Accenture PLC

in our results, which are building a foundation for stronger growth as we go into Q4 and next fiscal year. As you know, this fiscal year, our client spending developed differently than we expected at the beginning of the fiscal year, and these conditions continue, with clients prioritizing large-scale transformations, which convert to revenue more slowly, while limiting discretionary spending, particularly in smaller projects, with delays in decision-making and a slower pace of spending as well. In response, we have moved quickly to adjust by leveraging our unique strengths, our end-to-end services, including deep industry and functional expertise that enable these large-scale transformations or what we call reinventions. We're also leveraging our deep technology expertise and ecosystem partnerships and our learning machine and culture that gives us the agility to shift to new areas of demand including, for example, GenAI, while continuing to invest at scale for future growth. Here is how these strengths and our strategy are demonstrating results three quarters into the fiscal year. With our clients prioritizing large-scale transformations, we have accelerated our strategy to be the reinvention partner of our clients. Our success is reflected in our bookings of $21.1 billion, including another 23 clients with quarterly bookings greater than $100 million. bringing the total of such clients with these bookings to 92 year-to-date, seven more than last year at this time. This focus on being the reinvention partner is an important part of our strategy to return to stronger growth. As we enter next year, as this work ramps, the revenue from these large-scale bookings is expected to continue to layer in throughout the year. And we are also well-positioned to capture increases in discretionary spend when it comes back because of the strategic positioning these deals bring at our clients. We also have leaned into the new area of growth, Gen AI, which is comprised of smaller projects, as our clients primarily are in experimentation mode. And this quarter, we hit two important milestones. With over $900 million in new Gen AI bookings this quarter, we now have $2 billion in Gen AI sales year-to-date, and we have also achieved $500 million in revenue year-to-date. This compares to approximately $300 million in sales and roughly $100 million in revenue from Gen AI in FY23. Leading in Gen AI positions us to help our clients take the actions needed to reinvent and to benefit from Gen AI. which frequently means large-scale transformations. We are also taking an early lead with an eye toward long-term leadership in this critical technology, which is still in the early stages of maturity and adoption, despite its rapid evolution. We have built our expertise in making strategic acquisitions over the last decade, leveraging a strong balance sheet, and we have used this expertise to expand into new growth areas, scale in hot areas and geographies, and continue to build strength in our industry and functional consulting. We deployed $2.3 billion of capital across our geographic markets in Q3 across 12 acquisitions, bringing the total number of acquisitions to 35 with invested capital of $5.2 billion year-to-date as compared to $2.5 billion for the entire FY23. As a learning organization and talent creator, we continue to invest in our people with approximately 13 million training hours this quarter. This averages 19 hours per person, representing an increase predominantly due to GenAI as we continue to prepare our workforce for the infusion of GenAI across our business in the coming years. We also continue to steadily increase our data and AI workforce, reaching approximately 55,000 skilled data and AI practitioners against our goal of doubling our data and AI workforce from 40,000 to 80,000 by the end of FY26. We continue to take market share on a rolling four quarter basis against our basket of our closest global publicly traded competitors, which is how we calculate market share with revenues of 16.5 billion for the quarter of 1.4% in local currency and slightly above the midpoint of our FX adjusted range. We expanded adjusted operating margin by 10 basis points and delivered free cash flow of $3 billion. I want to congratulate our 97,000 people we have promoted around the world through June 1, including 702 to managing director and 64 to senior managing director, reflecting our commitment to providing vibrant career paths. We are recognized as a top 10 place to work in 10 countries, representing more than 70% of our people. number two in Argentina, Brazil, and the Philippines, number four in Singapore, number five in Costa Rica, Finland, and Indonesia, number seven in the U.S., and number 10 in Chile on the Great Place to Work list of best workplaces, and number two on Business Today's best companies to work for in India. And in recognition of our strong brand, we are proud to earn the number 20 position on Contra Brands' prestigious Top 100 Most Valuable Global Brands list, our highest rank to date, with an 11% increase in brand value to $81.9 billion. Our scale across strategy, consulting, technology, and operations, and our breadth and depth across industries and functions make us uniquely capable of helping our clients reinvent using technology, data, AI, and new ways of working. Before turning to KC, I wanna give a little more color on our acquisitions this quarter, which yet again demonstrate the strategic importance of both our ability to invest and our expertise in identifying, attracting, and integrating great companies joining Accenture. Let's start with new areas of growth. We completed our acquisition of Udacity to scale our technology learning and training services and to help our clients reskill and upskill their people. Udacity is a critical part of our LearnVantage digital learning platform, which we announced last quarter as a new area of growth for the future. Building on our expertise in customer-focused consulting, we invested to help drive our clients' growth agendas. We acquired Unlimited, an award-winning customer engagement agency with a deep understanding of human behavior as evidenced by its proprietary human understanding lab and AI-powered data insights platform. We acquired The Lumery, in Australia, a marketing technology consultancy that helps leading organizations deliver seamless customer experiences and transform their marketing services. It provides industry and platform consulting services, including marketing, advisory, and planning, implementation across entire technology stacks, operational excellence, and simplification. We closed our acquisition of GemSeek in Bulgaria, a leading customer experience analytics provider helping global businesses understand customers, through insights, analytics, and AI-powered predictive models. And we closed MindCurve, a cloud-native digital experience and data analytics company specializing in composable software, digital engineering, and commerce services. Now let's turn to scaling and hot industries. We acquired Cognosante, a provider of innovative technology solutions for U.S. federal health, defense, intelligence, and civilian agencies. With this acquisition, Federal Services is creating a new federal health portfolio for its business. We invested in customer management IT and Surf and PA, which will provide the public sector with technology, support, and justice and public safety in Italy. We see public service, and in particular health, intelligence, and defense as highly strategic industry focus areas globally for the next several years. And we invested in Team Expat, focusing on testing integration for lithography systems in the semiconductor industry, another attractive industry segment. Our investment in Flow Group, a leading European consultancy and Oracle business partner who specializes in global supply chain logistics, is helping us scale in supply chain, also a major growth area. Finally, we're scaling in attractive geographic markets. we acquired Climb, a technology-based consultancy based in Japan where we continue to experience very strong revenue growth. Over to you, Casey.

Thank you, Jolie, and thanks to all of you for taking the time to join us on today's call. We are pleased with our Q3 results, which were in line with our expectations and reflect continued investment at scale. We continue to serve as a trusted partner for our clients while running our business with rigor and discipline. Now let me summarize a few of the highlights for the quarter. Revenues grew 1.4% local currency with mid-single-digit growth or higher in seven of our 13 industries, including public service, industrial, high-tech, life sciences, energy, utilities, and health. We also continue to see improvement in our CMT industry group. And we continue to take smart share. As a reminder, we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of significant acquisitions through the date of their last publicly available results on a rolling four-quarter basis. Adjusted operating margin was 16.4%, an increase of 10 basis points over Q3 last year, and includes continued significant investments in our people and our business. Finally, we delivered free cash flow of $3 billion and returned $2.2 billion to shareholders through repurchases and dividends. To date, we've invested $5.2 billion across 35 acquisitions. With those high-level comments, let me turn to some of the details starting with new bookings. New bookings were $21.1 billion for the quarter, representing 22% growth in U.S. dollars and 26% growth in local currency, with an overall book-to-bill of 1.3. Consulting bookings were $9.3 billion, with a book-to-bill of 1.1. Managed services bookings were $11.8 billion, with a book-to-bill of 1.5. Turning now to revenues. Revenues for the quarter were $16.5 billion, a 1% decline in U.S. dollars and a 1.4% increase in local currency, and slightly above the midpoint of our FX adjusted guidance range, as the FX headwind was approximately 2% compared to the 1% headwind estimated at the beginning of the quarter. Consulting revenues for the quarter were $8.5 billion, a decline of 3%, and U.S. dollars in a decline of 1% in local currency. Managed services revenues were $8 billion, up 2% in U.S. dollars, and up 4% local currency. Taking a closer look at our service dimensions, technology services and strategy and consulting grew low single digits, and operations was flat. Turning to our geographic markets, in North America, revenue grew 1% local currency, led by growth in public service. partially offset by decline in banking and capital markets. In EMEA, revenues declined 2% local currency with growth in public service, offset by declines in banking and capital markets and communications and media. Revenue growth in Italy was offset by a decline in France. In growth markets, revenue grew 8% local currency, led by growth in banking and capital markets and industrial. Revenue growth was driven by Argentina and Japan, partially offset by a decline in Australia. Moving down the income statement, gross margin for the quarter was 33.4%, consistent with the same period last year. Sales and marketing expense for the quarter was 10.6%, compared to 10.5% for the third quarter last year. General and administrative expense was 6.3%, compared to 6.5% for the same quarter last year. Before I continue, I want to note that in Q3 of FY24 and FY23, We recorded $77 million and $347 million in costs associated with our business optimization actions respectively. These costs decreased operating margin by 40 basis points in EPS by 8 cents this quarter and operating margin by 210 basis points in EPS by 42 cents in Q3 of last year. In Q3 of last year, we also recognized a gain on our investment in Duck Creek Technologies which impacted our tax rate and increased EPS by 38 cents. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating income was 2.7 billion in the third quarter, reflecting an adjusted operating margin of 16.4%, an increase of 10 basis points from adjusted operating margin in the third quarter of last year. Our adjusted effective tax rate for the quarter was 25.5% compared with an adjusted tax rate of 24% for the third quarter last year. Adjusted diluted earnings per share were $3.13 compared with an adjusted diluted EPS of $3.19 in the third quarter last year. Day service outstanding were 43 days compared to 43 days last quarter and 42 days in the third quarter of last year. The cash flow for the quarter was $3 billion, resulting from cash generated by operating activities of $3.1 billion, net of property and equipment additions of $124 million. Our cash balance at May 31st was $5.5 billion, compared with $9 billion at August 31st. With regard to our ongoing objective to return cash to shareholders, in the third quarter, we repurchased or redeemed 4.3 million shares for $1.4 billion, an average price of $320.41 per share. As of May 31st, we had approximately $3.3 billion of share repurchase authority remaining. Also in May, we played a quarterly cash dividend of $1.29 per share for a total of $811 million. This represents a 15% increase over last year. And our Board of Directors declared a quarterly cash dividend of $1.29 per share to be paid on August 15th, a 15% increase over last year. In closing, we feel good about our results in Q3 and are now working hard to deliver Q4. We remain focused on capturing growth opportunities while continuing to invest in our business for long-term market leadership. Now let me turn it back to Julie.

Thank you, Casey. As I mentioned earlier, we're seeing more of the same in terms of the demand environment. Now let me give a little context on how we're executing our strategy to be the reinvention partner of choice and why we're uniquely positioned to be helping our clients on AI. It is important to remember that while there is a near universal recognition now of the importance of AI, which is the heart of reinvention, the ability to use GenAI at scale varies widely with clients on a continuum. With those which have strong digital cores genuinely seeking to move more quickly, while most clients are coming to the realization of the investments needed to truly implement AI across the enterprise, starting with a strong digital core, from migrating applications and data to the cloud, building a new cognitive layer, implementing modern ERP and applications across the enterprise, to a strong security layer. And nearly all clients are finding it difficult to scale Gen AI projects because the AI technology is a small part of what is needed. To reinvent using technology, data, and AI, you must also change your processes and ways of working, reskill and upskill your people, and build new capabilities around responsible AI, all with a deep understanding of industry, function, and technology to unlock the value. And many clients need to first find more efficiencies to enable scaled investment in their digital cores, in all these capabilities, particularly in data foundations. In short, GenAI is acting as a catalyst for companies to more aggressively go after cost, build the digital core, and truly change the ways they work, which creates significant opportunity for us. And this is why clients are coming to us. We are able to help our clients with this AI rotation because of our broad services across strategy and consulting, technology and operations, as well as everything customer through song and digital manufacturing and engineering through Industry X, and our relevance across the functions of the enterprises and 13 industries. Our privileged position in the technology ecosystem has never been more important. We are working closely with our ecosystem partners to help our clients understand the right data and AI backbone that is needed and how to achieve tangible business value. Now let me give you a few examples of the complex work of reinvention and building a digital core. We are partnering with Curry's, a leading European technology retailer, to unlock new growth and cost savings by accelerating its adoption of new technologies. First, we will move their operations from a legacy data center to a new cloud platform using pre-built and customized solutions to create a powerful digital core. This unified data foundation allows us to deploy automation and generative AI in key growth areas, such as repair centers, customer service, e-commerce, procurement, and in-store experiences, delivering faster, more efficient services to their customers. The move to a new platform supports the company's sustainability goals, reducing energy consumption by transitioning to a more efficient cloud infrastructure. Now, Curry's employees will be empowered to serve their customers better by offering high-touch experiences both online and in-stores. We're working with Independence Health Group, IHG, a leading health organization headquartered in southeastern Pennsylvania, on a transformation journey to modernize end-to-end operations, improving the way they serve current and future generations of customers. We will help migrate nearly 2 million members to a new digital-first platform, expected to drive immediate improvements in existing business processes. This will lay the foundation to leverage advanced technology and generative AI to proactively manage members' health. We are also helping reskill and retrain their operations staff, creating opportunities for employee development. With this reinvention, Independence continues its ongoing efforts to increase service quality, improve experiences, and enable better health outcomes, positioning them for new areas of growth in the rapidly changing healthcare landscape. Digital core work also requires deep industry expertise as we work with our clients to design the right tech, data, and AI to reinvent their enterprise and their industry. We are helping Macy's, an iconic American retailer, with a technology modernization effort. As a strategic technology execution partner, we will migrate their mainframe systems to a cloud platform, a move that will enhance their operational efficiency and scalability. This will allow Macy's to be more agile and enable growth. We are helping the Central Bank of the United Arab Emirates. the regulatory body responsible for the country's banking and insurance sector with a digital transformation to strengthen the financial system's stability and contribute to growth, innovation, and diversification in the sector, in line with the UAE's national vision. Our program will deliver advanced analytics along with AI-driven automation to improve supervisory capabilities and streamline activities for licensed financial institutions by creating best-in-class processes to support regulatory compliance. We will also modernize the bank's enterprise data management by implementing a single unified portal to provide a holistic view of the financial services ecosystem, all of which will enhance the UA's position as a global financial center. We are partnering with Virgin Media O2, a leading carrier services provider in the UK, to support regional businesses to realize the promise of 5G, opening new revenue streams and stimulating growth in the telco market. we will bring to market solutions built on our Edge orchestration platform, which combines Edge computing, data AI, Gen AI, and embedded security. This will enable use cases such as quality inspections, safe workplace management, and behavior monitoring to improve operations and customer experience. Whether it's enabling safe communication on building sites, creating a fan experience while handling crowds in busy venues, or supporting vital devices and clinician workflow in healthcare, Virgin Media O2 can now offer businesses a range of flexible, secure, and affordable solutions that boost efficiency, growth, and performance. And with our managed services and customer operations, we can work together with Virgin Media O2 to scale this growth. Security is a critical part of reinvention in the digital core. We saw continued very strong double-digit growth in our security business this quarter. We are partnering with the U.S. Navy to enhance its cybersecurity operations with cutting edge capabilities that will strengthen its data security posture and support mission readiness. More than ever, data and information are critically important to national security. Our solution sets are configured to provide defensive cyber operations across Navy networks to help safeguard digital assets and mission operations. Together, we will help ensure the U.S. Navy can combat evolving cyber threats, protect our sailors at sea, and defend American interests around the world. Once clients have a strong foundation, they can explore new opportunities to drive growth and efficiencies with GenAI. We are helping a leading global food and beverage company who already built a strong digital core as part of its reinvention journey to now leverage the power of generative AI to create new value. Together, we developed a digital shelf console pilot, a Gen AI engine that accelerates content creation for e-commerce and optimizes it to drive sales. The engine empowers marketers to audit and customize content at scale, expected to reduce time to deliver one year's worth of content to just eight working days and save costs of up to 80% quickly and effectively. Once they scale, this enables the company to produce more targeted content with significant time and cost efficiency and increase sales, and transform customer experiences. We have partnered with National Australia Bank, one of the country's largest financial institutions, to strategically implement and scale generative AI to create material value at speed, enhance relationship-driven customer service, and drive operational efficiencies. We worked on a methodical build of a secure and robust GenAI platform built within the bank's existing strategic data platform with the creation of 200 generative AI use cases in backlog. To date, over 20 use cases have been tested across the bank, with eight of these enterprise-grade pilots underway and a number of those scaling and already delivering value. We also co-created a methodology for delivering Gen AI projects, from experiments to scalable deployment, ensuring each stage delivers tangible business benefits. While doing so, National Australia Bank and Accenture are putting safety at the core of the approach through responsible AI and risk policies alongside developing in-house AI expertise and literacy. One of the areas of Rich's opportunities for our clients is customer experience transformation, which uses the unique capabilities of Song across creative customer insights and deep technology expertise. Song grew mid-single digits this quarter. We are helping Saudia Airlines, the national flag carrier of Saudi Arabia, to launch an innovative digital platform to transform the traveler's experience. Powered by GenAI, the platform will provide a one-stop solution, enabling customers to seamlessly plan their journeys, book flights, and modify their trips in just a few words, all while providing a personalized and conversational experience. The platform is continuously evolving and will integrate more services over time. This modernization will support Saudi Airlines' vision of redefining the standards of travel in a digital world. We continue to see strong demand for digital manufacturing and engineering services. Industry X grew high single digits in Q3. We are supporting a large Asia-Pacific automobile manufacturer on their reinvention towards software-defined vehicles. We will help accelerate software development and create a software center of excellence to optimize quality, cost pressures, and delivery times. the Center of Excellence will manage four key work streams, advanced driver assistance systems, in-vehicle infotainment, electrical and electronics, and powertrain. By leveraging our expertise and strategic partnerships, we are empowering them to strengthen and evolve its in-vehicle software, providing advanced functions and services throughout the vehicle's lifecycle. This enables the company to drive innovation, enhance driver and passenger experiences, and realize the full potential of software-defined vehicles. And we will continue to leverage all of our strengths to manage the current macro conditions and constrained spending while investing in leadership for the future. Back to you, Casey.