Accenture PLC Earnings - Q2 2025 Analysis & Highlights
Key Takeaways
Accenture's Q4 2025 earnings call highlighted strong financial results, growth in advanced AI, and a focus on reinvention and talent rotation, while providing guidance for fiscal year 2026.
Key financial results:
Revenue grew 4.5% in local currency in Q4. Excluding a 1.5% impact from the federal business, revenue grew 6%.
Adjusted operating margin was 15.1%, a 10 basis point increase compared to last year.
Adjusted EPS in the quarter was $3.03, representing 9% growth.
Free cash flow was $3.8 billion.
New bookings were $21.3 billion for the quarter, representing 6% growth in US dollars and 3% growth in local currency.
FY25 revenue of $69.7 billion, reflecting growth of 7% in local currency.
Adjusted operating margin of 15.6%, a 10 basis point expansion over adjusted FY24 results.
Adjusted earnings per share were $12.93, reflecting 8% growth over adjusted FY24 EPS.
Free cash flow of $10.9 billion, up 26% year-over-year.
Business segment results:
Consulting revenues for the quarter were $8.8 billion, up 6% in US dollars and 3% in local currency.
Managed Services revenues were $8.8 billion, up 8% in US dollars and 6% in local currency, driven by high single-digit growth in technology managed services and mid-single-digit growth in operations.
For the full year, Consulting revenues were $35.1 billion, up 6% in US dollars and 5% in local currency.
Managed Services revenues were $34.6 billion, up 9% in both US dollars and in local currency, driven by 10% growth in technology managed services and 6% growth in operations.
Industry X grew 10% and Song grew 8% in FY25.
Capital allocation:
Returned $1.4 billion to shareholders through repurchases and dividends this quarter.
Repurchased or redeemed 1.6 million shares for $474 million at an average price of $295.45 per share in Q4.
Paid a quarterly cash dividend of $1.48 per share for a total of $922 million in August.
Returned $8.3 billion of cash to shareholders while investing approximately $1.5 billion across 23 acquisitions in FY25.
Industry trends and dynamics:
Technology is front and center for every client.
Advanced AI has taken the mind share of CEOs, the C-suite and boards faster than any technology development in the past two decades.
Value realization has been underwhelming for many, and enterprise adoption at scale is slow other than with digital natives.
The biggest gap between mindshare and adoption is tech and org readiness.
Competitive landscape:
Accenture took share at more than 5x its investable basket.
Accenture continued to be the number one partner for all of its top 10 ecosystem partners by revenue in FY25.
Macroeconomic environment:
The macroeconomic backdrop did not improve over FY24.
No meaningful change, positive or negative, has been seen in the overall market.
Growth opportunities and strategies:
Accenture's strategy has been to be the number one partner for the tech ecosystem.
Launched Reinvention Services, which brings all of Accenture's capabilities into a single unit.
Focusing on delivering results regardless of market conditions by being the most relevant to clients.
Relevance today requires leadership in AI.
Expanded partnerships beyond the top 10 in AI and data.
Developed and are implementing a refreshed robust three-pronged talent strategy to rotate the workforce.
Investing in upskilling Reinventors.
Exiting people where re-skilling is not a viable path for the skills needed.
Continuously identifying areas of how Accenture operates to drive more efficiencies, including through AI.
Contracts are expanding and client relationships are compounding, creating a powerful, sustainable growth engine for Accenture.
Building the digital core remains the biggest growth driver.
Financial Guidance and Outlook:
For Q1 2026, revenues are expected to be in the range of $18.1 billion to $18.75 billion, which assumes a positive FX impact of approximately 1%.
Q1 guidance reflects an estimated 1% to 5% growth, including about a 1.5% impact from the federal business.
For full fiscal year 2026, revenue is expected to be in the range of 2% to 5% growth in local currency, including an estimated 1% to 1.5% impact from the federal business.
Excluding the impact of federal, revenue is expected to be an estimated 3% to 6%.
The inorganic contribution is expected to be about 1.5%, and about $3 billion is expected to be invested in acquisitions this fiscal year.
Adjusted operating margin for fiscal year 2026 is expected to be 15.7% to 15.9%, a 10 to 30 basis point expansion over adjusted fiscal 2025 results.
The annual adjusted effective tax rate is expected to be in the range of 23.5% to 25.5%.
Full-year adjusted diluted earnings per share for fiscal 2026 are expected to be in the range of $13.52 to $13.90, or 5% to 8% growth over adjusted fiscal 2025 results.
Operating cash flow is expected 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.
Free cash flow guidance reflects a very strong free cash flow to net income ratio of 1.2.
At least $9.3 billion is expected to be returned through dividends and share repurchases, an increase of $1 billion or 12% from fiscal 2025.
A quarterly cash dividend of $1.63 per share to be paid on November 14, a 10% increase over last year was declared and $5 billion of additional share repurchase authority was approved.
