Accenture Plc Q4 FY2024 earnings call

• Accenture doubled down on being the reinvention partner of clients, with full fiscal year bookings of $81 billion, 14% local currency growth, and 310 Diamond clients. - Delivered revenues of $65 billion, 2% local currency growth, and expanded adjusted operating margin by 10 basis points. - Invested significantly in business and people: $6.6 billion in Strategic Acquisitions, $1.2 billion in R&D, $1.1 billion in Learning and Development. - Generated free cash flow of $8.6 billion and returned $7.8 billion to shareholders. - Had $3 billion in new GenAI bookings in FY '24, with $1 billion in Q4, and nearly $900 million in GenAI revenue. - Worked with clients like TIAA to transform retirement record-keeping, a telecom to modernize core IT operations, Kuwait Government on security, HP on marketing transformation, QBE Insurance on underwriting, and Mondelez on consumer experience transformation. - Made acquisitions in areas like capital projects, health, and public service to drive growth.

For the full fiscal year 2024, Accenture delivered revenues of $65 billion, representing 2% growth in local currency. Bookings were $81 billion, a 14% growth in local currency. In the fourth quarter, revenue was $16.4 billion, with consulting revenues at $8.3 billion (up 1% in USD, 3% in local currency) and managed services revenue at $8.1 billion (up 5% in USD, 7% in local currency). Revenue growth was seen in seven of 13 industries, including public service, industrial, software and platforms, etc. Adjusted operating margin was 15% in the fourth quarter, up 10 basis points from the same period last year.

• First quarter of fiscal 2025 revenues expected to be in the range of $16.85 billion to $17.45 billion, assuming ~1.5% positive FX impact and 2%-6% local currency growth. - Full fiscal 2025 revenue expected 3%-6% local currency growth over fiscal 2024, including an inorganic contribution of a bit more than 3%. - Operating margin expected 15.6%-15.8%, a 10-30 basis point expansion over adjusted fiscal 2024. - Annual effective tax rate expected 22.5%-24.5%. - Full year diluted EPS expected $12.55-$12.91, 5%-8% growth over adjusted fiscal 2024. - Operating cash flow expected $9.4B-$10.1B, property and equipment additions ~$600M, free cash flow $8.8B-$9.5B. - Intends to tap long-term debt market to optimize capital structure.

• Known and unknown risks and uncertainties could cause actual results to differ materially from forward-looking statements, including factors in the news release, Annual Report on Form 10-K, and other SEC filings. These include macroeconomic conditions, market competition, and changes in client spending priorities.

Q: How does the current relationship between ACV and TCV evolve and translate into revenue visibility?

A: Angie Park and Julie Sweet discussed that Accenture has a strategy with more megas, having 19 more $100 million+ bookings than last year, and the guidance reflects the positioning with larger deals coming online.

Q: Any change in appetite for acquisitions in FY 2025?

A: Julie Sweet said the inorganic plan for FY 2025 has nearly 3% revenue contribution, with a plan of ~$3 billion of deployed capital, backend loaded, but always able to flex up/down.

Q: Cloud migration trends and cloud growth into FY 2025?

A: Julie Sweet mentioned cloud has migration happening for high-performance compute applications, early cloud journey clients, and modernization, with cloud continuing to be a significant driver of growth.

Q: Organic headcount hiring strategy and geographies?

A: Angie Park said they saw slight organic growth in Q4, added 24,000 people in FY 2024, hire for skills and demand, with a lot of hiring in India for technology.

Q: Commentary on consulting outlook for FY 2025 and discretionary spending recovery?

A: Angie Park said the guidance range accounts for different spending environments, with the range allowing for both potential discretionary spending recovery and deterioration.

Q: GenAI bookings cadence and margin?

A: Julie Sweet said GenAI bookings increased, with more from POCs to larger implementations, and GenAI margin is not particularly different from traditional business at this time as it's still a small part.