Accenture plc Q2 FY2026 earnings call

• Julie Sweet noted strong second quarter results with $18 billion revenue growing 4% in local currency, record bookings of $22.1 billion, 30 basis points of operating margin expansion, strong EPS growth, and significant free cash flow. Accenture closed three strategic acquisitions, deployed $1.6 billion, and expects to deploy $5 billion in acquisitions this year. Its long-term growth strategy is to help clients reinvent and capture AI opportunities, using strong balance sheet and successful acquisitions. - Angie Park summarized highlights: revenues grew 4% in local currency, broad-based across markets and work types; operating margin 13.8%, up 30 basis points; EPS $2.93, up 4%; strong free cash flow of $3.7 billion, returned $2.7 billion to shareholders; new bookings record $22.1 billion, with consulting and mandate services bookings, and fixed-price work increasing over 60% in FY25.

Revenues grew 4% in local currency. Consulting revenues were $8.9 billion, up 7% in U.S. dollars and 3% in local currency. Managed services revenues were $9.2 billion, up 10% in U.S. dollars and 5% in local currency. New bookings were a record $22.1 billion, with consulting bookings $11.3 billion and mandate services bookings $10.8 billion. Operating margin was 13.8%, up 30 basis points. EPS was $2.93, up 4% year over year. Free cash flow was $3.7 billion. Revenue growth was broad-based across geographic markets and types of work. In Americas, revenues grew 3% in local currency; in EMEA, 2% in local currency; in Asia Pacific, 10% in local currency.

• For Q3 2026, expects revenues in range of $18.35 to $19 billion, with FX impact ~positive 2.5%, local currency growth 1-5% including ~1% from federal business, excluding federal 2-6%. - For full fiscal 2026, expects local currency growth 3-5% including ~1% from federal business, excluding federal 4-6%; inorganic contribution ~1.5%; adjusted operating margin 15.7-15.9%, 10-30 basis point expansion; adjusted effective tax rate 23.5-25.5%; adjusted diluted EPS $13.65-$13.90, 6-8% growth; operating cash flow $11.5-$12.2 billion; property and equipment additions ~$700 million; free cash flow $10.8-$11.5 billion; expect to return at least $9.3 billion through dividends and share repurchases, increase of $1 billion from fiscal 2025.

Matters discussed on the call, including business outlook, are forward-looking and subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in the news release and discussed in annual and quarterly reports and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed on the call. The conflict in the Middle East is a factor with roughly 3,000 colleagues in the region, representing about 1% or $1 billion of revenue in FY25, but currently no significant financial impact, but environment is more uncertain.

• Q: What quantitative evidence should investors look at to substantiate Accenture is a net beneficiary of AI?

A: Look at market share, overall growth, growth with ecosystem outpacing overall growth, growth with emerging players, and number of companies initiating AI with them. - Q: How does frontier model improvement impact bookings growth and conversion to revenue?

A: Models create next opportunities, more experimentation and collaboration as models get better, but no direct correlation yet. - Q: About acquisitions upwards of $5 billion and inorganic growth contribution?

A: Expect $5 billion with potential to do more, inorganic contribution ~1.5% on timing. - Q: Headcount growth expectations and strategy?

A: Headcount expected to increase, continuation of talent rotation, no linear relationship with revenue since 2015. - Q: Emerging and evolving delivery models, FTE model pivot?

A: Mix of models, FTE model gives value in solving bespoke problems, delivery changing with more technology and expertise. - Q: Higher margin AI services offsetting competitive pricing, productivity boost?

A: Pricing improved in some areas, internally applying AI to improve delivery efficiencies, reflected in operating income. - Q: Big clients vs midsize companies spending on AI?

A: Smaller companies also spending, $100 million plus bookings reflect large enterprises' reinvention needs, early in long funnel of work with AI