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Accenture plc (ACN)·Q3 2025 Earnings Summary

Executive Summary

  • Strong quarter with revenue of $17.73B (+8% YoY USD; +7% LC) and diluted EPS of $3.49, both above guidance; operating margin expanded to 16.8% (+80 bps YoY GAAP, +40 bps vs adjusted prior year) .
  • Wall Street consensus was beaten: revenue +$0.40B (+2.3%) and EPS +$0.17 (+5.0%) versus S&P Global estimates; 21 EPS and 18 revenue estimates contributed to the consensus* [Q3 2025 estimates: GetEstimates].
  • Bookings were $19.7B (-6% YoY USD, -7% LC) with a 1.1 book-to-bill; Generative AI bookings were $1.5B and GenAI revenue exceeded $700M in the quarter, underscoring traction in AI at scale .
  • FY25 outlook raised: LC revenue growth now 6–7%, FX impact +0.2%, EPS $12.77–$12.89, FCF $9.0–$9.7B; Q4 revenue guided to $17.0–$17.6B (LC growth 1–5%) with ~2% federal headwind incorporated .
  • Strategic catalyst: Accenture announced a new “Reinvention Services” unit (effective Sep 1, 2025) to integrate Strategy, Consulting, Song, Technology, and Operations—aimed at faster AI-enabled delivery and growth .

What Went Well and What Went Wrong

What Went Well

  • Revenue, margin, EPS, and FCF strength: $17.73B revenue above adjusted guidance range; operating margin 16.8%; EPS $3.49; free cash flow $3.52B .
  • AI momentum: $1.5B GenAI bookings and >$700M GenAI revenue; data/AI workforce ~75,000, progressing toward 80,000 by FY26 .
  • CEO tone and market share: “broad-based growth and continued expansion of our leadership in Gen AI,” with market share gains against closest global peers; 30 clients with >$100M quarterly bookings .

What Went Wrong

  • Bookings down: $19.7B (-6% USD; -7% LC) indicating softer near-term demand pacing despite 1.1 book-to-bill .
  • Gross margin pressure: 32.9% vs 33.4% prior-year Q3; subs were not a material driver this quarter, but margin mix remains under watch .
  • Federal headwinds: Q4 outlook embeds ~2% headwind from slower procurement and cancellations; APAC softness in chemicals and natural resources noted .

Financial Results

Quarterly Comparison and Trend

MetricQ1 FY25Q2 FY25Q3 FY25
Revenue ($USD Billions)$17.69 $16.66 $17.73
Diluted EPS ($)$3.59 $2.82 $3.49
Operating Margin (%)16.7% 13.5% 16.8%
Gross Margin (%)32.9% 29.9% 32.9%
New Bookings ($USD Billions)$18.70 $20.91 $19.70

Q3 FY25 vs Estimates (S&P Global)

MetricConsensusActualBeat / (Miss)% vs Consensus
Revenue ($USD Billions)$17.32*$17.73 +$0.40*+2.3%*
Diluted EPS ($)$3.323*$3.49 +$0.17*+5.0%*
# of Estimates (EPS / Revenue)21* / 18*———

Values retrieved from S&P Global*

Segment Breakdown – Q3 FY25

CategoryRevenues ($USD Billions)YoY USDYoY LC
Consulting$9.01 +7% +6%
Managed Services$8.72 +9% +9%
Americas$8.97 +8% +9%
EMEA$6.23 +8% +6%
Asia Pacific$2.53 +5% +4%
Comms/Media/Tech$2.91 +5% +5%
Financial Services$3.28 +13% +13%
Health & Public Service$3.78 +7% +7%
Products$5.34 +7% +7%
Resources$2.41 +5% +4%

KPIs – Q3 FY25

KPIValue
Operating Income ($USD Billions)$2.98
Effective Tax Rate (%)24.0%
Operating Cash Flow ($USD Billions)$3.68
Capex ($USD Billions)$0.17
Free Cash Flow ($USD Billions)$3.52
DSOs (days)47
Cash & Cash Equivalents ($USD Billions)$9.6
Dividend per Share ($)$1.48 (paid May 15; declared payable Aug 15)
Share Repurchases (Q3)6.0M shares; $1.8B
Remaining Repurchase Authorization~$3.3B
Total Shares Outstanding~623M

Guidance Changes

MetricPeriodPrevious Guidance (Mar 20, 2025)Current Guidance (Jun 20, 2025)Change
Q4 Revenue ($USD Billions)Q4 FY25—$17.0–$17.6 New
Q4 LC Revenue Growth (%)Q4 FY25—1%–5% New
Q4 FX Impact (%)Q4 FY25—~+2.5% New
LC Revenue Growth (%)FY255%–7% 6%–7% Raised (bottom)
FX ImpactFY25~-0.5% +0.2% Raised
Operating Margin (%)FY2515.6%–15.7% 15.6% Narrowed
Annual ETR (%)FY2522.5%–24.5% 23.0%–24.0% Tightened
Diluted EPS ($)FY25$12.55–$12.79 $12.77–$12.89 Raised
Operating Cash Flow ($USD Billions)FY25$9.4–$10.1 $9.6–$10.3 Raised
Free Cash Flow ($USD Billions)FY25$8.8–$9.5 $9.0–$9.7 Raised
Capex ($USD Millions)FY25$600 $600 Maintained
Capital Return ($USD Billions)FY25≥$8.3 ≥$8.3 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY25)Current Period (Q3 FY25)Trend
GenAI initiativesQ1: $1.2B GenAI bookings; broad-based growth . Q2: $1.4B GenAI bookings; strength across types of work .$1.5B GenAI bookings; >$700M GenAI revenue; deep client case studies across industries .Scaling AI into delivery; bookings growing sequentially with embedded use cases.
Macro & uncertaintyQ1/Q2: FX headwinds/assumptions; resilient growth across markets .Elevated uncertainty noted; resilience via diversified model and large-scale reinvention focus .Cautious on macro; model proving resilient.
Federal/public sectorQ1/Q2: Public sector growth contribution noted .Q4 outlook embeds ~2% federal headwind from slower procurement/cancellations; Q3 impact immaterial .Near-term headwind expected; visibility monitored.
Bookings/compositionQ1: 30 clients >$100M bookings . Q2: ~flat LC bookings; mix Consulting vs Managed Services .$19.7B bookings; book-to-bill 1.1; trailing 12-month book-to-bill strong (overall 1.2; Consulting 1.1) .Solid pipeline; lumpy quarter-to-quarter.
Margins & pricingQ2: Gross margin 29.9% .Gross margin 32.9%; pricing improving; subs not a material driver; focus on operating margin .Margin mix improving with operating discipline.
Reorg to Reinvention Services—Integration to accelerate AI-enabled solutions; leadership changes effective Sep 1, 2025 .Positioned to drive next wave of growth.
Regional/industry trendsQ1/Q2: Americas/EMEA growth; APAC mixed .Americas +9% LC; EMEA +6% LC; APAC +4% LC with chemicals/natural resources softness .Americas leading; APAC mixed.

Management Commentary

  • Julie Sweet (CEO): “I am very pleased with our third quarter fiscal 2025 results... broad-based growth and continued expansion of our leadership in Gen AI.”
  • CFO (Angie Park): “Operating margin of 16.8%... a 40 basis point increase from adjusted operating margin in Q3 of last year... Free cash flow of $3.5 billion and returned $2.7 billion to shareholders.”
  • Strategy pivot: “Starting September 1, we are bringing all of our services... into a single integrated business unit called Reinvention Services... to embed data and AI more easily into our solutions and delivery.”
  • Client case studies highlight AI at scale across Air France-KLM (cloud/data/AI migration), Hyundai Heavy (agentic AI and digital twin), Nationwide (GenAI-powered SOC), Pfizer (agentic AI, zero-ops), Trinseo (AI Refinery use cases), Nestlé (digital twins for content) .

Q&A Highlights

  • Bookings and AI demand: GenAI demand remains very strong; bookings can be lumpy; embedded across solutions .
  • Inorganic vs organic growth: Target ~2% inorganic contribution over time; FY25 ~3%; emphasis on organic growth returning and disciplined M&A economics .
  • Federal outlook: Q4 ~2% headwind from slower procurement and cancellations; Q3 immaterial .
  • Margins: Subs not a material driver in Q3 gross margins; focus remains on operating margin expansion and pricing improvement .
  • Consulting book-to-bill: Trailing 12-month strong (overall 1.2; Consulting 1.1), despite quarterly lumpiness .
  • Technology mix: AI usage embedded across lifecycle; not predominantly greenfield code; pricing improving alongside efficiency gains .

Estimates Context

  • Q3 FY25 beats: Revenue $17.73B vs $17.32B consensus (+$0.40B; +2.3%); EPS $3.49 vs $3.323 (+$0.17; +5.0%)* ].
  • Next quarter: Q4 FY25 revenue guidance $17.0–$17.6B vs consensus revenue $17.36B*; EPS consensus $2.97*; management embeds ~2% federal headwind and ~+2.5% FX tailwind .
  • Implication: Consensus likely to adjust upward for FY25 EPS and FCF given raised guidance and margin trajectory; watch mix (Consulting vs Managed Services) and APAC industry softness for near-term revisions .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Quality beat: Broad-based revenue growth and EPS beat versus consensus with operating margin expansion; FCF robust at $3.52B—supportive of capital returns .
  • Guidance raised: FY25 LC revenue growth (6–7%), EPS ($12.77–$12.89), FCF ($9.0–$9.7B) and positive FX shift to +0.2%—increasing confidence into year-end .
  • AI scaling: $1.5B GenAI bookings and >$700M revenue demonstrate monetization; deep industry case studies suggest durable demand and cross-sell potential .
  • Watch bookings and federal: Bookings declined YoY; Q4 embeds federal headwind—monitor pipeline, large deal cadence, and public sector procurement trends .
  • Margin mix: Gross margin stabilized vs Q2; continued operating discipline and pricing improvements should support EPS resilience .
  • Structural catalyst: Reinvention Services integration (Sep 1, 2025) should accelerate AI-enabled delivery and solution velocity—potential medium-term multiple driver if execution is strong .
  • Near-term setup: Q4 guide brackets consensus; FX tailwind and organic growth re-acceleration into FY26 will be key for estimate momentum and stock narrative .