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12/20 21:31
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates stable financial performance with revenue growth and margin expansion. The shareholder return plan is notably positive, with increased dividends and share repurchases. The Q&A section reveals optimism about AI partnerships and pricing improvements, though there is some uncertainty about the timing of AI revenue impact. Overall, the positive guidance and strategic investments suggest a favorable short-term stock price outlook.
Revenue $18.7 billion, growing 5% in local currency year-over-year. Growth was broad-based across markets and types of work. Excluding the 1% impact from the federal business, revenue grew approximately 6% in local currency.
Bookings $20.9 billion, representing 12% growth in U.S. dollars and 10% growth in local currency year-over-year. This includes 33 clients with quarterly bookings greater than $100 million.
Adjusted Operating Margin 17%, an increase of 30 basis points year-over-year. This reflects significant investments in the business and workforce.
Adjusted EPS $3.94, representing 10% growth year-over-year. This growth reflects strong operational performance and margin expansion.
Free Cash Flow $1.5 billion, reflecting cash generated by operating activities of $1.7 billion, net of property and equipment additions of $157 million.
Managed Services Revenue $9.3 billion, up 8% in U.S. dollars and 7% in local currency year-over-year. Growth was driven by high single-digit growth in technology managed services and mid-single-digit growth in operations.
Consulting Revenue $9.4 billion, up 4% in U.S. dollars and 3% in local currency year-over-year.
Advanced AI Bookings $2.2 billion, nearly doubling from Q1 last year. Revenue from advanced AI reached approximately $1.1 billion this quarter.
Cash Returned to Shareholders $3.3 billion through accelerated share repurchases and dividends. This includes repurchasing 9.5 million shares for $2.3 billion and paying $1 billion in dividends.
Advanced AI Bookings: Achieved $2.2 billion in bookings this quarter, nearly doubling from Q1 last year.
Advanced AI Revenue: Reached $1.1 billion this quarter, marking a significant milestone.
Strategic Acquisitions: Invested $374 million in 6 acquisitions, including AI and data center engineering capabilities.
Market Share: Continued to take significant market share on a rolling 4-quarter basis against closest global competitors.
Geographic Revenue Growth: Revenue grew 4% in the Americas, 4% in EMEA, and 9% in Asia Pacific in local currency.
Revenue Growth: Achieved $18.7 billion in revenue, growing 5% in local currency.
Adjusted Operating Margin: Expanded by 30 basis points year-over-year to 17%.
Free Cash Flow: Generated $1.5 billion in free cash flow this quarter.
Partnership Strategy: 60% of revenue in Q1 came from work with top 10 ecosystem partners, outpacing overall growth.
AI Integration: Advanced AI is now embedded across nearly all operations, moving beyond standalone initiatives.
New Acquisitions: Acquired a majority stake in DLB Associates to expand in the data center professional services market.
Economic Uncertainty: The pace of overall spending and discretionary spend in the market remains at the same levels as the past year, indicating potential challenges in driving growth amidst economic uncertainties.
Federal Business Impact: The federal business is expected to have a 1% negative impact on revenue growth for fiscal 2026, which could affect overall performance.
Business Optimization Costs: The company recorded $308 million in costs related to employee severance in Q1, bringing the total to $923 million over six months. These costs impact operating margin, tax rate, and EPS.
Client Spending Prioritization: Clients are focusing on strategic and large-scale transformational programs, which convert to revenue more slowly, potentially impacting short-term financial performance.
AI Adoption Challenges: Enterprise adoption of advanced AI at scale is still nascent, with most clients requiring foundational work before scaling, which could delay revenue realization from AI projects.
Regulatory and Security Risks: Rising regulatory expectations and the need for robust cybersecurity measures are critical for clients, particularly in sectors like banking, which could increase operational complexity and costs.
Supply Chain and Infrastructure Risks: Modernizing aging infrastructure and managing multiyear, multibillion-dollar capital programs in sectors like transit could pose risks related to cost overruns, delays, and operational inefficiencies.
Revenue Guidance for Q2 FY26: Expected revenues to be in the range of $17.35 billion to $18 billion, reflecting 1% to 5% growth in local currency, including a 1% impact from the federal business. FX impact is expected to be approximately positive 3.5% compared to Q2 FY25.
Full Year FY26 Revenue Growth: Revenue is expected to grow 2% to 5% in local currency over FY25, including a 1% impact from the federal business. Excluding the federal business, growth is estimated at 3% to 6%. Inorganic contribution is expected to be about 1.5%.
Adjusted Operating Margin for FY26: Expected to be in the range of 15.7% to 15.9%, representing a 10 to 30 basis point expansion over adjusted FY25 results.
Adjusted EPS for FY26: Expected to be in the range of $13.52 to $13.90, reflecting 5% to 8% growth over adjusted FY25 results.
Free Cash Flow for FY26: Expected to be in the range of $9.8 billion to $10.5 billion, with a free cash flow to net income ratio of 1.2.
Capital Expenditures for FY26: Property and equipment additions are expected to be approximately $1 billion.
Shareholder Returns for FY26: At least $9.3 billion is expected to be returned through dividends and share repurchases, a 12% increase from FY25.
Quarterly cash dividend: $1.63 per share, a 10% increase over last year, totaling $1 billion in November.
Full fiscal year dividend return: At least $9.3 billion through dividends and share repurchases, a 12% increase from fiscal '25.
Share repurchase in Q1: 9.5 million shares repurchased or redeemed for $2.3 billion at an average price of $245.32 per share.
Accelerated repurchases and dividends: $3.3 billion returned to shareholders in Q1.
The earnings call summary indicates stable financial performance with revenue growth and margin expansion. The shareholder return plan is notably positive, with increased dividends and share repurchases. The Q&A section reveals optimism about AI partnerships and pricing improvements, though there is some uncertainty about the timing of AI revenue impact. Overall, the positive guidance and strategic investments suggest a favorable short-term stock price outlook.
The earnings call highlights strong financial performance with significant growth in key areas like security services and managed services. The guidance for FY '26 remains optimistic, supported by a strong backlog and pipeline. The company's strategic focus on AI and reinvestment of savings into growth areas is viewed positively. Although there are some uncertainties, such as the impact of DOGE and CapEx increase, the overall sentiment from the call is positive, with a focus on expansion and strategic growth initiatives.
Accenture's earnings call reveals strong financial performance with an 8% revenue increase and a 12% EPS growth. The company maintains a resilient model despite minor challenges like attrition. The strategic focus on AI and a solid bookings pipeline bolster optimism. Shareholder returns are robust, with increased dividends and share repurchases. Although some risks exist, such as supply chain challenges and investment risks, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and shareholder-friendly actions.
The earnings call summary presents a mixed picture: strong revenue growth and shareholder returns are offset by margin pressure and geopolitical uncertainties. The Q&A highlights management's lack of clarity on revenue risks and growth specifics, adding to uncertainty. While there is optimism around AI and partnerships, the cautious full-year guidance and forex impacts temper expectations. With no market cap data, a neutral rating is appropriate, reflecting balanced positive and negative factors.
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