- Full Fiscal-Year Bookings: $81 billion, 14% growth in local currency.
- Revenue: $65 billion for the year, 2% growth in local currency.
- Adjusted Operating Margin: Expanded by 10 basis points.
- Adjusted EPS Growth: 2% growth.
- Free Cash Flow: $8.6 billion.
- Cash Returned to Shareholders: $7.8 billion.
- New GenAI Bookings: $3 billion for the full fiscal year, including $1 billion in Q4.
- Revenue from GenAI: Nearly $900 million for the full fiscal year.
- Data and AI Workforce: Approximately 57,000 practitioners.
- Training Hours: Approximately 44 million, a 10% increase.
- Q4 Revenue: $16.4 billion, 5% growth in local currency.
- Q4 Adjusted Operating Margin: 15%, an increase of 10 basis points.
- Q4 Adjusted EPS: $2.79, 3% growth.
- Q4 Free Cash Flow: $3.2 billion.
- Q4 New Bookings: $20.1 billion, 24% growth in local currency.
- Consulting Bookings: $8.6 billion.
- Managed Services Bookings: $11.6 billion.
- North America Revenue Growth: 6% in local currency.
- EMEA Revenue Growth: 2% in local currency.
- Growth Markets Revenue Growth: 9% in local currency.
- Gross Margin: 32.5% for the quarter.
- Sales and Marketing Expense: 10.7% for the quarter.
- General and Administrative Expenses: 6.8% for the quarter.
- Cash Balance: $5 billion at August 31.
- Shares Repurchased: 2.1 million shares for $620 million.
- Quarterly Cash Dividend: $1.48 per share, a 15% increase.
- FY25 Revenue Guidance: 3% to 6% growth in local currency.
- FY25 Operating Margin Guidance: 15.6% to 15.8%.
- FY25 EPS Guidance: $12.55 to $12.91, 5% to 8% growth.
- FY25 Free Cash Flow Guidance: $8.8 billion to $9.5 billion.
- FY25 Cash Return to Shareholders: At least $8.3 billion.
Release Date: September 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Accenture PLC (ACN, Financial) reported record bookings of $81 billion for the fiscal year, representing 14% growth in local currency.
- The company delivered revenues of $65 billion for the year, showing 2% growth in local currency.
- Accenture PLC (ACN) expanded its adjusted operating margin by 10 basis points and achieved adjusted EPS growth of 2%.
- The company generated free cash flow of $8.6 billion, allowing it to return $7.8 billion to shareholders.
- Accenture PLC (ACN) has continued to invest significantly in GenAI, with $3 billion in new GenAI bookings and nearly $900 million in revenue for the fiscal year.
Negative Points
- The market environment in FY24 was challenging, impacting overall growth.
- Revenue growth in EMEA was only 2% in local currency, with declines in banking and capital markets.
- General and administrative expenses increased slightly to 6.8% compared to 6.7% in the same quarter last year.
- The company's cash balance decreased to $5 billion from $9 billion at the end of the previous fiscal year.
- Accenture PLC (ACN) expects a modest amount of long-term debt to increase liquidity, which could impact future financial flexibility.
Q & A Highlights
Q: Can you comment on the current relationship between the Annual Contract Value (ACV) and Total Contract Value (TCV) and how that's evolving?
A: Angie Park, Senior Managing Director - Lead, Business and Commercial Finance: We have pivoted our business to focus on large transformation deals, which positions us better than last year. We expect organic growth to be flat at the bottom end of our guidance range and up to 3% at the top end. Julie Sweet, CEO: We have had 19 more bookings over $100 million than last year, indicating a strong base of revenue from larger deals.
Q: How is client spending on cloud migration projects trending, and what should we expect for fiscal year 2025?
A: Julie Sweet, CEO: Cloud migration continues, especially for high-performance compute applications like mainframe. Some clients are still early in their cloud journey, while others are focusing on modernization. We expect cloud to remain a significant driver of growth, requiring deep industry knowledge.
Q: Can you comment on your hiring strategy and where you are focusing geographically?
A: Angie Park, Senior Managing Director - Lead, Business and Commercial Finance: We added about 24,000 people in Q4, reflecting business momentum. We continue to hire for skills and demand. Julie Sweet, CEO: We are primarily hiring in India, especially in technology, and refreshing our talent pyramid with new college graduates.
Q: What is your outlook for consulting in fiscal year 2025, and are you building in a discretionary spending recovery?
A: Angie Park, Senior Managing Director - Lead, Business and Commercial Finance: Our guidance assumes low to mid-single-digit growth for consulting. At the top end of our range, we expect the current discretionary spending environment to continue, while the bottom end allows for further deterioration.
Q: What are clients looking for to release discretionary spending?
A: Julie Sweet, CEO: Clients are cautious due to the macroeconomic environment. Industry-specific factors also play a role. For example, energy companies are focused on investments in renewables, while consumer goods companies are looking to improve efficiency. Overall, clients are focused on large transformations rather than smaller deals.
Q: Can you provide more details on the size of GenAI programs and their impact on internal productivity?
A: Julie Sweet, CEO: GenAI deals have grown from sub-$1 million to some above $10 million. Internally, we see the most productivity gains in managed services, similar to the introduction of myWizard in 2015-2016. However, client prioritization affects the pace of GenAI adoption.
Q: How should we think about the potential magnitude of leverage in your model going forward?
A: Angie Park, Senior Managing Director - Lead, Business and Commercial Finance: We plan to maintain our strong credit ratings and low net leverage. Our guidance includes potential interest expenses from modest long-term debt, which we plan to raise to optimize our capital structure.
Q: Are you seeing more incremental spending on GenAI, or is it mostly reallocations?
A: Julie Sweet, CEO: We haven't seen a change in overall IT spending but are observing a trend of clients saving money to invest in GenAI and data. The dynamic is more about reallocating existing budgets rather than incremental spending.
Q: Can you comment on the margin profile of GenAI services compared to traditional business?
A: Julie Sweet, CEO: GenAI is still a small part of our business and doesn't have a significantly different margin profile. We often embed GenAI in larger deals, so we don't view it as a separate margin category.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
