aging populations and talent shortages require new business models and ways of working. At the same time, technology is reshaping our future and creating new opportunities.

Accelerating digitization provides the inclusive, economically vibrant, and sustainable future our clients’ customers and citizens demand. Leveraging technology to its fullest helps clients to lead within their industries. Our end-to-end digital services, industry and technology expertise, and operational excellence combine to help clients advance their holistic digital transformation.

Through our proprietary Voice of Our Clients research, we analyzed the characteristics of leading digital organizations and found three common attributes:

Digital leaders across industries seek new ways to evolve their strategy and operational models and use technology and information to improve how they operate, deliver products and services, and create value.

CGI helps clients adopt leading digital attributes and design, manage, protect and evolve their digital value chains to accelerate business outcomes.

Quality processes

Our clients expect consistent service wherever and whenever they engage us. We have an outstanding track record of on-time, within-budget delivery as a result of our commitment to excellence and our robust governance model - CGI’s Management Foundation.

Our Management Foundation provides a common business language, frameworks and practices for managing operations consistently across the globe, driving continuous improvement. We also invest in rigorous quality and service delivery standards including the International Organization for Standardization (ISO) and Capability Maturity Model Integration (CMMI) certification programs, as well as a comprehensive Client Satisfaction Assessment Program, with signed client assessments, to ensure high satisfaction on an ongoing basis.

1.2. VISION AND STRATEGY

CGI is unique compared to most companies, as our vision is based on a dream: “To create an environment in which we enjoy working together and, as owners, contribute to building a company we can be proud of.” This dream has motivated us since our founding in 1976 and drives our vision: “To be a global, world-class end-to-end IT and business consulting services leader helping our clients succeed.” For further details, please refer to section 1.2. of CGI’s MD&A for the years ended September 30, 2023 and 2022, which is available on CGI’s website at www.cgi.com and which was filed with Canadian securities regulators on SEDAR+ at www.sedarplus.ca and the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov.

1.3. COMPETITIVE ENVIRONMENT

There have been no significant changes to our competitive environment since the end of Fiscal 2023. For further details, please refer to section 1.3. of CGI’s MD&A for the years ended September 30, 2023 and 2022 which is available on CGI’s website at www.cgi.com and which was filed with Canadian securities regulators on SEDAR+ at www.sedarplus.ca and the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

2.1. SELECTED QUARTERLY INFORMATION & KEY PERFORMANCE MEASURES

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

2.2. STOCK PERFORMANCE

2.2.1. Q1 2024 Trading Summary

CGI’s shares are listed on the Toronto Stock Exchange (TSX) (stock quote – GIB.A) and the New York Stock Exchange (NYSE) (stock quote – GIB) and are included in key indices such as the S&P/TSX 60 Index.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

2.2.2. Normal Course Issuer Bid (NCIB)

On January 31, 2023, the Company’s Board of Directors authorized and subsequently received regulatory approval from the TSX for the renewal of its NCIB which allows for the purchase for cancellation of up to 18,769,394 Class A subordinate voting shares (Class A Shares) representing 10% of the Company’s public float as of the close of business on January 24, 2023. Class A Shares may be purchased for cancellation under the NCIB commencing on February 6, 2023 until no later than February 5, 2024, or on such earlier date when the Company has either acquired the maximum number of Class A Shares allowable under the NCIB or elects to terminate the bid.

During the three months ended December 31, 2023, the Company purchased for cancellation 874,700 Class A Shares under its current NCIB for a total consideration of $117.0 million, at a weighted average price of $133.71. In addition, the Company paid for and cancelled 68,550 Class A Shares under its current NCIB for a total consideration of $9.2 million, which were purchased but not cancelled as at September 30, 2023.

As at December 31, 2023, the Company could purchase up to 11,692,148 Class A Shares for cancellation under its current NCIB.

On January 30, 2024, the Company’s Board of Directors authorized, subject to regulatory approval, the renewal of CGI’s NCIB which allows for the purchase for cancellation of up to 20,457,737 Class A Shares representing 10% of the Company’s public float as of the close of business on January 23, 2024. Class A Shares may be purchased for cancellation under the NCIB commencing on February 6, 2024 until no later than February 5, 2025, or on such earlier date when the Company has either acquired the maximum number of Class A Shares allowable under the NCIB or elects to terminate the bid.

2.2.3. Capital Stock and Options Outstanding

The following table provides a summary of the Capital Stock and Options Outstanding as at January 26, 2024:

2.3. INVESTMENT IN SUBSIDIARIES

On October 10, 2023, the Company acquired Momentum Consulting Corp. (Momentum), an IT and business consulting firm specializing in digital transformation, data and analytics and managed services, based in the U.S. and headquartered in Miami, Florida for a total purchase price of $54.1 million. The acquisition added approximately 175 professionals to the Company.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.1. BOOKINGS AND BOOK-TO-BILL RATIO

Bookings for the quarter were $4.2 billion representing a book-to-bill ratio of 116.2%. The breakdown of the new bookings signed during the quarter is as follows:

Information regarding our bookings is a key indicator of the volume of our business over time. Additional information on bookings can be found in the Key Performance Measures section of the present document. The following table provides a summary of the bookings and book-to-bill ratio by segment:

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.2. FOREIGN EXCHANGE

The Company operates globally and is exposed to changes in foreign currency rates. Accordingly, as prescribed by IFRS, we value assets, liabilities and transactions that are measured in foreign currencies using various exchange rates. We report all dollar amounts in Canadian dollars.

 Closing foreign exchange rates

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

3.3. REVENUE DISTRIBUTION

The following charts provide additional information regarding our revenue mix for the quarter:

3.3.1. Client Concentration

IFRS guidance on segment disclosures defines a single customer as a group of entities that are known to the reporting entity to be under common control. As a consequence, our work for the U.S. federal government including its various agencies represented 13.3% of our revenue for both the three months ended December 31, 2023 and 2022.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.4. REVENUE BY SEGMENT

Our segments are reported based on where the client’s work is delivered from within our geographic delivery model.

The table below provides a summary of the year-over-year changes in our revenue, in total and by segment before eliminations, separately showing the impacts of foreign currency exchange rate variations between Q1 2024 and Q1 2023. For the three months ended December 31, 2022, revenue by segment was recorded reflecting the actual foreign exchange rates for that period. The foreign exchange impact is the difference between the current period’s actual results and the same period’s results converted with the prior year’s foreign exchange rates.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

For the three months ended December 31, 2023, revenue was $3,603.0 million, an increase of $152.7 million or 4.4% over the same period last year. On a constant currency basis, revenue increased by $52.2 million or 1.5%. The increase was mainly due to organic growth within the government and communications and utilities vertical markets, as well as a recent business acquisition. This was partially offset by lower IP licenses revenue as new IP sales move more towards a software-as-a-service delivery and lower demand within certain vertical markets, mainly financial services, as well as one less available day to bill, due to the timing of statutory holidays in some regions in Europe.

3.4.1. Western and Southern Europe

For the three months ended December 31, 2023, revenue in the Western and Southern Europe segment was $653.1 million, an increase of $24.9 million or 4.0% over the same period last year. On a constant currency basis, revenue decreased by $12.0 million or 1.9%. This change in revenue was mainly due to lower demand within the financial services vertical market and the successful completion of a project in the MRD vertical market, partially offset by organic growth within the government and communications and utilities vertical markets.

On a client geographic basis, the top two Western and Southern Europe vertical markets were MRD and financial services, generating combined revenues of approximately $395 million for the three months ended December 31, 2023.

3.4.2. U.S. Commercial and State Government

For the three months ended December 31, 2023, revenue in the U.S. Commercial and State Government segment was $559.0 million, a decrease of $7.0 million or 1.2% over the same period last year. On a constant currency basis, revenue decreased by $9.5 million or 1.7%. This change in revenue was mainly due to higher IP licenses as a percentage of IP revenue in the prior year and lower demand within the health and financial services vertical markets. This was partially offset by a ramp up on new large managed IT services contracts and the recent business acquisition.

On a client geographic basis, the top two U.S. Commercial and State Government vertical markets were financial services and government, generating combined revenues of approximately $353 million for the three months ended December 31, 2023.

3.4.3. Canada

For the three months ended December 31, 2023, revenue in the Canada segment was $499.2 million, a decrease of $7.2 million or 1.4% over the same period last year. On a constant currency basis, revenue decreased by $7.4 million or 1.5%. This change in revenue was mainly due to lower demand within the financial services vertical market, partially offset by organic growth within the government vertical market.

On a client geographic basis, the top two Canada vertical markets were financial services and communications and utilities, generating combined revenues of approximately $335 million for the three months ended December 31, 2023.

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

3.4.4. U.S. Federal

For the three months ended December 31, 2023, revenue in the U.S. Federal segment was $483.2 million, an increase of $19.2 million or 4.1% over the same period last year. On a constant currency basis, revenue increased by $17.7 million or 3.8%. The increase in revenue was mainly due to organic growth in managed services engagements, including IP-based revenues.

For the three months ended December 31, 2023, 91.3% of revenues within the U.S. Federal segment were federal civilian based.

3.4.5. Scandinavia and Central Europe

For the three months ended December 31, 2023, revenue in the Scandinavia and Central Europe segment was $422.0 million, an increase of $23.8 million or 6.0% over the same period last year. On a constant currency basis, revenue increased by $10.8 million or 2.7%. The increase in revenue was mainly driven by organic growth on IP-based revenues, predominantly within the government vertical market. This was partially offset by lower demand within the communications and utilities and MRD vertical markets and one less available day to bill.

On a client geographic basis, the top two Scandinavia and Central Europe vertical markets were MRD and government, generating combined revenues of approximately $309 million for the three months ended December 31, 2023.

3.4.6. U.K. and Australia

For the three months ended December 31, 2023, revenue in the U.K. and Australia segment was $371.3 million, an increase of $41.4 million or 12.5% over the same period last year. On a constant currency basis, revenue increased by $20.4 million or 6.2%. The increase in revenue was mainly due to organic growth across most vertical markets, predominantly within the government vertical market. This was partially offset by lower demand within the financial services vertical market.

On a client geographic basis, the top two U.K. and Australia vertical markets were government and communications and utilities, generating combined revenues of $319 million for the three months ended December 31, 2023.

3.4.7. Finland, Poland and Baltics

For the three months ended December 31, 2023, revenue in the Finland, Poland and Baltics segment was $218.9 million, an increase of $15.6 million or 7.7% over the same period last year. On a constant currency basis, revenue increased by $2.8 million or 1.4%. The increase in revenue was mainly due to organic growth within the financial services and government vertical markets. This was partially offset by the successful completion of IP projects within the health vertical market and one less available day to bill.

On a client geographic basis, the top two Finland, Poland and Baltics vertical markets were financial services and government, generating combined revenues of approximately $131 million for the three months ended December 31, 2023.

3.4.8. Northwest and Central-East Europe

For the three months ended December 31, 2023, revenue in the Northwest and Central-East Europe segment was $204.5 million, an increase of $26.4 million or 14.8% over the same period last year. On a constant currency basis, revenue increased by $15.3 million or 8.6%. The increase in revenue was mainly due to organic growth across most vertical markets and a favourable client contract settlement. This was partially offset by one less available day to bill.

On a client geographic basis, the top two Northwest and Central-East Europe vertical markets were MRD and government, generating combined revenues of approximately $132 million for the three months ended December 31, 2023.

3.4.9. Asia Pacific

For the three months ended December 31, 2023, revenue in the Asia Pacific segment was $233.3 million, an increase of $15.3 million or 7.0% over the same period last year. On a constant currency basis, revenue increased by $17.2 million or 7.9%. The increase in revenue was mainly driven by the ramp up of new managed services contracts across most commercial vertical markets.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.5. OPERATING EXPENSES

3.5.1. Costs of Services, Selling and Administrative

Costs of services include the costs of serving our clients, which mainly consist of salaries, performance based compensation and other direct costs, including travel expenses, net of tax credits. These also mainly include professional fees and other contracted labour costs, as well as hardware, software and delivery center related costs.

Costs of selling and administrative mainly include salaries, performance based compensation, office space, internal solutions, business development related costs such as travel expenses, and other administrative and management costs.

For the three months ended December 31, 2023, costs of services, selling and administrative expenses amounted to $3,019.1 million, an increase of $119.5 million when compared to the same period last year. As a percentage of revenue, costs of services, selling and administrative expenses decreased from 84.0% to 83.8%.

As a percentage of revenue, costs of services increased compared to the same period last year, mainly due to lower IP licenses as a percentage of IP revenue primarily within the financial services vertical market, higher employee medical costs and one less available day to bill, due to the timing of statutory holidays in some regions in Europe. This was partially offset by profitable organic growth within the government and communication and utilities vertical markets.

As a percentage of revenue, costs of selling and administrative decreased compared to the same period last year, mainly due to savings generated from the Cost Optimization Program (see section 3.6.2. of the present document).

During the three months ended December 31, 2023, the translation of the results of our foreign operations from their local currencies to the Canadian dollar unfavourably impacted costs by $79.6 million, which was offset by the favourable translation impact of $100.6 million on our revenue.

3.5.2. Foreign Exchange Gain

During the three months ended December 31, 2023, CGI incurred $0.4 million of foreign exchange gain, mainly driven by the timing of payments combined with the volatility of foreign exchange rates. The Company, in addition to its natural hedges, uses derivatives as a strategy to manage its exposure, to the extent possible.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.6. EARNINGS BEFORE INCOME TAXES

The following table provides a reconciliation between our earnings before income taxes, which is reported in accordance with IFRS, and adjusted EBIT:

3.6.1. Acquisition-Related and Integration Costs

For the three months ended December 31, 2023 and 2022, the Company incurred $2.2 million and $19.4 million, respectively, of acquisition-related and integration costs for the integration towards the CGI operating model.

These costs were mainly related to vacating leased premises for $0.8 million ($1.3 million for the three months ended December 31, 2022), costs of rationalizing the redundancy of employment for $0.2 million ($7.3 million for the three months ended December 31, 2022) and other integration costs, such as professional fees and training activities for $1.1 million ($10.8 million for the three months ended December 31, 2022, including $3.8 million of costs in relation to the mandatory repayment of long-term debt).

3.6.2. Cost Optimization Program

During the year ended September 30, 2023, the Company initiated a cost optimization program (Cost Optimization Program) to accelerate actions to rightsize its real estate portfolio globally and improve operational efficiencies, including the increased use of automation and global delivery, focused on administrative activities. In the quarter, $47.7 million was expensed, which includes costs for terminations of employment of $31.2 million and costs of vacating leased premises of $16.5 million. The Company plans to incur approximately $43 million of additional expenses in the next quarter related to this program.

3.6.3. Net Finance Costs

Net finance costs mainly include interest on our long-term debt, lease liabilities and financial assets. For the three months ended December 31, 2023, the net finance costs decreased by $10.9 million, mainly due to additional interest income from our financial assets.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.7. ADJUSTED EBIT BY SEGMENT

For the three months ended December 31, 2023, adjusted EBIT for the quarter was $584.2 million, an increase of $30.1 million when compared to the same period last year. Adjusted EBIT margin increased to 16.2% from 16.1% when compared to the same period last year. The increase in adjusted EBIT margin was mainly due to profitable organic growth within the government and communication and utilities vertical markets, as well as savings generated from the Cost Optimization Program. This was offset by lower IP licenses as a percentage of IP revenue primarily within the financial services vertical market, higher employee medical costs and one less available day to bill, due to the timing of statutory holidays in some regions in Europe.

3.7.1. Western and Southern Europe

For the three months ended December 31, 2023, adjusted EBIT in the Western and Southern Europe segment was $86.7 million, an increase of $9.3 million when compared to the same period last year. Adjusted EBIT margin increased to 13.3% from 12.3%. The increase in adjusted EBIT margin is mainly due to profitable organic growth within the government and communications and utilities vertical markets and lower performance based compensation accrual.

3.7.2. U.S. Commercial and State Government

For the three months ended December 31, 2023, adjusted EBIT in the U.S. Commercial and State Government segment was $70.4 million, a decrease of $11.9 million when compared to the same period last year. Adjusted EBIT margin decreased to 12.6% from 14.5%. The change in adjusted EBIT was mainly due to lower IP licenses as a percentage of IP revenue within the financial services vertical market and higher employee medical costs. This was partially offset by profitable organic growth within the MRD vertical market and savings generated from the Cost Optimization Program.

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

3.7.3. Canada

For the three months ended December 31, 2023, adjusted EBIT in the Canada segment was $120.1 million, an increase of $1.1 million when compared to the same period last year. Adjusted EBIT margin increased to 24.1% from 23.5%. The increase in adjusted EBIT margin was mainly due to the profitable growth within the government vertical market, lower performance based compensation accruals and savings generated from the Cost Optimization Program. This was partially offset by lower billable utilization within the financial services vertical market.

3.7.4. U.S. Federal

For the three months ended December 31, 2023, adjusted EBIT in the U.S. Federal segment was $69.9 million, a decrease of $3.2 million when compared to the same period last year. Adjusted EBIT margin decreased to 14.5% from 15.8%. The change in adjusted EBIT margin was primarily due to higher employee medical costs and an increase in bid proposal costs. This was partially offset by savings generated from the Cost Optimization Program.

3.7.5. Scandinavia and Central Europe

For the three months ended December 31, 2023, adjusted EBIT in the Scandinavia and Central Europe segment was $37.8 million, an increase of $6.7 million when compared to the same period last year. Adjusted EBIT margin increased to 9.0% from 7.8%. The increase in adjusted EBIT margin was primarily due to profitable organic growth on IP-based revenues within the government vertical market, as well as savings generated from the Cost Optimization Program. This was partially offset by one less available day to bill.

3.7.6. U.K. and Australia

For the three months ended December 31, 2023, adjusted EBIT in the U.K. and Australia segment was $62.6 million, an increase of $17.5 million when compared to the same period last year. Adjusted EBIT margin increased to 16.9% from 13.7%. The increase in adjusted EBIT margin was primarily due to profitable organic growth within the government and communication and utilities vertical markets, as well as a favourable impact from a settlement with a supplier.

3.7.7. Finland, Poland and Baltics

For the three months ended December 31, 2023, adjusted EBIT in the Finland, Poland and Baltics segment was $27.0 million, a decrease of $2.2 million when compared to the same period last year. Adjusted EBIT margin decreased to 12.3% from 14.4%. The change in adjusted EBIT margin was mainly due to successful completion of IP projects within the health vertical market and one less available day to bill.

3.7.8. Northwest and Central-East Europe

For the three months ended December 31, 2023, adjusted EBIT in the Northwest and Central-East Europe segment was $33.9 million, an increase of $8.0 million when compared to the same period last year. Adjusted EBIT margin increased to 16.6% from 14.5%. The increase in adjusted EBIT margin was primarily due to the same factors identified in the revenue section.

3.7.9. Asia Pacific

For the three months ended December 31, 2023, adjusted EBIT in the Asia Pacific segment was $75.9 million, an increase of $4.9 million when compared to the same period last year. Adjusted EBIT margin decreased to 32.5% from 32.6%, which remained essentially stable.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.8. NET EARNINGS AND EARNINGS PER SHARE

The following table sets out the information supporting the earnings per share calculations:

3.8.1. Income Tax Expense

For the three months ended December 31, 2023, income tax expense was $137.3 million compared to $134.2 million over the same period last year, while our effective tax rate increased from 26.0% to 26.1% for the three months ended December 31, 2023 compared to the three months ended December 31, 2022.

When excluding tax effects from acquisition-related and integration costs and the Cost Optimization Program, the effective tax rate increased from 25.7% to 26.0% for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase is mainly attributable to the increase in the U.K. statutory tax rate.

The table in section 3.8.3. shows the year-over-year comparison of the tax rate with the impact of specific items removed.

Based on the enacted rates at the end of Q1 2024 and our current profitability mix, we expect our effective tax rate before specific items to be in the range of 25.0% to 26.5% in subsequent periods.

3.8.2. Weighted Average Number of Shares Outstanding

For Q1 2024, CGI’s basic and diluted weighted average number of shares outstanding decreased compared to Q1 2023 due to the impact of the purchase for cancellation of Class A Shares, partially offset by the exercise of stock options. The table in section 3.8.3. shows the year-over-year comparison of the weighted average number of shares outstanding. Please refer to note 5 of our interim condensed consolidated financial statements for additional information.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

3.8.3. Net Earnings and Earnings per Share Excluding Specific Items

Below is a table showing the year-over-year comparison excluding specific items, namely acquisition-related and integration costs and the Cost Optimization Program.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

4.1. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CGI’s growth is financed through a combination of cash flow from operations, drawing on our unsecured committed revolving credit facility, the issuance of long-term debt, and the issuance of equity. One of our financial priorities is to maintain an optimal level of liquidity through the active management of our assets and liabilities as well as our cash flows.

As at December 31, 2023, cash and cash equivalents were $1,132.7 million. Cash included in funds held for clients was $375.1 million. The following table provides a summary of the generation and use of cash and cash equivalents for the three months ended December 31, 2023 and 2022.

4.1.1. Cash Provided by Operating Activities

For the three months ended December 31, 2023, cash provided by operating activities was $577.2 million or 16.0% of revenue compared to $605.3 million or 17.5% of revenue for the same period last year.

The cash provided by operating activities during the quarter was mainly generated from cash net earnings and an improvement in DSO from 44 days in Q1 2023 to 41 days at the end of Q1 2024. This was partially offset by a higher tax payment related to the U.S. Tax Cuts and Jobs Act, which now requires companies to amortize their research and development costs over five years, instead of deducting them immediately each year.

The following table provides a summary of the generation and use of cash from operating activities:

The decrease of $28.1 million from our cash provided by operating activities was mostly due to an increase in tax payments related to the U.S. Tax Cuts and Jobs Act and the timing of client collections and supplier payments.

The timing of our working capital inflows and outflows will always have an impact on the cash flow from operations.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

4.1.2. Cash Used in Investing Activities

For the three months ended December 31, 2023, $148.8 million was used in investing activities while $191.0 million was used over the same period last year.

The following table provides a summary of the use of cash from investing activities:

The decrease of $42.1 million in cash used in investing activities during the three months ended December 31, 2023 was mainly due to less investments made with our funds held for clients, a loan receivable from the prior year, as well as a decreased investment on computer equipment. This was partially offset by cash used in the business acquisition of Momentum.

4.1.3. Cash Used in Financing Activities

For the three months ended December 31, 2023, $745.9 million was used in financing activities while $109.1 million was used over the same period last year.

The following table provides a summary of the use of cash from financing activities:

The increase of $636.8 million in cash used in financing activities during the three months ended December 31, 2023 was mainly driven by the scheduled repayment in full in December 2023 of the unsecured committed term loan credit facility in the amount of $670.4 million (US$500.0 million) and the purchase for cancellation of 943,250 Class A Shares, compared to 100,100 Class A Shares purchased for cancellation over the same period last year. This was partially offset by the net change in clients’ funds obligations and repayment of debt assumed from the business acquisition in the prior year.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

4.1.4. Effect of Foreign Exchange Rate Changes on Cash, Cash Equivalents and Cash Included in Funds Held for Clients

For the three months ended December 31, 2023, the effect of foreign exchange rate changes on cash, cash equivalents and cash included in funds held for clients had an unfavourable impact of $12.7 million. This amount had no effect on net earnings as it was recorded in other comprehensive income.

4.2. CAPITAL RESOURCES

As at December 31, 2023, cash and cash equivalents and investments represented $1,158.3 million.

Cash equivalents include term deposits, all with maturities of 90 days or less. Short-term and long-term investments include corporate bonds with maturities ranging from 91 days to five years, with a credit rating of A- or higher.

As at December 31, 2023, the aggregate amount of the capital resources available to the Company was $2,654.3 million. Certain long-term debt agreements contain covenants, which require us to maintain certain financial ratios. As at December 31, 2023, CGI was in compliance with these covenants.

As at December 31, 2023, CGI was showing a positive working capital (total current assets minus total current liabilities) of $442.1 million. The Company also had $1,496.0 million available under its unsecured committed revolving credit facility and is generating a significant level of cash, which CGI’s management currently considers will allow the Company to fund its operations while maintaining adequate levels of liquidity.

The tax implications and impact related to the repatriation of cash will not materially affect the Company’s liquidity.

4.3. CONTRACTUAL OBLIGATIONS

We are committed under the terms of contractual obligations which have various expiration dates, primarily related to long-term debt and the rental of premises, computer equipment used in outsourcing contracts and long-term service agreements. There have been no material changes to these obligations since September 30, 2023.

4.4. FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS

We use various financial instruments to help us manage our exposure to fluctuations of foreign currency exchange rates and interest rates. Please refer to note 11 of our interim condensed consolidated financial statements for additional information on our financial instruments and hedging transactions.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

4.5. SELECTED MEASURES OF CAPITAL RESOURCES AND LIQUIDITY

During the last twelve months, our long-term debt and lease liabilities decreased by $875.3 million mainly driven by the scheduled repayment in full of the unsecured committed term loan credit facility and the scheduled repayment of the senior unsecured notes.

We use the net debt to capitalization ratio as an indication of our financial leverage in order to realize our Build and Buy strategy (please refer to section 1.2. of CGI’s MD&A for the years ended September 30, 2023 and 2022 for additional information on our Build and Buy strategy). The net debt to capitalization ratio decreased to 17.6% in Q1 2024 from 24.1% in Q1 2023 mostly due to our cash generation, partially offset by the repurchase of shares during the last four quarters.

ROIC is a measure of the Company’s efficiency in allocating the capital under our control to profitable investments. The return on invested capital ratio increased to 15.9% in Q1 2024 from 15.5% in Q1 2023. The increase in ROIC was mainly the result of higher net earnings excluding net finance costs after-tax over the last four quarters.

DSO decreased to 41 days at the end of Q1 2024 when compared to 44 days in Q1 2023. The decrease was mainly due to improved collections and foreign exchange fluctuations.

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

4.6. GUARANTEES

In the normal course of operations, we may enter into agreements to provide financial or performance assurances to third parties on the sale of assets, business divestitures and guarantees on government and commercial contracts.

In connection with sales of assets and business divestitures, the Company may be required to pay counterparties for costs and losses incurred as a result of breaches in our contractual obligations, including representations and warranties, intellectual property right infringement claims and litigation against counterparties, among others.

While some of the agreements specify a maximum potential exposure, others do not specify a maximum amount or a maturity date or survival period. It is not possible to reasonably estimate the maximum amount that may have to be paid under such guarantees. The amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. No amount has been accrued in the consolidated balance sheets relating to this type of guarantee or indemnification as at December 31, 2023. The Company does not expect to incur any potential payment in connection with these guarantees that could have a material adverse effect on its interim condensed consolidated financial statements.

In the normal course of business, we may provide certain clients, principally governmental entities, with bid and performance bonds. In general, we would only be liable for the amount of the bid bonds if we refuse to perform the project once we are awarded the bid. We would also be liable for the performance bonds in the event of a default in the performance of our obligations. As at December 31, 2023, we had committed a total of $33.7 million for these bonds. To the best of our knowledge, we complied with our performance obligations under all service contracts for which there was a bid or performance bond, and the ultimate liability, if any, incurred in connection with these guarantees would not have a material adverse effect on our consolidated results of operations or financial condition.

4.7. CAPABILITY TO DELIVER RESULTS

CGI’s management believes that the Company has sufficient capital resources to support ongoing business operations and execute our Build and Buy growth strategy. Our principal and most accretive uses of cash are: to invest in our business (procuring new large managed IT and business process services contracts and developing business and IP solutions); to pursue accretive acquisitions; to purchase for cancellation Class A Shares and pay down debt. In terms of financing, we are well positioned to continue executing our four-pillar growth strategy in Fiscal 2024.

To successfully implement the Company’s strategy, CGI relies on a strong leadership team, supported by highly knowledgeable consultants and professionals with relevant relationships and significant experience in both IT and our targeted industries. CGI fosters leadership development through the CGI Leadership Institute ensuring continuity and knowledge transfer across the organization. For key positions, a detailed succession plan is established and revised frequently.

As a Company built on human capital, the knowledge of our consultants and professionals are critical to delivering quality service to our clients. Our human resources program allows us to attract and retain the best talent as it provides competitive compensation and benefits, a favourable working environment, training programs and career development opportunities. Employee satisfaction is monitored annually through a Company-wide survey. In addition, a majority of our professionals are owners of CGI through our Share Purchase Plan, which, along with our Profit Participation Plan, allows them to share in the Company’s success, further aligning stakeholder interests.

In addition to capital resources and talent, CGI has established the Management Foundation, which encompasses governance policies, organizational models and sophisticated management frameworks for our business units and corporate processes. This robust governance model provides a common business language for managing all operations consistently across the globe, driving a focus on continuous improvement. CGI’s operations maintain appropriate certifications in accordance with service requirements such as ISO and CMMI certification programs.

Management’s Discussion and Analysis  |  For the three months ended December 31, 2023 and 2022

The interim condensed consolidated financial statements for the three months ended December 31, 2023 and 2022 include all adjustments that CGI’s management considers necessary for the fair presentation of its financial position, results of operations, and cash flows.

ADOPTION OF ACCOUNTING STANDARD

The following standard amendments have been adopted by the Company on October 1, 2023:

Definition of Accounting Estimates – Amendments to IAS 8

In February 2021, the IASB amended IAS 8 Accounting Policies, Changes in Accounting estimates and Errors to introduce a definition of accounting estimates and to help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction is important because changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

In May 2021, the IASB amended IAS 12 Income Taxes, to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The implementation of these standard amendments resulted in no impact on the Company’s interim condensed consolidated financial statements.

FUTURE ACCOUNTING STANDARD CHANGES

The following standard amendments have been issued and will be effective as of October 1, 2024 for the Company, with earlier application permitted. The Company is currently evaluating the impact of these standard amendments on its interim condensed consolidated financial statements.

Classification of Liabilities as Current or Non-current and Information about long-term debt with covenants – Amendments to IAS 1

In January 2020, the IASB amended IAS 1 Presentation of Financial Statements, clarifying that the classification of liabilities as current or non-current is based on existing rights at the end of the reporting period, independent of whether the Company will exercise its right to defer settlement of a liability. Subsequently, in October 2022, the IASB introduced additional amendments to IAS 1, emphasizing that covenants for long-term debt, regardless whether the covenants were compliant after the reporting date, should not affect debt classification; instead, companies are required to disclose information about these covenants in the notes accompanying their financial statements.

Supplier finance arrangements – Amendments to IAS 7 and IFRS 7

In May 2023, the IASB amended IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to introduce new disclosure requirements to enhance the transparency on supplier finance arrangements and their impact on the Company’s liabilities, cash flows and liquidity exposure. The new disclosure requirements will include information such as terms and conditions, the carrying amount of liabilities, the range of payment due dates, non-cash changes and liquidity risk information around supplier finance arrangements.

Management’s Discussion and Analysis | For the three months ended December 31, 2023 and 2022

The Company’s significant accounting policies are described in note 3 of the audited consolidated financial statements for the years ended September 30, 2023 and 2022. Certain of these accounting policies, listed below, require management to make accounting estimates and judgements that affect the reported amounts of assets, liabilities and equity and the accompanying disclosures at the date of the interim condensed consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting period. These accounting estimates are considered critical because they require management to make subjective and/or complex judgements that are inherently uncertain and because they could have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.