Capita Navigates Contract Losses with AI-Driven Growth Strategy

Capita PLC (LON: CPI) provided a trading update for the 11 months ending November 30, 2025, revealing a mixed performance across its divisions.

The report highlights the impact of contract losses and volume reductions in the Contact Centre business, offset by growth in Capita Public Service and Pension Solutions.

Adjusted revenue performance mirrored the first half of the year. Capita Public Service, representing 63% of group revenue, grew by 4.0%. Growth moderated slightly in the second half due to client-driven revenue delays. The Contact Centre, accounting for 23% of group revenue, experienced an 18.3% decline due to previously announced contract losses and volume reductions.

Pension Solutions, contributing 8% to group revenue, showed improved growth in the second half, achieving a year-to-date growth of 1.5%. Regulated Services decreased by 14.3%, reflecting agreed contract hand-backs as Capita finalizes its exit from this sector. The transition agreement for the final two contracts in the closed book Life & Pensions business has been secured.

Looking ahead, Capita anticipates growth in Capita Public Service to be slightly below mid-single digits. A high-teen digit reduction in Contact Centre revenue is expected, alongside low single-digit growth in Pension Solutions. Guidance on margin improvement, free cash flow (including the £14m ICO settlement), and debt remains unchanged, aligning with medium-term targets.

Capita has delivered its targeted £250m of annualised cost savings, enhancing cost competitiveness across the organisation. This achievement is supported by the company's AI investment and strategy. The launch of the AI Catalyst Stack aims to operationalize AI at scale, positioning Capita as an AI-enabled business process outsourcer. A settlement with the ICO regarding the March 2023 cyber incident has also been reached.

The Group’s unweighted contract pipeline has seen a significant increase, reaching £16.5bn, up 41% from the half year. This represents the highest level for several years, with £3.5bn related to opportunities with a strong technology component.

The new AI&PO organization launched an AI Catalyst Lab, focusing on areas spanning customer service, knowledge management, training, and operational support. Agents are embedded across Microsoft and Salesforce platforms, and the Catalyst Lab has received over 550 opportunities and use cases. The launch of the AI Catalyst Stack for customers leverages operational expertise and hyperscaler partnerships to embed AI in mission-critical services.

Adolfo Hernandez, Chief Executive Officer of Capita, stated, “We are very pleased to have announced today an agreement for the transition of the remaining two legacy evergreen closed book Life & Pensions contracts to Royal London.”

He emphasized that this was a key priority for 2025 and a key element of the company’s ‘manage for value’ strategy. Hernandez also highlighted the progress against strategic priorities, including delivering £250m of annualised cost savings and the strength of the AI Catalyst Lab.

Driver Breakdown:

• Cost Savings: Achieved £250m in annualised cost savings through AI-driven efficiencies.
• AI Integration: Launched AI Catalyst Stack to embed AI into core services.
• Contract Pipeline: Increased unweighted contract pipeline by 41%, indicating future growth potential.