Accenture plc Q3 FY2025 earnings call

• Quarterly results: Bookings of $19.7 billion, 7% growth in local currency with revenue of $17.7 billion, above guided range. Operating margin expanded 40 basis points, EPS grew 12% over Q3 FY '24. - Investments: Invested in people with 38 million training hours year-to-date, up 18% over same period last year; data and AI workforce to approximately 75,000; over $297 million across 4 strategic acquisitions and investments. - Acquisitions: Expanded Learn Vantage with acquisitions of Talent print in India and Ascendiant in the US; strengthened digital product capabilities in Japan with Umami acquisition; expanded infrastructure expertise with acquisition in Scotland. - Recognitions: #6 on Great Place to Work list, #20 on top 100 global brands list, brand value at $103.8 billion. - Community and Talent: Supported UK government initiative to upskill 7.5M people in AI; 97,000 promoted this fiscal year.

Managed services revenues were $8.7 billion, up 9% in both U.S. dollars and local currency, driven by double-digit growth in technology managed services and mid-single-digit growth in operations. In the Americas, revenue grew 9% in local currency. Growth was led by banking and capital markets, Industrial and Health. In EMEA, 6% growth in local currency was delivered, led by growth in Life Sciences, Banking and Capital Markets and insurance. Revenue growth was driven by the United Kingdom, Germany and Italy. In Asia Pacific, revenue grew 4% in local currency, driven by growth in public service, banking, capital markets and insurance, partially offset by a decline in chemicals and natural resources.

• Fourth Quarter FY '25: Revenues expected in range of $17 billion to $17.6 billion, ~positive 2.5% impact of FX, 1%-5% growth in local currency; federal business expected to have ~2% headwind. - Full Fiscal '25: Local currency revenue growth 6%-7%; inorganic contribution ~3%; operating margin 15.6%, 10 basis points expansion; effective tax rate 23%-24%; diluted EPS $12.77-$12.89, 7%-8% growth; operating cash flow $9.6B-$10.3B, free cash flow $9B-$9.7B; expect to return at least $8.3B via dividends and share repurchases.

Economic and Geopolitical Uncertainty: Continued elevated uncertainty in global economic and geopolitical environment affecting client decision-making. Subcontractor Impact: Fluctuations in subcontractor usage affecting gross margins, though not a material driver this quarter.

Q: About leadership changes in account retention and talent delivery.

A: Attrition ticked up slightly, but leaders leaving are in demand, and the company has a deep bench.

Q: Heightened uncertainty and revenue above guidance.

A: Resilience of the model, focusing on clients' reinvention needs, and strong relationships with clients.

Q: Acquisitions and inorganic contribution.

A: Acquisition strategy remains core, disciplined, expecting ~3% inorganic contribution for FY '25, with flexibility based on market conditions.

Q: Growth model changes and financial implications.

A: Change driven by growth opportunity, not cost cutting, to fuel growth by integrating services for faster client delivery.

Q: Bookings composition, tariffs, and blockchain.

A: Clients focused on reinvention, AI, and cost efficiency; blockchain has renewed interest in financial services but not a big driver; tariffs had short pause, clients now focused on focus and leapfrog.

Q: Federal contracting impact and blockchain demand.

A: Federal business had immaterial impact in Q3, Q4 headwinds from slower procurement and cancellations; blockchain has renewed interest in financial services but not a major growth driver.

Q: Consulting book-to-bill and AI impact.

A: Bookings strong at $19.7B, 1.1 book-to-bill; AI integrated into delivery, guiding included effects, and pricing improving.