Earnings Call Insights: Accenture (ACN) Q3 2025
Management View
- Julie T. Spellman Sweet, CEO & Chairman, began by highlighting “another strong quarter of reinvention across industries, companies and countries” and emphasized that “we are very pleased with our results as we continue to deliver on our strategy to be our clients’ reinvention partner of choice and lead in Gen AI.” She reported $19.7 billion in bookings and 7% revenue growth in local currency to $17.7 billion, noting these results exceeded guidance and drove continued market share gains. Spellman Sweet highlighted a milestone quarter for Gen AI, with $1.5 billion in bookings and over $700 million in revenues, bringing year-to-date Gen AI bookings to $4.1 billion and revenue to $1.8 billion. She also announced a strategic realignment: “Starting September 1, we are bringing all of our services… into a single integrated business unit called Reinvention Services” to accelerate solution delivery and AI integration for clients.
- Angie Park, CFO, stated: “We are very pleased with our third quarter results with revenue above our guided range as well as very strong margin expansion, EPS growth and free cash flow.” Park also noted, “Based upon the strength of our results, we once again raised our full year revenue outlook, and we are on track to deliver or exceed all aspects of our guidance provided in September.”
Outlook
- Park provided guidance for Q4 fiscal 2025, expecting revenues between $17 billion and $17.6 billion, assuming FX impact of approximately positive 2.5% and local currency growth of 1% to 5%. She stated, “For the full fiscal ’25, we now expect our revenue to be in the range of 6% to 7% growth in local currency over fiscal ’24.”
- Park indicated expectations to invest about $1 billion to $1.5 billion in acquisitions for the year, and projected operating margin for fiscal 2025 at 15.6%. The annual effective tax rate is now anticipated to range between 23% and 24%. Full-year diluted EPS guidance is $12.77 to $12.89, reflecting 7% to 8% growth over the previous year.
- Free cash flow for the year is expected between $9 billion and $9.7 billion, and Park reiterated the company will “return at least $8.3 billion through dividends and share repurchases.”
Financial Results
- Q3 revenues totaled $17.7 billion, an 8% increase in U.S. dollars and 7% in local currency, with growth reported as broad-based across markets and services. Operating margin was 16.8%, up 40 basis points year-over-year. Diluted EPS reached $3.49, reflecting 12% growth over the prior year. Free cash flow was $3.5 billion, and $2.7 billion was returned to shareholders through repurchases and dividends.
- Consulting revenues were $9 billion (up 7% in U.S. dollars), and managed services revenues were $8.7 billion (up 9%). Gross margin for the quarter was 32.9%, with sales and marketing and general and administrative expenses at 9.9% and 6.1% respectively. The cash balance stood at $9.6 billion as of May 31.
Q&A
- Tien-Tsin Huang, JPMorgan, asked about leadership changes and talent retention. Spellman Sweet responded that “attrition ticked up a little bit this quarter, but as you know, that goes up and down. It’s well within kind of what we normally see.”
- Huang followed up on macro uncertainty and its impact on revenue and bookings. Spellman Sweet explained that Accenture’s resilience comes from “the building blocks that we have built over decades that we can bring together and quickly shift to meet clients’ needs,” emphasizing agility in response to lower discretionary spending.
- David John Koning, Baird, questioned Gen AI demand and acquisition pace. Spellman Sweet stated Gen AI demand “continues to be very, very strong,” while Park added that the acquisition strategy “remains exactly the same… we can flex up, we can flex down based upon the opportunities.”
- James Eugene Faucette, Morgan Stanley, inquired about possible changes in acquisition targets. Spellman Sweet indicated the approach remains “relatively consistent with how you’ve evaluated acquisitions from a capability standpoint in the past.”
- Bryan C. Bergin, TD Cowen, asked about federal business headwinds and implications of the new growth model. Spellman Sweet clarified that the model change is “being driven by what we see in the market in terms of our ability to grow. It is not being driven by cost cutting.”
- Jason Alan Kupferberg, BofA, sought clarity on Gen AI-driven code and efficiency. Spellman Sweet emphasized that “our guidance takes into account how we deliver and any effects on how Gen AI is being built into our commercial models.”
Sentiment Analysis
- Analysts questioned leadership stability, talent retention, federal sector risks, and the sustainability of growth and margins. Their tone was cautiously probing, with several seeking assurance amid macro uncertainty and operational changes.
- Management maintained a confident and constructive tone, repeatedly referring to the company’s resilience, agility, and ability to adapt its model. Spellman Sweet’s language around strategic pivots and historical success in transformation reflected consistent optimism. Park’s remarks were matter-of-fact and focused on financial discipline and execution.
- Compared to the previous quarter, both sides demonstrated a slightly more constructive tone. Analysts remained focused on risks but acknowledged the company’s track record, while management’s confidence appeared to increase, especially around the new growth model and outlook upgrades.
Quarter-over-Quarter Comparison
- Guidance for revenue growth was increased from 5%–7% in Q2 to 6%–7% for the full year in Q3. EPS growth guidance also moved higher, now at 7%–8% versus the prior 5%–7% range.
- Operating margin expectations narrowed to 15.6% from the prior 15.6%–15.7%. Planned acquisition investment was reduced to $1 billion–$1.5 billion from $2 billion–$3 billion previously.
- Management’s tone in Q3 was more proactive and forward-looking, underscored by the announcement of the new Reinvention Services business unit and confidence in scaling Gen AI-driven revenue.
- Analysts’ focus shifted from immediate macro and federal uncertainties in Q2 to questions around execution and implications of the organizational restructure in Q3.
Risks and Concerns
- Management highlighted “significantly elevated level of uncertainty in the global economic and geopolitical environment.”
- Federal sector was identified as a headwind, with Park noting “about a 2% headwind overall in Q4” and impact from slower procurement and cancellations.
- Analysts also raised concerns about leadership changes, talent retention, and the pace of acquisitions, all of which were addressed as manageable by management.
Final Takeaway
Accenture’s management emphasized that the company delivered another strong quarter, driven by continued momentum in Gen AI, broad-based revenue growth, and margin expansion. The introduction of the Reinvention Services business unit is positioned as a pivotal move to integrate capabilities and accelerate AI adoption for clients. Management raised the full-year outlook for both revenue and EPS growth, signaling confidence in Accenture’s diversified model, disciplined execution, and ability to adapt to changing market dynamics while navigating persistent macroeconomic and sector-specific uncertainties.