Accenture PLC Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jason Kupferberg - BofA Global Research - Analyst : So I just wanted to start outside of US also the other 92% of the business. Can you just clarify to what extent you are or not seeing clients hit the pause button at all on new initiatives? Any change in pace of converting pipeline to backlog or backlog into revenue? I can certainly appreciate that you're tone is a little bit more cautious, maybe the visibility isn't quite as high, but are you seeing tangible signs of any pause in client activity at this point in time?

Question: Jason Kupferberg - BofA Global Research - Analyst : Okay. So we've got a watch and wait on that. So let's go to US Federal just for a minute. Can you just clarify for us what the growth rate was in US Federal revenue in the quarter? And what you're assuming for the second half of the year in US Federal?

Question: Tien-Tsin Huang - JPMorgan - Analyst : just maybe instead of demand, I want to ask on the margin outlook, and the change there. How much of that is organic versus inorganic in terms of the change? And is it just -- I'm almost getting question is the cost -- is it just costing more to do business? Is there a cost to execution here going up? Is there a pricing change? What more can you share?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Got it. No, that's all clear. Just my follow-up, I think Jason asked about Federal already. Is there -- maybe I'll ask it a different way. Just is there a way to frame the real revenue at risk? I know mission-critical is maybe hard to find it here on the call. But is there anything that you can share in terms of what's really at risk or not at risk, thinking about duration? Or is it really more of an issue of replenishing work, et cetera? Just trying to get a better understanding of visibility there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2025 / 12:00PM, ACN.N - Q2 2025 Accenture PLC Earnings Call

Question: Bryan Keane - Deutsche Bank - Analyst : I guess my first one is, Julie, just thinking about how budgets were set and how conversations maybe changed from January, February to March. Could you give us some color on that?

Question: Bryan Keane - Deutsche Bank - Analyst : Yes, Angie, as my follow-up, I was going to ask, if you take the midpoint of that third quarter constant currency revenue, you get to about 5. it implies fourth quarter revenue range, looks a little wider than usual and maybe a couple of points lower than the third quarter. So just kind of what's built in? Are you building in a little bit of a slowdown in organic growth that fourth quarter? Or is that just some level of elevated uncertainty that goes into the fourth quarter number.

Question: David Koning - Robert W. Baird & Co., Inc. - Analyst : And I guess my first question, Health and Public Services typically is kind of flattish sequentially in Q2. It was down about 5% sequentially and -- I guess kind of asking Jason's question, too, is some of that US Federal? Or are there other parts of health and public services that were weaker than normal? I'm just trying to understand that.

Question: David Koning - Robert W. Baird & Co., Inc. - Analyst : Okay. And just as a follow-up, I think you might have mentioned pricing was pretty stable. I looked back the last seven quarters, you called pricing as being down a bit. I mean are we starting to get back to a more stable environment for pricing?

Question: Bryan Bergin - TD Cowen - Analyst : I want to start on bookings. Can you just give us a sense on 2Q bookings, how they landed relative to your plan? -- understanding just elevated uncertainty may extend signings. I'm just curious if that did, in fact, play out in 2Q? And can you comment how you feel your set up for the second half in bookings?

Question: Bryan Bergin - TD Cowen - Analyst : Okay. And then on the workforce, can you comment on how you're managing that mix of subcontractors or employees? And is that higher subcon mix in the quarter, just some form of a transition component as you've taken actions on bench across the organization? Are there certain service types where you're having to lean a little bit more on that subcon mix?

Question: Keith Bachman - BMO Capital Markets - Analyst : Perhaps, I'll ask my two just concurrently since they're on similar veins. On the first one, one of the previous questions was asking about AI, more from the demand side or revenue side. I wanted to go back to the supply side and delivery side. And while I think it's still really early in the life of GenAI because most of the work is actually still test, not inferencing. But are you seeing any changes in the nature of your economic relationship with your customers? In other words, are customers asking for some of the savings? Or is there any change in that narrative on how the supply side and economic relationship, broadly speaking, with your customers may unfold as GenAI matures a little bit? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2025 / 12:00PM, ACN.N - Q2 2025 Accenture PLC Earnings Call And then the second part of the question is I wanted to just jump into Song for a bit. And sort of the same type of question. I spent the last day with Adobe at their user group conference, and there's tremendous efficiency gains associated with both marketing and creativity. And just, Julie, any comments -- I know you mentioned Song had double-digit growth, which is quite impressive. How do you see the durable growth rate of Song? And so that's it for me, and Julie all the best to you in particular.

Question: Jonathan Lee - Guggenheim Securities LLC - Analyst : I want to clarify the change in the revenue outlook here. Your original outlook contemplated status quo at the high end of the outlook. Is that still the case? And is that index to what you're seeing today with the elevated uncertainty, but not necessarily any sort of slowdown?

Question: Tien-Tsin Huang - JPMorgan - Analyst : And then on the pricing front, it's good to hear about the pricing stability you're seeing despite the competitive environment. How do we think through the timing in which it takes stable pricing to flow through the P&L, especially if it looks like we're still digesting some of the pricing headwinds we've been seeing over the last few quarters?

Question: Darrin Peller - Wolfe Research - Analyst : Julie, I just want to wish you -- echo that and wish you have asked as well. When we think about what we're seeing in terms of the larger transformational contracts that are benefiting you so much this year despite slower discretionary or not a real improvement in discretionary yet. Just remind us again where you are on that path? I mean, again, bookings was a question before. It was up -- I wondered if it was more or less flat year-over-year, but your book-to-bill is still very strong, obviously. And so just help us understand what you're seeing in terms of the most transformational contracts right now that can give us room despite sort of whatever outcomes are on the discretionary? And then one quick follow-up, Julie, I know when we spoke last, you talked about how there was so much in terms of like waiting by executive CIO, CEOs and others on tariffs and some of the policies you talked about earlier. If we do get some resolution on that in the next couple of months, April 2 could be a big day from the administration in terms of explaining. I mean how much have you heard from your customers on how much they're just really waiting? There's pent-up demand budget? Just help us understand that a little more if you can.

Question: Darrin Peller - Wolfe Research - Analyst : That's really helpful, Julie. Just a quick follow-up would be on AI again on DeepSeek, just given the developments. I mean, has there been more of an emphasis around it, just given the ability to use even more efficient systems? Or -- just help us understand in terms of -- I know you've said before, 10% of customers might actually have the infrastructure ready. So still have a lot of work to do to repair. Has there been an acceleration in the momentum? Or is it the same as it was in the last couple of quarters?