Core Insights - Accenture plc is a global leader in professional services, specializing in strategy and consulting, technology and operations, and interactive services, with a strong focus on application services, data management, digital transformation, and cybersecurity [1] Price Target Trends - The consensus price target for Accenture's stock has declined from $321.2 a year ago to $289.09 three months ago, and further to $292.5 last month, indicating a more conservative outlook from analysts [2][6] Revenue Performance - Despite the declining price target, Accenture has exceeded Wall Street's expectations for first-quarter revenue, driven by strong demand for its artificial intelligence solutions [3][6] - Analyst Moshe Katri from Wedbush has set a higher price target of $350 for Accenture, reflecting optimism about the company's future prospects [3] Stock Performance and Investor Focus - Accenture's stock has declined by 22% this year, increasing pressure on the company to address investor concerns regarding bookings, guidance, and investments in artificial intelligence [4] - The upcoming first-quarter earnings report on December 18 will be closely monitored for new guidance or strategic initiatives that could impact stock performance [4] Strategic Focus - Accenture continues to innovate and expand its service offerings, particularly in cloud computing, artificial intelligence, and digital transformation, maintaining its position as a key player in the professional services industry [5][6]

We're joined now by CEO [music] Julie to discuss the quarter and and we were just wondering about the stock reaction. Julie, the market doesn't appear to be believing that the AI narrative around Accenture even though it's clearly accelerating your business. What's happening.You know, Sarah, we delivered an incredible Q1, our biggest ever in new business, and it's because our clients know they have to deliver results today, and they've got to reinvent. So, we demonstrated that again, $20.9% billion in new b ...

Core Viewpoint - Accenture (ACN.US) reported strong Q1 earnings, exceeding market expectations, particularly in digital and AI sectors, despite a stock price decline of over 1.4% to $269.74 [1] Financial Performance - Adjusted Q1 EPS was $3.94, surpassing market expectations - Revenue reached $18.74 billion, a year-over-year increase of 5.9%, exceeding analyst forecasts by approximately $210 million [1] - New signed orders totaled $20.9 billion, a 12% increase year-over-year in USD, and a 10% increase in local currency [1] - Advanced AI-related new orders amounted to $2.2 billion, indicating strong client investment in AI transformation [1] - Free cash flow for the quarter was $1.5 billion, with a total of $3.3 billion returned to shareholders through buybacks and dividends [1] - Share repurchases or redemptions totaled approximately $23 billion (around 9.5 million shares), with cash dividends of $1 billion, equating to $1.63 per share, a 10% increase year-over-year [1] Future Outlook - Q2 revenue guidance is set at $17.78 billion, aligning closely with market expectations - Full-year revenue growth is projected between 2% to 5% in local currency; excluding the estimated 1% negative impact from U.S. federal government business, growth could reach 3% to 6%, slightly below the previous market expectation of 5.6% [2] - The company raised its GAAP operating margin guidance to 15.2% to 15.4%, an expansion of 50 to 70 basis points year-over-year; adjusted operating margin is expected to be 15.7% to 15.9%, expanding 10 to 30 basis points [2] - GAAP diluted EPS guidance was increased to $13.12 to $13.50, reflecting an 8% to 11% year-over-year growth; adjusted EPS is projected at $13.52 to $13.90, slightly above the consensus estimate of $13.77 [2]

Core Insights - Accenture reported stronger-than-expected first-quarter results driven by increased demand for artificial intelligence-led IT services as clients are increasingly adopting automation and machine learning solutions [1] Group 1 - The company experienced a significant rise in demand for its services, particularly in the area of artificial intelligence [1] - Clients are increasingly turning to automation and machine learning, which is positively impacting Accenture's performance [1]

Group 1 - The core viewpoint of the articles highlights Accenture's strong Q1 performance, with several key metrics exceeding market expectations, indicating ongoing growth momentum in digital and AI sectors [1] - Accenture reported Q1 adjusted EPS of $3.94, surpassing market expectations, and revenue of $18.74 billion, a year-over-year increase of 5.9%, exceeding analyst forecasts by approximately $210 million [1] - The total new signed orders reached $20.9 billion, reflecting a 12% year-over-year increase in USD and a 10% increase in local currency, with advanced AI-related new orders amounting to $2.2 billion, showcasing rising investments from enterprise clients in AI transformation [1] Group 2 - For Q2, the company provided revenue guidance of $17.78 billion, aligning closely with market expectations, while maintaining an annual revenue growth forecast of 2% to 5% in local currency [2] - Excluding the anticipated 1% negative impact from U.S. federal government business, the annual revenue growth could reach 3% to 6%, slightly below the previous market expectation of approximately 5.6% year-over-year growth [2] - The company raised its GAAP operating margin guidance to 15.2% to 15.4%, reflecting a year-over-year expansion of 50 to 70 basis points, while adjusted operating margin is expected to be 15.7% to 15.9%, expanding by 10 to 30 basis points [2]

Market Overview - U.S. stocks experienced a positive trading session, with the Dow Jones index increasing by approximately 400 points, up 0.84% to 48,289.58, while the NASDAQ rose 1.53% to 23,040.25 and the S&P 500 gained 1.09% to 6,794.36 [1] - In the commodities market, oil prices increased by 1% to $56.48, while gold decreased by 0.2% to $4,364.50, silver fell by 1.1% to $66.160, and copper rose by 0.1% to $5.4370 [5] Company Performance - Accenture (NYSE:ACN) reported first-quarter 2026 earnings of $3.94 per share, exceeding the analyst consensus estimate of $3.75, and sales of $18.700 billion, slightly above the consensus estimate of $18.523 billion [2] - Athira Pharma Inc (NASDAQ:ATHA) shares surged 88% to $7.76 following the announcement of an agreement to acquire rights for the development and commercialization of lasofoxifene [9] - FuelCell Energy Inc (NASDAQ:FCEL) shares increased by 32% to $10.39 after reporting better-than-expected fourth-quarter financial results [9] Sector Performance - Consumer discretionary shares rose by 1.6% on Thursday, indicating a positive trend in this sector [1] - Energy stocks, however, saw a decline of 0.8% during the same trading session [1] International Markets - European shares showed gains, with the eurozone's STOXX 600 up 0.5%, Spain's IBEX 35 Index rising 0.7%, London's FTSE 100 gaining 0.1%, Germany's DAX 40 increasing by 0.5%, and France's CAC 40 up 0.4% [6] - Asian markets closed mixed, with Japan's Nikkei falling 1.03%, while Hong Kong's Hang Seng gained 0.12%, China's Shanghai Composite rose 0.16%, and India's BSE Sensex fell 0.09% [7]

Financial Data and Key Metrics Changes - Revenue for the quarter was $18.7 billion, reflecting a 5% growth in local currency and a 6% increase in U.S. dollars, at the top of the guided range [17][19] - Adjusted operating margin expanded by 30 basis points year over year to 17% [18][22] - Adjusted EPS grew by 10% year over year to $3.94 [18][22] - Free cash flow for the quarter was $1.5 billion, with a cash balance of $9.6 billion at the end of the quarter [23] Business Line Data and Key Metrics Changes - New bookings totaled $20.9 billion, representing a 12% growth in U.S. dollars and a 10% growth in local currency [18][19] - Consulting revenues were $9.4 billion, growing 4% in U.S. dollars and 3% in local currency [19] - Managed Services revenues reached $9.3 billion, with an 8% increase in U.S. dollars and 7% in local currency [19] Market Data and Key Metrics Changes - In the Americas, revenue grew 4% in local currency, with a 6% growth excluding federal business impacts [20] - EMEA delivered 4% growth in local currency, driven by banking and capital markets, insurance, and life sciences [20] - Asia-Pacific revenue grew 9% in local currency, led by banking and capital markets, communications and media, and public service [21] Company Strategy and Development Direction - The company continues to focus on large transformational programs for clients, emphasizing the importance of a modern digital core [25][26] - Advanced AI is increasingly embedded in solutions, with a significant focus on integrating multiple forms of AI [11][36] - The partnership strategy is grounded in client demand, with 60% of revenue in Q1 coming from work with top 10 ecosystem partners [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are prioritizing strategic and large-scale transformational programs, with no significant changes in discretionary spending observed [25][72] - The demand for advanced AI is rapidly maturing, with expectations for significant growth in the total addressable market for advanced AI [34] - The company expects revenue growth for fiscal 2026 to be in the range of 2%-5% in local currency, with an inorganic contribution of about 1.5% [39][40] Other Important Information - The company recorded $308 million in business optimization costs, impacting operating margin and EPS [21][22] - The company announced an agreement to acquire a 65% majority stake in DLB Associates, expanding its capabilities in the data center professional services market [14][15] Q&A Session Summary Question: Shift in consulting industry's role in AI - Management acknowledged a shift in perception, emphasizing that enterprise AI adoption requires foundational work around security and data management [43][44] Question: Timing for AI partnerships to impact revenue - Management indicated that the partnerships are part of a broader ecosystem and enterprise adoption will drive revenue growth [51][52] Question: Sustainability of revenue growth outpacing headcount growth - Management confirmed that revenue per person grew 7%, driven by talent rotation and hiring for new skills [56][57] Question: Discretionary spending outlook - Management stated that they are not waiting for discretionary spending to return, focusing instead on delivering results despite market conditions [71][72] Question: Fixed-price work growth potential - Management expressed confidence in the competitive advantage of fixed-price deals, noting that they provide clients with confidence in outcome delivery [73][74]

Financial Data and Key Metrics Changes - Revenue for the quarter was $18.7 billion, reflecting a 5% growth in local currency and a 6% increase in U.S. dollars, at the top of the guided range [17][19] - Adjusted operating margin expanded by 30 basis points year over year to 17% [18][22] - Adjusted EPS grew by 10% year over year to $3.94 [18][22] - Free cash flow for the quarter was $1.5 billion, with a cash balance of $9.6 billion [23] Business Line Data and Key Metrics Changes - New bookings totaled $20.9 billion, representing a 12% growth in U.S. dollars and a 10% growth in local currency [18][19] - Consulting revenues were $9.4 billion, growing 4% in U.S. dollars and 3% in local currency [19] - Managed services revenues reached $9.3 billion, with an 8% increase in U.S. dollars and 7% in local currency [19] Market Data and Key Metrics Changes - In the Americas, revenue grew 4% in local currency, with a 6% growth excluding federal business impacts [20] - EMEA saw a 4% growth in local currency, driven by banking and capital markets [20] - Asia-Pacific revenue grew 9% in local currency, led by banking and capital markets [21] Company Strategy and Development Direction - The company focuses on being a reinvention partner for clients, emphasizing large-scale transformational programs [25] - Advanced AI is increasingly embedded in solutions, with a significant focus on data management and modernization [26][36] - The partnership strategy is crucial, with 60% of revenue coming from top ecosystem partners, which is expected to continue driving growth [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are prioritizing strategic transformational programs despite a lack of change in discretionary spending [72] - The demand for advanced AI is growing, with expectations for significant market expansion in the coming years [34] - The company anticipates revenue growth of 2-5% in local currency for fiscal 2026, with a focus on maintaining strong cash returns to shareholders [39][40] Other Important Information - The company recorded $308 million in business optimization costs, impacting operating margin and EPS [21] - The company plans to invest approximately $3 billion in acquisitions for fiscal 2026 [39] Q&A Session Questions and Answers Question: Shift in consulting industry's role in AI - Management acknowledged a shift in perception, emphasizing that enterprise AI adoption requires foundational work around data and processes [43][44] Question: Timing for AI partnerships to impact revenue - Management indicated that the impact of AI partnerships on revenue is tied to enterprise adoption, which is expected to evolve over time [51][52] Question: Sustainability of revenue growth outpacing headcount growth - Management confirmed that revenue per person grew 7%, driven by talent rotation, and expects this trend to moderate [56][57] Question: Discretionary spending outlook - Management stated that they are not waiting for discretionary spending to return, focusing instead on delivering results through large transformational deals [72] Question: Fixed-price work growth potential - Management expressed confidence in the competitive advantage of fixed-price deals, noting that they provide clients with certainty in outcomes [74][75]

Group 1: Market Overview - Global equity markets experienced significant growth in Q3 2025, with the MSCI ACWI Index increasing by 7.62% [1] - Global fixed income markets also saw an uptick, as evidenced by a 0.60% rise in the Bloomberg Global Aggregate Bond Index during the same period [1] Group 2: Fund Performance - The Aristotle International Equity Fund (Class I-2) reported a return of 1.15% for the quarter, underperforming compared to the MSCI ACWI ex USA Index, which returned 6.89%, and the MSCI EAFE Index, which returned 4.77% [1] Group 3: Accenture plc Analysis - Accenture plc (NYSE:ACN) was highlighted as a significant detractor in the investor letter, with a one-month return of 8.69% but a substantial 25.28% decline over the past 52 weeks [2][3] - The company's revenue from AI-related services nearly doubled to $5.9 billion in fiscal 2025, but concerns about the impact of AI on its outsourcing business have arisen, particularly due to its reliance on billable hours [3] - Federal contracts, which historically account for about 8% of Accenture's revenue, have been affected by the U.S. government's DOGE initiative, adding to the company's challenges [3] - Despite these issues, Accenture is investing in its workforce, employing approximately 77,000 AI and data specialists, and is returning capital to shareholders through a 10% year-over-year increase in dividends and a 15% increase in share buybacks [3] - The current valuation of Accenture shares is at a 10-year low, despite earnings per share and free cash flow being over 50% and 40% higher than mid-2020 levels, respectively [3]

Financial Data and Key Metrics Changes - Revenue for the first quarter reached $18.7 billion, growing 5% in local currency, with adjusted EPS growth of 10% compared to the same quarter last year [6][17][20] - Adjusted operating margin expanded by 30 basis points year over year, reaching 17% [7][17] - Free cash flow for the quarter was $1.5 billion, with a cash balance of $9.6 billion at the end of the quarter [21][22] Business Line Data and Key Metrics Changes - New bookings totaled $20.9 billion, representing 12% growth in U.S. dollars and 10% growth in local currency [16][17] - Consulting revenues were $9.4 billion, growing 4% in U.S. dollars and 3% in local currency, while managed services revenues were $9.3 billion, growing 8% in U.S. dollars and 7% in local currency [18] - Advanced AI bookings reached $2.2 billion, nearly doubling from the previous year, with revenue of approximately $1.1 billion [9][10] Market Data and Key Metrics Changes - Revenue growth in the Americas was 4% in local currency, with a 6% growth excluding federal business impacts [18][19] - EMEA saw 4% growth in local currency, driven by banking and capital markets, while Asia-Pacific experienced 9% growth, led by Japan and Australia [19] - The demand for reinvention remains strong, with 60% of revenue in Q1 coming from work with top 10 ecosystem partners [11][12] Company Strategy and Development Direction - The company aims to be the most client-focused, AI-enabled workplace, emphasizing the importance of partnerships and strategic acquisitions to enhance capabilities [5][14] - Recent acquisitions include a 65% stake in DLB Associates, expanding capabilities in the AI data center engineering market [14] - The focus is on embedding advanced AI across various solutions, moving beyond standalone projects to integrated end-to-end solutions [10][34] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are prioritizing large-scale transformational programs, with no significant changes in discretionary spending observed [24][66] - The company expects revenue growth for fiscal 2026 to be in the range of 2-5% in local currency, with an inorganic contribution of about 1.5% from acquisitions [37][39] - The outlook for adjusted diluted earnings per share for fiscal 2026 is projected to be between $13.52 and $13.90, reflecting 5-8% growth over the previous fiscal year [38][39] Other Important Information - The company recorded $308 million in business optimization costs related to employee severance, impacting operating margin and EPS [20] - The company continues to invest significantly in talent and technology, with nearly 80,000 AI and data professionals targeted [7][8] Q&A Session Summary Question: Shift in consulting industry's role in AI - Management acknowledged a shift in perception, emphasizing that enterprise AI adoption requires foundational work around data and processes [42][44] Question: Revenue impact of AI partnerships - Management indicated that partnerships are crucial for enterprise adoption and will contribute to revenue as the market evolves [50][51] Question: Sustainability of revenue per head growth - Management confirmed a 7% growth in revenue per person, driven by talent rotation, but expects moderation as new hires are integrated [52][54] Question: Discretionary spending outlook - Management stated that they are not waiting for discretionary spending to return, focusing instead on delivering results despite current market conditions [65][66] Question: Fixed-price work growth potential - Management expressed confidence in the competitive advantage of fixed-price contracts, which have increased significantly, and noted ongoing evolution in commercial models [67][68]