Q2 2024 Accenture PLC Earnings Call

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Operator: Good morning. Thank you for standing by. Welcome to Accenture's second quarter fiscal 2024 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: Good morning, and thank you for standing by welcome to Accenture second quarter fiscal 2024 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you have a question at any time during the call. Please press one zero.

Operator: Later, we will conduct a question and answer session. If you have a question at any time during the call, please press one then zero. Similarly, if you should require assistance during the call, please press star then zero.

Katie OConor: You 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 your host managing director head of Investor Relations Katy O'connor. Please go ahead.

Operator: As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Managing Director, Head of Investor Relations, Katie OConor. Please go ahead.

Katy O'connor: Yeah.

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

Katie OConor: Thank you operator, and thanks, everyone for joining us today on our second quarter fiscal 2024 earnings announcement.

Katie OConor: As the operator, just mentioned I'm, Katy O'connor, managing director head of Investor Relations on today's call, you'll hear from Julie Sweet, our chair and Chief Executive Officer, and KC Mcclure, our Chief Financial Officer.

Katie OConor: 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.

Katie OConor: 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 result, KC will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the second quarter. Julie will then provide.

Katie OConor: Casey will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the second quarter. Julie will then provide a brief update on our market positioning before Casey provides our business outlook for the third quarter and full fiscal year 2024. We will then take your questions before Julie provides a wrap-up at the end of the call.

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

Katie OConor: 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, 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. 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.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie. Thank you, Katie, and everyone who joined us.

Katie OConor: 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 report reports on Form 10-Q.

Katie OConor: And other SEC filings these.

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

Katie OConor: Release or in the Investor Relations section of our website at Accenture Dot com as always Accenture assumes no obligation to update the information presented on this conference call now, let me turn the call over to Julie.

Julie T. Spellman Sweet: Thank you Katie and everyone joining and thank you to our 742000 people around the World who work every day to deliver 360 degree value for all our stakeholders.

Julie T. Spellman Sweet: And thank you to our 742,000 people around the world who work every day to deliver 360-degree value for all our stakeholders. I'm pleased with our performance in an uncertain macro environment. Our results highlight the benefit of the deep trust our clients have in us, our capabilities to do the most complex work at the heart of their businesses, the privileged position we hold within the ecosystem, and our ability to invest for the next waves of growth. We continue to see momentum in the quarter on how we are executing on our strategy to be the trusted reinvention partner of our clients, with a record 39 clients with quarterly bookings greater than $100 million. These large transformational winds position us to capture more growth as spending increases.

I am pleased with our performance in an uncertain macro our results highlight the benefit of the deep trust our clients have in us our capabilities to do the most complex work at the heart of their businesses. The privileged position, we hold within the ecosystem and our ability to invest for the next waves of growth.

Julie T. Spellman Sweet: We continued to see momentum in the quarter and how we are executing on our strategy to be the trusted reinvention partner of our clients with a record 39 clients with quarterly bookings greater than $100 million.

Julie T. Spellman Sweet: These large transformational wins position us to capture more growth as spending increases.

Julie T. Spellman Sweet: We also had over $600 million in new Gen-AI bookings, taking us to $1.1 billion in Gen-AI sales in the first half of the fiscal year, expanding our early lead in Gen-AI, which is core to our client's reinvention. We now have over 53,000 skilled data and AI practitioners against our goal of doubling our data and AI workforce from 40,000 to 80,000 by the end of fiscal year 26. We are laser-focused on the needs of our clients, and this focus is reflected in our bookings of $21.6 billion, representing our second-highest quarter on record. This included $10 billion of bookings in North America, our highest ever.

Julie T. Spellman Sweet: We also had over $600 million of new journey, I bookings, taking us to $1 1 billion and Jenny I sales in the first half of the fiscal year expanding our early lead in journey II, which is core to our clients' reinvention. We now have over 53000 skilled data and AI practitioner.

Julie T. Spellman Sweet: Against our goal of doubling our data and they will I work force from 40000 to 80000 by the end of fiscal year 'twenty six.

Julie T. Spellman Sweet: We are laser focused on the needs of our clients and this focus is reflected in our bookings of $21 $6 billion, representing our second highest quarter on record. This included $10 million of bookings in North America, our highest ever.

Julie T. Spellman Sweet: We continue to take market share with revenues of $15.8 billion for the quarter, flat compared to last year and slightly above the midpoint of our range. However, as we turned the page on the calendar year, we saw another turn of the dial on constraining spending by our clients, including spending on our services, particularly in parts of EMEA and North America. This was evident in the composition of our new bookings, which came in differently than expected. We see clients continuing to prioritize investing in large-scale transformations, which convert to revenue more slowly while further limiting discretionary spending, particularly on smaller projects. We also saw continued delays in decision making and a slower pace of spending.

Julie T. Spellman Sweet: We continued to take market share with revenues of $15 $8 billion for the quarter flat compared to last year and slightly above the midpoint of our range.

Julie T. Spellman Sweet: As we turned the page on the calendar year, we saw another turn of the dial on constraining spending by our clients, including spending on our services, particularly in parts of EMEA and North America.

Julie T. Spellman Sweet: This was evident in the composition of our new bookings, which came in differently than expected, we see clients continuing to prioritize investing in large scale transformations, which convert to revenue more slowly well further limiting discretionary spending particularly in smaller projects.

Julie T. Spellman Sweet: We also saw continued delays in decision, making and a slower pace of spending.

Julie T. Spellman Sweet: We are pleased that despite these conditions, our focused efforts to return to growth resulted in North America and CMT showing improvement over the last quarter. We are running our business with rigor and discipline, and we remain on track with the business optimization actions we announced last year to reduce structural costs to create greater resilience. We delivered adjusted EPS growth of 3%. We continue to invest significantly in our business to drive additional growth in highly strategic areas. With $2.1 billion of capital deployed across our geographic markets in Q2 in 11 acquisitions, bringing the total investment in acquisitions to $2.9 billion in H1 across a total of 23 acquisitions. We also continue to invest in learning for our people, with approximately 10 million training hours in the quarter, representing an average of 14 hours per person.

Julie T. Spellman Sweet: We are pleased that despite these conditions our focused efforts to return to growth resulted in North America, and CMT showing improvement over last quarter.

Julie T. Spellman Sweet: We are running our business with rigor and discipline and we remain on track with the business optimization actions, we announced last year to reduce structural costs to create greater resilience we.

Julie T. Spellman Sweet: We delivered adjusted EPS growth of 3%.

Julie T. Spellman Sweet: We continue to invest significantly in our business to drive additional growth and highly strategic areas with $2 $1 billion of capital deployed across our geographic markets in Q2, and 11 acquisitions, bringing the total investment in acquisitions to $2 $9 billion in H, one across a total of 12.

Julie T. Spellman Sweet: Three acquisitions.

Julie T. Spellman Sweet: We also continued to invest in learning for our people with approximately $10 million 10 million training hours in the quarter, representing an average of 14 hours per person.

Julie T. Spellman Sweet: In recognition of the 360-degree value we create, we are proud that we earned the number one position in our industry for the 11th year in a row and number 33 overall on Fortune's list of the world's most admired companies. We rank number one in our industry and number three overall on the Just Capital CNBC list of America's most just companies. And we have been recognized by Ethosphere as one of the world's most ethical companies for the 17th year in a row.

Julie T. Spellman Sweet: In recognition of the 360 degree value. We create we are proud that we earned the number one position in our industry for the 11th year in a row and number 33 overall unfortunate list of the world's most admired companies. We ranked number one in our industry a number three overall on the just capital.

Julie T. Spellman Sweet: CNBC list of America's most just companies and we have been recognized by Ethisphere as one of the world's most ethical companies for the 17th year in a row.

Julie T. Spellman Sweet: An important part of our growth strategy is to use our strong balance sheet to invest in order to scale higher growth areas and expand into new growth areas. We have a strong track record of delivering on this strategy. Here are some highlights from the quarter.

Julie T. Spellman Sweet: An important part of our growth strategy is to use our strong balance sheet to invest in order to scale higher growth areas and expand into new growth areas. We have a strong track record of delivering on this strategy here are some highlights from the quarter.

Julie T. Spellman Sweet: In North America, we invested in supply chain, an area with significant reinvention ahead with the additions of insight sourcing, impendi, and process technology. We acquired Navisite to help clients across multiple cloud providers, enterprise applications, and digital technologies modernize their digital core. And in Song, we acquired Work&Co to help our clients drive growth by designing and bringing digital brand strategies to market and operationalizing world-class digital products at scale. In EMEA, we are investing to help clients build their digital core and drive growth. In the UK, we invested in 6.6, which will help our clients transform their digital capabilities and modernize their legacy systems. We also acquired Redkite, with its full-stack data expertise, that will help our clients accelerate their performance with data-driven intelligence and AI. And in Germany, we added Voquetas, which will accelerate our clients' growth strategies using behavioral economics modeling to develop pricing strategies and sales concepts for B2B and B2C models.

Julie T. Spellman Sweet: In North America, we invested in supply chain, an area with significant reinvention ahead with the additions of insight sourcing impending and on process technology, We acquired NAV a site to help clients across multiple cloud providers enterprise applications and digital technologies modernize our digital core.

And in song, we acquired working Po to help our clients drive growth by designing and bringing digital brand strategies to market and operationalize them World class digital products at scale.

Julie T. Spellman Sweet: In EMEA, we are investing to help clients build their digital core and drive growth in the U K, we invested in six six which will help our clients transform their digital capabilities and modernize their legacy systems. We also acquired in the U K Red kite with its full stack data expertise that will help our clients accelerate their performance with data.

Julie T. Spellman Sweet: Driven intelligence and AI and in Germany, We added book hit Us, which will accelerate our clients' growth strategies using behavioral economics modeling to develop pricing strategy and sales concepts for b to B and B to C models.

Julie T. Spellman Sweet: Similarly, in growth markets, our acquisitions position us to drive our clients' growth agendas by expanding our capabilities in marketing and customer experience, with Rabbit's Tail in Thailand and Jixi in Singapore, helping clients in Indonesia capitalize on their fast-growing digital economy. Our ability to invest to fuel our organic growth is a competitive advantage, and as our clients continue to transform, we announced earlier this month that we will invest $1 billion over the next three years in Accenture LearnVantage, which will provide comprehensive technology learning and training services to help our clients reskill and upskill their workforce. Our investment includes the acquisition of Udacity, a digital education pioneer, which we expect to close by the summer. Once closed, we will have revenue in the zone of $100 million annually.

Julie T. Spellman Sweet: Similarly in growth markets, our acquisitions position us to drive our clients growth agenda is by expanding our capabilities in marketing and customer experience with rabbits tail in Thailand, and Dixie and Singapore, helping clients in Indonesia capitalize on our fast growing digital economy.

Julie T. Spellman Sweet: Our ability to invest to fuel organic growth is a competitive advantage and as our clients continue to transform we announced earlier. This month that we will invest $1 billion over the next three years and Accenture learn vintage, which will provide comprehensive technology learning and training services to help our clients re skill.

Julie T. Spellman Sweet: <unk> and Upskill their people.

Our investment includes the acquisition of Udacity, a digital education pioneer, which we expect to close by the summer.

Once closed we will have revenue in the zone of $100 million annually.

Julie T. Spellman Sweet: These services are highly strategic, and they enhance our position as a re-inventor partner of choice because talent is at the top of the agenda for CEOs. For example, we are helping Merck, a global biopharmaceutical company known as MSD outside of the United States and Canada, launch a groundbreaking generative AI training program for their employees to create world-class digital leaders. As a renowned thought leader in the biopharmaceutical market, Merck has long led the way in investing in its people and helping them build the skills and expertise needed to develop breakthrough therapies.

Julie T. Spellman Sweet: These services are highly strategic and they enhance our position as a reinvention of partner of choice because talent is at the top of the agenda for Ceos.

Julie T. Spellman Sweet: For example, we are helping Mark a global biopharmaceutical company known as MST outside of the United States and Canada launching groundbreaking generative AI training program for their employees to create world class digital leaders.

Julie T. Spellman Sweet: As the renowned thought leader in the biopharmaceutical market Merck has long lead the way and investing in its people and helping them build the skills and expertise needed to develop breakthrough therapies.

Kathleen R. McClure: Digital, data, analytics, and AI play a pivotal role in discovering, developing, manufacturing, and providing access for patients to medicines and vaccines. By once again investing in its people, Merck will be able to continue delivering on its promise to use the power of leading-edge science to save and improve lives around the world.

Julie T. Spellman Sweet: Digital data analytics, and AI play a pivotal role in discovering developing manufacturing and providing access for patients to medicines and vaccines.

Once again investing in its people mark will be able to continue delivering on its promise to use the power of leading edge science to save and improve lives around the world over to you KC.

Kathleen R. McClure: Thank you, Julie. And thanks to all of you for taking the time to join us on today's call. We were pleased with our overall results in the second quarter, with our second highest quarter of new bookings. We continue to invest at scale to strengthen our leadership position while delivering value for our shareholders. Now, let me summarize a few of the highlights of the quarter. Revenues were flat in local currency, with mid-single-digit growth or higher in six of our 13 industries, including public service, life science, utilities, energy, health, and high-tech.

Speaker Change: Julie and thanks to all of you for taking the time to join US on today's call. We were pleased with our overall results in the second quarter with our second highest quarter of new bookings, we continue to invest at scale to strengthen our leadership position, while delivering value for our shareholders.

Speaker Change: Now, let me summarize a few of the highlights of the quarter revs.

Speaker Change: Revenues were flat in local currency with mid single digit growth or higher in six of our 13 industries, including public service life Science utilities energy Health and high Tech, where our CMT industry group improved this quarter, we continued to see pressure as expected.

Kathleen R. McClure: While our CMT industry group improved this quarter, we continue to see pressure, as expected, and we continue to lose market share. 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. And we use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of significant acquisitions through the date of their last publicly available results on a rolling four-quarter basis. The adjusted operating margin of 13.7% decreased 10 basis points compared to Q2 last year, and the year-to-date operating margin is flat.

Speaker Change: And we continue to take market share as a reminder, we expect 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 and we use a consistent methodology to compare our financial results to burst.

Speaker Change: Adjusted to exclude the impact of significant acquisitions through the date of their last publicly available results on a rolling four quarter basis.

Speaker Change: Adjusted operating margin of 13, 7% decreased 10 basis points compared to Q2 last year and year to date operating margin is flat.

Kathleen R. McClure: This includes continued significant investments in our people and in our business. We delivered adjusted EPS in the quarter of $2.77, reflecting 3% growth over adjusted EPS last year. Finally, we delivered free cash flow of $2 billion and returned $2.1 billion to shareholders through repurchases and dividends.

Speaker Change: This includes continued significant investments in our people and in our business we.

Speaker Change: We delivered adjusted EPS in the quarter, a $2 77, reflecting 3% growth over adjusted EPS last year.

Speaker Change: Finally, we delivered free cash flow of $2 billion and returned $2 1 billion to shareholders through repurchases and dividends in the first half of the year, we have invested $2 9 billion in acquisitions across 23 transactions.

Kathleen R. McClure: In the first half of the year, we invested $2.9 billion in acquisitions across 23 transactions. With those high-level comments, let me turn to some of the details, starting with new bookings. New bookings were $21.6 billion for the quarter, representing a 2% decline in both U.S. dollar and local currency, with an overall book-to-bill of $1.4.

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

Speaker Change: Bookings were $21 6 billion for the quarter, representing representing a 2% decline in both U S dollar and local currency with an overall book to Bill of one four.

Kathleen R. McClure: Consulting bookings were $10.5 billion, with a book-to-bill of $1.3. Managed services bookings were $11.1 billion, with a book-to-bill of $1.4. Turning now to revenue, revenues for the quarter were $15.8 billion, flat in both U.S. dollars and in local currency, and were slightly above the midpoint of our guided range. Consulting revenues for the quarter were $8 billion, a decline of 3% in both U.S. dollars and local currency.

Speaker Change: Consulting bookings were $10 5 billion with a book to Bill of one three.

Speaker Change: Managed services bookings were $11 1 billion with a book to Bill of one four.

Speaker Change: Turning now to revenues revenues for the quarter were $15 8 billion flat in both U S dollars and in local currency and were slightly above the midpoint of our guided range.

Consulting revenues for the quarter were 8 billion a decline of 3% in both U S dollars and local currency.

Kathleen R. McClure: Managed service revenues were $7.8 billion, up 3% in both U.S. dollars and local currency. Taking a closer look at our service dimensions, technology services grew at low single digits, and operations and strategy and consulting declined at low single digits. Turning to our geographic markets, in North America, revenue was flat in local currency, with growth in public service offset by declines in banking and capital markets, software, and platforms, and communications and media. In EMEA, revenues declined 2% in local currency, with growth in public service offset by declines in communications and media and banking capital markets.

Speaker Change: Managed service revenues were $7 8 billion up 3% in both U S dollars and local currency.

Speaker Change: A closer look at our service dimensions technology services grew low single digits and operations and strategy and consulting declined low single digits.

Turning to our geographic markets in North America revenue was flat in local currency with growth in public service offset by declines in banking capital markets software and platforms and communications <unk> media in.

Speaker Change: In EMEA revenues declined 2% local currency with growth in public service offset by declines in communications and media and banking capital markets revenue growth in Italy was offset by declines in the United Kingdom, France and Ireland.

Kathleen R. McClure: Revenue growth in Italy was offset by declines in the United Kingdom, France, and Ireland. In growth markets, revenue grew 6% in local currency, led by growth in banking and capital markets, industrial, public service, and chemicals and natural resources. Revenue growth was driven by Japan and Argentina, partially offset by declines in Australia and Brazil. Moving down the income statement, the growth margin for the quarter was 30.9%, compared with 30.6% for the same period last year. Social market expense for the quarter was 10.3%, compared to 9.9% for the second quarter last year.

Speaker Change: And growth markets revenue grew 6% in local currency led by growth in banking capital markets industrial public service and chemicals and natural resources.

Speaker Change: Revenue growth was driven by Japan, and Argentina, partially offset by declines in Australia and Brazil.

Speaker Change: Moving down the income statement gross margin for the quarter was 39% compared with 36% for the same period last year.

Speaker Change: Sales and marketing expense for the quarter was 10, 3% compared to nine 9% for the second quarter last year.

Kathleen R. McClure: General Administrative Expense was 6.9% compared to 6.8% for the same quarter last year. Before I continue, I want to note that in Q2 of FY24 and FY23, we recorded $115 million and $244 million in costs associated with our business optimization actions, respectively. These costs decreased operating margin by 70 basis points and EPS by 14 cents this quarter and operating margin by 150 basis points and EPS by 30 cents in Q2 of last year. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating income was $2.2 billion in the second quarter, reflecting an adjusted operating margin of 13.7%, a decrease of 10 basis points from adjusted operating margin in the second quarter of last year. Our adjusted effective tax rate for the quarter was 18.8%, compared with an adjusted effective tax rate of 20.4% for the second quarter of last year.

Speaker Change: General.

Speaker Change: Administrative expense was six 9% compared to six 8% for the same quarter last year.

Before I continue I want to note that in Q2 of FY 'twenty, four and FY 'twenty, three we recorded $150 million and $244 million and costs associated with our business optimization actavis actions respectively.

Speaker Change: These costs decreased operating margins by 70 basis points and EPS by <unk> 14 cents this quarter and operating margin by 150 basis points and EPS by 30 sites in Q2 of last year.

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

Speaker Change: Adjusted operating income was $2 2 billion in the second quarter, reflecting an adjusted operating margin of 13, 7% a decrease of 10 basis points from adjusted operating margin in the second quarter of last year.

Speaker Change: Our adjusted effective tax rate for the quarter was 18, 8% compared with an adjusted effective tax rate of 24% for the second quarter last year.

Kathleen R. McClure: Adjusted diluting earnings per share were $2.77 compared with adjusted diluted EPS of $2.69 in the second quarter of last year. Today's services outstanding were 43 days compared to 49 days last quarter and 42 days in the second quarter of last year. Free cash flow for the quarter was $2 billion, resulting from cash generated by operating activities of $2.1 billion, net of property and equipment additions of $110 million.

Speaker Change: Adjusted Diluting earnings per share were $2 77 <unk>.

Speaker Change: Compared with adjusted diluted EPS of $2 69 in the second quarter last year.

Speaker Change: Days services outstanding were 43 days compared to 49 days last quarter and 42 days in the second quarter of last year.

Speaker Change: Free cash flow for the quarter was $2 billion.

Speaker Change: Solving from cash generated by operating activities of $2 1 billion net of property and equipment additions of $110 million.

Kathleen R. McClure: Our cash balance at February 29th was $5.1 billion, compared with $9 billion at August 31st. With regard to our ongoing objective to return cash to shareholders, in the second quarter, we repurchased or redeemed 3.8 million shares for $1.3 billion, at an average price of $352.35 per share. As of February 29th, we had approximately $4.6 billion of share repurchase authority remaining. Also, in February, we paid a quarterly cash dividend of $1.29 per share for a total of $813 million.

Speaker Change: Our cash balance at February 29th with $5 1 billion compared with 9 billion at August 31.

Speaker Change: With regards to our ongoing objective to return cash to shareholders.

Speaker Change: In the second quarter, we repurchased or redeemed three 8 million shares for $1 3 billion.

Speaker Change: And the average price of $352 and <unk> 35 per share.

As of February 29, we had approximately $4 6 billion of share repurchase authority remaining.

Speaker Change: Also in February we paid a quarterly cash dividend dividend of $1 29 per share for a total of $813 million.

Kathleen R. McClure: This represents a 15% increase over last year. Additionally, our Board of Directors declared a quarterly cash dividend of $1.29 per share to be paid on May 15th, also a 15% increase over last year. In closing, we remain laser focused on capturing growth opportunities in the market and delivering value for our clients. As you know and expect of us, we will operate with rigor and discipline while continuing to invest for long-term market leadership. Now, let me turn it back to Julie.

Speaker Change: 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 may 15th% to 15% increase over last year.

Speaker Change: In closing, we remain laser focused on capturing growth opportunities in the market and delivering value for our clients.

Speaker Change: As you know and expect of US we will operate with rigor and discipline, while continuing to invest for long term market leadership now, let me turn it back to Julie.

Julie T. Spellman Sweet: Thank you, Casey. Let me give you a little more color on the demand environment. Will all strategies continue to lead to technology and reinvention? Our clients are navigating an uncertain macro environment due to economic, geopolitical, and industry-specific conditions. And in response, we're seeing them thoughtfully prioritize larger transformations, building out their digital core, partnering to improve productivity, freeing up more investment capacity, to focus on growth and other initiatives with near-term ROI. Our focus on being at the center of our clients' business, doing their most complex transformational work, provides us with resiliency over time, as demonstrated by the fact that our top 100 clients have been customers for over 10 years. There is now near-universal recognition of the importance of AI, which is the heart of innovation.

Julie T. Spellman Sweet: Thank you Casey.

Let me give a little more color on the demand environment will all strategies continue to lead to technology and reinvention. Our clients are navigating an uncertain macro environment due to economic geopolitical and industry specific conditions.

Julie T. Spellman Sweet: And in response, we're seeing them thoughtfully prioritize larger transformations building out their digital core to partnering to improve productivity to free up more investment capacity to focus on growth and other initiatives with near term ROI.

Julie T. Spellman Sweet: Our focus on being at the center of our clients' business doing their most complex transformational work provides us with resiliency over time as demonstrated by the fact that our top 100 clients have been clients for over 10 years.

Julie T. Spellman Sweet: There is now near Universal recognition of the importance of AI, which is the heart of reinvention.

Julie T. Spellman Sweet: The ability to use AI at scale, however, varies widely with clients on a continuum, with those with strong digital cores generally seeking to move more quickly, while most clients are coming to grips with the investments needed to truly implement AI across the enterprise, and nearly all are finding it difficult to scale because the AI technology is a small part of what is needed.

Julie T. Spellman Sweet: The ability to use AI at scale, however varies widely with clients on a continuum with those which have strong digital Coors generally seeking to move more quickly while most clients are coming to grips with the investments needed to truly implement AI across the enterprise and nearly <unk>.

Julie T. Spellman Sweet: All are finding it difficult to scale because the AI technology is a small part of what is needed.

Julie T. Spellman Sweet: To reinvent using technology, data, and AI, you must have the right digital core, change your processes and ways of working, reskill and upskill your people, and build new capabilities around responsible AI, all with a deep understanding of industry and function in order to unlock the value. Many clients need to first find more efficiency to enable scaled investment in all these capabilities, particularly in their data foundation. We are able to help our clients with this AI rotation because of our broad services across strategy and consulting, technology, and operations, as well as everything customer through SONG and digital manufacturing and engineering through Industry X, and our relevance across the functions of the enterprises in 13 industries. Their privileged position in the technology ecosystem has perhaps never been more important. Generative AI is rapidly evolving and still in the early stages of maturity and adoption.

Julie T. Spellman Sweet: To reinvent using technology data and AI.

Julie T. Spellman Sweet: Must have the right digital core change your processes and ways of working we.

Julie T. Spellman Sweet: Reskill and Upskill your people and build new capabilities around responsible AI.

Julie T. Spellman Sweet: With a deep understanding of industry and function in order to unlock the value.

Julie T. Spellman Sweet: And many clients need to first find more efficiency to enable scaled investment in all of these capabilities, particularly in their data foundations.

Julie T. Spellman Sweet: We are able to help our clients with this AI rotation because of our broad services across strategy and consulting technology and operations as well as everything customer through song and digital manufacturing and engineering three industry X.

Julie T. Spellman Sweet: And our relevance across the functions of the enterprises in 13 industries.

Julie T. Spellman Sweet: Privileged position in the technology ecosystem has perhaps never been more important degenerative AI is rapidly evolving and still in the early stages of maturity and adoption and we are working closely with our ecosystem partners to help our clients understand the right data and AI backbone that is needed and how do we achieve tangible business value.

Julie T. Spellman Sweet: And we are working closely with our ecosystem partners to help our clients understand the right data and AI backbone that is needed and how to achieve tangible business value. I want to bring to life the complex work we are doing at the heart of our client's. Building on the back of a long-trusted partnership, we are working with Mondelz International, a world leader in snacking with well-known brands like Oreo, Velveeta, and Cadbury, to continue to drive growth and be an industry leader. Having laid the foundations of a strong shared services model powered by leading technology platforms and a data and AI foundation, we are now working on an ambitious reinvention of their digital core. We will design and implement a single cloud-based platform while also modernizing the finance function and transforming their supply chain planning and warehouse management capabilities.

Julie T. Spellman Sweet: Yeah.

Julie T. Spellman Sweet: I will now bring to life. The complex work, we are doing at the heart of our clients' businesses.

Building on the back of a long trusted partnership we are working with <unk> International a world leader in snacking with well known brands like Oreo Velveeta, and Cadbury to continue to drive growth and be an industry leader.

Julie T. Spellman Sweet: Having laid the foundations of a strong shared services modeled model powered by leading technology platforms and data and AI Foundation. We are now working on an ambitious reinvention of their digital core.

Julie T. Spellman Sweet: We will design and implement a single cloud based platform will also modernizing the finance function and transforming their supply chain planning and warehouse management capabilities. This will enable faster availability of products for customers driving more sales growth and maximum profitability.

Julie T. Spellman Sweet: This will enable faster availability of products for customers, driving more sales growth and maximum profitability. This new digital core will also allow Mondelz to further reinvent how it satisfy customers through the adoption of new technologies like generative AI. The cloud continues to be the foundation of the digital core. Our cloud business grew high single-digit this quarter as clients did work across the cloud continuum from migration to modernization to new business models to working at the intelligent edge. For example, we're helping Riyadh Air, a digitally native airline based in Saudi Arabia, become the world's first fully cloud-based airline. We will equip the brand new airline with a cloud-only infrastructure, enhanced cybersecurity, and AI-driven operations.

Julie T. Spellman Sweet: This new digital core will also allow <unk> to further reinvent how they satisfy customers through the adoption of new technologies like generative AI.

Julie T. Spellman Sweet: Cloud continues to be the foundation of the digital core our cloud business grew high single digits. This quarter as clients to work across the cloud continuum from migration to modernization to new business models to working at the intelligent edge.

Julie T. Spellman Sweet: For example, we're helping Riyadh air a digitally native airlines based in Saudi Arabia become the world's first fully cloud based airline we will equip the brand new airline with a cloud only infrastructure enhanced cyber security and AI driven operations our capabilities will ensure that we are there is digital core is future proof and.

Julie T. Spellman Sweet: Our capabilities will ensure that Riyadh Air's digital core is future-proof and remains legacy-free, enabling the airline to use cutting-edge technologies such as cloud, data, and AI to scale quickly and deliver a seamless and more personalized travel experience for its customers and employees. This will also help the company scale as it plans to operate in over 100 destinations by 2030. We are partnering with Belden, a global networking solution organization, on a cloud transformation program that will help them become a platform business. Unlocking the Power of Edge, Data, and AI to Drive New Business Opportunities and Enhance the Customer Experience. This platform will be powered by edge-to-cloud technology, allowing it to collect and analyze real-time data from industrial environments and improve operational efficiency.

Legacy free enabling the airline to use cutting edge technologies, such as cloud data and AI to <unk>.

Julie T. Spellman Sweet: Scale quickly and deliver a seamless and more personalized travel experience for its customers and employees. This will also help the company scale as it plans to operate over 100 destination destinations by 2030.

Julie T. Spellman Sweet: We are partnering with building a global networking solution organization on a cloud transformation program that will help them become a platform business unlocking the power of edge data and AI to drive new business opportunities and enhance the customer experience. This platform will be powered by edge to cloud technology, allowing.

Julie T. Spellman Sweet: To collect and analyze real time data from industrial environments and improve operational efficiencies.

Julie T. Spellman Sweet: This will provide valuable data-driven insights to Buildum and to their clients in industries where real-time insights are crucial. This reinvention will enable them to break down operational technology silos, allowing them to become a key player in the digital twin domain. We will also help enable this new service in the market. This strategic partnership will support Belden's reinvention from a products company into a data engineering and insights company that leverages the power of platform. We are focused on helping our clients leverage the power of AI quickly, generating tangible business value, leveraging our investment in differentiated tools that accelerate results. For example, our AI Navigator has helped clients across industries outline their value case, AI architecture, and AI solutions. And our recently announced AI switchboard is already helping clients with the complex new need for integration across LLM models. For example, one of the largest entertainment companies is currently testing the switchboard to compare how the same prompt would be interpreted by different models and how they perform before deciding on which model to use.

Julie T. Spellman Sweet: This will provide valuable data driven insights to build them and to their clients in industries, where real time insights are crucial.

Julie T. Spellman Sweet: This reinvention will enable them to breakdown operational technology silos, allowing them to become a key player in the digital twin domain. We will also help enable this new service in the market. This strategic partnership will support Belgians reinvention from a products company into a data engineering and insights company that leverages the power.

Julie T. Spellman Sweet: Of platforms.

Julie T. Spellman Sweet: We are focused on helping our clients to leverage the power of the I quickly generating tangible business value leveraging our investment in differentiated tools that accelerate results.

Our AI navigator has helped clients across industries outlined their value case, AI architecture, and AI solutions, and our recently announced AI switchboard is already helping clients with a complex new need for integration across LLM models. For example, one of the largest companies.

Julie T. Spellman Sweet: Companies is currently testing with switchboard to compare how the same prompt would be interpreted by different models and how they performed before deciding on which model to use.

Julie T. Spellman Sweet: Ultimately, an enterprise-wide AI rotation requires a strong data foundation. We are working with Telstra, Australia's leading telecommunications and technology company, on a radical simplification and modernization of its data ecosystem, accelerating its efforts to become AI-powered. We are modernizing and consolidating over 50 disparate enterprise data sources into a small, integrated set, forming Telstra's governed and secure data and AI core, allowing Telstra to rapidly scale bespoke generative AI capabilities in the future. Our work will also support the company's efforts to develop responsible, ethical, and secure market-leading AI frameworks, while helping their teams provide quicker, more effective, and more personalized customer interaction. One of the areas of richest opportunities for our clients is customer experience transformation, including with Generative AI, which uses the unique capabilities of song across creative, customer insights, and deep technology expertise. Song grew low single digits this quarter.

Julie T. Spellman Sweet: Ultimately an enterprise wide AI rotation requires a strong data foundation, we are working with Telstra, Australia's leading telecommunications and technology company on a radical simplification and modernization of its data ecosystem accelerating its efforts to become AI powered we are modernizing and consolidating over 50 disk.

Julie T. Spellman Sweet: <unk> enterprise data sources into a small integrated set forming telstra is governed and secure data and AI core, allowing telstra to rapidly scale. The spoke generative AI capabilities in the future are.

Julie T. Spellman Sweet: Our work will also support the companys efforts to develop responsible ethic and secure market, leading AI frameworks, while helping their teams to provide quicker more effective and more personalized customer interactions.

Julie T. Spellman Sweet: One of the areas of richest opportunities for our clients as customer experience transformation, including with generative AI, which uses the unique capabilities of song across creative customer insights and deep technology expertise.

Julie T. Spellman Sweet: <unk> grew low single digits this quarter.

Julie T. Spellman Sweet: We continue to help clients reimagine marketing to drive growth. For example, we're helping ExxonMobil, an energy supermajor, transform and optimize its end-to-end fuels marketing operations to drive future growth. With our global capabilities, our managed services will leverage our Synapse platform to drive automation and deliver measurable efficiencies across the fuels marketing business. Additionally, we are strengthening our partnership with Best Buy, a leading consumer electronics retailer, across multiple fronts to reimagine the customer experience, optimize costs, and drive growth. By leveraging data and generative AI, we are helping to transform their context in our operations and improve the customer and employee experience. We are also pleased to have entered into an agreement with Best Buy for lifecycle management of our own Accenture devices in North America and are creating a joint offering, end-to-end field service device support for clients. We have already applied this new offering to a major TV provider, marking our first entry into this new market.

Julie T. Spellman Sweet: We continue to help clients re imagine marketing to drive growth, we're helping exxonmobil and energy Supermajor transform and optimize its end to end fuels marketing operations to drive future growth with our global capabilities. Our managed services will leverage our <unk> platform to drive automation and deliver measurable.

Julie T. Spellman Sweet: <unk> efficiencies across the fuels marketing business.

Julie T. Spellman Sweet: We are strengthening our partnership with best buy a leading consumer electronics retailer across multiple fronts to re imagine the customer experience optimize costs and drive growth.

Julie T. Spellman Sweet: By leveraging data and generative AI, we are helping to transform their contact center operations and improve customer and employee experience.

Julie T. Spellman Sweet: We are also pleased to have entered into an agreement with best buy for lifecycle management of our own Accenture devices in North America and are creating a joint offering end to end field service device support for clients. We have already applied this new offering to a major television provider, marking our first entry into this new market.

Julie T. Spellman Sweet: These strategic initiatives underscore our commitment to helping Best Buy achieve superior customer experiences, operational efficiencies, and growth. Security is essential to reinvention. Moving beyond IT to protect the core assets of the business and evolve the critical role of security as technology, We saw very strong double-digit growth in our security business this quarter. We are working with one of the largest electric utility holding companies in the United States to integrate their operational technology into a seamless, unified cybersecurity solution. Together, we will enhance their security capabilities by implementing advanced monitoring and response, vulnerability management, and security automation. This will help reduce the risk of cyber events in their grid environment, protecting critical infrastructure serving tens of millions of people.

Julie T. Spellman Sweet: These strategic initiatives underscore our commitment to helping bestbuy achieve superior customer experiences operational efficiencies and growth.

Security is essential to reinvention moving beyond T to protecting the core assets of the business and evolving the critical role of security as technologies change we.

Julie T. Spellman Sweet: Saw very strong double digit growth in our security business this quarter.

Julie T. Spellman Sweet: We are working with one of the largest electric utility holding companies in the United States to integrate their operational technology into a seamless unified cyber security solution.

Julie T. Spellman Sweet: Together, we will enhance our security capabilities by implementing advanced monitoring and response vulnerability management and security automation. This will help reduce the risk of six year of cyber events and theyre, great environment protecting critical infrastructure, serving tens of millions of people.

Julie T. Spellman Sweet: We continue to see strong demand for digital manufacturing and engineering services. Industry X grew double digits in Q2. We're working with Indocount Industries Ltd., a global leader in the home textile space, on digital transformation to simplify operations, support its ambitious growth plans, and maximize e-commerce opportunities. We will build a cloud-enabled digital core powered by data and analytics that will help standardize, digitize, and automate processes and operations. From supply chain to logistics to manufacturing, the new platform will enable more efficient inventory management, quality standardization, optimal energy consumption, and a better customer experience. Together, we will reinvent their operations and help expand their business in India, the Middle East, North America, the UK, and Europe, and we continue our support for corporate green transformation by promoting carbon footprint compliance through the calculation and visualization of greenhouse gas emissions.

Julie T. Spellman Sweet: We continue to see strong demand for digital manufacturing and engineering services industry X grew double digits in Q2.

Julie T. Spellman Sweet: We're working with Indo Count Industries limited a global leader in the home textile space on digital transformation to simplify operations support its ambitious growth plans and maximize E. Commerce opportunities, we will build a cloud enabled digital core powered by data and analytics that will help standardize digitize and automate processes and operations.

Julie T. Spellman Sweet: From supply chain to logistics to manufacturing the new platform will enable more efficient inventory management quality standardization optimal energy consumption and better customer experiences.

Julie T. Spellman Sweet: Together, we will reinvent their operations and help expand their business in India Middle East North America, the UK and Europe.

Julie T. Spellman Sweet: And we continue our support for corporate Green transformation by promoting carbon footprint compliance to the calculation and visualization of greenhouse gas emissions.

Julie T. Spellman Sweet: To create a market where consumers can choose environmentally conscious products and services, a system to visualize the carbon footprint of each product is necessary. For example, we're assisting Matsumoto Precision, a precision machine parts processing company based in Japan, to gain more detailed insights into the sustainability of their production and achieve their decarbonization goal. We implemented a solution through a manufacturing platform that uses individual manufacturing performance information to record and report CO2 emissions on a per-product basis.

Julie T. Spellman Sweet: To create a market where consumers can choose environmentally conscious products and services a system to visualize the carbon footprint of each product is necessary for.

Julie T. Spellman Sweet: For example, we're assisting Matsumoto precision a precision machine parts processing company based in Japan to gain more detailed insights into the sustainability of their protection and achieve their decarbonization goal we.

Julie T. Spellman Sweet: We implemented a solution through a manufacturing platform that uses individual manufacturing performance information to record and report the Cotr mission on a per product basis. This will allow matsumoto precision to enhance our understanding of the environmental impact of their business and contribute more effectively to the realization of a day decarbonize.

Julie T. Spellman Sweet: This will allow Matsumoto Precision to enhance their understanding of the environmental impact of their business and contribute more effectively to the realization of a decarbonized society. Back to you. Thanks, Julie.

Julie T. Spellman Sweet: Yeah.

Julie T. Spellman Sweet: Back to you Casey Thanks Joey.

Speaker Change: Let me turn to our business outlook for the third quarter of fiscal 'twenty four we expect revenues to be in the range of $16. Two 5 billion to $16 85 billion. This assumes the impact of FX will be about negative 1% compared to the third quarter of fiscal 'twenty, three and reflects an estimated negative 1% to 3%.

Kathleen R. McClure: Now let me turn to our business outlook. For the third quarter of fiscal 24, we expect revenues to be in the range of $16.25 billion to $16.85 billion. This assumes the impact of FX will be about negative 1 percent compared to the third quarter of fiscal 23 and reflects an estimated negative 1 to 3 percent positive growth in local currency for the full fiscal year 24. Based upon how the rates have been trending over the last few weeks, we continue to expect the impact of FX on our results, and US dollars will be about flat compared to fiscal 23. For the full fiscal 24, we now expect revenue to be in the range of 1 to 3% growth in local currency over fiscal 23, which assumes an inorganic contribution approaching 3%.

Speaker Change: Positive growth in local currency.

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 expect the impact of FX on our results in U S dollars will be about flat compared to fiscal 'twenty three.

For the full fiscal 'twenty four we now expect revenue to be in the range of 1% to 3% growth in local currency over fiscal 'twenty, three which assumes an inorganic contribution approaching 3%.

Speaker Change: We continue to expect business optimization optimization actions to impact fiscal 'twenty for GAAP operating margin by 70 basis points and EPS by 56 cents.

Speaker Change: For adjusted operating margin, we now expect fiscal year 'twenty four to be 15, 5%, a 10 basis point expansion over fiscal 'twenty three results.

Kathleen R. McClure: We continue to expect business optimization actions to impact Fiscal 24 Gap operating margin by 70 basis points and EPS by 56 cents. For adjusted operating margin, we now expect fiscal year 24 to be 15.5%, a 10 basis point expansion over fiscal 23 results. We now expect our adjusted annual effective tax rate to be in the range of 22.5% to 24.5%. This compares to an effective tax rate of 23.9% in fiscal 23.

Speaker Change: We now expect our adjusted annual effective tax rate to be in the range of 22, 5% to 24, 5%. This.

Speaker Change: This compares to an effective tax rate of 23, 9% in fiscal 'twenty three.

Speaker Change: We now expect our full year adjusted earnings per share for fiscal 'twenty four to be in the range of $11 97 to.

Kathleen R. McClure: We now expect our full-year adjusted earnings per share for Fiscal 24 to be in the range of $11.97 to $12.20, or 3-5% growth over Fiscal 23 results. For the full fiscal 24, we continue to expect operating cash flow to be in the range of $9.3 billion 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 billion to $9.3 billion. Our free cash flow guidance continues to reflect a very strong free cash flow to net income ratio of 1.2. 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 shareholders. With that, let's open it up so that we can take your questions. Katie?

To $12 in 'twenty.

Speaker Change: Or 3% to 5% growth over fiscal 'twenty three results.

Speaker Change: For the full fiscal 'twenty four we continue to expect operating cash flow to be in the range of $9 3 billion to $9 9 billion.

Speaker Change: Our operating equipment additions to be approximately $600 million and free cash flow to be in the range of $8 7 billion to $9 3 billion are.

Speaker Change: Our free cash flow guidance continues to reflect a very strong free cash flow to net income ratio of one two.

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 shareholders.

Speaker Change: With that let's open it up so that we can take your questions Katy.

Katy: 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.

Speaker Change: Operator would you provide instructions for those on the call.

Katie OConor: Thanks, Casey. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask questions. Operator, would you please provide instructions for those on the call?

Speaker Change: If you'd like to ask a question. Please press one then 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.

Operator: 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.

Speaker Change: Your first question comes from the line of Tien Tsin Huang from JP Morgan. Please go ahead.

Operator: 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. Your first question comes from the line of Kin Jin Wong from J.P. Morgan. Please go ahead. Thank you. Good morning to all of you.

Speaker Change: Alright, Thank you and good morning to all of you Julien.

Speaker Change: Big picture, maybe too simple of a question, but just curious to get your thoughts on where we are in the cycle for you.

Speaker Change: Service has been because we've been doing sector.

Speaker Change: All of us for quite some time know Accenture has done well you've had very large.

Speaker Change: Activity come through.

Speaker Change: A short term cycle stuff as a result tissue as you said.

Kin Jin Wong: Julie, just a big picture, maybe too simple of a question, but I'm just curious to get your thoughts on where we are in the cycle for IT services, Ben, because we've been seeing sector softness for quite some time now. But Accenture has done well. You've had very large deal activity come through; short-term cycle stuff is always a little pressured, as you said. Where are we in terms of seeing maybe things bottoming or short-cycle discretionary spend return? Yeah, I mean, Tianzhen, I think, you know, it's hard to predict at this point anything other than what we see right now, right?

Speaker Change: Or are we in terms of seeing maybe things bottoming or short cycle discretionary spend returning.

Speaker Change: Yeah, I mean, Tien tsin, I think it's hard to it's hard to predict at this point you know anything other than what we see right now right. So what's different than 90 days ago, well as we said you know in December we.

Speaker Change: Really get visibility into our clients' budgets in January we say that every year right and so as the calendar year. You know we turned the page what we saw was a further tightening of spending at our clients.

Speaker Change: And that affects our services and particularly on the smaller projects. So you know from a sort of trend perspective, right 90 days ago there.

Julie T. Spellman Sweet: So what's different than 90 days ago? Well, as we said, you know, in December, we really get visibility into our clients' budgets in January. We say that every year, right?

Speaker Change: We didn't see the same level now you've kind of turned the dial a little bit more constraints and that's where we see the budgets being set for calendar year 'twenty four right and as you said, though.

Julie T. Spellman Sweet: And so as the calendar year, you know, we turn the page, what we saw was a further tightening of spending at our clients, particularly on the smaller projects. So, you know, from a sort of trend perspective, right, 90 days ago, we didn't see the same level.

Speaker Change: In this environment, we're taking market share and we're seeing building momentum on our strategy to be the reinvention partner with a record 39 clients with bookings over $100 million. So what does that tell you right. So the clients understand the importance of the technology led.

Julie T. Spellman Sweet: Now you've kind of turned the dial a little bit more constrained, and that's where we see the budgets being set for calendar year 24. And as you said, though, in this environment, we're taking market share, and we're seeing building momentum on our strategy to be the reinvention partner with a record 39 clients with bookings over $100 million. So what does that tell you, right?

Speaker Change: Transformation right and the fundamentals remain the same right. There's a lot more reinvention ahead, we're still when you look at whereas cloud right, both migration and modernization, we say about 80% of the opportunity is ahead right data and AI about 90% of the opportunities.

Julie T. Spellman Sweet: So the clients understand the importance of the technology-led transformation, right? And the fundamentals remain the same, right? There's a lot more reinvention ahead. We're still, when you look at where the cloud is, right?

Speaker Change: Ahead re platforming and cloud based platforms about 65% of that opportunity ahead based on you know who is actually adopted the more modern platforms and security I think security can be kind of forever ahead, but at least you know 65% of head and Thats before you get to thinking about areas like digital.

Julie T. Spellman Sweet: Both migration and modernization. We say about 80% of the opportunity is ahead, right? Data and AI, about 90% of the opportunity is ahead. Replatforming and cloud-based platform, about 65% of that opportunity ahead based on, you know, who has actually adopted the more modern platforms, and security, well, I think security can be, you know, kind of forever ahead, but at least, you know, 65% ahead, and that's before you get to thinking about areas like digital manufacturing and engineering services, where that technology has only been coming online even in the last couple of years, sort of modern technology Prioritize the large transformational deals and then be positioned to capture the spending when it increases.

Speaker Change: Manufacturing engineering services, where that technology is the only been coming online even in the last couple of years sort of the modern technology and of course customer also extraordinarily early days so.

Speaker Change: Where we really focus on.

Speaker Change: Is meeting clients, where they are today right. So that's prioritized the large transformational deals and then be positioned to capture the spending when it increases and we see the sort of the the industry as being very strong because all claim.

Speaker Change: Have to get there they need to get to the technology transformation, they need to get the reinvention and Thats why youre seeing even as the constraints youre seeing that early interest and Jenny I mean, a billion sales in the first six months of the year that is the fastest we have ever built sales in an emerging technology and what it tells.

Julie T. Spellman Sweet: And we see the industry as being very strong because all clients have to get there. They need to get to the technological transformation. They need to get to reinvention.

Julie T. Spellman Sweet: And that's why you're seeing, even as the constraints, that early interest in Gen AI. I mean, a billion sales in the first six months of the year, that is the fastest we have ever built sales in an emerging technology. And what it tells you is that clients understand the importance of AI, that they're going to have to reinvent every part of the enterprise. And that's exactly what we've done for the last decades at Accenture, right? Being the company that can go from strategy to build to operations, deep in industry and functional expertise because of strategy and consulting all come together for this moment to be the partner for reinvention across the enterprise, not just to build the technology but to use it to reinvent.

Speaker Change: Are you is that clients understand the importance of AI that theyre going to have to reinvent every part of the enterprise and that's exactly where everything we've done for the last decades at Accenture right being the company that can go from strategy to build to.

Speaker Change: <unk> deep in industry and functional expertise because of strategy and consulting all comes together for this moment to be the partner for reinvention across the enterprise not just to build the technology, but to use it to reinvent and that's exactly what you see in these results which is why.

Julie T. Spellman Sweet: And that's exactly what you see in these results, which is why I'm super confident about the industry in the future. Yeah, no, I'm confident Accenture will be there to catch all that, like you said, but maybe it's my follow-up with the GNAI bookings. Any trends on deal size and confidence that some of these early bookings will convert to become a part of this whole large $100 million plus deal activity across or pull through from GNAI? So a couple of things, right, when you see in our resilience is that we are doing these, you know, bookings over $100 million. And that's the kind of layers that just gives you that base, right, of resilience during this period.

Speaker Change: I am.

Speaker Change: I am Super confident about the industry in them in the future.

Speaker Change: Yes.

Speaker Change: Okay that makes sense will be the catch all of that like you said, but maybe as my follow up with the.

Speaker Change: With the Jimmy <unk> bookings.

Speaker Change: On deal size in and confidence that some of these early bogies will convert to become a part of this whole large $100 million plus deal.

Speaker Change: This deal activity across more pull through from <unk>.

Speaker Change: That question makes sense.

Speaker Change: So a couple of things right.

Speaker Change: What you see in our resilience is that we are doing these.

Speaker Change: Bookings over $100 million and Thats, what kind of layers that that just gives you that base rate of resilience. During this period as we said we are seeing further constraint on the smaller projects. So that's why you've got the updated guidance right, but the base of these larger deals we feel.

Julie T. Spellman Sweet: As we said, we've seen further constraints on the smaller projects. So that's why you've got, you know, the updated guidance, right? But the base of these larger deals we feel really good about from a resilience perspective. And then, you know, you know how this is, right?

Speaker Change: Good about from a resilience perspective and then.

Speaker Change: Do you know how this is right.

Julie T. Spellman Sweet: You're at the client, you're at the heart of their business, you're really doing the strategic work. That's what all these large deals represent. And then, as spending, you know, increases, you catch the pent-up demand. And, you know, that's kind of how we see it. And that's how we've, you know, run it in the bath.

We're at the client you are at the heart of their business Youre really doing the strategic work Thats, what all of these large deals represent and then as spending increases.

Speaker Change: Increases you catch the pent up demand and that's kind of how we see it and that's how we run it in the past and by the way of course as you know we were really investing inorganically to capture more growth, which you also start to see.

Julie T. Spellman Sweet: And by the way, of course, as you know, we're really investing organically to capture, you know, more growth, which you also start to see in particular at the back end of our fiscal year. Thanks, Tianjin. Your next question comes from the line of Bryan Keane from Deutsche Bank. Please go ahead.

Speaker Change: In particular, they are at the back end of our fiscal year.

Speaker Change: Thanks, Tien tsin.

Speaker Change: Your next question comes from the line of Bryan Keane from Deutsche Bank. Please go ahead.

Bryan Connell Keane: Hi, Good morning case, if a center does 1% constant currency in the third quarter, that's kind of the midpoint of the range I guess the implied midpoint for <unk> is a ramp up to 6% constant currency, what kind of visibility do you have going into a number of the mid.

Bryan Connell Keane: Casey, if Accenture does 1% constant currency in the third quarter, that's kind of the midpoint in the range. I guess the implied midpoint for 4Q is a ramp up to 6% constant currency. What kind of visibility do you have going into a number like that in the fourth quarter? Yeah. Hi Bryan.

Bryan Connell Keane: Point like that in the fourth quarter.

Speaker Change: Yeah, Hi, Brian Thanks for your question and you're right. You're obviously your math is correct that that would be what the our guidance would say in terms of visibility, but it's really no different than what we have anytime in the past in this part of the year for our full year guidance. Obviously, we are.

Kathleen R. McClure: Thanks for your question. And you're right. Obviously, your math is correct.

Kathleen R. McClure: That would be what our guidance would say. In terms of visibility, it's really no different than what we have had in the past in this part of the year for our four-year guidance. Obviously, we are not forecasting the whole year. We just have the back half of the year.

Speaker Change: Not forecasting that the whole year, we just have the back half of the year Theres no difference and visibility as it relates to what we've done any other time of the year any other year. This time and we do our same.

Kathleen R. McClure: There's no difference in visibility as it relates to what we've done any other time of the year, any other year this time of year. And we do our same analysis and outlook to provide you with our guidance of the one to three. Got it, got it. And then, Julie, just thinking about... Clients need to update their data in order to leverage AI and scale. Why isn't that translating to stronger demand in the business? You would think that everybody would turn around and spend, you know, considerably in the short term to get that ramp up in order to get AI to leverage it, but it doesn't quite translate. I'm just trying to figure out the disconnect.

Speaker Change: Analysis and outlook to provide you with our guidance of the one to three.

Speaker Change: Got it got it and then Julie just thinking about.

Speaker Change: Clients need to update their data in order to leverage AI and scale.

Speaker Change: Why isn't that translate into stronger demand in the business you would think that everybody would turn around and spend.

Speaker Change: Considerably on short term to get that ramp up in order to get to leverage it but it doesn't quite translating I'm just trying to figure out the disconnect there.

Julie T. Spellman Sweet: Yeah, so there are two things. So first of all, it's about prioritization, right? So they're overall constrained on spending, right? So you make choices, right, as opposed to it being added. So they're not able to allocate extra budget.

Speaker Change: Yeah. So there's two things so first of all it's about prioritization right. So their overall constraint on spending right. So you make choices right as opposed to it being additive so theyre not able to allocate extra budget, they're prioritizing their budget. So youre.

Julie T. Spellman Sweet: They're prioritizing their budget, so you're seeing more of a substitution right now as opposed to, hey, we need to do this. Let's add to the budget.

Speaker Change: Seeing more of a substitution right now as opposed to hey, we need to do that so let's add to the budget and that's tied to the uncertain macro that's putting people constraint I would one I had one bankers say, it's corporates, who put themselves on a diet given the given the macro right. The second thing Brian is you have to remember that you.

Julie T. Spellman Sweet: And that's tied to the uncertain macro that's putting people constrained. I had one banker say it's like corporates who put themselves on a diet given the macro, right? The second thing, Bryan, is you have to remember, right? You need to be in the cloud, you've got to have modern platforms.

Speaker Change: You can't just jumped to the great data Foundation right you need to be in the cloud.

Speaker Change: You've got to have modern platforms and so what you should read into the.

Julie T. Spellman Sweet: And so what you should read into the, you know, the higher clients, the clients doing these higher bookings, right, is that they're often doing the big transformations, oftentimes being ready to put in the data foundation, right? There are only still 40% of workloads are in the cloud. 20% of those roughly haven't been monetized, right?

Speaker Change: The higher client students.

Speaker Change: I'm steering these higher bookings rate is that theyre doing the big transformations oftentimes to be ready to put in the data Foundation right. There's only still 40% of workloads or in the cloud 20% of those roughly haven't been modernized rate many of our clients haven't put in the platforms. If you don't have the major ERP platforms that are mark.

Julie T. Spellman Sweet: Many of our clients haven't put in the platforms yet. If you don't have the major ERP platforms that are modern, you know, you don't create a data foundation to fuel generation AI in isolation. So you've got to build the digital core, and as we've said, there's a lot more to go. And that's what's driving these larger, complex transformations. Like people don't like to do these big transformations in the sense that they're big, they're hard, they're complicated, and they need to do them in order to ultimately be able to use AI, not just in a part of the business or as a proof of concept, but really to transform and get the value they now see. And so it's, again, you can't jump to AI. You've got to put all the pieces together, and a lot of clients aren't there yet, which is our opportunity. I got it.

Speaker Change: You don't you don't create a data foundation to fuel Jenny I in isolation, so you've got to build the digital core and as we've said there's a lot more to go and that's what's driving these larger complex transformations like people don't like to do these big transformations in the sense of you know, they're big they're hard they're complicated and they.

Speaker Change: Need to do them in order to ultimately be able to use the AI not just in a part of the business or as a proof of concept, but really to transform and get the value. They now see and so it's again you can't you can't jump to AI, you've got to put all the pieces and a lot of clients aren't there.

Speaker Change: Yes.

Speaker Change: Which is our opportunity.

Speaker Change: Got it thank you for taking the questions.

Bryan Connell Keane: Thank you for taking the question. Thanks Bryan. Thanks Bryan. Your next question comes from the line of James Faucette from Morgan Stanley. Please go ahead.

Speaker Change: Thanks, Ryan Thanks, Brian.

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

James Eugene Faucette: Great, thank you very much. I wanted to follow up on the questions around AI, etc. I recognize that like everybody.

James Eugene Faucette: Great. Thank you very much I wanted to follow up on the questions around particularly.

James Eugene Faucette: Et cetera, I recognize like everybody is kind of a different stages, how should we think about first the timeline in terms of preparing and getting ready for that.

James Eugene Faucette: Stages. How should we think about first the timeline in terms of preparing and getting ready? Implementation. Solutions, et cetera, and then moving into full implementation and how we should think about that affecting Accenture's business. And like you mentioned, you've talked about some record bookings or the number of new customers over 100 million, like how that will ramp up over time. So let me just start with the strategy around capturing the growth opportunity from Gen AI. So this is the same playbook that we have used in every wave of new technology evolution. When we went from mainframe to client server, then to cloud and software as a service, and then to RPA and AI-driven automation when you saw things like MyWizard and Synops.

James Eugene Faucette: Implement.

James Eugene Faucette: Pollutions et cetera, and then moving into the full implementation and how we should think about that affecting eccentric business and what you mentioned you talked about some record bookings or the number of new customers over $100 million like how that will ramp in the timeframe.

Speaker Change: Yeah, well, so maybe just let me just start with like the strategy around capturing the growth opportunity from Gen. AI right. So this is the same playbook that we have used in every wave of new technology evolution.

Speaker Change: Evolution right. When we went from mainframe to client server than to cloud and software as a service and then to RPI and AI driven automation. When you saw things like my Wizard in Sin ops right we.

Speaker Change: We have the same strategy the strategy starts with we want to be the first mover.

Julie T. Spellman Sweet: The strategy starts with, we want to be the first mover to help our clients use technology. And that's why we're doing with our investments of $3 billion to create solutions for them. And you see that coming through with our sales in generative AI, which, as I said earlier, are the fastest we've ever seen in sort of these new technologies because there's a lot of interest and we're the leader. So we want to be the first mover in helping our clients. The second part of our strategy is to be the first mover in using technology itself to serve our clients, right? And we did that with the digital, with AI automation, you know, on all of our platforms. And what that does, it's a proven formula because if we invest big to be early and be the first mover, right, then we're positioned to capture all the opportunity with our clients because they need to, you know, adopt it and transform. And as I just went through, that requires a lot of the digital core.

Speaker Change: To help our clients use the technology and that's why what we're doing with our investments of $3 billion to create solutions for them and you see that coming through with our sales in generative AI, which as I said earlier are the fastest we've ever seen and sort of.

Speaker Change: These new technologies, because theres a lot of interest and we're the leader so we want to be the first mover in helping our clients use it.

Speaker Change: The second part of our strategy is to be the first mover in using the technology itself to serve our clients right and we did that with like the digital with AI automation, you know with all of our platforms.

Speaker Change: And with that does it's a proven formula because if we invest big to be early and be the first mover right. Then we're at position to capture all of the all the opportunity in our with our clients because they need to adopt it and transform and as I just.

Speaker Change: Went through that requires a lot. The digital core then you've got to actually use it to change new ways of working right too.

Julie T. Spellman Sweet: Then you've got to actually use it to change new ways of working, right, to, you know, upskill your talent, right, and build new capabilities like Responsible AI. When we are able to be the first mover, which we are already starting to do now with Gen AI and how we deliver, that enhances our competitive position, right? It makes us more differentiated.

Speaker Change: Upscale your talent right and build new capabilities like responsible AI.

Speaker Change: When we are able to be the first mover, which we are already starting now to use journey and how we deliver that enhances our competitive position right. It makes us more differentiated and of course. It also then allows our clients over time the more we use the journey II to achieve the results they.

Julie T. Spellman Sweet: And, of course, it also then allows our clients, over time, the more we use Gen AI to achieve the results they need at a lower cost, which frees up their investment capacity to do the massive reinvention. And, of course, we are then best positioned to be their partner as they reinvest in using the tech and AI to reimagine their enterprise. And that use of AI, because remember, as you think about growth, right? You've got a lot of the digital core that's got to be built, right? You can't jump that step, right?

Need at a lower cost, which frees up their investment capacity to do the massive reinvention and of course, we are the best positioned to be their partner as they reinvest in using the tech and AI to.

Speaker Change: Two.

Speaker Change: Re imagine their enterprise and that use of AI, because remember as you think about the growth rate.

Speaker Change: You've got a lot of the digital core of it's got to be built by you can't jump that step right. It's not a magic technology right, but then as you build it you didn't have to go.

Julie T. Spellman Sweet: It's not a magic technology, right? But then, as you build it, you then have to go, you know, function by function, to change the ways you work to actually get the productivity and growth. So, we really see this as being, you know, kind of the next decade of what our clients are going to be focused on, and we're positioning ourselves to be their partner and be the first mover in both places. Yeah, and maybe I'll take the layering question on the larger deals and, and, and talk a little bit about how that's going to work for the back half of your year as it relates to guidance. Right, so we have the larger deals that were terrific in our second quarter and our whole first half of the year, but you're right, they do layer in slower than the smaller deals.

Speaker Change: Function by function.

Speaker Change: To change the way you work to actually get the productivity and the growth. So we really see this as being you know kind of the next decade of drop of what our clients are going to be focused on and we're positioning ourselves to be their partner and be the first mover in both places.

Speaker Change: And maybe I'll take the layering in question on the on the on the larger deals and and and talk a little bit about how that's going to work for the back half of your year as it relates to guidance and so we have the larger deals that were terrific right in our second quarter and our whole first half of the year, but you are right they do layer.

Speaker Change: In slower.

James Eugene Faucette: And we see pressure on the volume of our smaller deals. And that's why we have the one to three guidance for the full year. Now, we do feel good about delivering on this guidance and what that means for H2. And it really is for a few reasons that we've talked about before. But let me just kind of reiterate, you know, the first is that our competitive advantage is that we have the ability to invest. And you saw us do that in H1.

Speaker Change: Then the smaller deals and we see pressure in the volume of our smaller deals and that's why we have the one to three.

Speaker Change: Guidance for the full year now we do feel good about delivering to this guidance.

Speaker Change: What that means for age two and it really is for a few reasons that we've talked about before but let me just kind of reiterate the first is that our competitive.

Speaker Change: No advantage is that we have the ability to invest and you saw us do that in each one and Julie talked about that with investing more in acquisitions. This year in the first half than we did all of last year, and that's really important because that drives.

Kathleen R. McClure: And Julie talked about that investing more in acquisitions this year, the first half that we did all of last year. And that's really important, because that drives inorganic growth. But again, we do that really to fuel organic growth, but we see that coming online in the back half of the year. The second thing is that we have done these larger transformation deals, but also the ones from previous years. And we see that continuing to benefit us as it relates to revenue, as it will layer on in the back half of the year. And that really just speaks to the resilience of our strategy, both in terms of being what Julie talked about being where clients need us and our inorganic strategy to continue to benefit, to pivot to scale in new areas of growth.

Speaker Change: Inorganic growth, but again, we do that really to fuel organic growth, but we see that coming online in the back half of the year. The second thing is that we have done these larger transformation deals, but also the ones from the previous years.

Speaker Change: We see that continuing to benefit us as it relates to revenue as they will layer on in the back half of the year and it really just speaks to the resilience of our strategy. Both in terms of being what you always talked about being where our clients need us and our inorganic strategy to continue to benefit to pivot to scale in new areas of growth and so that's how that all kind of comes.

Kathleen R. McClure: And so that all kind of comes together in terms of revenue conversion from those larger deals and when they come online, James. And maybe I'll also add what that means from a type of work perspective for the entire year. What we now see from the context of the one to three is our consulting type of work probably will be flat-ish, and we see our managed services growing to about mid-single-digit growth for the year. Great, thanks for the color to both of you.

Speaker Change: Together in terms of revenue conversion from those larger deals and when they come online.

Speaker Change: James and maybe I'll, just also add what that means from a type of work for the entire year what.

Speaker Change: What we now see from the context of the one to three years, our consulting type of work probably about flattish.

James Eugene Faucette: And we see our managed services growing to about mid single digit growth for the year.

James Eugene Faucette: Great. Thanks for the color to both of you and quickly Casey just in terms of the.

James Eugene Faucette: And quickly, Casey, just in terms of that investment, how do we think about how that affects the margin expansion? I mean, typically, when you're doing acquisitions, there's a little bit of time before you can start to get people on the same type of trajectory as Accenture's margin expansion, but just trying to get a sense of how we should think about that impact. Yes, thanks for that.

James Eugene Faucette: Investment how should.

James Eugene Faucette: How do we think about like how that effects. The margin expansion I mean, typically when you're doing acquisitions. There is a little bit of time before you can start to get people to the same type of trajectory as expenditures.

James Eugene Faucette: Margin expansion, but just trying to get a sense of how we should think about that impacting as well.

Kathleen R. McClure: Well, first of all, I just want to put out that I'm really pleased with our profitability in the first half of the year and the outlook for our profitability for the full year. Our margin is flat, but we have EPS growth for the first half of the year, and profit growth of 5%, and that really just points to the rigor and discipline that we continue to operate our business with. Well, really importantly, what Julie talked about, all the investments we're making in our business and our people continue, right? So, as you look at the back half of the year, we now see that 10 basis points of expansion is where we see it. Again, very important, we continue to have high levels of investment in our people and our business.

Speaker Change: Thanks, Doug well first of all I'm, just I just wanted to put out there.

Speaker Change: Really pleased with our profitability in the first half of the year and the outlook for our profitability for the full year op margin is flat, but we have EPS growth for the first half of the year profit growth of 5% and that really just points to the rigor and discipline that we continue to operate our business in but really importantly, it's really talked about all the investments, we're making in our business and our people continue.

Speaker Change: Right. So as you look at the back half of the year, we now see that 10 basis.

Basis points expansion is where we see it again very important.

Speaker Change: Important continue to have high levels of investment or people in our business and EPS, we see for the whole year at about 3% to 5% and one thing I will point out just to help all of you. We did benefit from the first half of the year and our EPS with higher nonoperating income, which makes a lot of sense on interest income on our higher cash.

Kathleen R. McClure: In EPS, we see for the whole year at about, you know, 3% to 5%. One thing I will point out, just to help all of you, we did benefit from the first half of the year in our EPS with, you know, higher non-operating income, which makes a lot of sense on interest income on our higher cash balance. In the first half, you see that our cash went from 9 to 5, still a great amount.

Speaker Change: Balance the first half you see that our cash went from nine to five so great cash we can no concerns will continue with our capital allocation.

Kathleen R. McClure: No concerns. We'll continue with our capital allocation strategy. But just as you model in the back half of the year, you'll see that, not surprisingly, with lower cash, we'll have lower interest income. So, just as you're working through your EPS modeling for the first half and the second half, that's something that you might want to consider. Super helpful. Thank you.

Speaker Change:

Speaker Change: We had a strategy, but just as you model in the back half of the year Youll see that not surprisingly with lower cap.

Speaker Change: Lower cash will have lower interest income so just as youre working through your EPS modeling for the first half in the second half that's something that you might want to consider.

Speaker Change: Super helpful. Thank you.

Bryan C. Bergin: Your next question comes from the line of Bryan Bergin from TD Colon. Please go ahead. Hi, good morning.

Speaker Change: Your next question comes from the line of Bryan Bergin from TD Colin. Please go ahead.

Speaker Change: Yeah.

Bryan C. Bergin: Hi, good morning, Thank you.

Julie T. Spellman Sweet: Thank you. So Julie, I'm curious, just based on your conversations with leaders, what might be the catalyst here to have clients release spending programs and kind of lean back into shorter cycle work? Just as the economic data generally holds up, are we just in a slower for longer backdrop?

Bryan C. Bergin: So Julien I'm curious just based on your conversations with the leaders what might be the catalyst here to have clients release spending programs and kind of lean back into shorter cycle work.

Bryan C. Bergin: Economic data generally holds up or are we just.

Bryan C. Bergin: In a slower for longer backdrop, or just kind of hoping you can shed some color on how youre thinking about a recovery internally on what enterprises really are watching and waiting for.

Julie T. Spellman Sweet: Or just kind of hoping that you can share some color on how you're thinking about a recovery internally here and what enterprises are really watching and waiting for. I think there's going to be a couple of dynamics, right? Like, remember, they just set budgets. So, you know, we're kind of assuming these are their budgets for their calendar year. And we see, in general, most of this constraint is tied to the uncertain macro. So, you know, those are the kind of things.

Yeah look I think there's going to be a couple of dynamics right like remember they just set budgets. So you know we're kind of assuming these are the budgets for their calendar year and we see in general most of this constraint is tied to the uncertain macro. So you know those are the kinds of things they've got budgets.

Julie T. Spellman Sweet: They set budgets, and they've got uncertain macros. Yeah, and just a reminder that, you know, everything that we're talking about in terms of giving guidance, I know all of you know this, but just as a reminder, our fiscal year ends in August, right? So there's, it's a little bit over halfway through the calendar year.

Bryan C. Bergin: And you've got uncertain macro.

Bryan C. Bergin: And then just a reminder that you know.

Bryan C. Bergin: Everything that we're talking about in terms of giving guidance I know all of you know this but just it just as a reminder, our fiscal year ends in August right. So there, it's a little bit over halfway through the calendar year.

Julie T. Spellman Sweet: Okay, okay, that makes sense. And then as it relates to Gen-AI, just kind of the revolutionary versus evolutionary kind of questioning here, just given how much work needs to be done for most clients to really do anything with large language models, how do we interpret that as a driver of your growth? So, meaning, does Gen-AI enable you to essentially drive a higher level of growth when spending does become more normal?

Speaker Change: Okay, Okay that makes sense.

Speaker Change: And then as it relates to Jenny I, just kind of the revolutionary versus evolutionary kind of questioning here just given how much work needs to be done for most clients to really do anything with large language models, how do we interpret that as a driver.

Speaker Change: Of your growth so meaning does gen. AI enabled you to essentially drive a higher level of growth when spending does become more normal or should we think about this more as a next tech wave that enables comparable levels of normalized growth just because of how long this might all take for large enterprises to get there.

Julie T. Spellman Sweet: Or should we think about this more as a next tech wave that enables comparable levels of normalized growth just because of how long this might all take for large enterprises to get there? What I'd say is this is more about, we think of this as prior technological waves, right? Each one's been a little bit faster in terms of that, but especially when you look at where our clients are on the continuum of building out that digital core, there's a lot to go, and you really need that to fully realize it. We see this as more like our past, the way these things have evolved in the past.

Speaker Change: Well what I'd say is this is this is more about like we think of this as like prior technology waves right. Each one has been a little bit faster rate in terms of that but especially when you look at kind of where our clients are on the continuum of building out that digital core.

Speaker Change: There is a lot to go and you really need that to fully realize it so.

Speaker Change: We see this as more like our prior you know kind of the way these things have.

Julie T. Spellman Sweet: Right now, that's what we... Good, thank you. Your next question comes from the line of Dave Koning from Baird. Please go ahead.

Speaker Change: Have evolved in the past.

Speaker Change: Right now that's what we see.

Speaker Change: Okay. Thank you.

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

David John Koning: Yeah, hey guys, thanks so much. I guess my question is, are you seeing your clients probably having much lower attrition, just like every company has low employee attrition right now? Are you seeing them take their own employees, their own IT employees, and just do more internally right now, or is that a little bit of just the demand issue right now? We certainly are seeing, you know, obviously, our clients have invested in more technology internally on our advice, right? We've said to them, you know, during the pandemic, with technology being so important, they should be building up their technology. So sure, there are clients, they've got a lot of our clients, but not all of them, because it really depends on your positioning. So some of our clients, that's really not the differentiator, right? So they want a smaller IT, and they've got others who've built it up, and it really depends on where they are.

David John Koning: Yeah, Hey, guys. Thanks, so much I guess.

David John Koning: A question are you seeing your your clients, probably having much lower attrition just like every company is low employee attrition right. Now are you seeing them take their own employees their own employees and just do more internally right now and is that a little bit of just the demand issue right now.

David John Koning: I mean, we certainly are seeing.

David John Koning: Or obviously are our clients have invested in more technology internally at our advice right. We've said to them during the pandemic with technology being so important they should be building up their technology. So sure there's clients they've got a lot of our clients on all of it because it really depends on your positioning.

David John Koning: So some of our clients that's really not the differentiator of rates. So they want a smaller I T and they've got others, who built it up and it really depends on where they are but sure I mean, we certainly got our clients doing more.

Julie T. Spellman Sweet: But sure, I mean, we've certainly got clients doing more, you know, doing more in-house as part of it, and we've got other clients outsourcing more, right? So like, it's really all over the map because it's very company-specific as to what makes sense for their strategy. Okay, thanks. And just one quick follow-up question for Casey. The tax rate, clearly you lowered guidance just on the tax rate itself. Is that something one-off for this year, or is that something now that just seems more normal?

David John Koning: You know doing more in house as part of it and we've got other clients.

David John Koning: Outsourcing more right. So it's really all over the map because it's very company specific as to what makes sense for their strategy.

Okay. Thanks, and just one quick follow up for KC.

Kathleen R. McClure: The tax rate clearly you lowered guidance just on the tax rate itself is that something one off to this year or is that something now that just seems more normalized.

Kathleen R. McClure: Yeah, so, you know, there are really four things that every year are the same that really influence our tax rate, and it just really is how those things come together. You know, there is the geographic mix of income, any settlements from previous years, any increase that we need to do on prior year tax liabilities, and lastly, the impact of our equity on our tax rate. So those four things really are confluences of the same every year; depending on how they fall, that's going to influence where we land on our tax rate. And so this year, we saw them, you know, favorably and aggregated, so we were able to keep our two-point range but drop it by one percent.

So you know Theres really four things that every year are the same that really influence our tax rate and it just really is how those things come together.

Kathleen R. McClure: There are geographic mix of income or any.

Kathleen R. McClure: Any.

Kathleen R. McClure: Settlements from previous years, any increase that we need to do on prior year tax liabilities and lastly, the impact of our equity on our tax rate. So those four things really of Confluences. The same every year, depending on how they fall that's going to influence where we land on our tax rate and so we this year, we saw them favorably and in aggregate.

Kathleen R. McClure: So we were able to keep our two point range, but drop it by one 1%.

David John Koning: Well, thank you guys. Thank you. Your next question comes from the line of Jamie Friedman from Susquehanna. Please go ahead. Hi. Good morning, everyone.

Speaker Change: Okay, well, thank you guys.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Jamie Friedman from Susquehanna. Please go ahead.

Jamie Friedman: Hi, Good morning, everyone I have a really big picture question I'm curious.

James Eric Friedman: I have a really big picture question. I'm curious. Julie, how do you feel about Accenture's role in the broader context of technology like software and the cloud? And I realize in your prior very thoughtful answer about technology, architecture, and the cloud, you talked about the importance of technology, architecture, and the cloud. And I'm wondering if you could talk a little bit about that. Thank you. That was a great structure, as was your innovation session back on February 16th, but it does seem like other parts of tech are doing better than services, so I'm just interested in your perspective on services in the context of broader tech. Yeah, no, absolutely.

Jamie Friedman: Julie how you feel about accenture his role in the broader context of technology like software and cloud and I realize in your prayer prior very thoughtful answer about technology architectures.

Jamie Friedman: That was agreed.

Jamie Friedman: Structure as was your innovation session back on February 16th.

Jamie Friedman: But it does seem like.

Other parts of tech are doing better than services. So I'm just interested in your perspective on <unk>.

Jamie Friedman: Services in the context of broader tech spending.

Speaker Change: Yeah no.

Speaker Change: Absolutely, it's a great question right.

Julie T. Spellman Sweet: It's a great question, right? Services are where you can dial back more easily than when you're, you know, signing up for licenses for technology that you need. So you'd imagine, and this is what we're seeing, that when you're constraining overall spending, right, your discretionary spending, you go to service providers where you're saying, wait, I can, I can pause for that. I can wait for that.

Speaker Change: Services are where you can dial back more easily than when you're signing up for licenses for technology that you need right. So you would imagine and which is what we're seeing that when you are constraining overall spending right your discretionary spending.

Speaker Change: You know you go to like service providers, where youre, saying wait I can I can pause for that I can wait for that and at the same time you know.

Julie T. Spellman Sweet: And at the same time, you know, you've got other parts of it, like with software, where you have to, you know, if they're things you really need to invest in, and you've got different licenses. So, you know, it's really not different than other, you know, than other cycles. Services, you know, have a bigger opportunity to say, you know, it's a little more discretionary, let So, you know, there's nothing mysterious about it. It's kind of, you know, what I consider kind of normal in this kind of macro world.

Speaker Change: <unk> got in other parts of it like with software where you've got to.

Speaker Change: If it's things you really need to invest in and you've got different licenses. So it's really not different than other than other cycles is services.

Speaker Change: You know bigger opportunity to say you know, it's a little more discretionary let's wait.

Speaker Change: Even if I bought the licenses I'm going to wait to actually incur the cost because a lot of times you know the cost of the services can be significantly higher than the software licenses right because you've got all the change that you've gotta do and all of that around so you know again, we don't see anything sort of different than when you've got an uncertain macro you look around for your discretionary.

James Eric Friedman: That's right. And I think just as a reminder, even with all of that, we still have the record spend with us, right, with $40 billion of bookings for the first half of the year. Yep, those are great points. All right. I'll drop back. I'll drop back into the queue.

Speaker Change: Spending and you cut back and that's why of course, you're seeing still the big transformations happening because it's not discretionary and they've really got to re platform and that so it's like nothing mysterious about it as kind of you know what I consider kind of normal in this kind of a macro that's right and I think just as a reminder, even with all of that we still have the record spend with us.

Julie T. Spellman Sweet: Thank you, Julie. Thanks. Operator, we have time for one more question and then Julie will wrap up the call. Okay, that question comes from the line of Ashwin Shirvaikar from Citi. Please go ahead. Thank you. Hi, Julie. Hi, Kasey.

Speaker Change: Right with $40 billion.

Speaker Change: Of bookings for the first half of the year.

Speaker Change: Yeah, those are great points right I'll drop back I'll drop back in queue. Thank you Julie Thanks Casey.

Speaker Change: Thanks.

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

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

Ashwin: Thank you.

Ashwin: Hi, Casey.

Ashwin Vassant Shirvaikar: I am going back to, hey, going back to the question of bookings. Are clients actually revisiting existing bookings, ones that they signed maybe last year in a time sphere, re-looking at them using the lens of..., applying sort of rapidly evolving AI capabilities? To what extent is that happening?

Ashwin: I was going back to going back to the question of bookings our clients actually visiting existing bookings ones that they sign maybe last year.

Ashwin: Spire.

Ashwin: Really looking at them using the lens of.

Ashwin: Applying sort of rapidly evolving journey I'd capabilities.

Ashwin: To what extent is that happening and then that kind of implies obviously.

Julie T. Spellman Sweet: And then that kind of implies, obviously, you know, can we can use those past bookings and backlogs as an indicator of future growth and how soon that can layer in? Yeah, so I'll take the just maybe more just the financial kind of mechanical part of it. You know, we have not seen a change.

Ashwin: No.

We can we use those past bookings and backlog.

Ashwin: The indicator of future growth and how soon that didn't live in.

Speaker Change: Yeah sure I'll take the just maybe more just a financial kind of mechanical part of it we have not seen a change and.

Kathleen R. McClure: And, you know, working the work that's already been contracted, what we would call our backlog. And what we talked about was really spending on new sales, new services, and their smaller projects. And that's the dynamic that we have factored into our guidance for the year. Got it.

Speaker Change: Working the work that's already been contracted what we would call our our backlog and what we talked about was really spending on new a new sales new services and they're smaller projects and thats. The dynamic that we have factored into our guidance for the year.

Speaker Change: Got it and then the other question was on LOE.

Julie T. Spellman Sweet: And then the other question was on LearnVantage and Udacity. I thought that was a particularly interesting deal. If you could walk us through maybe the mechanics of that deal and, you know, every company is investing in talent here. This seems to be a bit different approach, maybe. Could you just talk about the rationale, the downstream impact, and so on?

Speaker Change: Loan vantage and Udacity I thought that was it.

Particularly interesting.

Interesting deal if you could walk us through maybe the mechanics of that deal and.

Speaker Change: And every company is investing in talent here that seems to be.

Speaker Change: Different.

Different approach maybe.

Speaker Change: Can you just talk about the rationale the downstream impact and so on.

Julie T. Spellman Sweet: Sure. Thank you because I'm super passionate about what we're doing with LearnVantage because it is so critical for our clients. Talent is the number one agenda item for CEOs, number one. And when you think about what reinvention means, the clients have to do an AI rotation, and they have to do a talent rotation. And what LearnVantage does is it first and foremost provides the ability for everything from the board to the C-suite to business users to the technologists to get the technology training they need to make the right decisions on AI, for example, to be able to become deeper in the new technologies. And so it really goes from the board to the technologist. And with Udacity, what we're able to provide is essentially the same approach Accenture uses, right? So we spend over a billion dollars a year ourselves. You saw our latest average of 14 hours per employee. And we use learning science to learn and do so. Most of our clients are unable to do that.

Speaker Change: Sure. Thank you because it's when I'm super passionate about what we're doing with learn vantage because it is so critical for our clients talent is the number one agenda item for Ceos, the number run and when you think about what what reinvention means the clients have to do in AI rotation and they have to do.

Speaker Change: With talent rotation right and what learned vantage does is it first and foremost provides the ability for everything from the board to the C suite to business users to the technologists to get the technology training they need to make the right decisions.

Speaker Change: On AI for example, right to be able to become deeper and the new technologies and so it really goes from the board to the technologists and with Udacity. What we're able to provide is essentially the same approach Accenture uses right. So we spent over $1 billion ourselves you saw our latest.

Speaker Change: Average 14 hours per employee and we have we use learning science to learn and do most of our clients are unable to do that in the big differentiator for us in the market here is that we accenture no. When you train someone we have to then put them on a job and they have to get paid to do something so they are.

Julie T. Spellman Sweet: The big differentiator for us in the market here is that we, Accenture, know when you train someone, we have to then put them on a job, and they have to get paid to do something. So they are work ready. So we're bringing that expertise now at scale to our clients, and what Udacity does is the same thing. They use experts and mentors. They have real project work that they then coach people on. So it's that same sort of approach of learning and doing, you know, but our companies, our clients don't have all the work that we do. So Udacity has created this ability.

Speaker Change: Work ready, so we're bringing that expertise expertise now at scale to our clients and what you that Citi does it's the same thing they use exports mentors. They have a real project work that that they then coach people on so it's that same sort of approach of learn and do.

Speaker Change: You know what our companies our clients don't have all the work that we do so udacity has created this ability.

Julie T. Spellman Sweet: And so, it's coupled then with Accenture's deep understanding of what it takes to train and be work ready. So we're really excited about it. Our clients are excited about it. They've been coming to us.

Speaker Change: So and it's coupled then with Accenture has deep understanding of what it takes to train and be work ready. So we're really excited about it our clients are excited about it they've been coming to us we've been doing this learning and this enables us now to do it at scale and again, we want to be the reinvention partner so.

Julie T. Spellman Sweet: We've been doing this learning, and this enables us now to do it at scale. And, again, we want to be the reinvention partner. So the more that we can fill all of the needs of our clients around that, the better position that we will be in. So we see LearnVantage is highly, highly strategic. And, by the way, it also has we have a managed service today to actually manage the learning services that companies are now doing internally, which we also expect to invest in and expect to grow. I am so very excited.

Speaker Change: So the more that we can fill all of the needs of our clients around that the better position that we will be so we see learn vantage is highly highly strategic and by the way. It also has we have a managed service today to actually manage the learning services that companies are now doing internally.

Speaker Change: Which we also expect to we're investing and expect to grow so very excited and then finally <unk>.

Julie T. Spellman Sweet: And then, finally, we all have the responsibility as corporates to bring our people along the journey. And so when people worry about things like AI and displacement, right, we feel that our ability to bring, like, proven upskilling expertise to help our clients be able to bring their people is really, really important. It's important for our communities. It's important to their boards. And we all should consider it really important.

Speaker Change: We all have as a responsibility as our as corporates to bring our people along the journey and so when people worry about things like AI and displacement rate, we feel that our ability to bring like proven upskilling expertise to help our clients be able to bring their people is.

Speaker Change: Really really important it's important for our communities. It is important to their boards and we all should consider it really important it's the right thing to do.

Julie T. Spellman Sweet: It's the right thing to do, so thank you very much. Great. So, thanks, everyone. 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 day, to assure you that we are working every day to continue to earn that trust. Thank you. That does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.

Got it thank you very much.

Speaker Change: Okay, great. So thanks, everyone in closing I want to thank all of our shareholders for your continued trust and support all of our people for what you do every day to show you that we are working every day to continue to earn that trust. Thank you.

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

Speaker Change: Okay.