17th Jun 2025 12:10
(Alliance News) - Capita on Tuesday reiterated full-year guidance for 2025, with revenue expected to remain broadly flat on-year.
The London-based outsourcing company for business services is anticipating its operating margin to improve slightly in the second half.
In the medium term, Capita was "confident" of hitting its medium term adjusted operating target of between 6% and 8%.
From the end of 2025, the firm expects to be free cash flow positive, with an outflow between GBP45 million and GBP65 million for the full-year, weighted to the second-half.
Shares in Capita were 4.5% higher at 260.60 pence on Tuesday afternoon in London.
Capita reported a 4.5% drop in adjusted revenue for the five months from January to May, though this was in line with expectations. The total value awarded in the period was GBP969 million, up 24% on-year.
The firm's Public Service division grew 2.3% as Central Government contracts offset losses in Electronic Monitoring Service and Local Public Service. Public Service made up about 70% of new contract wins.
The Contact Centre business saw an estimated 21% revenue drop, and offset new total contract value by 49%. Capita noted that subdued contracting in telecommunications was expected to have an annualised impact in the second half.
Pension Solutions fell 1.1%, although the firm gained a new client in this division. The Regulated Services branch, which Capita exited during this period, increased 6.4% due to a termination exit fee and deferred income from a Mortgage Software contract.
Capita noted expansion of scope for an existing contract with the Royal Navy, operationally effective from July. As of June, the company has achieved GBP185 million annualised savings, it said, on track for GBP250 savings by December.
A key growth area is the use of AI hiring agents, Capita said, carried out through Agentforce AI, subsidiary of San Francisco, California-based cloud software firm Salesforce.com Inc. Capita used this to speed up the recruitment process, and claims it has found 100 other AI agent uses across its business.
"In recent months, client interest in agentic AI solutions has grown exponentially. We are reinvesting a portion of our efficiency savings into new technology solutions, particularly those underpinned by AI and we are focused on bringing these technology solutions to more clients," commented Chief Executive Adolfo Hernandez.
By Holly Munks, Alliance News reporter
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