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Highlights

  • CPI’s group adjusted revenue declined 4.5% YoY for the five months ended 31 May 2025.
  • During the reported period, the company contact centre revenue declined 21.1% YoY amid contract losses and reduced telecom volumes.
  • CPI has achieved GBP 185 million in annualised cost savings, targeting GBP 250 million by December 2025.

Capita plc (LSE:CPI) is a UK-based business services provider operating across eight countries with 34,000 employees, delivering people-based and technology-enabled solutions to public and private sector clients in the UK and Europe.

The company has released a trading update for the five months ended 31 May 2025, confirming that the company remains on course to meet its full-year 2025 financial expectations. The Group expects broadly flat revenue for the year, with operating margin improvements weighted toward the second half. Management reaffirmed expectations for free cash flow positivity by year-end 2025.

In the five-month period, Group adjusted revenue declined 4.5% YoY. Capita Public Service recorded a 2.3% YoY increase, benefiting from new and ongoing contracts in Central Government. However, losses in other areas partially offset this growth. Contact Centre revenue dropped 21.1% YoY due to earlier contract terminations and lower volumes, particularly in the telecommunications segment. Pension Solutions experienced a 1.1% YoY decrease following the completion of short-term engagements. Regulated Services revenue rose by 6.4% YoY, due to a one-off termination exit fee and deferred income recognition in the Mortgage Software segment.

The Group reported contract wins with a total contract value (TCV) of GBP 969 million during the period, a 24% increase compared to the same timeframe in 2024. Capita Public Service saw TCV growth of over 70% YoY, while the Contact Centre division posted a 49% YoY decline. Notable contract wins included renewals with Southern Water and the Education Authority Northern Ireland, and extensions of scope with the Royal Navy and a pension services client.

Capita continues to implement AI-driven technology through internal platforms and external solutions. The company has identified more than 200 AI use cases via its Capita AI Catalyst Lab, with five products already launched and several more in the testing pipeline. 

The company has also started deploying 'Agentic AI' solutions, using Agentforce AI, powered by Salesforce, in recruitment processes to streamline candidate onboarding. Over 100 internal opportunities for agentification have been identified across the business.

In line with its transformation agenda, Capita is enhancing internal processes, including migrating IT and HR systems to ServiceNow. It also reports approximately 150,000 monthly interactions through its deployment of Microsoft Copilot. The firm’s AI, Data and Technology Academy has supported upskilling efforts, with over 10,000 digital training courses completed and more than 600 employees enrolled in management apprenticeships so far in 2025.

Capita reported that GBP 185 million of annualised cost savings have been achieved, with the company remaining on track to reach the GBP 250 million target by December 2025. This programme is expected to contribute to margin improvements, primarily in the second half of the year.

The company continues to anticipate a free cash outflow between GBP 45 million and GBP 65 million for the full year, reflecting GBP 55 million in cash costs associated with the cost reduction programme. Cash outflow and increased net financial debt are expected to be more pronounced in the first half of the year. Capita maintains its medium-term adjusted operating margin target of 6–8%.