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spk06: 20 to 24%, so you heard that in our guidance. And we do think bookings and outsourcing, bookings for both, excuse me, revenue for both consulting and outsourcing are both going to be in that range. So we have another strong quarter in consulting and outsourcing revenue growth. And on top of that tension, we do see another strong bookings quarter in Q4. And we feel good about both our consulting and our outsourcing pipeline. So hopefully that gave you enough color on where we see bookings and the rest of the year playing out.
spk09: Got it. So balance across the two, which is great. So maybe my quick follow-up, everyone's been asking us, so I thought I'd ask you guys, Julie, specifically here, maybe for you, just how recession-ready is Accenture, right, with what the stock market is telling us? How is Accenture different or maybe similarly positioned to what we've seen in past down cycles? Any quick comments on that? Thank you.
spk05: Sure. Thanks, Tianjin. So we don't predict the macroeconomic. So what we do is really focus on what has helped us be successful. And obviously, every financial situation is going to be different. The pandemic, we don't know how this is going to be versus what was happening a decade ago. And so let me just focus on why we are in a strong position. And that is First of all, what's driving today is total enterprise reinvention. And so that means companies are trying to transform using tech data and AI around the enterprise. And we've been investing for a decade to be in the position that we're relevant to the enterprise. And so we can do everything, as you saw in our examples, from... you know, HR and finance to, you know, manufacturing, right? To in the insurance industry, underwriting and claims, right? So, and it's really the entire enterprise that we're relevant to. And that'll gives us a huge power to help our clients. And you see that's happening right now. You know, with the inflationary environment, you've got consumer goods companies focused very much on cost. as well as growth. And we're able to, you know, help them do both, right? And on the other hand, you've got, say, the energy companies that have had a really rough cycle who now have the ability to invest more, continuing on their cost discipline, but trying to also drive their, you know, transition to clean energy, right, and to advance their digitization. And so our diversity sector in both what we can do and our diversity in industries is extraordinarily helpful. And then as you think about why we're a leader today, I just want to sort of make sure people understand the power of the fact that we can do everything from strategy to consulting to manage services. So if you just take a consumer goods company, one of the biggest areas of spend is in marketing. We have amazing strategists at Accenture, right? It's a huge group. It's really, really relevant. And what they bring is not simply, here, let's go after your marketing spend. That looks like the biggest spend. What they can say is, and let me explain to you that the trend is to digitize, to use hubs, to not be as geographic specific. And let me show you where we've actually executed that and are managing that service for some of the leading companies. That's what our strategists can uniquely bring. And we can talk to our clients and say, And we can either help you build the capability or we can do it on your behalf because we can access the talent, we can move you more quickly. And so as we think about why are we strong today and how do we deliver on our enduring shareholder value proposition of growing faster than the market, delivering margin expanse and returning to shareholders and delivering 360-degree value, It's really based on this unique set of capabilities, these very strong-tested relationships, and then, of course, all of this underpinned by technology where we're a powerhouse and we are the leading partner of the largest technology companies in the world.
spk09: That's great. Thank you for your comments. Thanks.
spk04: Operator, next question.
spk03: I apologize, I was talking with my mute on. We will next go to the line of Lisa Ellis with Moffitt Nathanson. Please go ahead.
spk04: Hi, good morning. Thanks for taking my question. I guess I'll take the attrition one. It looks like attrition, you know, after coming down a bit the last couple of quarters, re-upticked a bit this quarter. Can you just talk about perhaps any,
spk05: color there are any underlying dynamics and and how is uh how is the attrition environment looking uh looking going forward thank you yeah sure lisa i mean usually we see an uptick in attrition from q2 to q3 uh we actually also see seasonally another uptick in q4 which we'll expect to see so you know this is kind of in line with prior patterns and again It's primarily driven by India at the lower end of our pyramid, which is highly competitive. At the same time, we're able to hire for the demand we see. And also, as we've commented before, our overall executive retention, which is the people who are driving our business every day, continues to be high. So not a lot of change, and these are really seasonal upticks.
spk04: Okay, got it. And maybe a follow-up on that and then also on Tim's question related to the R word, the possession word. What are the types of steps? Can you just remind us, like, if you do start to see a slowdown in the business, kind of what are the adjustments that Accenture makes or can make quite quickly to react to, you know, to a changing demand environment, right? realizing that, you know, you're often at the kind of front end of the sphere on that, given the, you know, given your strength in consulting and a lot of short, shorter duration projects.
spk05: Sure. I mean, you know, at the core of our business is how we manage supply and demand, right? And so, you know, we're, our ability to, we do have high attrition, right? So our ability to not, for example, uh, when I say high attrition, meaning our industry has high attrition, so our ability to not hire to replace that attrition. Our core competency is managing supply and demand. We have an ear to the ground with our clients, but we also have a lot of analytics around what we're seeing in open demand, what we're seeing in our pipeline. We manage our business with great rigor and discipline, and we'll, you know, continue to do that, you know, throughout this cycle. And, of course, I just want to make sure we're not walking past an incredible quarter from revenue and the bookings. And as Casey said, we see continued strong demand going into the next quarter with another strong bookings quarter and another strong revenue quarter.
spk04: Yes, got it. Terrific. Thank you.
spk03: And next, we go to the line of Jason Kupferberg with Bank of America. Please go ahead.
spk00: Good morning, guys. I just wanted to start with a clarification on the full-year EPS guidance. It sounds like you're now absorbing an extra $0.29 of headwind relative to where you were last quarter, with the $0.15 from exiting Russia and the $0.14 from incremental FX headwind. Is that accurate?
spk06: So, Jason, that is accurate in that the 15 cents for Russia, that's absolutely accurate. And then we have an additional 14 cents updated from the guidance that we gave you last quarter that we are absorbing. So, you are correct.
spk00: Right. Right. So, you're still maintaining the lower half of... the EPS guidance from last quarter despite absorbing an extra 29 cents. Okay. I just wanted to make sure. That's right.
spk06: I mean, I think, yeah, the key thing that you're asking and the key point I want to make sure that we're getting across is that there's no change to our business, right, fundamentals and our business performance. Right. We actually had a bit of an increase in our revenue guidance, which helps us partially offset that. the 14 cent drag that we have from FX. So really strong, we continue to see really strong business operations. We just can't absorb completely all of that large FX movement that we saw from last quarter to this quarter. That's all.
spk00: Of course, of course. And I guess it's encouraging to hear that there doesn't seem to really be much change at all in the demand environment. Obviously, there's been a lot of worry and wonder about that. But can you maybe just talk to us about like nuances of how client conversations have been evolving over the past three months? You know, any change in, you know, client decision making patterns or, you know, our clients, you know, doing more recession preparation on their end?
spk05: Sure. So first of all, as always, we call it like we see it. So today we see strong demand, and we're not seeing a change in decision-making. What we are seeing is a shift, depending on the industry and the market, on what clients are asking for. So, for example, in the industries like a consumer goods industry, you're seeing a lot more focus on cost than a year ago, right? With CEOs saying, hey, Julie, you know how I always used to talk to you about growth? Can we talk about growth and cost? Right. You're seeing, you know, more investment going into help me do more with less. And, you know, at the core of that is cloud data AI. You also see a big focus on can we go faster? And I was just meeting with a CEO last week who said, Julie, I just can you just look at our, you know, at our strategy and are we being transformational enough? Right. Are we challenging ourselves to go fast enough? And this is where the experience that we have of doing this, particularly over the last two years where we saw this compressed transformation, is so important. I was just speaking with an energy company last week where they, you know, like a lot of companies early on when digital transformation started, say, five, six years ago in the front office, they've been doing a bunch of experiments of digital twins around. And they're saying to us, okay, Julie, Help us understand where are we going to get the most value, but how do we scale? And that's that unique combination we have of, like, we can understand from a strategic perspective where's the biggest value. But I can then take, like, let me take you this company over here, different industry that's been doing digital twins that we've just been massively scaling over the 18 months. Let's share with you the lessons learned on how to do that because it is the next digital frontier. There isn't as much experience, and now we'll help you go faster. So the context is different depending on the industry. I think every CEO is, of course, focused on the macroeconomic, and people like to use that as a catalyst for doing some of the harder things around cutting costs. And what we do as Accenture, because Accenture, We can help on all aspects of that. We also can embed, you know, in a growth conversation. You saw the example we used of a big retailer in earnings where we're helping them grow and we're taking out $100 million in cost at the same time, right? And that's what makes us so unique, and that's why we will just continue to stay very focused. You know, we're doing a lot in supply chain that, you know, those conversations accelerated in Europe for obvious reasons. But really it's a global phenomenon and we're doing a ton there. And, of course, as we think about our business, when we look at the demand, we also look at do we need to upskill any place because we're seeing more demand, say, in supply chain or more demand in a particular industry. And that's where the agility of our learning, as you may recall, in the first six months after the pandemic, we upskilled 100,000 people to shift to cloud and collaboration technology. So that's how we stay very close, and then we use these other tools we have, like our ability to upskill, to make sure that we are responding to what our clients need.
spk00: Great, Carla. Thanks for the comments.
spk03: And our next question is from Ashwin Srivikar. Please go ahead.
spk02: Thank you. Good quarter, folks. Demand trend still seems strong. I appreciate the qualitative remark on the revenue focus versus cost focus. We already saw a tick down here in the percent of revenues from consulting as well. I guess the question is around whether you believe that consulting outsourcing balance might maybe, you know, get back down to 50-50 if you anticipate an air pocket down the road because outsourcing work just tends to have longer ramps. Could you kind of talk through that?
spk06: Yeah, sure, Ashwin, happy to. And so just in terms of, I'm going to start with the last part first. In terms of just our mix, right, we, and I'm not going to guide anything into next year, but if you just look historically at at our mix, it can move around 1% or 2% between consulting and outsourcing. But it's generally been, as you know, for years, in the zone of about 55% consulting and about 45% outsourcing. And we're seeing the same this year. So that's the first point. And then in terms of consulting, we are really pleased with our performance to date. And as you know, when I gave guidance for consulting for Q4, but just a reminder that our book-to-bill is really strong for the year in consulting. And anything, as you know, over one or around one book-to-bill in consulting, we consider strong. We also look at it over trailing four quarters. But I will give guidance for you in September for next year, and that's where we can give you some sense of what the outsourcing is consulting type of work will be next year. But no, you can look at our patterns and see it's about 55-45.
spk02: Got it. Got it. No, thank you for that. And I guess the follow-up is on M&A. I think you might have mentioned in the past quarter that your M&A spend target this year was closer to $4 billion. It looks like you might not get there. Any color around you know, valuations easing, you know, what's sort of going on with regards to sort of the strategic approach to M&A. Are you now looking, is that also changing given the revenue versus cost focus, or is that just a longer-term view? Parts around that would be great.
spk06: Yeah, I'll let Julie talk about the strategy, but just to recap what I did say. You're right. We had previously said we thought it would be about $4 billion. We now think it's going – we've done $2.2 billion to date, 27 transactions year-to-date. We now think it will be about $2.5 billion, and that's because there's about a billion, Ashwin, that is going to go into next year because of required regulatory approvals. So that really is the biggest difference between the $2.5 and the $4 billion that we talked about.
spk05: Yeah, and from a strategic point of view, we continue to believe that the – you know, mergers and acquisitions, V&A as we call it, is critical to the way we grow. And there's three big reasons. The first is we will do it for scale. So you saw us do a lot of cloud acquisitions, for example, because we wanted to capture the momentum in the market and to build scale in countries, like we did a big one in France, for example, where we didn't have the scale and we had a lot of market momentum. The second reason we do it is to move into adjacencies. So you saw us build Accenture Songman Interactive over years. We've used that very effectively with Industry X. So you saw the UNLAV big acquisition last year, for example, and that continues. And you're starting to see that now in sustainability. We just announced three acquisitions. So where we're really going into new areas with new skills and capabilities. And then third, we're always looking to, you know, sort of continue to add in our industry and functional expertise. And that strategy has served us well, and we continue to, you know, to believe that that's an important part of our growth going forward.
spk02: Thank you. Keep up the good work.
spk03: Thank you. Our next question is from Brian Keene with Deutsche Bank. Please go ahead.
spk08: Hi guys, good morning and congrats on the results. Wanted to specifically ask about Europe continues to show robust growth, 30% growth, and I think Casey called out Germany, France, UK, Italy. So, you know, lots of concern about the unfortunate situation in war in Ukraine. Is there anything that you guys are seeing that could be in the go forward, you know, impact in Europe? Because right now we're not seeing any weakness in those results.
spk05: Yeah, we're not seeing any weakness in those results. And so we continue to really stay close to our clients. There's, as I talked a little bit about earlier, there's a shift. in focus in many of the more impacted industries and across the board around things like energy efficiency, right? And so our strength in, for example, manufacturing and sustainability is helping us drive, you know, conversations and helping our clients get more energy efficient for obvious reasons, given the background in Europe, supply chain, you know, lots going on in supply chain. As you think about, you know, What we're doing there, we're doing everything from, you know, helping them have greater insights. So we're working with a food retailer, for example, to understand how they can anticipate disruptions better and earlier using data and analytics. So, you know, supply chain is a big topic. And then, you know, cost because everyone's anticipating disruptions. you know, at least a continuation of the inflationary environment that we're seeing globally. And so cost becomes a big focus. So it's today, again, all roads lead to not just technology data and AI, but how do you use it to transform the business, which is our sweet spot, right? That is what we do. We partner with the technology companies and our clients to help them use these technologies to get results. And that's what we're doing today. And And that's the environment that we're seeing our clients need.
spk08: Got it. I know that's helpful. And then maybe just as a quick follow-up, Casey, any thoughts on the latest on pricing and Accenture's ability to maintain or even get pricing increases in some different areas where the demand is strongest? Thanks so much, and congrats again.
spk06: Okay. Yes. So we were pleased that we did see, again, improvement, Brian, in our pricing. And again, reminder that pricing, when we talk about pricing, it's the margin on the work that we sold. And we really need to continue to focus on that, which is what we are doing to offset what we're continuing to see in wage inflation in our business, which, as we all know, is in all industries and really is across the globe. And we are seeing some improvement coming from pricing in our P&L, so I'm pleased with that. And at the same time, As you would expect, we're changing the mix of people on our contracts and also using technology to help offset the impact of wage increases. So, again, very focused on pricing. That's the biggest lever that we have. But all of these improvements together are still lagging the compensation increases, but we're still very, very focused on it.
spk08: Thank you.
spk06: Great.
spk03: And our next question is from Brian Bergen with Cowen. Please go ahead.
spk07: Hi, good morning. Thank you. Follow up here on bookings. Any changes in bookings profiles as it relates to contract duration? And are you seeing any uptick in the interest of clients to sell captive operations here? I'm curious if that type of transaction is picked up.
spk06: There really is no change. at all in terms of the profile of our bookings as it relates to duration?
spk05: I'd say on the captive side, it's more of a steady, kind of it's been steady. I don't think I'd say ticked up or not ticked up. It's been steady for the last couple of years.
spk07: Okay. And then just a question on Accenture Song. Can you talk about some of the operational changes that have been reported in that business as it relates to the consolidation of agency brands and what that does for you?
spk05: I think a couple things. I'd start with the rebranding is really more around reflecting what we're doing today. Accenture Interactive and that brand was kind of old because it started a decade ago, right? And it doesn't really reflect kind of the particularly post-pandemic, which is really a complete use of technology, bringing in creative, using data and AI, and moving very, very fast. So this is where you've got examples like we've given in the past of like a Jaguar Land Rover where they're using managed services to personalize experiences, and they're moving very, very quickly. And so, Song just really captures better what, in fact, we are doing there. And from an operational perspective, you know, it's just a natural evolution to bring together some of the brands that we've acquired over the years. You know, we built Accenture Song through a very deliberate M&A strategy. And so, you know, I think of it more of just kind of the natural evolution.
spk06: Great. Operator, we have time for one more question, and then Julie will wrap up the call.
spk03: Very good. That one comes from James Fawcett with Morgan Stanley. Please go ahead.
spk01: Great. Thank you very much, and thanks for all the details this morning. I wanted to ask a couple more nuanced questions. around Accenture's operations right now. And first, starting with the bench, how would you characterize your bench right now? Are there pockets of resources that are underutilized versus overutilized? And how much of an operational impact could that be having right now, if any?
spk06: James, thanks for the question. I will just maybe just focus on the key metrics that we look at and we report every quarter as it talks about our people and the usage of our people and clients. We're at 91%, which is really in the zone of utilization that we like to be in. We're running a little bit hot throughout the past year and a half since the pandemic, and we're at 91%. So that's a very healthy range that we're good with.
spk01: Got it. And then a lot of the conversation this morning obviously is focused on macro and demand, etc., but Are there any industry groups and or service dimensions that you're expecting to accelerate versus decelerate, especially as the customers seem to be at least modifying a little bit the conversations they're having to focus a little more on cost versus growth, et cetera? Are there key parts of that, those different industries and segments that could see changes as a result?
spk06: Maybe I'll just anchor to what we saw this quarter, and I can give it to Julie to give a little bit of color on that. But we did see all 13 industries this quarter have double-digit revenue growth, right? And when we talked about bookings, we had strength across all of our markets, services, and industries.
spk05: Yeah, and I would just add that I think Remember, an industry isn't a monolith, right? So you had, coming out of the pandemic, in almost every industry you had some percentage, we talked about this, who went really fast. Now you've got others who are saying, wait a minute, we're seeing the impact of some of the leaders move faster in their digital transformations. And so, you know, for example, those who moved early to the cloud, we're now talking about the next phase of how do you utilize the cloud to drive new things Remember our little formula, cloud is the foundation, data is the driver, and AI is the differentiator. And so, you know, if you've moved to the cloud, now you're using the data and that differently, right, as opposed to those who still need to move to the cloud. Like we are very early in the transition. And so the way we think about it is if you have a total enterprise, we walk our clients through it. What's the digital core you need to have? Where are you on the maturity scale? And how do you prioritize? And so while we look at the industries as growing double digits, what's actually happening within the industry really depends on where you are on the maturity curve. And that's what drives our business, right? Because we can help the clients who are leaders go to the next level, and we're helping the ones that are behind, you know, try to leapfrog. And so I think it's important to look at it in that sense, is that you need to have granular, deep understanding of the industries, and we help our clients with that to know where to go next. Great. Thanks, James. All right. In closing, we really appreciate everyone for joining us today, and thank you again to all of our people and our leaders for another outstanding quarter in every dimension from our financial results to our 360-degree value beyond our financials. And thank you to all of our shareholders for your continued trust and support. We'll work hard every day to continue to earn it. All the best.
spk03: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect. We're sorry, your conference is ending now. Please hang up.
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