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Accenture plc (ACN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $16.66B (+5% USD, +8.5% LC), at the top end of guidance; GAAP EPS was $2.82 (+7% YoY; +2% vs prior-year adjusted), while GAAP operating margin was 13.5% (down 20 bps vs prior-year adjusted) .
  • New bookings were $20.91B (−3% USD, flat LC) with 32 clients >$100M; GenAI bookings were $1.4B and GenAI revenue was ~$0.6B, underscoring AI-driven demand .
  • FY25 guidance was tightened: revenue growth 5–7% LC (from 4–7%), operating margin 15.6–15.7% (from 15.6–15.8%), and EPS to $12.55–$12.79; Q3 revenue outlook is $16.9–$17.5B (3–7% LC) .
  • Key narrative drivers: broad-based growth across markets and work types, stable pricing amid competitive backdrop, and recent uncertainty tied to U.S. Federal procurement reviews and macro/tariff discussions; management emphasized resilient model and large-deal layering as catalysts .

What Went Well and What Went Wrong

What Went Well

  • Broad-based top-line strength: revenues $16.66B (+8.5% LC), with managed services +11% LC and Americas +11% LC; 9 of 13 industries grew high-single-digit or higher .
  • AI traction accelerated: $1.4B in GenAI bookings and ~$0.6B revenue; management highlighted scaling client deployments and ecosystem-led wins (e.g., Telstra JV) .
  • Cash generation and shareholder returns: FCF $2.68B; paid $1.48 dividend (~$929M total) and repurchased 4.0M shares for $1.4B (remaining authorization ~$5.0B) .
    • “We are very pleased to have another milestone quarter in Gen AI with $1.4 billion in new bookings.” — Julie Sweet .

What Went Wrong

  • Margin headwinds: gross margin fell to 29.9% (from 30.9%); operating margin of 13.5% was 20 bps below prior-year adjusted, driven by higher contractor costs and business optimization comps .
  • FX pressure: actual Q2 FX impact (~−3.0%) was worse than the −2.5% assumption from Q1 guidance, modestly dampening USD-reported growth .
  • Federal uncertainty: new administration’s procurement slowdown and GSA contract reviews create near-term visibility risk; management reflected this in ranges for Q3 and FY25 .

Financial Results

Summary Performance vs Prior Periods and Estimates

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Revenue ($USD Billions)$16.41 $17.69 $16.66
GAAP Diluted EPS ($)$2.66 $3.59 $2.82
GAAP Operating Margin %14.3% 16.7% 13.5%
Gross Margin %32.5% 32.9% 29.9%
Free Cash Flow ($USD Billions)$3.18 $0.87 $2.68
New Bookings ($USD Billions)$20.10 $18.70 $20.91

Q2 FY2025 vs Wall Street Consensus (S&P Global)

MetricConsensus*ActualSurprise
Revenue ($USD Billions)16.61*16.66 +$0.05B*
Primary EPS ($)2.81*2.82 +$0.01*
EBITDA ($USD Billions)2.92*2.53*−$0.39B*

Values marked with * retrieved from S&P Global (Capital IQ).

Segment Breakdown – Q2 FY2025

  • By Type of Work
Type of WorkRevenue ($B)YoY USDYoY LC
Consulting$8.28 +3% +6%
Managed Services$8.38 +8% +11%
Total$16.66 +5% +8.5%
  • By Geographic Market
GeographyRevenue ($B)YoY USDYoY LC
Americas$8.55 +9% +11%
EMEA$5.80 +4% +8%
Asia Pacific$2.30 −3% +1%
Total$16.66 +5% +8.5%
  • By Industry Group
IndustryRevenue ($B)YoY USDYoY LC
Communications, Media & Technology$2.73 +3% +6%
Financial Services$3.01 +7% +11%
Health & Public Service$3.61 +8% +10%
Products$5.05 +6% +9%
Resources$2.26 +1% +5%
Total$16.66 +5% +8.5%

KPIs – Q2 FY2025

KPIQ2 FY2025Prior Period
GenAI Bookings ($B)$1.4 $1.2 (Q1 FY25)
GenAI Revenue ($B)~$0.6 ~$0.5 (Q1 FY25)
DSOs (days)48 50 (Q1 FY25)
Cash & Equivalents ($B)$8.49 $8.31 (Q1 FY25 balance)
Dividend per Share ($)$1.48 $1.48 (Q1 FY25)
Shares Repurchased (mm)4.0 2.5 (Q1 FY25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (LC)FY20254%–7% (Dec 19, 2024) 5%–7% (Mar 20, 2025) Raised
FX Impact (USD)FY2025~−0.5% ~−0.5% Maintained
Operating MarginFY202515.6%–15.8% 15.6%–15.7% Narrowed Lower End
Annual ETRFY202522.5%–24.5% 22.5%–24.5% Maintained
Diluted EPS ($)FY2025$12.43–$12.79 $12.55–$12.79 Raised Lower End
Operating Cash Flow ($B)FY2025$9.4–$10.1 $9.4–$10.1 Maintained
Free Cash Flow ($B)FY2025$8.8–$9.5 $8.8–$9.5 Maintained
Property & Equipment ($M)FY2025$600 $600 Maintained
Capital Return ($B)FY2025≥$8.3 ≥$8.3 Maintained
Revenue ($B)Q3 FY2025n/a$16.9–$17.5 New
LC Growth (%)Q3 FY2025n/a3%–7% New
FX ImpactQ3 FY2025n/a~−0.5% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024, Q1 FY2025)Current Period (Q2 FY2025)Trend
GenAI adoption & revenueFY2024 bookings $3B; early deployment; Q1 FY25 GenAI bookings $1.2B; ~$0.5B revenue $1.4B bookings; ~$0.6B revenue; expanding client scale and ecosystem-led wins Accelerating
Pricing & competitivenessCompetitive market; lower pricing in legacy areas noted in Q1 Pricing relatively stable but competitive; margin variability managed via delivery, digitization Stabilizing
Discretionary spendConstrained in Q1; no broad-based improvement; large deals layered in Still constrained; top-end FY guide does not require improvement; ranges allow deterioration Unchanged/Constrained
Federal businessMission-critical work; ~8% of revenue FY24 Procurement slowdown; GSA contract reviews; uncertainty reflected in guidance Elevated uncertainty
Regional trendsEMEA challenged; UK repositioning underway; NA modestly better in Q1 Americas +11% LC; EMEA +8% LC; APAC +1% LC; UK highlighted as coming back Improving in UK; Broad-based growth
Work types mixManaged Services outgrowing Consulting in FY2024/Q1 Managed Services +11% LC; Consulting +6% LC Continued MS outperformance
Industry X & SongIX double-digit growth in Q1; Song high single-digit IX high-single-digit growth; Song double-digit growth Healthy growth

Management Commentary

  • “We continue to deliver on our strategy to lead reinvention for our clients… broad-based growth across markets, industries, and types of work… milestone quarter in Gen AI with $1.4 billion in new bookings.” — Julie Sweet .
  • “Operating margin… includes significant investments in our people and our business… pricing relatively stable… competitive market.” — Angie Park .
  • “Elevated uncertainty… tariffs and consumer sentiment… we remain well positioned with clients because strategies lead to reinvention through tech, data and AI.” — Julie Sweet .

Q&A Highlights

  • Demand/conversion: No evidence of pauses; discussions include potential acceleration on cost programs amid uncertainty .
  • Federal revenue visibility: Specific quarter growth not disclosed; FY/Q3 ranges reflect estimated impacts; organic growth now expected 2–4% for FY25 (inorganic a bit >3%) .
  • Margins: Gross margin pressure tied to contractor costs and prior-year severance; operating margin expansion for FY25 guided at +10–20 bps vs adjusted FY24 .
  • Bookings/book-to-bill: Q2 bookings $20.9B; overall book-to-bill 1.3; 32 clients >$100M .
  • Discretionary spend/pricing: Discretionary still constrained; pricing relatively stable but competitive; layering large transformational deals continues .

Estimates Context

  • Q2 FY25 delivered slight beats vs consensus: revenue $16.66B vs $16.61B*, EPS $2.82 vs $2.81*; EBITDA was below consensus ($2.53B* vs $2.92B*) as mix and contractor costs weighed on gross margin .
  • FY25 guidance raised at lower bounds (revenue growth LC and EPS), implying estimate adjustments upward for top-line and EPS but with margin discipline and competitive pricing tempering expectations .

Values marked with * retrieved from S&P Global (Capital IQ).

Key Takeaways for Investors

  • Broad-based revenue growth with strong MS outperformance and AI traction is intact; large-deal layering supports sustained top-line momentum even with constrained discretionary spend .
  • Margins face near-term pressure (gross margin down ~100 bps YoY) from contractor mix and competitive pricing; management targets modest FY margin expansion via delivery efficiency and digitization .
  • Federal exposure (~8% FY24 revenue) presents risk to visibility; current ranges incorporate uncertainty, limiting downside if reviews/slow procurement persist .
  • FX sensitivity matters: Q2 USD growth impacted by worse-than-assumed FX; monitor FX trajectory into H2 for USD-reported upside/downside .
  • Cash returns remain robust (FCF, dividend, buybacks); balance sheet supports ongoing M&A (now $2–$3B for FY25) to reinforce strategic capabilities, including AI/Industry X .
  • Watch UK/EMEA momentum and APAC recovery; Americas strength continued; industry breadth (FS, H&PS, Products) supports resilience .
  • Near-term trading: modest beats and tightened guidance should support stability; headline risk around federal and macro/tariffs may drive volatility; medium-term thesis centers on AI-enabled reinvention and MS scale. .

Appendix: Additional Relevant Press Releases

  • Accenture and Siemens formed a dedicated business group to scale AI-powered engineering/manufacturing solutions (targeting 7,000 professionals), reinforcing Industry X trajectory and AI embedding across PLM/shops-floor operations .