Divya Goyal: And that’s good to know. Thanks, George.
George D. Schindler: Yes. Sure, Divya.
Operator: Your next question comes from Stephanie Price from CIBC. Stephanie, please go ahead.
Stephanie Price: Thank you, and good morning. Maybe just following up on Divya’s question on M&A. So, momentum was the first M&A deal that CGI has done in several quarters? Just in case you can elaborate a little bit on what you’re seeing in the M&A market at this point and also curious, if you want run M&A target for the coming year? I know you had that $1 billion target last year.
George D. Schindler: Yes. So, on the M&A, kind of, landscape. As I mentioned, it’s been, the valuations have been jumping around. There was a bit of a disconnect that we’ve talked over last several quarters. But, valuations are definitely, as I mentioned, moving into a more reasonable range. And so, we’re very, remain very active. Looking at the pipeline, the pipeline, quite frankly even some of the pipeline is being refilled with some activity we had in the past that maybe the valuations were or for our part and they’re coming back together. And so, the pipeline has both new entrants, but also some that we’re very familiar with and been in discussions with before. That bodes well for the activity here in the coming quarters.
So, I think it maybe gives you some idea of kind of how that pipeline is shaping up and what the market looks like. And again, in this type of a period and a slowdown, it helps companies to come together. And so again, I think there’s a richer opportunity set. But for that reason given where the volatility was and now where it’s going we’re not setting a specific target, but again, it’s a priority for us in the coming year.
Stephanie Price: Perfect. Thanks. And then, just in terms of bookings, obviously been very solid despite the uncertain macro here. Just curious if you could expand a little bit on what you’re seeing around pipeline conversion and decision cycle. Just curious how confident you’re feeling and being able to replenish bookings as we kind of look ahead here?
George D. Schindler: Yes. I’m feeling very good about the bookings outlook given some of the opportunity set as I mentioned, some of the discussions we’ve had with clients, the visits that we’ve taken with them to our operations around the globe, because it’s not just offshore. It’s really that whole global delivery model that is tracked as the clients right now. And I do believe as we move throughout the year, I think you’ll see for all the reasons I outlined, around business needs, you’ll see some of that even SI&C coming back. And remember, it’s not every industry that SI&C has not remained strong. There’s, like I said, in government and in health, life sciences and even insurance, utilities you see some of that SI&C remaining.
So I think, we’re feeling pretty good about the outlook and the other is that they’re bigger deals. And so, we’re looking at bookings that are bigger size, some of that consolidation, that’s going on. So, we’re feeling still pretty good. Of course, bookings are always lumpy. And to your, one part of your question, yes, we do see that just given the environment the decisions tend to be a bit slower. And so, we did have a number of deals, in fact, that including some of the areas where we had very strong bookings like U.S. CSG, we had some bookings that actually slipped from the fourth quarter to the first quarter. So, we are still seeing some of that happen, and that’s just natural in the current environment.
Stephanie Price: Great. Thank you for the color.
Operator: Your next question comes from Jerome Dubreuil from Desjardins. Jerome, please go ahead.
Jerome Dubreuil: Good morning. Thanks for taking my questions. Just want to make sure we’re all on the same page in terms of your outlook for 2024. You mentioned, expect revenue growth to be consistent with the IT demand environment. If I’m looking quickly at what Gartner expects for 2024, they’re in the high-single-digits that seems a bit high, and maybe you’re not preferring to that, and Gartner is not exactly the same period given your fiscal year. So, if you can provide a bit more detail on this, please?
George D. Schindler: Yes, we don’t give guidance, as you know, Jerome, but the current market is it’s not really what, like Gartner says, it’s really what, with the market, actually is producing. And that’s right now, it’s obviously in the low-single-digits. So, that’s where we are today. I do believe that’s going to evolve as we move throughout the year. I think the back half of the year will be stronger than the front half of the year here that regarding all everything I talked about. But for us we can’t control the decision making speed and the market, but we do control the model and the approach that we have. And resilience to economic slowdowns and built into our model, managed services at 55% of the revenue in Q4 and 60% of the bookings gives us that long-term outlook intellectual property 22.6% of revenue in Q4 and rising.
It’s sticky. It’s recurring. So, that’s going to be a focus of ours. And as I mentioned, the government industry work now at 37%, up 20 basis points, it tends to be countercyclical. So, we feel pretty confident in where we’re going. We’re really going to focus on the things that we can control. And, like I said, I think those tailwinds and that approach and that model will outweigh some of the headwinds. I can’t tell you, exactly, what those, how those headwinds book as we move through the year, but that’s why we feel pretty confident. And that’s why we believe we can continue to deliver that double-digit EPS accretion.
Jerome Dubreuil: Yes, thanks. That’s very helpful. And then, second, a bit related and a different angle on bookings. We’ve seen you had very strong bookings, obviously, not exactly the same trend as we’re seeing the revenue and we’ve seen it for or some of the global peers as well. Is there a different difference in terms of trends you’re seeing in terms of booking conversion to revenue? And maybe some of the contracts that were already booked that are taking a little bit longer to translate into revenue. Is this something you’re seeing right now?
George D. Schindler: Yes. Well, there’s two things going on as we talked about in the last couple calls, the conversion for managed services always takes a little longer because you have a transition. Same goes for IP in many cases, particularly if it’s a software as a service, but there’s implementation associated with it, at the beginning. So, there is just naturally a longer cycle there. And of course, that’s at the same time that that shorter term revenue is under some pressure. And so, it’s just a matter of timing and balancing those out. I think we’re on the back end of that type of situation. I don’t think we’re past it yet, just given the dynamics that we see going on and a little bit of the slowness not just even in making a decision, but then going from decision to starting the projects, it’s just taking a little bit longer.
But, with the model that CGI has being ROI led, that’s kind of our antidote to some of that slowness because we put that business case right in front of the client and we all align on it. That’s our anecdote, but it’s still a little bit slowness there.
Jerome Dubreuil: Thank you.
Operator: Your next question comes from Robert Young from Canaccord Genuity. Robert, please go ahead.
Rob Young: Hi. Maybe just a quick question on M&A. I think in the prepared comments, you emphasized, building critical mass and strategic metro markets. I didn’t hear anything about large deals, but then in response, one of the questions you’ve said that the deals are getting larger. And so, is that larger metro markets or are you still evaluating larger I mean, maybe mega deals. And what would be the biggest things that prevents CGI from looking at or executing on the very large deals?
George D. Schindler: Yes. We’re still active in looking at larger acquisition targets. Don’t — when I talk about what we’re trying to do in M&A is build out those metro markets. That’s both for the small ones and the large ones. We look at large targets that have operations across Europe and North America. When we integrate it will still help us in specific metro market. So, it really is, it works on both sides of the avenue. So, thanks for asking for the clarification because we are looking at both. There’s no real hurdles from evaluation, from integration, obviously, from access to a capital perspective for us to do a larger one. It really is about making sure that they’re accretive. And, making sure that, we have an understanding of how we would make that accretive.
