British outsourcing company Capita plc (LSE:CPI) on Tuesday maintained its full-year guidance despite reporting a 4.5% revenue decline in the first five months of 2025.

The company expects broadly flat revenues for the full year with a small increase in operating margin and a free cash flow outflow of £45-65 million, according to a trading update.

Capita’s performance is expected to be weighted toward the second half of the year, particularly given the known headwinds in its Contact Centre business, which saw a 21% revenue drop in the first half.

The company also faces timing challenges between cost savings and increased expenses from pay reviews and additional National Insurance Contributions.

Despite these challenges, contract awards have been strong with Total Contract Value (TCV) up 24% to £969 million compared to the same period last year. Year-to-date TCV won in Capita Public Service increased by over 70%, offsetting a 49% reduction in the Contact Centre business.

Across business segments, Capita Public Services revenue grew 2.3%, while Regulated Services increased 6.4%, benefiting from a one-off termination exit fee and deferred income release from a contract in the Mortgage Software business.

Pension Solutions revenue declined 1% as the completion of short-term contracts offset new wins.

The company has achieved £185 million in annualized cost savings and remains on track to deliver its target of £250 million in annualized savings by December 2025.

Capita continues to expect positive free cash flow from the end of 2025 and maintains confidence in delivering its medium-term margin guidance of 6-8%.

The company is also making strategic progress in embedding technology, including transformative AI solutions to drive efficiency, with more details expected in its upcoming H1 results.

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