ACN
Earnings call · May 2025 (Q3 FY25)

Accenture Q3 FY25 earnings call ACN

Jun 20, 2025 Source

Executive summary

Accenture Q3 FY25 — Strong Reinvention Bookings and Gen AI Momentum

Accenture delivered a strong quarter, driven by its reinvention strategy and leadership in Gen AI, with revenue exceeding guidance and robust bookings. The company is implementing a new growth model, 'Reinvention Services,' to integrate its offerings and accelerate AI adoption, aiming to fuel future growth. Despite an elevated level of global economic and geopolitical uncertainty, client demand for large-scale transformations remains high, with a focus on cost efficiencies and AI integration across industries.

Highlights

5
  • New bookings reached $19.7 billion, including 30 clients with quarterly bookings greater than $100 million.

  • Revenue grew 7% in local currency to $17.7 billion, exceeding the guided range.

  • Gen AI bookings hit $1.5 billion in the quarter, contributing to $4.1 billion year-to-date.

  • Operating margin expanded 40 basis points year-over-year to 16.8% (adjusted).

  • Diluted EPS grew 12% year-over-year to $3.49 (adjusted).

Concerns

4
  • New bookings decreased 7% in local currency year-over-year.

  • Gross margin for the quarter was 32.9%, down from 33.4% in Q3 FY24.

  • Federal business is expected to be a 2% headwind to overall growth in Q4 FY25.

  • Acquisition investment for FY25 is expected to be $1 billion to $1.5 billion, a slower pace than prior years due to market conditions.

Guidance & targets

CategoryTargetConfidence
Q4 FY25 Revenue Growth (local currency)
1% to 5%
high materiality
High
FY25 Revenue Growth (local currency)
6% to 7%
high materiality
High
FY25 Inorganic Contribution to Revenue Growth
about 3%
medium materiality
High
FY25 Acquisition Investment
$1 billion to $1.5 billion
medium materiality
High
FY25 Operating Margin
15.6%
high materiality
High
FY25 Annual Effective Tax Rate
23% to 24%
low materiality
High
FY25 Diluted EPS
$12.77 to $12.89
high materiality
High
FY25 Operating Cash Flow
$9.6 billion to $10.3 billion
medium materiality
High
FY25 Property and Equipment Additions
approximately $600 million
low materiality
High
FY25 Free Cash Flow
$9 billion to $9.7 billion
high materiality
High
FY25 Cash Return to Shareholders
at least $8.3 billion
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Consulting
Revenue grew 6% in local currency.
$9 billion7% in USD
Managed Services
Revenue grew 9% in local currency, driven by double-digit growth in technology managed services (application and infrastructure) and mid-single-digit growth in operations.
$8.7 billion9% in USD
Americas
Growth led by Banking and Capital Markets, Industrial, and Health. Revenue growth driven by the United States.
9% in local currency
EMEA
Growth led by Life Sciences, Banking and Capital Markets, and Insurance. Revenue growth driven by the United Kingdom, Germany, and Italy.
6% in local currency
Asia Pacific
Growth driven by Public Service, Banking, Capital Markets, and Insurance, partially offset by a decline in Chemicals and Natural Resources. Revenue growth led by Japan and Australia, partially offset by a decline in Singapore.
4% in local currency

Operational metrics

Revenue
$17.7 billion 8% in USD, 7% in local currency
Q3 FY25

Above guided range, with FX impact approximately positive 0.5%.

Gen AI Bookings
$1.5 billion
Q3 FY25

Another milestone quarter for Gen AI bookings.

Gen AI Revenue
$700 million
Q3 FY25

Revenue generated from Gen AI initiatives.

Gen AI Bookings
$4.1 billion
YTD Q3 FY25

Total Gen AI bookings year-to-date.

Gen AI Revenue
$1.8 billion
YTD Q3 FY25

Total Gen AI revenue year-to-date.

Training Hours
38 million up 18%
YTD Q3 FY25

Investment in people development.

Data and AI Workforce
approximately 75,000
Q3 FY25

Progressing towards a goal of 80,000 by end of FY26.

Brand Value
$103.8 billion up 27% from $81.9 billion
Q3 FY25

Ranked #20 on Kantar BrandZ's list of top 100 most valuable global brands.

Non-GAAP operating margin
16.8% up 40 bps
Q3 FY25

Compared to adjusted operating margin last year, includes significant investments.

Non-GAAP EPS
$3.49 up 12%
Q3 FY25

Compared to adjusted EPS last year.

Share Repurchases
$1.8 billion
Q3 FY25

Part of cash returned to shareholders.

Share Repurchase Authority Remaining
$3.3 billion
as of May 31

Remaining authorization for share repurchases.

Quarterly Cash Dividend
$1.48 per share 15% increase over last year
Q3 FY25

Paid in May.

Quarterly Cash Dividend Declared
$1.48 per share 15% increase over last year
Q4 FY25

Declared by Board of Directors.

Acquisition Investment
$789 million
YTD Q3 FY25

Primarily attributed to 15 acquisitions.

Effective Tax Rate
24% vs adjusted 25.5% last year
Q3 FY25

Compared with adjusted effective tax rate of 25.5% for Q3 FY24.

Cash and investments balance
$9.6 billion vs $5 billion at August 31
as of May 31

Cash balance at quarter end.

Headcount
790,000 up 5% year-over-year
Q3 FY25

Total global headcount.

Utilization
92%
Q3 FY25

Ticked up even with revenue above guided range.

Industry KPIs

MetricValueDetails
Headcount dso47 days days
Customer logo metrics30 clients
Large customer cohorts30 clients
Bookings tcv book to bill$19.7 billion USD
Genai ai book of business$1.5 billion USD

Orderbook & backlog

New Bookings $19.7 billion Q3 FY25

6% decrease in USD, 7% decrease in local currency

Overall Book-to-Bill 1.1 Q3 FY25
Consulting Bookings $9.1 billion Q3 FY25
Consulting Book-to-Bill 1.0 Q3 FY25
Managed Services Bookings $10.6 billion Q3 FY25
Managed Services Book-to-Bill 1.2 Q3 FY25
Trailing 12 Months Book-to-Bill 1.2 Q3 FY25
Consulting Trailing 12 Months Book-to-Bill 1.1 Q3 FY25

Deals & partnerships

TalentSprint Acquisition to expand LearnVantage capabilities.

Enhances ability to deliver industry-relevant certifications and tailored upskilling and reskilling programs in India.

Ascendiant Acquisition to expand LearnVantage capabilities.

Enhances ability to deliver industry-relevant certifications and tailored upskilling and reskilling programs in the United States.

Yumemi Acquisition to strengthen Song's capabilities.

Strengthens Song's ability to craft, launch, and scale digital products in Japan.

Soben Acquisition to expand Industry X capabilities.

Expands infrastructure and capital projects expertise globally and across Europe, particularly in Scotland.

Air France-KLM Multiyear partnership for digital transformation. multiyear

Helping migrate legacy applications to the cloud, deploying over 400 apps, and setting the stage for growth through continuous reinvention with data and AI.

Fincantieri Partnership to accelerate digital transformation in the maritime industry.

Building Navis Sapiens, an AI-powered ecosystem for smarter, more integrated ships, including application services, a secure AI platform, and a marketplace. The first AI-equipped ship is expected to launch by end of 2025.

Nationwide Building Society Partnership to transform cybersecurity operations.

Built a cloud-based Gen AI-powered security information and event management capability, migrating hundreds of terabytes of security logs to achieve a streamlined security infrastructure.

Pfizer Deepening partnership to lead reinvention using Gen AI and Agentic technologies.

Using GenWizard platform to embed AI into technology managed services, integrating AI refinery components, and training employees on Agentic AI through LearnVantage services.

Tronox Partnership to reimagine operations using AI-driven solutions.

Building a cloud-based standardized data foundation and launching new services based on high-value Gen AI and agentic use cases for productivity, site efficiency, and workforce enablement.

Vale Partnership to transform environmental licensing program.

Expanded 'smart licensing' platform using generative AI to scan application materials and environmental studies for compliance, tailoring checklists, automating document validation, and deploying AI-powered chatbots.

Nestle Collaboration to accelerate digital transformation using AI-powered digital twins.

Developed a secure cloud-based platform with Accenture Song to create 3D virtual replicas of physical products, streamlining content creation and localization for personalized, high-quality content.

Fortune 100 high-tech company Partnership to transform sales and marketing functions.

Shaping a future-ready model with Accenture Song that integrates sales and marketing, accelerating speed to market, increasing efficiency through automation and shared services, and driving value through Gen AI and Agentic architecture.

Risks & headwinds

Elevated global economic and geopolitical uncertainty Ongoing

Significantly elevated level compared to calendar year 2024

Mitigation:Focusing on clients' needs for large-scale reinvention, leveraging diversified portfolio and integrated services to build resilience and deliver results.

Federal business headwind Q4 FY25

Approximately 2% headwind to overall growth

Mitigation:Anticipated impact included in Q4 guidance, stemming from slower procurement and cancellations.

What to watch in Q4 FY25

Q4 FY25 Revenue Growth (local currency)

next quarter
Current 7% (Q3 FY25)
Target 1% to 5%

Why it matters

This will indicate the immediate impact of the federal business headwind and overall market conditions on Accenture's top-line growth.

For the fourth quarter of fiscal '25, we expect revenues to be in the range of $17 billion to $17.6 billion. This assumes the impact of FX will be approximately positive 2.5% compared to the fourth quarter of fiscal '24 and reflects an estimated 1% to 5% growth in local currency.

Q&A highlights

Are there any changes in talent retention or delivery given recent headcount numbers and leadership departures, especially with the reorg?

Attrition ticked up slightly but remains within normal ranges. Leadership departures are expected as Accenture leaders are in high demand, and the company has a deep bench of talent. The reorg is a strategic move for growth, not cost-cutting.

“Attrition ticked up a little bit this quarter, but as you know, that goes up and down. It's well within kind of what we normally see. And Tien-Tsin, over time, we have leaders who leave Accenture and pursue other opportunities. Our leaders are in demand, as you might imagine. And we have a deep bench of leaders.”

asked by Tien-Tsin Huang · answered by Julie T. Sweet

3 min read 6 chapters

Detailed narrative

Market Share Gains and Reinvention Strategy

Accenture continues to gain market share on a rolling four-quarter basis against its global publicly traded competitors, demonstrating the effectiveness of its strategy to be a reinvention partner of choice. The company's ability to pivot quickly to meet client needs, particularly in challenging markets, is attributed to its diversified portfolio, long-standing client relationships, and integrated service offerings across strategy, consulting, technology, operations, and Song. This agility allows Accenture to focus on large-scale transformations that drive significant client value.

Gen AI Leadership and Impact

Accenture reported another milestone quarter for Gen AI, with $1.5 billion in bookings and over $700 million in revenues, bringing year-to-date Gen AI bookings to $4.1 billion and revenue to $1.8 billion. Gen AI is described as a catalyst for reinvention, creating new opportunities and enabling clients to meet challenges in innovative ways. The company emphasizes that Gen AI alone is a tool, and the substantial work required to use it at scale is where Accenture's expertise in data, enterprise functions, industries, and change management comes into play.

Strategic Investments and Acquisitions

Accenture continues to invest significantly in its business, including $297 million across four strategic acquisitions this quarter. These acquisitions, such as TalentSprint and Ascendiant, enhance LearnVantage capabilities for upskilling and reskilling. Yumemi strengthens Song's digital product craft, and Soben expands Industry X's infrastructure and capital projects expertise. Year-to-date, Accenture has invested $789 million in 15 acquisitions, aligning with its strategy to scale and expand capabilities, though the pace has been slower this year due to market conditions.

Talent Development and Workplace Recognition

The company invested in its people with 38 million training hours year-to-date, an 18% increase over last year. The data and AI workforce expanded to approximately 75,000, progressing towards a goal of 80,000 by the end of FY26. Accenture was recognized as the #6 World's Best Workplace by Great Place to Work and earned the #20 position on Kantar BrandZ's list of top 100 most valuable global brands, with brand value increasing 27% to $103.8 billion. These efforts underscore a commitment to talent and community development.

New Growth Model: Reinvention Services

Effective September 1, Accenture is integrating all its services—strategy, consulting, Song, technology, and operations—into a single business unit called Reinvention Services. This change aims to deliver leading solutions faster, embed data and AI more easily into offerings, and facilitate talent development as technology evolves. The new model is driven by the market's inflection point and Accenture's belief that a different operating structure will fuel future growth, building on past successful growth model transformations.

Client Examples Highlight Broad Capabilities

Accenture showcased diverse client engagements, including digital transformation for Air France-KLM (cloud migration, data, AI), accelerating digital transformation for Fincantieri (AI-powered ecosystem for shipbuilders), enhancing cybersecurity for Nationwide Building Society (cloud-based Gen AI security), and transforming operations for Pfizer (Gen AI and Agentic technologies). Other examples include Tronox (AI-driven solutions for manufacturing), Vale (Gen AI for environmental licensing), and Nestle (AI-powered digital twins for content creation), demonstrating the breadth of Accenture's impact across industries and functions.

AI-generated summary of the company's earnings call. Not investment advice.