By Adriano Marchese

CGI shares fell sharply as second-quarter results missed expectations, exacerbating already-weak sentiment around software stocks.

Shares fell 14% to 86.90 Canadian dollars ($63.51) on Wednesday.

The Montreal-based IT and consulting firm said the quarter was hampered by slower client decision making in several key markets as well as continued softness in European manufacturing and lingering weakness in its U.S. federal business.

"The one that is still in flux is manufacturing, especially in France and in Germany," Chief Executive Francois Boulanger said in a call to investors. "As we know, Germany, it's a tough economy for now and so that's where we're seeing some softness on that side."

The executive noted conditions are improving elsewhere, with U.S. federal government business coming back up organically. "You had federal government [business] that had a pretty tough two quarters ago at minus 12%. This quarter at minus 7%," Boulanger said.

Like many software and IT‑services companies, CGI has been under pressure in recent months, with the stock down about 31% year to date as investors rotate toward a small group of AI leaders and away from firms seen as more exposed to slowing discretionary tech spending. Its U.S. federal government business has also been a drag, adding to the broader headwinds facing the sector.

CGI's bookings fell by about C$171 million to C$4.31 billion in the three months ended March 31, while its backlog added C$514 million to end the quarter at C$31.5 billion.

Revenue in the fiscal second quarter rose 3.3% to C$4.16 billion, falling short of analyst expectations. Growth was padded by currency movements, and on a constant‑currency basis revenue increased 1.6%.

Net income rose to C$444.7 million, or C$2.09 a share for the three months ended March 31, up from C$429.7 million, or C$1.89 a share, a year ago. Adjusted earnings were in-line with forecasts at C$2.27 a share.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

April 29, 2026 12:28 ET (16:28 GMT)

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