Accenture PLC Q3 2025 Earnings Call Summary

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

Question: Tien-tsin Huang - JPMorgan - Analyst : Thanks so much. Good morning. I want to ask about the leadership changes in talent retention, if that's okay, voluntary and involuntary is what I'm thinking about. Given some of the headcount numbers this quarter, we're getting some questions on that and some departures from the leaders with today's reorg. I'm just curious, Julie, are you observing any change in talent retention or shift in talent delivery overall?

Question: Tien-tsin Huang - JPMorgan - Analyst : Yes. That history is definitely there. Okay, my follow-up question, just -- I know you've called out now a couple of quarters of heightened uncertainty, but you're still generating revenue above your guidance. Public sector, I think I heard immaterial couple of points on overall growth in the fourth quarter and products were generally fine. I know that was a worry. I'm just curious if this heightened uncertainty is translating at all in any way, and how you're guiding or how you're seeing clients interact with you? How did bookings come in versus plan? And any other considerations as you exit the year given the 1% to 5% growth guide?

Question: Tien-tsin Huang - JPMorgan - Analyst : Well done. Thank you.

Question: David Koning - Baird - Analyst : Good job. And I guess my first question, Gen AI bookings remain very strong, but sequentially grew a little slower than in some previous quarters. And just wondering kind of the backdrop of Gen AI demand relative to other types of projects in the current environment?

Question: David Koning - Baird - Analyst : Yes. Okay. And then I guess just a numbers question. Secondly, pace of acquisitions, a lot slower this year than last year, obviously. Still the 3% or a little over 3% guide for this year's contribution, is that intact? And then maybe what could we expect maybe into next year based on a little slower pace of acquisitions this year?

Question: David Koning - Baird - Analyst : Yeah, that's great. Thanks guys, good job.

Question: James Faucette - Morgan Stanley - Analyst : Hi, good morning, thanks for all the details. I wanted to just quickly follow up on that question around acquisitions and contribution. I understand you're not seeing kind of the -- it sounds like you're not seeing the financial profile. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:00PM, ACN.N - Q3 2025 Accenture PLC Earnings Call But how are you feeling about any change that you may need to make or want to make in terms of types of companies or skill sets, et cetera, that you're looking at? Is that changing at all? Or does that remain relatively consistent with how you've evaluated acquisitions from a capability standpoint in the past?

Question: James Faucette - Morgan Stanley - Analyst : That's great articulation of that. And then my follow-up question is back on the point around organic growth. As we're exiting this fiscal year, are you anticipating that we're going to be able to maintain that organic growth rate even on a year-over-year basis exiting this fiscal fourth quarter? We've got a few questions given the amount of inorganic vis-a-vis your overall guided range of growth for the fiscal fourth quarter.

Question: James Faucette - Morgan Stanley - Analyst : Thank you so much.

Question: Bryan Bergin - TD Cowen - Analyst : Hi, good morning. Thank you. So I appreciate the color on the growth headwind you provided on DOGE for the fourth quarter. I'm curious how much clarity or just visibility you have right now on the potential cancellations or reductions of scope across the portfolio of the work that you do for the government, just given the timing of their fiscal year-end, really less concerned about this year, but just going forward, I'm trying to just make sure we're all kind of aligned on expectations. Should we kind of be thinking about that two-point headwind in 4Q as a run rate? Or any other color you can share?

Question: Bryan Bergin - TD Cowen - Analyst : Okay. Understood. My follow-up on the growth model changes. So are there implications on the financial model here? Just understanding this is being made for client delivery on the integration of services, but are there savings for you also on the back end and the delivery org? If so, how should we be thinking about that?

Question: Bryan Bergin - TD Cowen - Analyst : Yeah, that's clear. Thank you.

Question: Darrin Peller - Wolfe Research - Analyst : Guys, thanks again. Maybe we just start off a little bit more around bookings composition. And just if you can give us a little bit more sense as to what types of contracts from a size standpoint you're seeing and also where the priorities are from a budget standpoint from your customers at this point? And then I also want to kind of go in a little bit more into tariffs just because I know, Julie, we talked in the past about uncertainty on the tariff side keeping customers on the sidelines. Are you seeing any change in that yet? And what could be the change if we get more and more clarity as time goes on in terms of where position contracts could be geographically?

Question: Darrin Peller - Wolfe Research - Analyst : That's really great color, thank you. And then just a quick follow-up would just be around hiring plans, maybe incorporating how you're thinking about the bench for AFS or what you need there. But just more broadly, if you can give us a sense of what you're looking at going forward. Thanks again guys.

Question: Darrin Peller - Wolfe Research - Analyst : Great thanks guys.

Question: Ramsey El-Assal - Barclays - Analyst : Hi, thank you for taking my question. I wanted to follow up on, I think, Bryan's question earlier about sort of DOGE impact. What degree did federal contracting or sort of lack thereof on bookings in the quarter? And I guess, are the Q4 headwinds coming more from cancellations? Or is it the result of less new procurement for maybe shorter-term deals?

Question: Ramsey El-Assal - Barclays - Analyst : Okay. A follow-up for me. Blockchain technology sort of shifted in our favor over the past few years. It seems to be having another moment currently. I'm just curious if you're seeing any renewed demand or interest from your clients on Blockchain, how you guys play in the space, maybe particularly in the financial services vertical, but elsewhere as well.

Question: Ramsey El-Assal - Barclays - Analyst : Thank you very much.

Question: Jim Schneider - Goldman Sachs - Analyst : Good morning. Thanks for taking my question. Julie, I was wondering if you can maybe kind of extend on your commentary around clients pivoting from pause to being maybe a little bit more proactive in their posture. Can you maybe talk about that in the context of your pipeline and your visibility in terms of bookings pipeline into the next quarter and beyond directionally relative to maybe last quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:00PM, ACN.N - Q3 2025 Accenture PLC Earnings Call

Question: Jim Schneider - Goldman Sachs - Analyst : Thank you. And then as a follow-up, maybe one for Angie, sort of a housekeeping question. I realize you do not sort of manage the business to gross margins, but instead operating margins. But there has been a little bit of gross margin pressure in the business last couple of quarters. I believe you may have called out some kind of increased use of subcontractors last quarter. I'm wondering if you saw that again this quarter and how you sort of expect that to trend over the next few quarters if that reverses.

Question: Jason Kupferberg - BofA Merrill Lynch - Analyst : Good morning, guys. Thank you. I just wanted to start on the consulting side. I know the book-to-bill was 1.0 in the quarter, and you typically target something a little higher. Your tone on the impact of macro on client decision-making does sound a little bit better. So would you expect this metric to improve in Q4?

Question: Jason Kupferberg - BofA Merrill Lynch - Analyst : Okay. Just as a follow-up, some other IT services companies have been saying that upwards of 20% or so of their code is now being written by AI and wondering if something similar would be true for Accenture these days? And if so, are you sharing AI-related savings back with the clients and seeing them reinvest those savings in other projects with Accenture? Or are there instances where there's some net deflationary pressure on revenue? How is all that kind of netting out? Thank you.

Question: Jason Kupferberg - BofA Merrill Lynch - Analyst : Thanks.