Good day, and welcome to Accenture's first quarter of the first fiscal year 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to Alexia Quadrani, Executive Director, Head of Investor Relations. Please go ahead.

Thank you, Operator, and thanks everyone for joining us today on our fourth quarter and full-year fiscal 2025 earnings announcement. As the Operator just mentioned, I'm Alexia Quadrani, Executive Director and Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chief Executive Officer, and Angie Park, our Chief Financial Officer. We hope you've had an opportunity to review the news release we issued a short time ago, and we also have an earnings presentation, which will be made available on our website after the call. Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results. Angie will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the fourth quarter and fiscal year. Julie will then provide a brief update on the market position before Angie provides our business outlook for the first quarter and full-year fiscal 2026. We will then take your questions before Julie provides a wrap-up at the end of the call. Some of the matters we'll discuss on this call, including our business outlook, are forward-looking and, as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations from non-GAAP financial measures where appropriate to GAAP in our news release or in the Investor Relations section on our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie.

Thank you, Alexia, and to everyone joining this morning, and thank you to our more than 779,000 reinventors around the world for your extraordinary work and commitment to our clients. In fiscal year 2025, we delivered a strong year financially. We significantly elevated our competitive positioning, and we took our next big steps to position us for growth in the age of AI. We grew 7% last year, which was adding $5 billion in revenue, with over $80 billion in bookings. We did so against a macroeconomic backdrop that did not improve over FY24. Of that 7% growth, the majority was organic, and the growth was broad-based across markets, industries, and types of work. We also delivered strong earnings per share growth and generated strong free cash flow, both above our guidance on an adjusted basis, and we returned a significant amount of cash to shareholders, an increase of 7% over FY24. We took share at more than 5X our investable basket. How did we do it? We built on the rapid shift in our business we made by the end of FY24 to address the challenging market conditions. We then took action to fully capitalize on the competitive advantages we have built over a long period of time to deliver these results. These advantages include our ecosystem partnerships, our breadth of capabilities, our deep and trusted client relationships, our track record of investing in new skills and rotating our business with successive technology revolutions, and of course, our ability to invest. Our strategy for more than a decade has been to be the number one partner for the tech ecosystem, and it's serving us well. Technology is front and center for every client, and in FY25 we continued to be the number one partner for all of our top…

Thank you, Julie, and thanks to all of you for joining us on today's call. We were very pleased with our results in the fourth quarter, which were at the top of our guided range and completed another strong year for Accenture. Our results reflect our relentless focus to consistently deliver on our shareholder value proposition while investing for long-term market leadership and reinforce our role as a trusted reinvention partner for our clients and a leader in AI. Now, let me summarize a few highlights for the quarter. Revenues grew 4.5% in local currency. Excluding the 1.5% impact from our federal business, our revenues grew 6% in Q4, and we continue to take significant market share at more than 5X, reflecting the relevance of our services and the strength of our diversified portfolio and execution. As a reminder, we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of significant acquisitions through the date of their last publicly available results on a rolling four-quarter basis. Adjusted operating margin was 15.1%, an increase of 10 basis points compared to adjusted Q4 results last year. We continue to drive margin expansion while making significant investments in our business and our people. We delivered adjusted EPS in the quarter of $3.03, which represents 9% growth compared to adjusted EPS last year. Finally, we delivered free cash flow of $3.8 billion and returned $1.4 billion to shareholders through repurchases and dividends this quarter. Before I move on to the details of the quarter, I want to spend a moment on the six-month business optimization program we initiated in…

Thank you, Angie. Today, we've worked across every major market with more than 9,000 clients, including the world's largest companies, three quarters of the Fortune Global 100 and 500. As we look at the markets, we have not seen any meaningful change, positive or negative, in the overall market. We are focused on delivering results regardless of the market conditions by being the most relevant to our clients. Relevance today requires leadership in AI. We're working with companies early in their journey to use AI, which want our help to get them AI ready and to leverage our assets and platforms to accelerate their ability to deploy AI, as well as to help them do what they can now to use AI, even when they're not fully ready across the enterprise. We also are working with companies far along their journey to be AI ready and wanting to be the first to change the game with AI, even as its potential is still emerging. The technology itself is new and rapidly changing, so across companies, they need help in understanding the tech landscape. This is where we are in the age of AI. It is very early innings, however you look at it, which means there is massive opportunity ahead for our clients, our ecosystem partners, and us. It is well recognized that advanced AI has taken the mindshare of CEOs, the C-suite, and boards faster than any technology development we've seen in the past two decades. At the same time, as reported widely, value realization has been underwhelming for many, and enterprise adoption at scale is slow other than with digital natives. This is why our clients are turning to us. We know that the gap between mindshare and faster actual adoption is because the enterprise reinvention required to…

Thanks, Julie. Now let me turn to our business outlook. For the first quarter of fiscal 2026, we expect revenues to be in the range of $18.1 billion to $18.75 billion. This assumes the impact of FX will be approximately positive 1% compared to the first quarter of fiscal 2025. Our Q1 guidance reflects an estimated 1% to 5% growth, including about a 1.5% impact from our federal business, with AFS contracting mid-teens. For the full fiscal year 2026, based upon how the rates have been trending over the last few weeks, we currently assume the impact of FX on our results in U.S. dollars will be approximately positive 2% compared to fiscal 2025. For the full fiscal 2026, we expect revenue to be in the range of 2% to 5% growth in local currency over fiscal 2025, including an estimated 1% to 1.5% impact from our federal business. Excluding the impact of federal, our revenue is expected to be an estimated 3% to 6%. This year, we expect an inorganic contribution of about 1.5%, and we expect to invest about $3 billion in acquisitions this fiscal year. For adjusted operating margin, we expect fiscal year 2026 to be 15.7% to 15.9%, a 10 to 30 basis point expansion over adjusted fiscal 2025 results. We expect our annual adjusted tax rate, effective tax rate, to be in the range of 23.5% to 25.5%. This compares to an adjusted effective tax rate of 23.6% in fiscal 2025. We expect our full-year adjusted diluted earnings per share for fiscal 2026 to be in the range of $13.52 to $13.90, or 5% to 8% growth over adjusted fiscal 2025 results. For the full fiscal 2026, we expect operating cash flow to be in the range of $10.8 billion to $11.5 billion, property and equipment additions to be approximately $1 billion, and free cash flow to be in the range of $9.8 billion to $10.5 billion. Our free cash flow guidance reflects a very strong free cash flow to net income ratio of 1.2. We expect to return at least $9.3 billion through dividends and share repurchases, an increase of $1 billion, or 12% from fiscal 2025. Our board of directors declared a quarterly cash dividend of $1.63 per share to be paid on November 14, a 10% increase over last year, and approved $5 billion of additional share repurchase authority. We remain committed to returning a substantial portion of our cash generated to shareholders. With that, let's open it up so we can take your questions. Alexia.

Thanks, Angie. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you please provide instructions for those on the call?

Absolutely. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. Today's first question comes from Tien-Tsin Huang with JPMorgan. Please go ahead.

I think it's a good presentation here. My first question I'll ask on visibility on revenue growth, if that's OK. Just love to hear your thoughts on visibility compared to the last couple of years, given the backlog, which is quite big with large deals. You have the pipeline, of course, and then what you're seeing on discretionary spending, given the economic backdrop as you see it.

Great. Hi, Tien-Tsin. Good morning. Let me start with that. As we look at FY2026, we feel really good about our positioning. As you said, you saw our strong bookings of $80.6 billion in FY2025. That positions us for FY2026. We can see our backlog from the large deals. If you look at our pipeline, and looking at our pipeline, it's solid overall, and we see strong demand for our large transformation deals. From a discretionary perspective, what we've assumed is at the top end of the range, there's no change in discretionary spend, while at the bottom of the range, it allows for deterioration. By the way, as you think about our guidance of 2% to 5%, excluding AFS, we're at 3% to 6% for the year.

OK. Thanks for that, Angie. Julie, I like your AI remarks. Can you dig us? I'd like to want to dig in a little bit more, if you don't mind. Just give us your latest thoughts on AI-driven productivity and those gains and how they might unfold. I get that question quite a bit from investors. Do you see potential deflationary effects? How might that impact Accenture services, both positively and negatively? Thanks.

Great. Thanks, Tien-Tsin. We do not see AI as deflationary. We do see and are seeing it as expansionary, similar to every tech evolution we've been through. The move from analog to digital, from on-prem to cloud and SaaS, and as many of you who've been with us over the course of the years have known, in every successive tech evolution, we've become stronger. If you look at AI, we see the same thing. Yes, AI absolutely boosts efficiency in areas like coding or operations. Those savings do not disappear. They're being reinvested into new priorities. The list of what our clients want to do with technology is truly virtually unlimited. When we can save them money by delivering our services with advanced AI, that frees up their budget to do the next things on their list. That's what they're doing. They're always going to those next priorities, and we're best positioned then to help them. That is how we delivered our 7% growth last year. Two years in, we're seeing the pattern for how that journey to advanced AI is expanding our business. By the way, I will add that one of the most consistent things that I'm telling CEOs today is that their AI strategy has to focus on both growth and productivity. Almost every CEO that I've talked to says they've pivoted way too far toward productivity and not enough to growth, which, of course, we are helping them with things like Song. We give that advice really from our own experience in how we have successfully grown through every tech evolution, embracing the productivity on one side and then capturing the opportunity it creates on the other side by helping our clients.

Thank you. Our next question today comes from Dave Koning with Baird. Please go ahead.

Yeah. Hey, guys. Great job and great to see Gen AI bookings reaccelerate. A question, I guess, a little like Tien-Tsin's question. Just wanted to ask about the balance between Gen AI and managed services. You do a ton of managed services work. You get to know client operations really well. You can probably go in and recommend Gen AI work and gain a lot of share there, but then maybe displace some managed services. How does that really balance between consulting and managed services over time? Does the net of it all push revenue and margins higher?

Sure. First, let me just kind of ground you in how we're thinking about consulting and managed services in FY26, just so we all have the facts of how we're thinking about it in FY26. I'll give you some more color on how we see those things actually work in the market. Angie, you want to just ground them in the FY26 piece?

Hi, David. Good morning. For our guidance for FY26, both consulting and managed services are balanced. We see both of them in the low to mid-single-digit range. That's the context.

Yeah. As you know, how it's actually worked out on the ground is that as you think about enterprise-wide strategies, a lot of times what we're talking to our clients about is where do you invest and build proprietary capabilities, where do you want to buy capabilities, and where are you best situated to go faster because you're partnering and buying them through a managed service like Accenture. What we're seeing a lot of is, for example, companies that are really behind, they're not as far along in their tech journey. They need managed services because they simply can't go fast enough. It's not just a cost play. They want the cost takeout, but they want to use everything we've invested in our platforms to get them to the advanced AI. Similarly, in the core operations, things like digital manufacturing and supply chain, we're developing more and more managed services there in order to allow them to go faster. We see this kind of continuing to develop as we have over the last several years, where managed services have become very strategic. They're not just a cost play. The more we can save them money in the way that we deliver, using advanced AI, that allows them to then reinvest into the business. Very similar patterns, managed services really for the last five or six years have become a very important part to the strategy of companies and how to use advanced technology, now it's advanced AI, faster.

Great. No, that's super helpful. Maybe just quick follow-up. Are you expecting a similar Q4 headwind through the first three quarters of this year and then anniversary it in Q4, and then going forward, maybe not having much impact at all? Is that kind of how you're modeling it?

That's exactly right. We expect it to anniversary at the end of Q3.

Awesome. Thanks, guys. Nice job.

Thanks.

Thank you. Our next question today comes from James Faucette with Morgan Stanley. Please go ahead.

Thank you very much. Appreciate all the incremental color and detail here from everybody. I wanted to ask, we see, at least in the forecast, a little bit of increase in CapEx, et cetera. I'm wondering if you can give us a little bit of detail where that investment is going and how we should expect that to play out further.

Sure. On our CapEx, we expect about $1 billion this year, which is about $400 million more than FY2025. This is really about us expanding our real estate and leasehold improvements in certain geographies, certain major markets for us.

Because we're bringing more people back to the office.

Kind of what I suspected. You mentioned, and we saw the reacceleration in Gen AI and bookings, et cetera. How is the pricing of those projects evolving? Has the velocity of projects transitioning from proof of concept to production changed at all?

Let me just start on the pricing. For our Gen AI projects and the pure Gen AI that we were, or advanced AI that we've been talking about, we do see pricing that is accretive overall to Accenture's average.

Yeah. In terms of acceleration, in terms of kind of moving from proof of concept to production, we're seeing more and more now move into production because we're helping them with the proof of concept, and then we're helping them scale. You also are just continuously seeing companies that weren't as fast out of the block now starting proof of concept. It really is a cycle that many companies are going to go through. You have leaders who are way ahead. We have other companies that are just getting started. What I would say is, rather than a reacceleration or deceleration, these things are going to be like everything. They're going to be lumpy, in terms of it. What we really look at is the overall trend of how much growth that we are getting and our share of this new spend.

Thank you. Our next question comes from Jamie Friedman with Susquehanna. Please go ahead.

Hi. Good morning. I too appreciate your prepared remarks. Really thought-provoking. I wanted to ask, Julie, about the way you're defining advanced AI. I think if the transcript's right, you say Gen AI, agentic AI, and physical AI. I'm actually asking about why you're saying you're not including data because we've sort of been trained that data is foundational. Why is the data component not in the definition of advanced AI?

Because what we're trying to share with you is how we're taking spend in a new market. By the way, data is absolutely critical. In fact, one out of every two projects in Gen AI, Agentic AI, physical AI has significant data pull-through. Our data business is on fire, right? This is an absolutely critical area. Companies are just getting started. It's nascent in many places. It's part of the digital core that we're building. It's just that to date, we've wanted to share with all of you transparently the really new area. Data is part of the digital core that's growing. We've shared with you that 60% of our revenue is from the ecosystem partners, including the data. Look, going forward, now that advanced AI is, in fact, in all of the work, because it's either actual work or we're getting ready for the work, we'll think about how to share that. Just to date, since this started for all of us, like really from negligible revenue, we wanted to share how we've been specifically accelerating in the new area of spend.

Got it. Thank you. Going further, will you say that every new wave of technology has a time where you have to train and retool, and your core competence is to do that at scale? I'm just wondering, relative to prior technology, and you alluded to some of this in prior architectures, how do you think about that requirement, which you have tremendous mindshare at, which is to do technology at scale? How do you think about this relative to some of the previous technological evolutions? Thank you.

It's going faster. There is so much demand, and the technology is moving faster. The more advanced skills and the new types of skills are coming faster. That's why we're being very decisive, right? Upfront, we said you've got to start training everyone in the new skills. We're now saying we've got to move faster to that. Also, remember that when we went into this, we'd already trained about 500,000 of our people on classical AI because going back to FY2019, we said the next decade would be about cloud, data, and AI. We start with a very strong base. This is definitely moving faster than prior technology evolutions in terms of how fast the demand is coming and the importance of us really winning the talent rotation.

Thank you. Our next question today comes from Bryan Bergin with TD Cowen. Please go ahead.

Hey, good morning. Thanks for the added detail in the slides here. My first question on Gen AI impact. Can you speak about client behavior in seeking to use Gen AI and agentic solutions more themselves? You mentioned the efficiencies from the tech in areas like software development. I'm curious if you're seeing more clients seeking to then benefit to do that more themselves versus with third parties. I'm also curious if you've seen clients that thought they could do it themselves 6 to 12 months ago and then realize they do need help and they return to you.

Yes. In fact, especially early on, because Gen AI seemed so simple, right? The reality is it's not the technology that is the biggest barrier. It is actually being able to get the mindset reorganized around how best to use it, the ability to do the change management, the process reinvention. If you think about your average company, their core competencies inside are not things like end-to-end process reinvention, right? You're hard-pressed to find a CEO that doesn't say, "I feel like my organization is too siloed. I feel like we don't have the right way of managing our data." We've had lots of clients who have started things on their own and then come to us who've got good proofs of concept that their team was able to do, but then just can't scale it. I'm doing right now, like just in the next few weeks, I'm personally leading a few different workshops with the entire C-suites of companies where the focus is, share with us how do we actually scale it and what can we really do now, right? As we're a couple of years into this, we have a number of solutions which we're now doing repeatedly within industries and across industries. Our clients are looking for us to share that success so that they can start, stop just having their own team saying, "Well, I have this idea, this idea," and saying, "How can we actually get scale now?"

OK. Thank you. That's helpful. A follow-up on the business optimization program. Can you talk about the assumed savings you expect to achieve from this optimization program and how it may help you evolve your operations? I'm specifically curious if you see that kind of combined with Gen AI adoption internally allowing you to operate at a sustainably higher utilization as that did take up this quarter.

Hi, Brian. I think that for overall, we expect savings of over $1 billion from our business optimization program, which we expect that we will reinvest in our business and in our people because it's so important for our future growth. We expect to reinvest that while still delivering modest margin expansion.

Yeah. In terms of the connection, just making sure this particular, these moves are primarily due to our talent strategy. The other piece was an exit of a couple of non-strategic acquisitions. On the talent strategy, it's more around, our number one strategy is upskilling. Given the skills we need, and we've had a lot of experience in upskilling, we're trying to, in a very compressed talent timeline where we don't have a viable path for skilling, sort of exiting people so we can get more of the skills in we need. That's really not related to the utilization piece in terms of it ticking up to 93%. We think it'll stay in the zone, in the low 90s to that, and it'll fluctuate a little bit. To your point around what can we do long term, we are continuously looking at, as the technology matures, our new structure around reinvention services. We'll look to see, are there ways that we can use the technology to deliver our services and operate Accenture in its core better? That's one of the reasons why we have the new reinvention services to really simplify how we're operating because that makes it much easier to start to use this AI. More to come as we fully roll out that model and identify new opportunities.

Thank you. Our next question comes from Darrin Peller of Wolfe Research. Please go ahead.

Hey, guys. Thanks. It's good to hear from what it sounds like the pace of procurement change has calmed down a bit from the government side, such that you can forecast those. I guess, number one, just to verify that's right, you feel more confident around forecasting on it. There's a lot of policy changes. Just want to touch on a couple and ask you your thoughts lately. Number one, now that we have a little more clarity on tariffs, do you see more capital investment, especially in areas like products? Number two, maybe you could just comment on H-1B changes or potential changes. What are your thoughts around either wages or the pace of hiring of H-1Bs going forward and how it may or may not impact the business? Just a quick one on health care and the big beautiful bill, if any impact you're seeing there. Thanks, guys.

Great. Thanks. Just quickly on federal, we do see procurement is now starting to pick up, although it's still slower than it has been in the past. The demand in federal is very much around modernization, consolidation, efficiency. Tech is at the center, so lots of demand around ERP and platforms. Our position with the ecosystem is really key here and our strategy to expand that partnership. Those partnerships are also important. We're really pleased with our new partnership with Palantir, which is really playing a critical role in federal. We feel good about where we are in federal and are relevant to the administration's agenda. That's what we're really focused on, being relevant to our clients. That's federal. On capital investment, I would say it's still a little early, right? Obviously, you've seen the improvement with the cut in interest rates. We're a global company, so there's a lot of stuff going on around the world. I think it's just a little bit too early to call yet how much this is going to open up on the capital investment. Of course, we're growing very significantly and taking advantage of the investments that are already happening, as you saw in our capital projects business. On H-1B visas, for us, this is really a non-issue because we only have about 5% of our people in the U.S. on H-1B visas, and they're for really specialized experience and skills for our clients. Not something that is really a big impact on Accenture. Whether it's health care or a lot of the different policy changes, remember, our business thrives by helping our clients navigate change, right? What we're seeing is that every time there's big policy changes, and this has been true for decades, that's why in our business, we have industry expertise. We have the functional expertise. When you have new compliance rules, et cetera, that usually drives more business for us. At this point, we see an opportunity to really stay close to our clients and help them navigate and take advantage and comply with new policy changes. That's true in health care, and it's really true across the board.

Thank you. Operator, we have time for one more question, and then Julie will wrap up the call.

Absolutely. Our final question comes from Jim Schneider at Goldman Sachs. Please go ahead.

Good morning. Thanks for taking my question. Julie, I just wonder if you could follow on your comment that you expect headcount to grow during the course of the fiscal year across all regions. Can you maybe kind of frame for us the magnitude of that and the timing for it, given the context of some of the other business optimization actions you're seeing? Where would you expect headcount growth to land exiting the year, perhaps?

I'll take that. Hey, Jim. Good morning. What I would tell you is, look, we expect it to grow across all markets. We don't have a specific number that we're giving you, but based upon the demand that we see, we expect our headcount to grow.

Great. As a follow-up on that, if you could maybe talk about the net impact of AI you're using internally to optimize your own work, your own business, utilization. I think you mentioned earlier, 93%. That's basically hitting a new record. When would we expect to see that either reflected in even higher utilization or potentially gross margins, even though we know you don't manage directly to that?

Yeah. Remember, right now, our utilization is really a reflection of the kind of momentum in demand that we're seeing. You saw the bookings, right? Our utilization, we would expect to continue to move around in the low 90%, so we don't have a structural change in utilization due to AI. We are already embedding AI, particularly in our big platforms like Gen AI, to drive efficiencies, and that's reflected in both our bookings and in our guide for the year. We're going to continue to be the leaders because that is what works, right? As you lead yourself, we're able to take that to our clients. We're able to show them how we're doing it and then help them do it in their business. That's kind of how it's developing.

Thank you. As we close the question and answer session, I'd like to turn the conference back over to Julie Sweet for closing remarks.

Terrific. Thanks again, everyone, for joining. In closing, I just want to thank all of our shareholders for your continued trust and support. We are working every day to earn your trust. A huge thank you to all of our reinventors because you are why we are able to deliver these results. Thanks again.

Thank you. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.