Accenture PLC Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Accenture's Q1 2026 earnings call highlighted strong bookings, revenue growth at the top of guidance, adjusted operating margin expansion, and adjusted EPS growth, driven by the company's focus on helping clients reinvent their enterprises. The call also emphasized the importance of partnerships, particularly in the AI space, and strategic acquisitions to expand capabilities and market reach.
Key Financial Results
Revenue of $18.7 billion, up 5% in local currency, at the top of the guided range.
Bookings of $20.9 billion, including 33 clients with quarterly bookings greater than $100 million.
Adjusted operating margin expanded by 30 basis points year-over-year.
Adjusted EPS growth of 10% compared to Q1 last year, reaching $3.94.
Free cash flow of $1.5 billion.
Business Segment Results
Consulting revenues were $9.4 billion, up 3% in local currency.
Managed Services revenues were $9.3 billion, up 7% in local currency, driven by high single-digit growth in technology managed services and mid-single-digit growth in operations.
Capital Allocation
Returned $3.3 billion to shareholders through accelerated repurchases and dividends.
Invested $374 million primarily in six strategic acquisitions.
Repurchased or redeemed 9.5 million shares for $2.3 billion at an average price of $245.32 per share.
Paid a quarterly cash dividend of $1.63 per share, a 10% increase over last year, for a total of $1 billion.
Industry Trends and Dynamics
Demand for reinvention remains strong, with clients prioritizing larger transformational programs focused on building their digital core and driving both efficiency and growth.
Technology is front and center for every client.
Advanced AI is increasingly embedded in large transformation programs.
The total addressable market for advanced AI is expected to grow more than 40% through 2029, from roughly $20 billion today to over $70 billion.
Competitive Landscape
Accenture continues to strengthen its competitive position by taking significant market share on a rolling four-quarter basis against its closest global publicly traded competitors.
The company's ability to attract and retain great talent is one of its most important competitive advantages.
Strong leadership in advanced AI is a clear competitive advantage.
Evolving partnerships are a significant competitive advantage.
Macroeconomic Environment
The pace of overall spending and discretionary spend in the market is at the same levels seen over the last year.
Growth Opportunities and Strategies
Focus on helping clients reinvent every part of their enterprise.
Investments in talent strategy to rotate the workforce, with a goal of 80,000 AI and data professionals.
Expanding and forming new partnerships with emerging AI and data companies.
Focus on four strategic growth areas: digital core, security, Accenture Song, and Industry X.
Capital projects capabilities and presence in the high-growth data center consulting market.
Financial Guidance and Outlook
For the second quarter of fiscal 2026, revenues are expected to be in the range of $17.35 billion to $18 billion.
Assumes the impact of FX will be approximately positive 3.5%, compared to the second quarter of fiscal 2025.
Q2 guidance reflects an estimated 1% to 5% growth in local currency, including about a 1% impact from the federal business.
For the full fiscal 2026, revenue is expected to be in the range of 2% to 5% growth in local currency over fiscal 2025, including an estimated 1% impact from the federal business.
Excluding the impact of federal, revenue is expected to be an estimated 3% to 6%.
Expect an inorganic contribution of about 1.5%, and continue to expect to invest about $3 billion in acquisitions this fiscal year with the potential to do more.
For adjusted operating margin, continue to expect fiscal year 2026 to be 15.7% to 15.9%, a 10 basis point to 30 basis point expansion over adjusted fiscal 2025 results.
Continue to expect the annual adjusted effective tax rate to be in the range of 23.5% to 25.5%.
Continue to expect 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.
Continue to 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.
Continue to expect to return at least $9.3 billion through dividends and share repurchases, an increase of $1 billion or 12% from fiscal 2025.
