Accenture plc Q4 FY2025 earnings call

• FY2025 saw strong financial performance with 7% growth in local currency, adding $5 billion in revenue and over $80 billion in bookings. - Significant focus on ecosystem partnerships, with 60% of revenue from work with top 10 ecosystem partners growing 9%. - Substantial investment in AI talent, with 77,000 AI and data professionals and over 550,000 reinventors trained in Gen AI fundamentals. - Launched reinvention services in September 2025, bringing all capabilities into a single unit to simplify selling and delivery. - Conducted a business optimization program with a charge of $615 million in Q4 FY2025, expecting additional $250 million in Q1 FY2026, with savings to be reinvested in the business and people.

In fiscal year 2025, Accenture's Consulting revenues were $35.1 billion, representing a 6% increase in U.S. dollars and 5% in local currency, contributing approximately 50.4% to the total revenue of $69.7 billion. Managed services revenues were $34.6 billion, up 9% in both U.S. dollars and local currency, accounting for about 49.6% of the total revenue. The growth in managed services was driven by 10% growth in technology managed services and 6% growth in operations.

• For Q1 fiscal 2026, revenues expected to be in the range of $18.1 billion to $18.75 billion, assuming ~1% positive FX impact. - Full-year fiscal 2026 revenue expected to be 2%-5% growth in local currency, with an estimated 1%-1.5% impact from federal business. - Adjusted operating margin expected to be 15.7%-15.9%, a 10-30 basis point expansion over FY2025. - Adjusted diluted EPS range $13.52 - $13.90, 5%-8% growth over FY2025. - Expected cash return to shareholders at least $9.3 billion, a $1 billion increase from FY2025.

• Macroeconomic uncertainties that could impact actual results. - Execution risks related to the business optimization program, including ensuring successful talent rotation and divestiture of non-strategic acquisitions. - Regulatory changes and their potential impact on client spending and business operations.

Q: Tien-Tsin Huang with JPMorgan asked about visibility on revenue growth and discretionary spending.

A: Angie Park stated they feel good about FY2026 positioning with strong bookings, solid pipeline, and discretionary spend assumptions with range for deterioration.

Q: Tien-Tsin Huang then asked about AI-driven productivity.

A: Julie Sweet responded AI is expansionary, not deflationary, with savings from AI enabling clients to reinvest in new priorities.

Q: Dave Koning with Baird asked about balance between Gen AI and managed services.

A: Angie Park and Julie Sweet discussed that both consulting and managed services are balanced in FY2026, with managed services strategic for clients to go faster with advanced AI.

Q: James Faucette with Morgan Stanley asked about CapEx investment.

A: Angie Park said CapEx expected ~$1 billion, mainly for real estate and leasehold improvements in major markets.

Q: Jamie Friedman with Susquehanna asked about definition of advanced AI.

A: Julie Sweet explained advanced AI includes Gen AI, agentic AI, and physical AI, with data being critical but previously shared as new spend area.

Q: Bryan Bergin with TD Cowen asked about business optimization program savings.

A: Julie Sweet said expected savings over $1 billion, to be reinvested in business and people.

Q: Darrin Peller of Wolfe Research asked about federal procurement and policy changes.

A: Julie Sweet discussed federal procurement picking up, capital investment still early, and H-1B visas not a big impact, with policy changes driving business for Accenture.

Q: Jim Schneider at Goldman Sachs asked about headcount growth and AI utilization.

A: Angie Park said headcount expected to grow across markets, and utilization in low 90% range, with AI embedding driving efficiencies.