Q1 2024 Accenture PLC Earnings Call

Thank you all for standing by welcome to Accenture as first quarter fiscal 2024 earnings call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you wish to ask a question. Please press one then zero now on your phone.

Thank you all for standing by. Welcome to Accenture's first quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question, please press 1 then 0 now on your phone. If you should require assistance during the call, please press star then 0. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Katie O'Connor, managing director, head of investor relations. Please go ahead.

Should require assistance during the call. Please press Star then zero as a reminder, this conference is being recorded I would now like to turn the conference over to our host Katy O'connor managing director head of Investor Relations. Please go ahead.

Thank you, operator and thanks everyone for joining us today on our first quarter fiscal 2024 earnings announcement. As the operator just mentioned, I'm Katie O'Connor, Managing Director, Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chair and Chief Executive Officer, and Casey McClure, our Chief Financial Officer.

Thank you operator, and thanks, everyone for joining us today on our first quarter fiscal 'twenty 'twenty four earnings announcement as the operator, just mentioned I'm Katy O'connor managing director head of Investor Relations on today's call you will hear from Julie Sweet, our chair and Chief Executive Officer, and KC Mcclure, our chief.

Katy O'connor: Financial Officer, we hope you've had an opportunity to review the news release, we issued a short time ago. Let me quickly outline the agenda for today's call Julie will begin with an overview of our results KC will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the first quarter.

We hope you've had an opportunity to review the news release we issued a short time ago.

Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results. Casey will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the first quarter.

Julie will then provide a brief update on our market positioning before KC provides our business outlook for the second quarter and full fiscal year 2024. We will then take your questions before Julie provides a wrap up at the end of the call.

Katy O'connor: Julie will then provide a brief update on our market positioning before KC provides our business outlook for the second quarter and full fiscal year 2024. We will then take your questions before Julie provides a wrap up at the end of the call.

Some of the matters we'll discuss on this call, including our business outlook, are forward-looking, and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call.

Julie Sweet: Some of the matters, we'll discuss on this call, including our business outlook are forward looking and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our annual report on Form 10-K, and quarterly reports on Form 10-Q and other SEC.

Julie Sweet: E filings.

Julie Sweet: These risks and uncertainties could cause actual results to differ materially from those expressed in this call.

Julie Sweet: During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures, where appropriate to GAAP in our news release or in the Investor Relations section of our website at Accenture Dot com as always accenture.

Speaker Change: <unk> has no obligation to update the information presented on this conference call now, let me turn the call over to Julie.

Julie Sweet: Thank you Katie and everyone joining and thanks to our 743000 people around the world for their incredible dedication and commitment every day, which is how we are able to consistently deliver 360 degree value for all our stakeholders.

Thank you, Katie, and everyone joining. And thanks to our 743,000 people around the world for their incredible dedication and commitment every day, which is how we are able to consistently deliver 360-degree value for all our stakeholders.

I am pleased that we delivered on our commitments this quarter while continuing to invest significantly in strategic areas to drive the next waves of growth, including extending our early leadership in generative AI. And we did so against a macro backdrop that continues to be challenging.

Julie Sweet: I am pleased that we delivered on our commitments this quarter, while continuing to invest significantly in strategic areas to drive the next waves of growth, including extending our early leadership in generative AI and we did sell against the macro backdrop that continues to be challenging.

Starting with our financial results, our bookings were $18.4 billion, representing 12% growth in local currency.

Julie Sweet: Starting with our financial results, our bookings were $18 $4 billion, representing 12% growth in local currency.

We had 30 clients with quarterly bookings greater than $100 million in the quarter, and over half were in North America, representing the trust our clients have in us to be at the center of their major programs, spending and ongoing reinvention.

Julie Sweet: We had 30 clients with quarterly bookings greater than $100 million in the quarter and over half were in North America, representing the trust our clients have enough to be at the center of their major programs spending and ongoing reinvention.

We delivered revenues of $16.2 billion for the quarter at the top end of our FX adjusted range representing growth, 1% growth in local currency. We continued to take market share. As expected, we continued to see lower discretionary spend, which particularly impacts our consulting type of work, as well as slower decision making, and our CMT industry group continues to be challenged.

Julie Sweet: We delivered revenues of $16 $2 billion for the quarter at the top end of our FX adjusted range representing growth 1% growth in local currency, we continued to take market share.

As expected, we continued to see lower discretionary spend which particularly impacts our consulting type of work as well as slower decision, making and our CMT industry group continues to be challenged.

We remain on track with the business optimization actions we announced in March to reduce structural costs to create greater resilience. And finally, we expanded adjusted operating margin by 20 basis points and delivered adjusted EPS growth of 6% while continuing to invest in our business and our people.

Julie Sweet: We remain we remain on track with the business optimization actions, we announced in March to reduce structural costs and create greater resilience and finally, we expanded adjusted operating margin by 20 basis points and delivered adjusted EPS growth of 6%, while continuing to invest in our business and our people.

Julie Sweet: Turning now to our investments we closed 12 acquisitions this quarter for a total of $788 million in strategic areas across our geographic markets.

We closed 12 acquisitions this quarter for a total of $788 million in strategic areas across our geographic mark.

In North America, we are continuing to build out our new growth area of capital projects, an $88 billion addressable market in North America, which we entered in August with the acquisition of answer advisory. In Q1, we added ComTech, a consulting and program management company for infrastructure projects in Canada. We also invested in the next digital frontier with our supply chain acquisition of the Shelby Group.

In North America, we are continuing to build out our new growth area of capital projects and 88 billion dollar addressable market in North America, which we entered in August with the acquisition of answer Advisory in Q1, we added Comtech, a consulting and program management company for infrastructure projects in Canada, we.

Julie Sweet: Also invested in the next digital frontier with our supply chain acquisition of the Shelby group, we expanded our cloud capabilities with the acquisitions of Osselet consulting and encapsulate and we invested in digital marketing in the health care industry with the acquisition of concentric life.

We expanded our cloud capabilities with the acquisitions of Ocelot Consulting and Encapsulate. And we invested in digital marketing in the healthcare industry with the acquisition of Concentric Life.

In EMEA, we expanded our cybersecurity capabilities with the acquisition of InnoTech in Spain, enhanced our business process services in the insurance industry with the acquisition of On Service Group in Germany, and invested in digital healthcare and talent with the acquisitions of Nautilus Consulting and the storytellers in the UK.

Julie Sweet: In EMEA, we expanded our cyber security capabilities with the acquisition of Intertek in Spain enhanced our business process services in the insurance industry with the acquisition of on service group in Germany, and invested in digital health care and talent with the acquisitions of novel is consulting and the storytellers in the U K.

Finally, in growth markets, we are focused on the cloud opportunity with the acquisition of Solnet in New Zealand, along with cybersecurity with the acquisition of NEMO in Mexico, and on digital marketing services with the SONG acquisition of Signal in Japan.

Julie Sweet: Finally in growth markets, we are focused on the cloud opportunity with the acquisition of Sone that in New Zealand, along with cyber security with the acquisition of Nemo in Mexico and on digital marketing services with the song acquisition of signal in Japan.

Our ability to invest at scale to fuel our organic growth is a competitive advantage. For example, in EMEA we are focusing on pivoting our CMT business. We are investing with Vodafone to create a strategic partnership to commercialize its market-leading shared services operations and unlock new sources of growth and efficiency, enhanced speed to market, and new customer opportunities for their operating companies and partner markets.

Julie Sweet: Our ability to invest at scale to fuel our organic growth is a competitive advantage. For example in EMEA. We are focusing on pivoting our CMT business, we are investing with Vodafone to create a strategic partnership to commercialize its market, leading shared services operations and unlock new sources of gas.

Julie Sweet: Growth and efficiency enhanced speed to market and new customer opportunities for their operating companies and partner markets together, we plan to create a new data and AI driven shared services model and the scaled commercially driven and more efficient organization with higher quality services and enhanced speed to market for its portfolio of.

Together, we plan to create a new data and AI-driven shared services model and a scaled, commercially-driven and more efficient organization with higher quality services and enhanced speed to market for its portfolio of offers.

Julie Sweet: <unk> the new unit will utilize Accenture is world class technology transformation and managed services such as its digital solutions and platforms and deep AI expertise. It will also tap into a well known learning capabilities to continuously create new skilling and career paths for our.

The new unit will utilize Accenture's world-class technology, transformation, and managed services, such as its digital solutions and platforms, and deep AI expertise. It will also tap into our well-known learning capabilities to continuously create new skilling and career paths for its people. This move speaks to Vodafone's ambition to work in new ways, reduce structural complexity, reinvent their company, and the industry.

Affords people this move speaks to Vodafone ambition to work in new ways reduce structural complexity reinvent their company and the industry.

And of course, we continue to invest in learning for our people with approximately 8 million training hours in the quarter, representing an average of 12 hours per person.

Julie Sweet: And of course, we continued to invest in learning for people with approximately 8 million training hours in the quarter, representing an average of 12 hours per person.

Julie Sweet: Turning to generative AI, our growth and investments.

turning to generative AI, our growth and investment.

We continue to take an early leadership position in Gen AI, which will be an important part of the reinvention of our clients in the next decade. Last quarter, we shared that we had sold approximately 300 projects with $300 million in sales in all of FY 23.

We continue to take an early leadership position in journey, II, which will be an important part of the reinvention of our clients in the next decade.

Julie Sweet: Last quarter, we shared that we had sold approximately 300 projects with $300 million in sales in all of FY2023.

demand continued to accelerate in Q1 with over $450 million in gen A.I. sales.

Demand continued to accelerate in Q1 with over $450 million and Jenny I sales.

Julie Sweet: As you know we are investing $3 billion in AI over three years for many of our clients 2023 was a year of generative AI experimentation. We are now focusing on helping our clients in 2024 realized value at scale. We're excited about the recent launch of our specialized services to help companies.

As you know, we are investing $3 billion in AI over three years. For many of our clients, 2023 was a year of generative AI experimentation.

We are now focusing on helping our clients in 2024 realize value at scale. We're excited about the recent launch of our specialized services to help companies customize and manage foundation models.

Julie Sweet: Customized and manage foundation models.

we're seeing that the true value of generative AI is to deliver on personalization and business relevance. This is driven by context and accuracy.

Julie Sweet: We're seeing that the true value of generate AI is to deliver on personalization and business relevance. This is driven by context and accuracy.

Julie Sweet: Data read it readiness, along with foundation model choices and customization or some of the most important steps in decisions that companies will make in the next year as they pursue value our clients are going to use an array of models to achieve their business objectives. Our proprietary switchboard allows a user to select the combination of models to address business.

data readiness along with foundation model choices and customization are some of the most important steps and decisions that companies will make in the next year as they pursue value. Our clients are going to use an array of models to achieve their business objectives.

Our proprietary switchboard allows the user to select the combination of models to address business context or factors like cost or accuracy. And we will offer rigorous training and certification programs to organizations using these new services to customize and scale GNAI solutions and transform every link in their value chain.

Julie Sweet: Context are factors like cost or accuracy, and we will offer a rigorous training and certification programs to organizations using these new services to customize and scale journey II solutions and transform every link in their value chain.

Julie Sweet: We are also investing in AI acquisitions. For example, we recently announced our intent to acquire Macoma and Italy based firm that helps companies advance their uses of AI and generative AI technologies with this acquisition, we will add 90 experienced AI professionals, many specializing in generative AI along with the X.

We are also investing in AI acquisitions. For example, we recently announced our intent to acquire Amagama, an Italy-based firm that helps companies advance their uses of AI and generative AI technology.

With this acquisition, we will add 90 experienced AI professionals, many specializing in generative AI, along with the expertise that includes engineering, mathematics, economics, historians, philosophers, and designers, who will join our growing network of professionals in our Advanced Center for AI.

Julie Sweet: With expertise that includes engineering athletics economics historians philosophers and designers, who will join our growing network of professionals in our advanced center for AI.

And we are progressing towards our goal of doubling our deeply skilled data and AI practitioners from 40,000 to 80,000 with an additional 5,000 practitioners as of Q1.

Julie Sweet: And we are progressing towards our goal of doubling our deeply skilled data and AI practitioners from 40000 to 80000 with an additional 5000 practitioners as of Q1.

Julie Sweet: Finally, a few additional highlights the 360 degree value that we created this quarter. We recently achieved our highest brand value and ranked to date on interbrand prestigious best Global brands list, increasing to $21 $3 billion in ranking number 30.

Finally, a few additional highlights of the 360-degree value that we created this quarter. We recently achieved our highest brand value and ranked to date on Interbrand's prestigious Best Global Brands list, increasing to $21.3 billion and ranking number 30.

We jumped from number 17 to number 10 on the 2023 world's best workplaces list by fortune and great place to work. This recognition is particularly noteworthy because it is based on feedback from our people.

Julie Sweet: We jumped from number 17 to number 10 on the 2023 worlds best workplaces list by Fortune and great place to work. This recognition is particularly noteworthy because it is based on feedback from our people.

Julie Sweet: We were recognized for the seventh year in a row on the Wall Street Journal list of Best managed companies for excellence in customer satisfaction employee engagement and development innovation, social responsibility and financial strength and we also received the top score for social responsibility and are among the top 10 for customer satisfaction.

We were recognized for the seventh year in a row on the Wall Street Journal list of best managed companies for excellence in customer satisfaction, employee engagement, and development, innovation, social responsibility, and financial strength. And we also received the top score for social responsibility and are among the top ten for customer satisfaction.

We continue to lead in our ability to attract people with different backgrounds, different perspectives, and different lived experiences.

Julie Sweet: We continue to lead in our ability to attract people with different backgrounds different perspectives in different lived experiences. Our success is reflected in the top score on the human rights campaign's corporate equality index in the U S for the 16th consecutive year for leading equitable workplace policies practices and benefits for Elbit LGBTQ.

Our success is reflected in the top score on the Human Rights Campaign Corporate Equality Index in the U.S. for the 16th consecutive year for leading equitable workplace policies, practices, and benefits for LGBTQ plus people.

Julie Sweet: <unk> people and.

And today, we're proud to present an update to our 360-degree value reporting experience, which is available on our website because we believe that transparency builds trust and helps us all make more progress.

Julie Sweet: And today, we are proud to present, an update to our 360 degree value reporting experience, which is available on our website because we believe that transparency builds trust and helps us all make more progress.

Julie Sweet: Over to you Casey. Thank you Julie happy holidays to all of you and thanks for taking the time to join US on today's call. We are pleased with our Q1 results, which were in line with our expectations and include continued investments at scale to strengthen our position as a leader in the market. Once again, our results illustrate our ability to manage our business.

Thank you, Julie. Happy holidays to all of you, and thanks for taking the time to join us on today's call. We are pleased with our Q1 results, which were in line with our expectations and include continued investments at scale to strengthen our position as a leader in the market. Once again, our results illustrate our ability to manage our business with rigor and discipline and deliver value for our shareholders. So let me begin by summarizing a few of the highlights for the quarter.

Casey: With rigor and discipline and deliver value for our shareholders. So let me begin by summarizing a few of the highlights for the quarter.

Revenues grew 1% local currency with mid-single-digit growth or higher in five of our 13 industries, including public service, industrial, utilities, health, and energy. As expected, we saw continued pressure in our CMT industry group.

Casey: Revenues grew 1% local currency with mid single digit growth or higher in five of our 13 industries, including public service industrial utilities health and energy as expected. We saw continued pressure in our CMT industry group.

And we continue to take markets here. As a reminder, we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of any significant acquisitions through the date of their last publicly available results on a rolling four-quarter basis.

Casey: And we continue to take market share.

Casey: As a reminder, we express we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to their adjusted to exclude the impact of any significant acquisitions through the date.

Their last publicly available results on a rolling four quarter basis.

We delivered adjusted EPS in the quarter of $3.27, reflecting 6% growth over EPS last year. Adjusted operating margin was 16.7% for the quarter, an increase of 20 basis points over Q1 last year, and includes significant investments in our people and our business.

Casey: We delivered adjusted EPS in the quarter of $3 27.

Casey: Reflecting 6% growth over EPS last year adjusted operating margin was 16, 7% for the quarter, an increase of 20 basis points over Q1 last year and includes significant investments in our people and our business.

Casey: Finally, we delivered free cash flow of $430 million and returned $2 billion to shareholders through repurchases and dividends. We also invested $788 million in acquisitions across across 12 transactions in the quarter.

Finally, we delivered free cash flow of $430 million and returned $2 billion to shareholders through repurchases and dividends. We also invested $788 million in acquisitions across 12 transactions in the quarter.

With those high-level comments, let me turn to some of the details starting with new booking.

Casey: With those high level comments, let me turn to some of the details starting with new bookings.

Casey: New bookings were $18 4 billion for the quarter, representing 14% growth in U S dollars and 12% growth in local currency with a book to Bill of one one consulting bookings were $8 6 billion with a book to Bill of 1.0 managed services bookings were $9 8 billion with a book to Bill of one three.

New bookings were $18.4 billion for the quarter, representing 14% growth in U.S. dollars and 12% growth in local currency, with a book-to-bill of 1.1. Consulting bookings were $8.6 billion, with a book-to-bill of 1.0. Managed services bookings were $9.8 billion, with a book-to-bill of 1.3.

Turning now to revenues. Revenues for the quarter were $16.2 billion, a 3% increase in U.S. dollars and 1% local currency. And we're at the top end of our guided range, adjusted for our foreign exchange tailwind of approximately 1.5% compared to the 2.5% estimate provided last quarter.

Casey: Turning now to revenues revenues for the quarter were $16 2, billion% to 3% increase in U S dollars and 1% local currency and we're at the top end of our guided range adjusted for foreign exchange tailwind of approximately one 5% compared to the two 5% estimate provided last quarter.

Consulting revenues for the quarter were $8.5 billion, flat U.S. dollars, and a decline of 2% in local currency. Managed services revenues were $7.8 billion, up 6% U.S. dollars, and 5% local currency. Taking a closer look at our service dimensions, technology services grew mid-single digits, operations was flat, and strategy and consulting declined mid-single digits.

Casey: Consulting revenues for the quarter were $8 5 billion flat in U S dollars and a decline of 2% in local currency.

Casey: Managed services revenues were $7 8 billion up 6% in U S dollars and 5% local currency.

Casey: A closer look at our service dimensions technology services grew mid single digits operations was flat and strategy consulting declined mid single digits.

Turn into our geographic markets. In North America, revenue declined 1% local currency. Growth was led by public service, offset by declines in communications and media, software and platforms, and banking and capital markets. Before I continue, I want to highlight that for this fiscal year 24, we have reorganized our geographic segments.

Casey: Turning to our geographic markets in North America revenue declined 1% local currency growth was led by public service offset by declines in communications and media software and platforms and banking and capital markets before I continue I want to highlight that for this fiscal year 'twenty four we have reorganized our geographic segments.

Europe is now EMEA and includes the Middle East and Africa which were previously included in growth markets.

Casey: Europe is now EMEA and includes the Middle East and Africa, which were previously included in growth markets.

The reclassification for prior years can be found in our investor relations website.

Casey: The reclassification for prior years can be found in our Investor Relations website.

Casey: In EMEA revenues grew 2% local currency led by growth in public service and banking capital markets, partially offset by decline in communications and media.

In AMIA, revenues grew 2% local currency led by growth in public service and banking and capital markets, partially offset by decline in communications and media. Revenue growth was driven by Italy, Austria, and France, partially offset by a decline in the United Kingdom.

Casey: Revenue growth was driven by Italy, Austria, and France, partially offset by a decline in the United Kingdom.

In growth markets, we deliver 5% revenue growth and local currency driven by growth in chemicals and natural resources, public service, and banking and capital markets. Revenue growth was led by Japan.

Casey: In growth markets, we delivered 5% revenue growth in local currency driven by growth in chemicals, and natural resources public service and banking capital markets revenue growth was led by Japan.

Moving down the income statement gross margin for the quarter was 33, 6% compared to 32, 9% for the first quarter last year.

Moving down the income statement, gross margin for the quarter was 33.6% compared to 32.9% for the first quarter last year.

Sales and marketing expense for the quarter was 10.5% compared with 9.8% for the first quarter last year.

Casey: Sales and marketing expense for the quarter was 10, 5% compared with nine 8% for the first quarter last year.

General and administrative expense was 6.4% compared to 6.6% for the same quarter last year.

Casey: General and administrative expense was six 4% compared to six 6% for the same quarter last year.

Before I continue, I want to note that in Q1, we recorded $140 million in costs associated with our business optimization actions, which decreased operating margin by 90 basis points and EPS by 17 cents. The following comparisons exclude these impacts and reflect adjusted results.

Casey: Before I continue I want to note that in Q1, we recorded $140 million of costs associated with our business optimization actions, which decreased operating margin by 90 basis points and EPS by <unk> 17.

Casey: The following comparisons exclude these impacts and reflect adjusted results.

Adjusted operating income was $2.7 billion in the first quarter, reflecting a 16.7% operating margin and increase of 20 basis points from operating margin in Q1 last year.

Casey: Adjusted operating income was $2 7 billion in the first quarter, reflecting a 16, 7% operating margin an increase of 20 basis points from operating margin in Q1 last year.

Casey: Our adjusted effective tax rate for the quarter was 23, 2% compared with an effective tax rate of 23, 3% for the first quarter last year.

Our adjusted effective tax rate for the quarter was 23.2%, compared with an effective tax rate of 23.3% for the first quarter last year.

adjusted diluting earnings per share were $3.27 compared with diluted EPS of $3.08 in the first quarter last year.

Casey: Adjusted Diluting earnings per share were $3 27.

Casey: Compared with diluted EPS of $3.08 in the first quarter last year.

Day service outstanding were 49 days compared to 42 days last quarter and 48 days in the first quarter of last year.

Casey: Days service Outstanding were 40, 49 days compared to 42 days last quarter and 48 days in the first quarter of last year.

Pre-cash flow for the quarter was 430 million, resulting from cash generated by operating activities of 499 million and appropriating equipment additions of 69 million. Our cash balance at November 30th was 7.1 billion compared with 9 billion at August 31st.

Free cash flow for the quarter was $430 million, resulting from cash generated by operating activities of $499 million net of property and equipment additions of $69 million or.

Casey: Our cash balance at November 30 was $7 1 billion compared with 9 billion at August 31.

with regards to our ongoing objective to return cash to shareholders. In the first quarter, we repurchased or redeemed 3.8 million shares for $1.2 billion at an average price of $311.90 per share. At November 30th, we had approximately $5.4 billion of share repurchase authority remaining.

Casey: With regards to our ongoing objective to return cash to shareholders in the first quarter, we repurchased or redeemed three 8 million shares for $1 2 billion.

Casey: At an average price of $311 90 per share at November 30, we had approximately $5 4 billion of share repurchase authority remaining.

Also in November , we paid a quarterly cash dividend of $1.29 per share for a total of $810 million. This represents a 15% increase over last year. And our board of directors declared a quarterly cash dividend of $1.29 per share to be paid on February 15, a 15% increase over last year.

Casey: Also in November we paid a quarterly cash dividend of $1 29 per share for a total of $810 million.

Casey: This represents a 15% increase over last year.

Casey: And our board of directors declared a quarterly cash dividend of $1 29 per share to be paid on February 15th% to 15% increase over last year.

Casey: So in closing we remain committed to delivering on our long standing financial objectives growing faster than market and taking share Jenna.

So, in closing, we remain committed to delivering on our long-standing financial objectives, growing faster than market and taking share, generating modest margin expansion and strong earnings while at the same time investing at scale for our long-term market leadership, generating strong free cash flow and returning a significant portion of that cash to shareholders. And now, with that in mind, thank you very much for your time.

Casey: Generating modest margin expansion installer earnings while at the same time investing at scale for our long term market leadership.

Casey: Generating strong free cash flow and returning a significant portion of that cash to shareholders.

Casey: Now, let me turn it back to Julie.

Thank you, KC. As we begin our second quarter, we remain laser focused on creating value for our clients. The pace of spending continues to be impacted by the macro environment.

Julie Sweet: Thank you Casey.

Julie Sweet: As we begin our second quarter, we remain laser focused on creating value for our clients. The pace of spending continues to be impacted by the macro environment our business in the UK in particular in Q1, so even greater challenges than we expected last quarter.

Our business in the UK in particular and Q1 saw even greater challenges than we expected last quarter.

The fundamentals of our industry remain unchanged. All strategies continue to lead to technology and companies need to reinvent every part of their enterprise using tech, data, and AI to optimize operations and accelerate growth.

Julie Sweet: The fundamentals of our industry remain unchanged all strategies continued to lead to technology and companies need to reinvent every part of their enterprise using tech data and AI to optimize operations and accelerate growth.

To do so, they must build a digital core. Strategy and consulting, which brings our deep industry and functional expertise, is critical to how we differentiate by helping our clients ensure they drive business value from their digital core.

Julie Sweet: To do so they must build a digital core strategy and consulting which brings our deep industry and functional expertise is critical to how we differentiate by helping our clients ensure they drive business value from their digital core.

We are continuing to see significant demand in areas like cloud migration and modernization, modern ERP and data and AI, including GEN AI, platforms and security. All of which represent areas of great opportunity and is still early with more digital core to be built in the future than has been done today.

Julie Sweet: We are continuing to see significant demand in areas like cloud migration and modernization modern ERP and data and AI, including Gen AI platforms in security.

Julie Sweet: All of which represent areas of great opportunity and there's still early with more digital core to be built in the future than it has been done to date.

Let me bring to life the significant opportunities still ahead with examples from the quarter. Our cloud momentum continues in Q1 with strong double-digit growth reflecting the ongoing significant market opportunities.

Julie Sweet: Let me bring to life the significant opportunities still ahead with examples from the quarter.

Julie Sweet: Our cloud momentum continued in Q1 with strong double digit growth, reflecting the ongoing significant market opportunity. We estimate only 40% of enterprise workloads are in the cloud of which only 20% or so our modernized and 80% opportunity remaining clients are continuing to prioritize the digital core as evidenced by <unk>.

We estimate only 40% of enterprise workloads are in the cloud, of which only 20% or so are modernized. And 80% opportunity remains.

Clients are continuing to prioritize the digital core as evidenced by strong demand for cloud migration.

Julie Sweet: Strong demand for cloud migration.

We're working with a leading insurance provider to continue their cloud transformation. Together, we are migrating hundreds of applications to a cloud-based platform, enabling the company to exit their data centers by 2025.

Julie Sweet: We're working with a leading insurance provider to continued their cloud transformation together, we are migrating hundreds of applications to a cloud based platform, enabling the company to exit their data centers by 2025 to date, we have migrated more than half of their apps to the cloud and this is not just a migration we are modernizing applications and accelerating <unk>.

To date, we have migrated more than half of their apps to the cloud, and this is not just a migration. We are modernizing applications and accelerating automation to integrate disparate data more easily from acquisitions and help the company move into new markets. And we are helping reshape their organizational mindset, drive cultural change, and find new ways of working, including the creation of a new IT service model to lead complex transformations with agility and speed.

Julie Sweet: Nation to integrate disparate data more easily from acquisitions and help the company move into new markets and we are helping reshape their organizational mindset drive cultural change and find new ways of working including the creation of a new service model to meet complex transformations with agility and speed this transformation will reduce legacy.

This transformation will reduce legacy complexity and technical debt, enable more cost-effective back office operations, and drive growth and innovation, ultimately helping the company provide more affordable and personalized insurance solutions for families in business.

Julie Sweet: <unk> and technical that enable more cost effective back office operations and drive growth and innovation ultimately, helping the company provide more affordable and personalized insurance solutions for families and businesses.

And for those clients who have made significant progress on their migration, they are investing to modernize and innovate across the cloud continuum, extending cloud to the edge, unlocking greater value with more opportunities still ahead.

Julie Sweet: And for those clients, who have made significant progress on their migration they are investing to modernize and innovate across the cloud continuum, extending cloud to the edge unlocking greater value with more opportunities still ahead.

For example, we recently announced an expansion of our strategic partnership with McDonald's to help execute their technology strategy and leverage the company's scale to unlock greater speed and efficiency for customers, restaurant teams, and employees.

Julie Sweet: For example, we recently announced an expansion of our strategic partnership with Mcdonald's to help execute their technology strategy and leverage the company's scale to unlock greater speed and efficiency for customers restaurant teams and employees. This new work supports mcclard Mcdonald's ambition to connect restaurants worldwide.

This new work supports McDonald's ambition to connect restaurants worldwide with cloud technology and apply generative AI solutions across McDonald's platforms.

Julie Sweet: With cloud technology, and applied generative AI solutions across Mcdonald's platforms. Accenture also will support the acceleration of automation innovation and the enhancement of the digital capabilities that Mcdonald's employees Accenture has deep understanding of the Mcdonald's business industry and technology will help unlock opportunities in there.

Accenture also will support the acceleration of automation innovation and the enhancement of the digital capabilities of McDonald's employees. Accenture's deep understanding of the McDonald's business industry and technology will help unlock opportunities in their ongoing digital investments as McDonald's reinvents the customer experience and stays ahead of their customers changing needs.

Julie Sweet: Ongoing digital investments as Mcdonald's reinvent the customer experience and stays ahead of their customers' changing needs.

Julie Sweet: Turning to data and AI, we estimate that less than 10% of companies have mature data and AI capabilities. This is a critical part of building the digital core and we see this embedded in our larger transformations and work focus on data and AI modernization and in the opportunities of generative AI.

Turning to data and AI, we estimate that less than 10% of companies have matured data and AI capabilities. This is a critical part of building the digital core and we see this embedded in our larger transformations in work focus on data and AI modernization and any opportunities of generative AI.

We help leaders such as BBVA, a global financial services group, to stay ahead of the curve by continuing to reinvent its business model with Gen AI. For example, we are building a Gen AI-powered financial coach assistant to help them disrupt customer centricity in the banking industry while they reinvent their digital core to also become even more efficient.

Julie Sweet: We help leaders such as BBVA, a global financial services group to stay ahead of the curve by continuing to reinvent its business model with Gen. AI. For example, we are building a gen AI powered financial coach assistant to help them disrupt customer centricity and the banking industry, while they reinvent their digital core to also become even more efficient.

This work is a continuation of our ongoing GNAI implementation, which is transforming BBA's operations and digital marketing and is helping employees be more productive. Thanks to its strong digital core, BBVA can continue to reinvent across their enterprise by applying GNAI.

Julie Sweet: This work is a continuation of our ongoing <unk> implementation, which is transforming bva's operations and digital marketing and is helping employees be more productive. Thanks to its strong digital core BBVA can continue to reinvent across their enterprise by applying Gen II.

We are also helping a global hospitality group to support its content production capability in marketing communications across its hotel brands, tailoring content to guests' evolving needs. This new data-driven content supply chain model will create personalized, flexible, and efficient marketing communications content across every customer's touch point.

Julie Sweet: We are also helping a global hospitality group to support its content production capability in marketing communications across its hotel brands tailoring content to guests' evolving needs. This new data driven content supply chain model will create personalized flexible and efficient marketing community communications content across every.

Julie Sweet: <unk> customer touch point.

Julie Sweet: Spanning both physical and digital communications the service will be available to all marketing professionals, enabling content production management from its initial brief to performance measurement and content optimization. This will increase the effectiveness of its digital marketing programs to drive more traffic to its branded website and deliver exceptional customer.

Expanding both physical and digital communications, the service will be available to all marketing professionals enabling content production management from its initial brief to performance measurement and content optimization. This will increase the effectiveness of its digital marketing programs, drive more traffic to its branded website, and deliver exceptional customer experiences, all while reducing costs.

Julie Sweet: Experiences.

Julie Sweet: All while reducing costs.

Platforms a core component of the digital core and are critical to our clients transformations. We estimate 60% of the opportunity is still ahead as clients upgrade their core platform.

Julie Sweet: Platforms, a core component of the digital core and are critical to our clients' transformations. We estimate 60% of the opportunity is still ahead as clients upgrade their core platforms. We are working with Oc B C group, a Singapore based multinational banking and financial services Corporation, and a two year transformation journey to modernize.

We are working with OCBC Group, a Singapore-based multinational banking and financial services corporation on a two-year transformation journey to modernize their human resources organization.

Julie Sweet: Our human resources organization.

We will shift key HR functions such as hiring, talent management, and career development to the cloud and create a next generation HR operating model with enhanced capability.

Julie Sweet: We will shift key HR functions, such as hiring talent management and career development to the cloud and create a next generation HR operating model with enhanced capabilities together, we will drive operational efficiency with our strategic focus on future talent readiness employee experience and AI, driven decision, making and by providing a scalable.

Together, we will drive operational efficiency with a strategic focus on future talent readiness, employee experience, and AI-driven decision-making. And by providing a scalable framework to meet evolving business needs, we will free up HR capacity to provide high-value advisory work and empower business and HR leaders with analytics and insights to facilitate better talent decisions.

Julie Sweet: <unk> framework to meet evolving business needs, we will free up HR capacity to provide high value advisory work and empowered business in HR leaders with analytics and insights to facilitate better talent decisions.

Julie Sweet: Security is also essential to a digital core and we continued to see very strong double digit growth in our security business this quarter.

Security is also essential to a digital core, and we continue to see very strong double-digit growth in our security business this quarter. While the opportunity to continue to grow and expand, we estimate that currently only 36 percent of business leaders are confident that their organizations are cyber resilient, representing at least 64 percent of untapped potential.

The opportunity to continue to grow and expand we estimate that currently only 36% of business leaders are competent that their organizations are cyber resilient, representing at least 64% of untapped potential.

An example of our important work with our clients to build secure organizations is Fortria, a global contract research organization of about 19,000 people that provides clinical trial and research services for life sciences companies in more than 90 countries.

Julie Sweet: An example of our important work with our clients to build secure organizations is for trio a global contract research organization of about 19000 people that provides clinical trial and research services for life Sciences companies and more than 90 countries.

Julie Sweet: We're working with <unk> to deliver Databased outcomes, and health related insights, which required parents to regional and local industry and government regulations.

We're working with Fortria to deliver database outcomes and health-related insights, which require adherence to regional and local industry and government regulations.

As they continue to grow and enter new markets, they need a partner to ensure that their cybersecurity program remains resilient and compliant with security best practices.

Julie Sweet: As they continue to grow and enter new markets. They need a partner to ensure that their cyber security program remains resilient and compliant with security best practices. We.

We will co-create, architect, and operate a series of global cyber security services and capabilities through our managed services. Our partnership will help Fortria grow its business, utilizing flexible risk and security strategies.

Julie Sweet: We will co create architect and operate a series of global Science Cyber security services and capabilities through our managed services. Our partnership will help for trio grow its business utilizing flexible risk and security strategies.

Julie Sweet: We are focused on helping clients re imagined marketing in their customer experience to drive growth falling demand continues to remain strong with double digit growth in Q1.

We are focused on helping clients reimagine marketing and their customer experience to drive growth. Song Demand continues to remain strong with double-digit growth in Q1. We are collaborating with Pujot, a French automotive brand, to lead strategic and creative direction for its global communication.

Julie Sweet: We are collaborating with <unk>, a French automotive brand to lead strategic and creative direction for its global communications. The partnership supports <unk> ambition to engage a younger audience and become a leader in the electric vehicle market.

The partnership supports Pujo's ambition to engage a younger audience and become a leader in the electric vehicle market.

Julie Sweet: Accenture song will manage global communications across all traditional and digital media channels. The first campaign will be a full 360 integrated launch of the all new electric <unk> SUV E 308 in early 2024.

Accenture Song will manage global communications across all traditional and digital media channels. The first campaign will be a full 360-integrated launch of the all-new electric fast-back SUV E3008 in early 2024.

Finally, we continue to see strong demand for digital manufacturing and engineering services. We estimate that only 5% of enterprises have scaled matured digital capabilities across their organizations. Industry X grew strong double-definition.

Julie Sweet: Finally, we continue to see strong demand for digital manufacturing and engineering services, we estimate that only 5% of enterprises have scaled mature digital capabilities across their organizations industry X grew strong double digits in Q1.

We are working with a leading global, a leading chairman, multinational car manufacturer to engineer the next generation of infotainment system. Using our deep industry expertise and software engineering capabilities, we will support the implementation of a new flexible platform that enables the next level of in-car experience with cutting-edge customer features while minimizing complexity and maximizing the software we use across hardware generation.

We are working with a leading global leading chairman multinational car manufacturer to engineer. The next generation of infotainment infotainment system.

Julie Sweet: Using our deep industry expertise in software engineering capabilities, we will support the implementation of a new flexible platform that enables the next level of in car experience with cutting edge customer features while minimizing complexity and maximizing the software reuse across hardware generations.

Julie Sweet: We're working with a global food manufacturer on a total enterprise reinvention strategy to modernize its supply chain reduce operating costs and position. It for the future. We will transform key supply chain processes, such as planning procurement manufacturing and distribution.

We're working with the global food manufacturer on a total enterprise reinvention strategy to modernize its supply chain, reduce operating costs and position it for the future. We will transform key supply chain processes such as planning, procurement, manufacturing and distribution.

AI and intelligent automation will optimize end-to-end supply chain operations and achieve greater efficiency and agility. We'll also help the company leverage data for better decision-making and implement portfolio optimization to ensure the right assets are focused on for investment to maximize returns and minimize risk. This self-funded program is expected to generate significant productivity gains with ongoing savings fueling further capability builds and bottom line growth. Thank you for watching.

Julie Sweet: And intelligent automation will optimize end to end supply chain operations and achieve greater efficiency and agility.

Julie Sweet: We also help the company leverage data for better decision, making and implement portfolio optimization to ensure the right assets are focused on for investment to maximize returns and minimize risks. This self funded program is expected to generate significant productivity gains with ongoing savings fueling further capability built.

<unk> and Bottomline growth.

Speaker Change: Back to you Casey Thanks, Julie now, let me turn to our business outlook.

Thanks, Julie. Now let me turn to our business outlook.

For the second quarter fiscal 24, we expect revenues to be in the range of $15.4 to $16 billion. This assumes the impact of FX will be about negative 0.5 compared to the second quarter fiscal 23 and reflects an estimated negative 2% to positive 2% growth in local currency.

Speaker Change: For the second quarter fiscal 'twenty four we expect revenues to be in the range of $15 $4 billion to $16 billion.

Speaker Change: This assumes the impact of FX will be about negative 0.5 compared to the second quarter of fiscal 'twenty, three and reflects an estimated negative 2% to positive 2% growth in local currency for.

for the full fiscal year 24 based upon how the rates have been trending over the last few weeks, we continue to assume the impact of FX on our results and U.S. dollars will be about flat compared to fiscal 23.

Speaker Change: For the full fiscal year 'twenty four based upon how the rates have been trending over the last few weeks, we continue to assume the impact of FX on our results in U S dollars will be about flat compared to fiscal 'twenty three.

For the full fiscal 24, we continue to expect our revenue to be in the range of two to five growth in local currency over fiscal 23, with the inorganic contribution now expected to be more than two.

Speaker Change: For the full fiscal 'twenty four we continue to expect our revenue to be in the range of two to five growth in local currency over fiscal 'twenty three with the inorganic contribution now expected to be more than two.

Speaker Change: We continue to expect business optimization actions.

We continue to expect business optimization actions to impact fiscal 24 gap operating margin by 70 basis points and EPS by 56 cents. The following guidance for full year 24 excludes these impacts.

Speaker Change: <unk> fiscal 'twenty for GAAP operating margin by 70 basis points and EPS by <unk> 56.

Speaker Change: The following guidance for full year 'twenty four excludes these impacts.

For adjusted operating margin, we continue to expect fiscal year 24 to be 15.5 to 15.7 percent at 10 to 30 basis point expansion over adjusted fiscal 23 results.

For adjusted operating margin, we continue to expect fiscal year 'twenty four to be $15 five to 15, 7% a 10 to 30 basis point expansion over adjusted fiscal 'twenty three results.

We continue to expect our annual adjusted effective tax rate to be in the range of 23.5% to 25.5%. This compares to an adjusted effective tax rate of 23.9% in Fiscal 23. We continue to expect our full-year adjusted earnings per share for Fiscal 24 to be in the range of $11.97 to $12.32, or 3% to 6% growth over adjusted Fiscal 23 results.

Speaker Change: We continue to expect our annual adjusted effective tax rate to be in the range of 23, 5% to 25, 5%. This compares to an adjusted effective tax rate of 23, 9% in fiscal 'twenty three.

Speaker Change: We continue to expect our full year adjusted earnings per share to be in.

Speaker Change: For fiscal 'twenty four to be in the range of $11 97 to.

To $12 32 or.

Speaker Change: Or 3% to 6% growth over adjusted fiscal 'twenty three results.

For the full fiscal 24, we continue to expect operating cash flow to be in the range of $9.3 to $9.9 billion, property and equipment additions to be approximately $600 million, and free cash flow to be in the range of $8.7 to $9.3 billion. Our free cash flow guidance reflects a free cash flow to net income ratio of $1.2 billion.

Speaker Change: For the full fiscal 'twenty four we continue to expect operating cash flow to be in the range of nine 3% to $9 9 billion property and equipment additions to be approximately $600 million and free cash flow to be in the range of eight 7% to $9 3 billion.

Speaker Change: Our free cash flow guidance reflects a free cash flow to net income ratio of 1.2.

Speaker Change: Finally, we continue to expect to return at least $7 7 billion through dividends and share repurchases as we remain committed to returning a substantial portion of our cash to our shareholders with that let's open it up so we can take your question Katy.

Finally, we continue to expect to return at least $7.7 billion through dividends and share repurchases as we remain committed to returning a substantial portion of our cash to our shareholders. With that, let's open it up so we can take your questions. Katie? Thanks, Kasey. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you provide instruction for those on the call?

Speaker Change: Thanks, KC I would ask that you each keep to one question and a follow up to allow as many participants as possible to ask a question operator would you provide instructions for those on the call.

Thank you. If you'd like to ask a question, please press 1 and 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1 and 0 at this time. And one moment please for your first question.

If you'd like to ask a question. Please press one zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one zero at this time and one moment. Please for your first question.

Speaker Change: Your first question comes from the line of Jason Kupferberg from Bank of America. Please go ahead.

Your first question comes from the line of Jason Kupferberg from Bank of America. Please go ahead.

Jason Kupferberg: Good morning, guys happy holidays, I just wanted to start with a question on the revenue guidance for Q2, the midpoint there would suggest.

Good morning, guys. Happy holidays. I just wanted to start with a question on the revenue guidance for Q2. The midpoint there would suggest a point of deceleration, but we do have an easier comparison, and there was a return to positive growth in consulting bookings, so just hoping you can help us reconcile that and then maybe comment on the second half reacceleration that is continuing to be implied in the guide, maybe slightly steeper than previously thought.

Jason Kupferberg: A point of deceleration, but we do have an easier comparison and there was a return to positive growth in consulting bookings. So just hoping you can help us reconcile that and then maybe comment on the second half Reacceleration that is.

Continuing to be implied in the guide maybe slightly steeper than previously thought.

Speaker Change: Yeah, great. Thanks, Thanks, Jason happy holidays to you too so.

Yeah, great. Thanks. Thanks, Jason. Happy Holidays to you, too. So first, let me first start in terms of our guidance. I'll first start with Q1. And as you heard us say, we were really pleased with our Q1 performance.

Speaker Change: So first let me first start in terms of our guidance I'll first start with Q1 and as you heard US say, we were really pleased with our Q1 performance.

And as you stated, our Q2 guidance is the same as Q1, and maybe a couple things that I'll point out compared to what we bought 90 days ago, and as Julie mentioned, we do see some differences in AMIA, particularly in the UK, where we're focused on repositioning the business factor growth, and that's going to take some time.

And as you stated our Q2 guidance is the same as Q1 and maybe a couple of things that I'll point out compared to what we thought 90 days ago and as Julie mentioned, we do see some differences in EMEA, particularly.

Speaker Change: Particularly in the U K, where we're focused on repositioning the business back to growth and that's going to take some time, but Jason what what is the same as that we are still operating in an environment, which is the same that we described last quarter, where the discretionary spend and the decision making is slow and so right now as you're expecting.

But, Jason, what is the same is that we are still operating in an environment, which is the same that we described last quarter, where the discretionary spend and the decision making is slow.

And so right now, as you expect, and you know that we do this every year, we're talking to our clients right now about their 24 budgets.

We do this every year, we're talking to our clients right now about their 24 budgets.

And so that's all, again, to be expected. When we look forward into H2 to start with just what the math is, we continue to see higher growth in the back half of the year.

Speaker Change: And so that's all again to be expected when.

When we look forward into H two to start with just what the math is we continue to see higher growth in the back half of the year.

That's going to start with higher growth in Q3.

Speaker Change: That's going to start with higher growth in Q3.

Speaker Change: And our confidence in our H to incur.

And our confidence in our H2 increased growth is really based on a few things. Again, reiterating what we talked about at the beginning of the year. First is our results in Q1. So we're confident, again, that we were able to deliver across the board as we expected in the first quarter. And also then, as Julie mentioned quite a bit, we made a lot of investments in our business in the quarter, and that's helping us pivot to higher growth areas.

Speaker Change: Increased growth is really based on a few things again reiterating what we talked about the beginning of the year versus our results in Q1.

Speaker Change: So we're confident again that we were able to deliver across the board as we expected in the first quarter.

Speaker Change: And also then as Julie mentioned quite a bit we made a lot of investments in our business in the quarter, and that's helping us pivot to higher growth areas and.

In addition to that, as we talked about last quarter, the same remains, we do have our revenue positioned in the back half of our year from these larger transformation deals, so that has not changed. We continue to see that. And then we just need to continue to layer in our new sales as we get closer to the back half of the year. So we're really very pleased to reiterate the two to five percent revenue guidance that we had at the beginning of the year.

In addition to that as we talked about last quarter. The same remains we do have our revenue positioned in the back half of our year from these larger transformation deals. So that has not changed we continue to see that and then we just need to continue to layer in our new sales of as we get closer to the back half of the year.

Speaker Change: So we're really very.

Speaker Change: Pleased to reiterate the 2% to 5%.

Speaker Change: Revenue guidance that we had at the beginning here.

Okay, that's helpful. And just as a quick follow-up, what should we expect in terms of second-quarter bookings for consulting and managed services year over year? I know managed services has a particularly tough comp.

Speaker Change: Okay. That's helpful and just as a quick follow up what should we expect in terms of second quarter bookings for consulting our management managed services year over year I know managed services has a particularly tough comp.

Speaker Change: Thanks again.

Yeah, so Jason, I know I've been giving color and basically kind of guiding to future quarter bookings. But as you know, really well covering after so long bookings can really be lumpy. So I'm not going to give that color anymore. Go for what I would say is it's the best way to think about demand for our business.

Speaker Change: So Jason I know I've been giving color.

Speaker Change: Basically kind of guiding to a future quarter bookings, but as you know really well covering up for so long bookings.

Speaker Change: Bookings can really be lumpy, so I'm not going to give that color any more go forward. What I would say is it's the best way to think about demand for our business as the revenue guide that we gave and we gave revenue guidance for the second quarter as well.

is the revenue guide that we give and we give revenue guidance for the second quarter as well as our two to five for the full year and obviously we'll continue to do that. And I'll just put in that we do feel good about our pipeline. We have a very solid pipeline.

Speaker Change: As our two to five for the full year and obviously, we'll continue to do that and I'll just put it in that we do feel good about our pipeline, we have a very solid pipeline.

Speaker Change: Your next question comes from the line of Tien Tsin Huang from Jpmorgan. Please go ahead.

Your next question comes from the line of Tianjin Wang from J.P. Morgan. Please go ahead.

Okay, perfect. Yeah, I just want to follow up to Jason's question, just with the bookings, which is better than expected, and your large field backlog is quite large now. Just the visibility in the bookings.

Speaker Change: Okay perfect follow up to Jason's question, just with the bookings, which as David and as expected.

Speaker Change: The large deal backlog is quite large now.

Speaker Change: The visibility on that.

Speaker Change: The timeliness.

timeliness of those conversions? Have you seen any signs of push out or delays or that kind of thing? Just trying to understand the conversion potential. Yeah, so.

Speaker Change: Timeliness of those conversions have you seen any signs of.

Speaker Change: Push out or delays or that kind of thing just trying to understand the conversion of the country.

Yes, so maybe just a couple of things on that so.

I think, you know, conversion can be really mainly impacted by the mix, right? So the mix of deals that we have. So let's just start with, overall, we haven't seen any change in the conversion based on the mix of work. So strategy and consulting, which converts faster than you know with operations, there's been no change within those different parts of our business, no change in the conversion. What we have talked about, and we've been consistent, that there's really been, you been doing, and we've been doing a lot of work that we've been doing, and we've been doing a lot of work that we've been doing, and we've been doing a lot of work that we've been a lot of work that we've been doing, and we've been doing a lot of work that we've been

Speaker Change: I think you know conversion can be really mainly impacted by the mix right. So the mix of deals that we have so let's just start with overall, we haven't seen any change in the conversion based on the mix of work, so strategy and consulting which convert faster than you know if operations. There has been no change within those differ.

Speaker Change: Parts of our business no change in the conversion.

Speaker Change: We have talked about and we've been consistent that theres really been there is no change over the last 90 days and our.

discretionary spend environment, and that is consistent with our expectations, so and we haven't been reliant and we're not reliant on a change in that macro to get to our full year guidance. So what does that mean? Hopefully you guys can hear me. The lower trouble in the line is that as we have lower discretionary spend that does impact the conversions to engine as you know, but we have factor that all into our guidance.

Speaker Change: Discretionary spend environment and that is consistent with our expectations. So and we haven't been reliant and we're not reliant on a change in that macro if we get to our full year guidance. So what does that mean I.

Hopefully you guys can hear me the low the lower <unk> on the line.

Speaker Change: Okay.

Speaker Change: Is that.

Speaker Change: As we have lower discretionary spend that does in PRC pack the conversions Tien tsin as you know, but we have factored that all into our guidance.

Understood, Casey. Thanks for that. And just my quick follow-up. I know you've been really busy with acquisitions, and Julie listed a bunch of them. Is there a change here in the rhythm of acquisitions or your appetite? It sounds like the revenue contribution is up a nut, but up a little bit. But you tell me. I didn't know if there was a change in your thinking here on the deal.

Understood Thanks for that.

Speaker Change: Follow up I know you've been really busy with.

Speaker Change: With acquisitions and jewelry you listed a bunch of them is there a change here in the rhythm of acquisitions or your appetite it sounds like the revenue contribution is.

Speaker Change: A little bit.

Speaker Change: I didn't know if there was a change in your thinking here on that deal.

Speaker Change: Yes.

Yeah, I mean, I'm going to maybe give a little bit of color now, certainly hand it over to Julie. Just more from a financial perspective, I think, and as you know this really well, but our competitive advantage really is our investment capacity that allows us to pivot to higher areas of growth. And we can do that and invest through every cycle. And you've seen us do that.

Speaker Change: Maybe give a little bit of color now certainly handed over their jolie just more from a financial perspective, I think as you know this really well but are competitive.

Speaker Change: Advantage really is our investment capacity that allows us to pivot to higher areas of growth and we can do that and invest through every cycle and you've seen us do that and I really think that is clearly a differentiator for US you see that with our strong start this quarter Julie talked about the 12 acquisitions $800 million of spend and we have.

And I really think that is clearly a differentiator for us. You see that with our strong start. This quarter, Julie talked about the 12 acquisitions, $800 million to spend. And we have five more that we've announced for Q2.

Five more that we've announced for Q2.

All of that and we're reconfirming out margin expansion of 10 to 30 basis points.

Speaker Change: All of that and we're Reconfirming op margin expansion of 10 to 30 basis points I think it's important to see that in terms of our strategy.

I think it's important to see that in terms of our strategy, we're continuing to do this to really fuel organic growth. And lastly, I think one of the parts that

Speaker Change: Continuing to do this to really fuel organic growth and lastly, I think one of the parts that.

really distinguishes us as our capital allocation framework, which is durable yet flexible. So we're able to flex up and do inorganic to the degrees that we see that we'd like to, while at the same time, continuing to increase our return to our shareholders. So I think it's really, really great.

Speaker Change: Really just trying to discuss is our capital allocation framework, which is durable yet flexible so we're able to flex up and do inorganic two degrees that we see that wed like to while at the same time continuing to increase our return to our shareholders shareholders. So I think it's really really great.

Speaker Change: Great Yeah, and there's no there's no change in.

Great, yeah. And there's no change in the strategies in the sense that we're still trying to, you know, we're still investing to either scale and hot air.

And in the strategy in the sense of we're still trying to.

Speaker Change: We're still investing to either scale in hot areas or.

or add new types of skills so you see that we're executing in capital projects like we described right in August we did.

Add new types of skills. So you see that we're executing in capital projects like we described right in August we did the yes in August we did the answer advisory we just added Canada.

Speaker Change: Then of course, adding.

Speaker Change: <unk> niche skills and consulting and whether.

whether it's industry or functional. So no change in strategy, but I would reiterate that it is really a huge competitive advantage for us that we can invest across the cycles. You saw that we did that in the first year after the pandemic where we significantly increased and again always to drive organic growth and position ourselves for those next waves. So you're going to see the AI acquisitions. You saw health in the UK, another great area of growth, capital projects. So think about our strengths here is how we accelerate pivoting to growth. And then I'll just add Tinge that you heard me mention in guidance that we are going to do now more than 2% in organic contribution.

Speaker Change: Whether it's industry or functional so no change in strategy, but I would reiterate that it is really a huge competitive advantage for us that we can invest across the cycles. You saw that we did that in the first year. After the pandemic, where we significantly increased and again always to drive.

Speaker Change: Organic growth and position ourselves for those next wave so youre going to see the AI acquisitions, you saw health in the UK another great area of growth capital projects. So think about our strength here is how we accelerate pivoting to growth and then I'll just add Tien tsin that you heard me mentioned in <unk>.

how we accelerate pivoting to growth.

And then I'll just add that you've heard me mention in guidance that we are going to do now more than 2% inorganic contribution for this year.

Speaker Change: And so we are going to do now more than 2% inorganic contribution for this year, yes.

Yeah, no, I'm sure you'll amplify the growth of what you buy. Just just wanted to check on that. That's helpful.

Speaker Change: No Im sure Youll amplify the growth of what you bought and just wanted to check on that that's helpful. Thank you.

Speaker Change: Thanks.

Speaker Change: Your next question comes from the line of Ashwin <unk> from Citi. Please go ahead.

Your next question comes from the line of Ashwin Srivakaar from Citi. Please go ahead.

Thanks and congratulations on the performance, happy holidays from me. I want to ask about as you have conversations with your clients with regards to budget and spending priorities into next year, if you can comment first of all on that and then we'll move on.

Ashwin: Thanks, and congratulations from the performance are happy holidays from me.

I wanted to ask.

Ashwin: About <unk>.

Ashwin: You have conversations with your clients with regards to budget and spending priorities into into next year. If you can comment.

First of all on that and and and then.

It's only a couple of quarters since Gen AI took hold, but it's a fast-moving technology and I want to inquire into whether the nature of those discussions has changed or become more meaningful, gone past proof of concept and so on.

Ashwin: It won't be a couple of quarters since our since sort of the G&A I kind of took hold but it's a fast moving technology and I want to kind of enquired into whether the nature of those discussions has has change or become more meaningful gone past.

Ashwin: Proof of concept and so on.

Great. And happy holidays to you, too. Great question. So first, with respect to your first point around what's happening in the market.

Speaker Change: Great and happy holidays to you too great questions. So first.

Speaker Change: With respect to.

Speaker Change: On your first point around what's happening.

Speaker Change: In the market.

Speaker Change: On client budgets is what I would say is that.

on client budgets is what I would say is that

We're having lots of discussions that are pretty similar to what we've been talking about, which is, how do you prioritize in a more cautionary environment? So we'll really know how that, you know, will play out in January as always, because this is when we, you know, they finalize. But what I'd say is it's the consistent theme I've been talking about, which is.

Speaker Change: We're having lots of discussions that are pretty similar to what we've been talking about which is how do you prioritize and a more cautionary environment. So we'll really know how that will play out in January as always because this is when we you know they finalized but what I'd say is it's the consistent theme I've been talking about which is in a cautionary variant.

in a cautionary environment, in a tough macro, we're helping clients prioritize and they're in the things that we talked about in the script again today, things like building the digital core, it's using the technology to drive both growth and cost. And I would just say on the macro side, right, is that, you know, our clients, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things that we talked about in the script again today, we're helping them prioritize and they're in the things

In a tough macro we're helping clients prioritize and theyre in the things that we talked about in the script again today things like building the digital core it's using the technology to drive both growth and cost and I would just say on the macro side right is that.

Speaker Change: Our clients recognize you cannot cut your what itself to growth and if you think about the examples that I used in todays script. Most of them were both cost and growth rate because that is what our clients are focused on is how are they going to grow revenue. Despite whatever the environment is.

recognize you cannot cut yourself to growth. And if you think about the examples that I used in today's script, most of them were both costs.

and growth, right? Because that is what our clients are focused on, is how are they going to, you know, grow revenue despite whatever the environment is. And that, of course, is our unique capabilities to be able to do both. And then with respect to GenAI, so first of all, I just want to say $450 million in, you know, sales this quarter, we're very pleased with. I mean, it demonstrates we are leading here. All of last year, it was $300 million.

Speaker Change: And that of course is our unique capabilities to be able to do both.

And then with respect to <unk>. So first of all I, just want to say $450 million in.

Speaker Change: Sales this quarter were very pleased with I mean, it demonstrates we are leading here all of last year it was $300 million.

And to your point, the conversations are changing. You have examples like BBVA, which we talked about earlier in my script, where we're starting to use it at scale. Our clients want to get out of proofs of concept to material value. And we're super well positioned. Why? Gen AI is not plug and play.

Speaker Change: And to your point the conversations are changing you have examples like BBVA, which we talked about earlier in my script, where we're starting to use it at scale, our clients want to get out of proofs of concept to material value and we're super well.

Speaker Change: Ill positioned Y Gen. AI is not plug and play it is not just technology in fact, it's closer to of any other technology think about cloud that's farther away from the heart of the business in order to scale you have to deeply understand the technology, which is still.

It is not just technology. In fact, it's closer to any other technology. Think about cloud. That's farther away from the heart of the business.

In order to scale, you have to deeply understand the technology, which is still rapidly changing and the business.

Speaker Change: Rapidly changing.

Speaker Change: And the business value and this is accenture is leadership position right. We have strategy, we have consulting deep industry and functional expertise.

And this is Accenture's leadership position, right? We have strategy, we have consulting, deep industry and functional expertise.

We're the biggest partner with every major player. We're working with them at a product level, and we can bring those two things together.

Speaker Change: B.

Speaker Change: Biggest.

Speaker Change: Partner with every major player, we're working with them at a product level and we can bring those two things together. So think of 2024 as being the shift for our clients from experimentation to scale and we believe we're the best positioned to lead that shift to value.

Think of 2024 as being the shift for our clients.

from experimentation to scale. And we believe we're the best position to lead that shift to value.

Speaker Change: Yeah.

Understood, understood. I want to ask also about operations performance. It did decelerate meaningfully. I think it was high single-digit growth, and now it's flat. Is that also a reflection you mentioned just now, maybe a pivot from cost savings to revenue generation maybe is beginning? Is that what's happening, or are there other factors in here?

Speaker Change: Understood understood.

Speaker Change: I wanted to ask also about our operations performance. It did decelerate meaningfully I think it was high single digit growth and now it's flat is that also a reflection you mentioned.

Speaker Change: Now maybe a pivot from.

Speaker Change: Cost savings to revenue generation, maybe is beginning as it is that what's happening or are there other factors in here.

Speaker Change: Yeah, maybe just in terms of the quarter performance operations came in as expected as.

Yeah, maybe just in terms of the quarter performance, operations came in as expected. As we talked about at the beginning of the year, Ashwin, we do have some impacts in CMT that impact operations, and so we'll see that growth will fluctuate as we go throughout the year. That's part, though, of our overall guidance for the full year of managed services continuing to be mid-single to high single-digit growth.

Speaker Change: As we talked about at the beginning of the year Ashwin, we do have some impacts in CMT.

Speaker Change: Impact operations and so we'll see that growth will be may fluctuate as we go throughout the year, that's part though of our overall guidance for the full year of managed services.

Speaker Change: Continuing to be mid.

Speaker Change: Mid single.

High single digit growth for the year, Yeah, and in fact, I would say, it's the opposite operations, which was impacted by the way by CMT. For example, like it's going to build similar to the way Accenture is going to build over the course of the year actually the sweet spot of operations is that it does both cost and.

Yeah. And in fact, I would say it's the opposite. Operations, you know, which was impacted by the way by CMT, for example, look, it's going to build similar to the way Accenture is going to build, you know, over the course of the year. Actually, the sweet spot of operations is that it does both cost and growth. So the BBBA example includes operations, Fortria includes operations. So these are our managed services are highly strategic because

Speaker Change: Growth. So the BBVA example includes operations for trio includes operations. So these are our managed services are highly strategic because they are typically able to do both think about transformation. Our managed services are as much about modernizing so and.

They are typically able to do both. Think about IT transformation. Our managed services are as much about modernizing. So an IT...

you know modernized tech is what drives growth. So we really see our strength being that our managed services are strategic and one of the reasons is that we do them in the context of understanding the industry.

Modernized tech is what drives growth. So we really see our strength being that our managed services are strategic and one of the reasons is that we do them in the context of understanding the industry and the function. So we're not you know back office, we're bringing that strategy in <unk>.

and the function. So we're not, you know, back office. We're bringing that strategy and consulting expertise.

Speaker Change: Consulting expertise to make sure that it isn't just a cost play and that's an important differentiator for us.

to make sure that it isn't just a cosplay, and that's an important differentiator for us.

Got it thank you both.

Speaker Change: Thank you.

Your next question comes from the line of Brian Bergen from TD Cohen. Please go ahead.

Your next question comes from the line of Bryan Bergin from TD Cowen. Please go ahead.

Bryan Bergin: Hi, guys. Good morning, happy holidays, I wanted to start on your some of the expectations around shorter cycle on discretionary work within S&P MSI.

Hi guys. Good morning. Happy holidays. I wanted to start on some of the expectations around shorter cycle and discretionary work within S&C and SI. Do you have a sense of stabilization forming there or cuts still occurring in those areas? And maybe can you give us a sense on how you expect consulting to do in the second

Bryan Bergin: A sense of stabilization, forming there or cut still occurring in those areas and maybe can you give us a sense on how you expect consulting to do in the second quarter.

Speaker Change: Yeah. So look we're in.

Yeah, so look, as Casey said earlier, we're operating kind of the same environment we have for the last few quarters, right? Discretionary spend is down, and we're right in the middle of the budget cycle, so next quarter we'll have a much better view of, you know, what's there. But if you sort of look around in the environment, there aren't a lot of green shoots on the economic side. I mean, they didn't, obviously...

Speaker Change: As Casey said earlier, we're operating kind of the same environment. We have for the last few quarters right discretionary spend is down.

Speaker Change: And we're right in the middle of the budget cycle. So next quarter, we'll have a much better view of what's there, but as you sort of look around and the environment. There aren't a lot of green shoots on the economic side and obviously you know.

you know the volatility on the geopolitical side continues and so

Speaker Change: The volatility on the geopolitical side continues and so as Casey said, we're not planning right now for kind of a change in the macro which means that we're not planning for a change in discretionary spending we just don't see that being meaningfully different as we go into 2024, and obviously we'll update.

in the macro, which means that we're not planning for a change in discretionary spending. We just don't, you know, see that being meaningfully different as we go into 2024 and obviously we'll update you. But that's why when you think about like the question earlier on revenue conversion, you know, our level of smaller deals is just down, it's going to stay down for a while, which means that how revenue is going to, how sales are going to bleed into revenue is going to, you know, be consistent with what we've been seeing. So, yeah, and then you want to comment, yeah, just in terms of brand on the overall growth, there's no change from what we said at the beginning of the year in terms of our full year outlook for consulting type of work. We see low single digit positive growth for the full year. That's in our two to five and

Speaker Change: Hugh.

Speaker Change: But thats why when you think about like the question earlier on revenue conversion our level of smaller deals is just down it's going to stay down for a while which means that how revenue is going to be how sales are going to bleed into revenue is going to.

Speaker Change: Be consistent with what we've been seeing so and then you want to comment.

Speaker Change: Just in terms of Brian on the overall growth Theres no change from what we said at the beginning of the year in terms of our full year outlook for consulting type of work, we see low single digit.

positive growth for the full year, that's in our 2 to 5, and Q1 came in as we expected, which was negative 2.

Positive growth for the full year, that's in our two to five and Q1 came in as we expected which was negative two.

Okay, that's helpful. And then just the clarification around the M&A. So first, I don't know if you mentioned M&A in the first quarter, the contribution to growth, and we're saying greater than 2% for the full year. Just to be clear, that's, that's just rounding around 2 or we upwards.

Speaker Change: Okay. That's helpful. And then just a clarification around the M&A and so forth.

Speaker Change: I don't know if you mentioned M&A in the first quarter the contribution to growth.

Speaker Change: And we're seeing greater than 2% for the full year just to be clear. That's that's just a rounding around jewelry upwards of three.

Thanks. Yeah. So we're saying more than two for the full year, and it can fluctuate by quarter, so we really just stick to our guidance for the overall year.

Speaker Change: Yes, yes, so we are saying more than two for the full year and.

Speaker Change: It can fluctuate by quarter. So we really just stick to our guidance for the overall overall year.

Right. And if we get close to three, we'll talk about that. But right now, it's more than two. Right. Because we gave you guys a two, it's down definitely more than two. And remember, we only do deals that we think are good deals. So what we see right now is a lot of good deals that is going to get us to above two. And if that, you know, we have a lot of financial flexibility. So if that changes, we'll update if it's, if it gets above three.

Speaker Change: Great.

We get close to three we'll talk about that but right now it's more than two right. Because we gave you guidance here, it's down definitely more than two and remember we only do deals that we think are good deals. So what we see right. Now is a lot of good deals that is going to get us to above two and if that we have a lot of financial flexibility. So if.

Speaker Change: That changes, we'll update if it's if.

Speaker Change: If it gets above three.

Speaker Change: Thanks Happy holidays.

Speaker Change: Happy holidays.

Speaker Change: Your next question comes from the line of Dave Koning from Baird. Please go ahead.

Dave Koning: Yeah, Hey, guys. Thanks, so much.

Yeah, hey guys, thanks so much. One thing I noticed, I guess gross margin growth, year-over-year expansion, gross margin was the strongest in about nine quarters or so. Is that just lower attrition, offshore shift? Maybe walk through why that's gotten nicely,

Dave Koning: One thing I noticed I guess gross margin growth year over year expansion gross margin was the strongest in about nine quarters or so.

Dave Koning: Is that just lower attrition offshore shift maybe walk through why that's gotten nicely better.

Yeah, hey Dave, thanks for the question. So, as you know, we run our business for operating margin, which we did 20 basis point expansion this quarter and.

Yeah, Hey, Dave Thanks for the question. So as you know we run our business to operating margin, which we did 20 basis point expansion this quarter and I will mention that if I did it already that the 10 to 30 that we have for the year, we might see more variability as we go throughout the quarters, but now back to gross margin you're right. We did see expansion this quarter, but it's really hard to.

I will mention that if I didn't already that the 10 to 30.

that we have for the year, we might see more variability as we go throughout the quarter.

But now back to growth margin, you're right, we did see expansion this quarter, but it's really hard to look at that in isolation. And why is that? Well, there's various things that, you know, can go in and out of gross margin in terms of increase or decrease spend. So, for example, one would be acquisitions. There's a lot of some of the.

Dave Koning: Look at that in isolation and why is that well there's various things that can go in and out of gross margin in terms of increase or decrease spend. So for example, one would be acquisitions, there's a lot of some of the.

investment acquisition, some of that spend will go into gross margin and that can be lumpy as it goes throughout. As you know, it also depends on where people spend their time. So for example, you saw that, yes, we had improvement in gross margin, but then we also had increased

Dave Koning: Investment acquisitions some of that spend will go integrate gross margin and that can be lumpy as we go throughout.

You know it also depends on where people spend their time. So for example, you saw that yes, we had improvement gross margin, but then we also had increased.

of sales and marketing costs, which is the result of people spending more time out in the market selling to create the $18.4 billion in sales that we have. So that's why, again, we look at those components, but really at the end of the day, we always continue to run our business top market.

Dave Koning: Sales and marketing costs, which as a result of people spending more time out in the market selling to create the $18 4 billion in sales that we have so that's why again, we look at we look at those components, but really at the end of the day, we always continue to run our business to op margin.

Speaker Change: Got you thanks for that and then maybe as a follow up just to Jason's question at the beginning on kind of the backend loaded growth.

Thanks for that. And then maybe as a follow-up just to Jason's question at the beginning on kind of the back end loaded growth, if I just put in normal sequential patterns in Q3 and Q4, I get to about 2% constant currency. So the low end to guide, is there a scenario given bookings for really good this quarter that actually the progression sequentially in the back half of the year is better than normal and then that kind of gets to the better parts of the guidance range for revenue?

Speaker Change: If I just put a normal sequential patterns in Q3 and Q4.

Speaker Change: I get to about 2% constant currency. So the low end of guide is there a scenario given bookings were really good this quarter that it actually the progression sequentially in the back half of the year is better than normal and then that kind of gets to the better parts of the of the guidance range for revenue.

Speaker Change: Yeah. So I think obviously when you do what you just kind of talking about it as a bit of the math what I would tell you. This is giving you the year over year, while we look at it in terms of our guidance right. So we had 1% growth this quarter with strong bookings right, 1% revenue growth with strong bookings, we see Q2 shaping up the same way year over year.

Yes, so I think, you know, obviously when you do what you're just kind of talking about is a bit of the math. What I would tell you is give you the year over year way. We look at it in terms of our guidance, right? So we had 1% growth this quarter with strong bookings, right? 1% revenue growth with strong bookings. We see Q2 shaping up the same way year over year. And again, just reinforcing that we do see.

Speaker Change: And again, just reinforcing that we do see fuel and our sequential growth in the back half of the year based on the transformation deals that we have found that is no different than what we talked about at the beginning of the year, we've layered in than the sales that we expect as we go throughout and that there's no difference to how we're doing our our range that gets us to the 2% to 5% range I would say at the top.

fuel and our sequential growth in the back half of the year based on the transformation deals that we have signed. That's no different than what we talked about at the beginning of the year. We've layered in then the sales that we expect as we go throughout and that, you know, there's no difference to how we're doing our, our range, you know, that gets us to the two to five percent range. I would say at the top end of our range, again, as we said, you know, we're going to

Speaker Change: And if our range again as we said.

You know, last quarter just when we set guidance that, you know, when to get to the top end of our guidance range, you would see S and C reconnecting with growth would be one thing that we'd see and you would probably also see the mid to high single digits that we've been referencing consistently in managed services be more like high single digits.

Speaker Change: Last quarter, just want to set guidance that when to get to the top end of our guidance range you would see essence C. Reconnecting with growth would be one thing that we'd say and you would probably also see the mid to high single digits that we've been referencing consistently and managed services be more like high single digits. So hopeful.

So hopefully that helps, Steph. Yeah, that's helpful. Thanks, guys. Nice job.

Speaker Change: That helps Dave.

That's helpful. Thanks, guys nice job.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Brian King Kim from Deutsche Bank. Please go ahead.

Your next question comes from the line of Brian King, King from Deutsche Bank. Please go ahead.

hi guys good morning uh... just wanted to ask for the clarification on the u k market in particular i know the economy has been weak there for a couple years so and i know it's been a call out for uh... kind of the quarter what what exactly happened in the u k and and then what's the outlook for that

Speaker Change: Hi, guys. Good morning, just wanted to ask him a clarification on the UK market in particular I know the economy has been weak there for a couple of years, So and I know, it's been a callout for kind of the quarter what exactly happened in the U K and then what's the outlook for that.

Speaker Change: Sure.

So, in the UK, as you said, it has been kind of challenged for a couple of years and we have a big banking capital market business there and we're really trying to

Speaker Change: U K as you said it has been kind of a challenge for a couple of years and and we have a big banking capital markets business, there and we're re.

Speaker Change: Really trying to pivot to more growth there than other areas Thats why you saw the acquisitions that we did for example, this quarter and what we're seeing is that it's just taking longer than we anticipated to really move into the other areas in banking capital markets, which we've talked about.

pivot to more growth there in other areas. That's why you saw the acquisitions that we did, for example, this quarter. And what we're seeing is that it's just taking longer than we anticipated to really move into the other areas and banking capital markets, which we've talked about.

Speaker Change: <unk> been more challenged particularly in the U K and so it's really about how long, it's taking us to pivot and we think it's going to take some time, so I'm not going to call exactly when but we do think it's going to take some time and it's taking more time than we anticipated.

Speaker Change: Into the fiscal year. So we've got a good team we're on it and again this is where youre going to see us do more acquisitions to diversify our business there as we reposition.

Yeah, maybe just also, Brian , just for context, it's about 6% of our overall business, a little bit more than $4 billion that we have in the UK. Got it. No, that's helpful. And then, Casey, just to make sure we understand the comments on the margins, given the movement in acquisitions and the pickup in acquisitions, there could be some fluctuations in given quarters. We have it perfectly in the range of $10 to $30 per quarter.

Speaker Change: That yes, maybe just also Brian just for context is about 6% of our overall business a little bit more than $4 billion that we have in the UK.

Yeah, maybe just also, Brian , just for context, it's about 6% of our overall business, a little bit more than $4 billion that we have in the UK.

Got it. No, that's that's helpful. And then Casey, just to make sure we understand that the comments on on the margins.

Got it.

Speaker Change: That's helpful and then Casey just to make sure we understand the comments on the margins.

Given given the movement in acquisitions and the pickup in acquisitions, there could be some fluctuations in given quarters youre not going to have it perfectly.

given given the movement in in acquisitions in the pic of an acquisition there could be some fluctuations in giving quarters you're not gonna have it perfectly uh... you know ten in the law in the range of ten to thirty per quarter any quarters to call out in particular where could fall below the range given a ramp of acquisitions in the ramp of investments

Speaker Change: In the in the range of 10 to 30 per quarter any quarters to call out in particular, where it could fall below the range given the ramp of acquisitions in the ramp up of investments. Thanks.

Yeah, I don't want to really guide to the quarter because, you know, 10 basis points or 20 basis points on a quarter, that's spend, Brian , as you know, that's kind of big and small in terms of the dollar amount that we're talking about. So, you know, we're going to guide overall to the full year of 10 to 30 for the full year. And I just wanted to point out that, you know, we might have some periods where, you know, it's just a little bit more variable than what you've seen us do over the years. Got it. Thank you.

Yes, no I don't.

Speaker Change: We don't really guide to the quarter, because you know 10 basis points or 20 basis points on a quarter that spanned Brian as you know that's kind of big and small in terms of the dollar amount that we're talking about so we're going to guide overall to the full year of 10 to 30 for the full year and I just wanted to point out that we might have some periods, where it's just a little bit more variable than what you've seen us do.

Speaker Change: Over the years.

Speaker Change: Got it thank you happy holidays.

Speaker Change: Brian.

Your next question comes from the line of Darren Peller from Wolf Research. Please go ahead.

Speaker Change: Your next question comes from the line of Darrin Peller from Wolfe Research. Please go ahead.

Darrin Peller: Okay. Thanks, guys.

Hey, thanks guys. Just want to touch on headcount growth. I mean, it's still, I think it's still

Darrin Peller: To touch on head count growth I mean, it's still I think it's Stu.

still a bit decelerating. And so what are the expectations going forward? I mean, just given the backdrop of an acceleration on the revenue in the second half of the year and then.

Darrin Peller: Little bit decelerating and so what are the expectations going forward I mean, just given the backdrop of an acceleration on the revenue in the second half of the year and then.

Julie, maybe we could just touch on the linearity of the business one more time just if we could revisit the mix of the kind of business you're seeing now and the revenue per head you'd expect or maybe just.

Speaker Change: Julie will then we could just touch on the linearity of the business one more time, just if we could revisit the mix of the kind of business. You are seeing now in the revenue per head you would expect.

Speaker Change: Or maybe just Directionally, what you would anticipate based on the mix, we're seeing and what demand is for it.

Speaker Change: Yes so.

Yes, so thanks for that, Darren. So I'll talk about in terms of our people, in terms of number of people we have. First, I'll start with, as you know, managing supply and demand is really our core competency. And you can see that in our ability to manage our utilization at high levels. And I'll just point.

Speaker Change: Thanks for that Darren So I'll talk about in terms of our our people in terms of number of people. We have first I'll start with as you know managing supply demand is really our core competency and you can see that in our ability to manage our utilization at high levels and I'll just point out that for the last 13 quarters.

So last 13 quarters, our utilization has been 91% or higher, and so we hire for the skills that we

Speaker Change: Utilization has been 91% are higher and so we hired for the skills that we need.

you know and we hire where we need them and you you're what you're pointing out is that we had about a 1% increase.

Speaker Change: And we hire where we need them and you're what you're pointing out is that we had about a 1% increase year over year and our.

year-over-year in our in our headcount as well as about a 1% sequentially and that's in line with what we how we see revenue going for the rest of the year. So there's really no change there.

Speaker Change: And our head count as well as about a 1% sequentially and Thats in line with what we how we see revenue.

Speaker Change: <unk> for the rest of the year. So there's really no change there and as it relates to the revenue per head in the non linearity I mean, we do have automation.

And as it relates to the revenue per head and the nonlinearity, I mean, we, we do have automation, we do have value based projects. So while there still is a obviously connection to the amount of people that we have, we have been able to break that the other parts where we were able to.

Speaker Change: We do have value based projects. So while there still is a obviously connection to the amount of people that we have we have been able to break that there are parts, where we're able to.

not fully disconnect, but, you know, not completely rely on headcount to drive revenue. Yeah, and Darren, in terms of just demand, right, so I kind of anchor to, first of all, we're seeing demand for transformational deals. So, in an environment like this, the thing that I look at most is, are we continuing to have our clients do more than $100 million of bookings, right, which is in our industry.

Not fully disconnect, but you know not not completely rely on head count to drive revenue and Darren and then in terms of just demand right. So.

Speaker Change: I kind of anchor to first of all we're seeing demand for transformational deals so in an environment like this.

Speaker Change: The thing that I look at most is are we continuing to have our clients do more than $100 million of bookings rate, which is in our industry.

We are a real standout here and what does that mean that means that we continue to be at the heart of where clients are spending to do material transformation.

Speaker Change: We are a real stand out here and what does that mean that means that we continue to be at the heart of where clients are spending to do material transformation, that's where you want to be so that you're positioned when inevitably discretionary spending you know the pace you know get goes back up the macro changes you want to be at the heart. So.

That's where you want to be so that you're positioned when inevitably discretionary spending, you know, the pace, you know, goes back up, the macro changes, you want to be at the heart. So at times like this, that's what I'm really, you know, looking at. And that's where you're seeing, I will tell you, this is one of the most exciting times in the market. Like you just take what we are announcing today on McDonald's, I talked about in the script, right?

Speaker Change: At times like this that's what I'm really looking at and Thats, where youre seeing the I will tell you. This is one of the most exciting times in the market like you just take what we are announcing today on Mcdonald's I talked about in the script right incredible.

incredible company, technology-driven. We've been their long-time partner. Just expand at the partnership to take it all the way to the edge and reinvent their restaurants and their crew experience. This is going to be really cutting work at the edge because that's where we're starting to see the leaders cloud go and we're leading there.

Speaker Change: Incredible company technology, driven we've been there a long time partner just expanded the partnership to take it all the way to the edge and reinvent their restaurants and their crew experience. This is going to be really cutting work at the edge, because that's where we're starting to see the leaders in cloud go and we're leading.

Speaker Change: There those are the kinds of things that then you see how theyre going to expand there's so much opportunity still in these big areas of like.

Those are the kinds of things that then you see how they're going to expand. There's so much opportunity still in these big areas of like.

of cloud, of data and AI, but cloud itself, yes, you've done a lot of migration. There's still more migration to go, but even more importantly, you've got to take it all the way to the edge. So, from a demand perspective, we continue to see the transformations that move the needle for cost and growth, and that's what we're expecting.

Speaker Change: <unk> cloud data and AI, but cloud itself, yes, we've done a lot of migration theres still more migration to go but even more importantly, you got to take it all the way to the to the edge. So.

From a demand perspective, we continue to see the transformations that moved the needle for cost and growth and that's what we're expecting from a mix perspective, we're not seeing a big change between managed services and consulting the mix. We're seeing is that in this environment, you're seeing less of the smaller deals which convert to revenue.

From a mixed perspective, we're not seeing a big change between managed services and consulting. The mix we're seeing is that in this environment, you're seeing less of the smaller deals which convert to revenue faster and more on the larger deals. And that's been around for a while, and that's what you're going to continue to see. And we are laser focused on making sure we are winning in the reinvention, the transformation. And at the same time, massively pivoting.

Speaker Change: New faster and more on the large the larger deals and thats been around for a while and Thats, what youre going to continue to see and we are laser focused on making sure. We are winning in the reinvention the transformation and at the same time massively pivoting to Gen AI and our clients have.

to Gen AI, right? And our clients have so much work to do to be able to use Gen AI, but you can see the momentum in our business, right? From that change from 300 million of all of last year to 450 in a quarter. And I'll just remind you, that's not the pull through, that's not data. We are very pure because we really wanna be sharing with all of you, where is Gen AI in the market? So we're pretty excited about where we are today and what's ahead.

Speaker Change: So much work to do to be able to use gen. AI, but you can see the momentum in our business right from that change.

Speaker Change: Changed from $300 million of all of last year to 450 in a quarter and I'll just remind you that's not the pull through that's not data. We are very pure because we really want to be sharing with all of you where is gen. AI in the market. So we're pretty excited about where we are today and what's ahead.

Speaker Change: That's really helpful. Look you guys have obviously managed well through what was a softer discretionary demand environment. So I guess my question would be if we thought about what a normalized run rate of revenues on really how you would be.

That's really helpful. Look, you guys have obviously managed well through what was a softer discretionary demand environment. So I guess my question would be, if we thought about what a normalized run rate of revenues on, really, S&C would be,

If we just said today's a normal, no longer softer discretionary environment, where do you think the difference is? I mean, I know it's probably hard to give an exact or precise estimate, but how much upside is there?

Speaker Change: If we just said today as a normal no longer softer your discretionary environment, where do you think the difference is I mean, I know, it's probably hard to give an exact precise estimate but.

Speaker Change: How much upside is there when we get that back.

Well, we have a really strong strategy in consulting business, and so we're very positive about that business growing, but beyond that, I think, Darren, you know, we're not going to start to predict, you know, growth rates, but in the meantime, it is a huge differentiator. Nobody has that combination that we have, and that is what is driving the resilience of our business to be at the core of our clients' agenda. Thanks so much, Darren.

Speaker Change: We have a good a really strong strategy in consulting business and so we're very positive about that business growing but beyond that I think Darren we're not going to start to predict growth rates, but in the meantime. It is a huge differentiator nobody has that combination of that we have and that is what is driving.

Speaker Change: The resilience of our business to be at the core of our clients' agenda. Thanks.

Speaker Change: Thanks, so much downgrade.

Operating we have time for one more question and then Julie will wrap up the call

Speaker Change: Operator, we have time for one more question and then Julie will wrap up the call.

Okay. That question comes from the line of James Fussett from Morgan Stanley . Please go ahead.

Speaker Change: Okay that question comes from the line of James Faucette from Morgan Stanley. Please go ahead.

Great, thank you so much. I want to just ask a couple of follow-up questions to those that have already been asked. First, I want to ask you a couple of questions.

Great. Thank you so much.

James Faucette: Just ask a couple of follow up questions to those that have already been asked first on the <unk>.

James Faucette: Organic contribution appreciate that it's going to be better than 2%.

I appreciate that it's going to be better than 2%. Can you talk a little bit about whether that increased activity is, or how you would balance that increased activity?

James Faucette: Could you talk a little bit about whether that increased activity is an hour. How you would balance that increased activity between just better.

better valuations and more opportunities from a purely financial perspective in the market versus, it sounds like some of the acquisitions you're doing you're trying to push into new strategic areas and just wondering how you're balancing those strategies.

James Faucette: Valuations and more opportunities from a purely financial perspective in the market versus it sounds like some of the acquisitions Youre doing is trying to push into new strategic areas and just wondering how you're balancing those strategic imperatives versus perhaps a little better valuations.

Yeah, I mean, I wouldn't even call out.

I wouldn't say that this activity is because of better valuations at any given time when we look at the market and we see where are the growth opportunities.

James Faucette: I wouldn't say that these this activity is because of better valuations right at any given time when we look at the market rate and we see where are the growth opportunities. We want to move quickly and we look at organic versus inorganic ways of moving quickly, we never do anything surely inorganic or purely organic.

We want to move quickly, and we look at organic versus inorganic ways of moving quickly. We never do anything purely inorganic, right, or purely organic. And so think about our acquisitions as being matched to what is the opportunity in the market and what's the best way to capture that growth quickly, right? And so the strategy of categories is the same.

James Faucette: So think about our acquisitions as being matched to what is the opportunity in the market and what's the best way to capture that growth quickly right and so the strategy of categories is the same right. So there are new areas that we want to go into like capital markets. That's an investment decision. We go into a certain number of those were <unk>.

Right, so there are new areas that we want to go into, like capital markets. That's an investment decision. We go into a certain number of those. We're executing now with rigor. We went, bought answer advisory. Now we bought the next one in Canada. Right, so that's just about, it's a great growth area and we're trying to pivot. And the best way to do that, to build something that we don't have already organically, is to make some inorganic acquisitions. And then that becomes organic growth and we're able to kick in our recruiting, you know, machine. If you think about the UK, health is a great area. We just bought a health company, right? So,

James Faucette: <unk> now with rigor, we went and bought answer advisory now we bought the next one in Canada. So that's just about a great growth area and we're trying to pivot and the best way to do that to build something that we don't have already organically is to make some inorganic acquisitions, and then that becomes organic growth and we're able to kick in our recruiting.

James Faucette: Machine, if you think about the U K health is a great area. We just bought a health company right. So you look at the market and you say if I wanted to diversify what's the fastest way to diversify.

You look at the market and you say, if I want to diversify, what's the fastest way to diversify into new areas? And that's where often inorganic can help us do that through these niche acquisitions in consulting and industry. And then you've got just massive opportunities like cloud,

James Faucette: Into new areas, and Thats, where often inorganic can help us do that through these niche acquisitions in consulting and industry and then you've got this massive opportunities like cloud and security, where you saw some of those acquisitions in supply chain and that's all about both adding phenomenal talent quickly.

and security where you saw some of those acquisitions and supply chain, and that's all about both adding phenomenal talent quickly and scaling to go after a market that's today, right? So that's how we think about it. It's extremely rigorous. We always have a decision. What's the best way to get there organically or inorganically? And inorganic is always about acceleration and driving organic growth.

James Faucette: And scaling to go after a market that's today right. So that's how we think about it's extremely rigorous we always have a decision what's the best way to get there organically or inorganically and inorganic is always about acceleration and driving organic growth.

So it's very consistent. We've been doing it in a very disciplined way and in these kinds of environments

James Faucette: So it's very consistent we've been doing it in a very disciplined way and in these kinds of environments. We believe the companies that invest when and that is why we do actions like we did last year to increase our business resilience and enable us to be really well positioned to <unk>.

We believe the companies that invest win and that is why we do actions like we did last year to increase our business resilience and enable us to be really well-positioned to invest when others are not. That's great.

James Faucette: Invest when others are not.

Speaker Change: That's great color I appreciate that.

And similarly, just on bookings activity and AI contribution, there are clear acceleration

Speaker Change: Similarly, just on on bookings activity in contribution.

Speaker Change: Contribution or a clear acceleration.

and the A.I. level of activity, et cetera. When you're talking to clients,

Speaker Change: The eye.

Level of activity et cetera, when you're talking to clients and in that kind of thing how are they thinking about.

that kind of thing. How are they thinking about AI budget allocation versus other initiatives, etc. Right now, are they looking at it as, hey, this is an incremental investment that we need to be making given the pace of change in technology, or are they trying to really use that spend or have that spend?

Speaker Change: I allocate AI budget allocation versus other initiatives et cetera, right now or are they looking at it as hey, This is an incremental investment that we need to be making given the pace of change in technology.

Or are they trying to to really use that spend or perhaps that spend would be.

to offset some other projects, maybe that they're going to curtail a little bit sooner. Just trying to think about, as that continues to build, how we should think about it being incremental.

Speaker Change: To offset some other projects, maybe that theyre going to curtail a little bit. So we're just trying to think about as that.

Speaker Change: That continues to build how we should think about incremental versus substitutive within within a lot of the budgets.

Right now, we're seeing a lot of reprioritization, right, because, I mean, obviously, the market's growing. Like, we're growing, the market's growing, so spending and technology is increasing. It's not increasing as fast as it was increasing a couple of years ago, right, so spending and technology is increasing, but within that...

Speaker Change: Now, we're seeing a lot of re prioritization right because I mean, obviously the market's growing like we're growing the market is growing so spending in technology is increasing it's not increasing as fast as it was increasing a couple of years ago right. So spending on technology is increasing but within that youre seeing more prioritization in our research.

you're seeing more prioritization. And our research, everybody's research is saying, hey, more spending on AI. For lots of companies, it's also more spending mostly on building that digital core because many companies don't have the data states.

Speaker Change: Everybody's research is saying hey, more spending on AI for lots of companies. It's also more spending mostly on building that digital core because many companies don't have the data as states in order, they're not in the cloud. They don't have the data in order to use the <unk> So think of it as a real.

in order, they're not in the cloud, they don't have the data in order to use the Gen AI. So think of it as a real focus on building a digital core to enable as well.

On building a digital core to enable as well so market is still growing it's more about prioritization of where that spending is going.

Market's still growing. It's more about prioritization of where that spending's going. Okay, great.

Speaker Change: Okay, great. Thank you so much.

So, in closing, I want to thank all of our shareholders for your continued trust and support, and all of our people for what you do every single day. And I wish everyone a happy and a healthy holiday season. Thank you for joining today.

Speaker Change: So in closing I want to thank all of our shareholders for your continued trust and support and all of our people for what you do every single day and I wish everyone, a happy and healthy holiday season. Thank you for joining today.

Speaker Change: That does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

That does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

Speaker Change: Yeah.

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