Accenture Plc Q1 FY2025 earnings call

• Clients prioritized large-scale transformations with bookings of $18.7 billion, including 30 clients with quarterly bookings > $100 million.
• Grew 8% in local currency, revenue $17.7B above guided range, and took market share against competitors.
• GenAI had $1.2B in bookings and ~$500M in revenue.
• Operating margin flat, EPS up 10% over Q1 adjusted FY24 EPS.
• Invested $242M in 5 acquisitions, 14M training hours. Data and AI workforce ~69,000.
• Recognized as Fortune's best workplace (#6) and Interbrand's top brand ($21.9B, #31).
• Partnerships in various industries for digital transformation, e.g., U.S. Air Force cloud work, BCC ICCREA Group reinvention, Spotify ad operations support.

Revenues for the first quarter were $17.7 billion, a 9% increase in U.S. Dollars and 8% in local currency, approximately $240 million above the top end of the guided range. Consulting revenues were $9 billion, up 7% in U.S. Dollars and 6% in local currency. Managed services revenue were $8.6 billion, up 11% in both U.S. Dollars and local currency. In geographic markets, Americas revenues grew 11% in local currency, EMEA grew 6% in local currency, and Asia Pacific delivered 4% revenue growth in local currency.

• Q2 FY2025 revenue expected $16.2B-$16.8B, ~-2.5% FX impact, 5%-9% local currency growth.
• Full FY2025 local currency revenue growth 4%-7%, FX impact ~-0.5%, inorganic contribution ~3% (1st half ~4%, 2nd half ~2%).
• Operating margin FY2025 15.6%-15.8%, tax rate 22.5%-24.5%.
• FY2025 diluted EPS range $12.43-$12.79, 4%-7% growth.
• Operating cash flow $9.4B-$10.1B, property additions ~$600M, free cash flow $8.8B-$9.5B.
• Plan to return at least $8.3B via dividends and repurchases.

• Market conditions and client spending on smaller deals could materially impact results.
• Risks from known and unknown factors in SEC filings, including FX fluctuations.

Q: Tien-Tsin Huang asked about U.S. federal government exposure and strategy.

A: Julie Sweet said Accenture is well-positioned to help federal government with security, efficiency, and cloud/data/AI solutions, seeing opportunity in commercial solutions to federal.

Q: Jason Kupferberg asked about net headcount adds and hiring mix.

A: Angie Park said hiring concentrated in India, with high utilization rates, and Julie Sweet noted organic momentum underlying guidance.

Q: Bryan Keane asked about guidance deceleration.

A: Angie Park said no unique Q2 factors, guidance reflects broad-based growth and organic momentum.

Q: Darrin Peller asked about budget visibility and onshore/offshore mix.

A: Julie Sweet said budget visibility in Jan/Feb, no big trend on onshore/nearshore, focus on global skill optimization.

Q: Jim Schneider asked about AI project size and pivot.

A: Julie Sweet said clients prioritizing within current budget, acceleration in data foundation and cloud for GenAI.

Q: Dave Koning asked about interest expense and Q2 guide.

A: Angie Park said interest expense factors into guidance, Q2 guide solid with no unique Q2 factors.

Q: James Faucette asked about capital structure and consulting bookings.

A: Julie Sweet discussed capital structure flexibility and consulting bookings tied to cost efficiency and growth themes.

Q: Keith Bachman asked about pricing dynamics and Europe.

A: Julie Sweet said competitive market with lower pricing, Europe's dynamics baked into guidance.

Q: Bryan Bergin asked about workforce and contract profitability.

A: Angie Park said no change in wage inflation, focused on pricing and differentiation to mitigate margin pressure.