Accenture plc Q1 FY2026 earnings call

Key Points

• Bookings were $20.9 billion, with 33 clients having quarterly bookings >$100 million. Revenue was $18.7 billion, growing 5% in local currency at the top of the guided range.
• Adjusted operating margin expanded by 30 basis points year over year, and adjusted EPS grew 10%. Nearly 80,000 AI and data professionals were reached, with ~8 million training hours logged.
• Advanced AI bookings were $2.2 billion, nearly doubling from Q1 last year, and revenue reached ~$1.1 billion. The company shared it would no longer isolate specific metrics for advanced AI as demand evolves.
• Partnership strategy: 60% of Q1 revenue came from work with top 10 ecosystem partners. Plan to continue highlighting the role of top partners and expand partnerships with a broad set of ecosystem players.
• Strategic acquisitions: Announced acquisition of 65% stake in DLB Associates, and invested $374 million in six strategic acquisitions to scale capabilities and new growth areas.

In the first quarter, Accenture's revenues grew 5% in local currency to $18.7 billion. Consulting revenues were $9.4 billion, up 4% in U.S. Dollars and 3% in local currency. Managed services revenues were $9.3 billion, up 8% in U.S. Dollars and 7% in local currency. Geographically, The Americas saw 4% local currency growth (excluding 2% federal impact, it grew 6%), EMEA had 4% local currency growth led by banking, capital markets, insurance, and life sciences, and Asia Pacific saw 9% local currency growth led by banking, capital markets, communications, media, and public service.

• Fiscal 2026 revenue expected to be in the range of $17.35 billion to $18 billion, assuming ~3.5% positive FX impact. Q2 guidance: 1%-5% local currency growth (including ~1% federal impact).
• Adjusted operating margin expected to be 15.7%-15.9% for fiscal 2026, a 10-30 basis point expansion from fiscal 2025. Full year adjusted diluted EPS expected to be $13.52-$13.90 (5%-8% growth).
• Free cash flow expected to be $9.8 billion to $10.5 billion for fiscal 2026, with at least $9.3 billion returned to shareholders through dividends and share repurchases.

Forward-looking statements are subject to known and unknown risks and uncertainties, including those set forth in SEC filings such as the annual report and Form 10-K, which could cause actual results to differ materially from those expressed on the call.

Q: Tien-Tsin Huang from JPMorgan asked about the shift in the consulting industry's role in AI and the impact on business activity.

A: Julie Sweet responded that enterprise AI is fundamentally different from consumer AI, requiring foundational work like data and process improvement. Clients are turning to Accenture for help bridging the gap between technology and measurable results.

Q: Jason Kupferberg from Wells Fargo asked about when AI partnerships start moving the needle on revenue.

A: Julie Sweet stated that partnerships are part of an ecosystem for clients, and enterprise adoption of AI is dependent on client progress, with Accenture focusing on scaling solutions and integrating with existing ecosystems.

Q: James Faucette from Morgan Stanley asked about the mix of proof of concept vs. full production projects in AI.

A: Julie Sweet explained that clients are moving away from isolated models and toward solutions integrating various AI forms, with areas like customer service, finance, and procurement scaling into production, while harder areas like pharma and R&D are still early in scaling.

Q: Bryan Keane from Citi asked about discretionary spend and fixed pricing.

A: Julie Sweet said there's no catalyst for immediate change in discretionary spend, but clients are focused on large transformational deals. Fixed pricing is a competitive advantage as clients need confidence in outcome delivery.

Q: Bryan Bergin from TD Cowen asked about navigating AI model advances like SOAR.

A: Julie Sweet noted that tools like SOAR are embraced, but Accenture focuses on using them to create new products and experiences, with Song being critical for helping clients find growth through new ways and productivity gains.

Q: Darrin Peller from Wolfe Research asked about revenue opportunities for clients with completed digital core work.

A: Julie Sweet explained that while digital core work is ongoing, it expands Accenture's work, requiring process changes and talent upscaling, with examples of clients leapfrogging using AI across enterprises.

Q: Kevin McVeigh from UBS asked about margin trajectory and AI metric implications.

A: Angie Park said the 17.3% margin was due to efficiencies and fixed pricing, with adjusted operating margin expected to be 15.7%-15.9% for fiscal 2026. AI metrics are early and not yet drawing strong correlations, while margin is affected by annual investments.