Accenture PLC

Good day and welcome to Accenture's second quarter fiscal 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Katie O'Connor, Managing Director, Head of Investor Relations. Please go ahead.

Thank you, Operator, and thanks, everyone, for joining us today on our second quarter fiscal 2025 earnings announcement. As the Operator just mentioned, I'm Katie O'Connor, Managing Director, Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chair and Chief Executive Officer, and Angie Park, our Chief Financial Officer. We hope you've had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results. Angie will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the second quarter. Julie will then provide a brief update on our market positioning before Angie provides our business outlook for the third quarter and full fiscal year 2025. We will then take your questions before Julie provides a wrap-up at the end of the call. Some of the matters we'll discuss on this call, including our business outlook, are forward-looking and, as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures where appropriate to GAAP in our news release or in the investor relations section of our website at Accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie.

Thank you, Katie, and everyone joining this morning. And thank you to our more than 800,000 people around the world for their extraordinary work and commitment to our clients, which resulted in a very strong quarter, creating 360-degree value for all our stakeholders. Starting with our quarter, we are very pleased with our results as we continue to deliver on our strategy to return to strong growth in FY25. I will share some highlights from the quarter and then turn to an update on new developments since we were together in December in our federal business and the current environment more broadly. Our clients continue to prioritize large-scale transformations, and we are their reinvention partner of choice, as reflected in our bookings of $20.9 billion, including 32 clients with quarterly bookings greater than $100 million. We grew 8.5% in local currency with revenue of $16.7 billion at the top end of our guided range, and we continued 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. We had another milestone quarter in Gen AI, with $1.4 billion in new bookings and approximately $600 million in revenue. Operating margin contracted 20 basis points compared to adjusted operating margin last year, and we delivered EPS growth of 2% over Q2 FY24 adjusted EPS. We continue to invest significantly in our business to drive additional growth in highly strategic areas, with over $250 million deployed primarily across six strategic acquisitions, and we invested in our people with approximately 15 million training hours this quarter designed to help us bring the latest in solutions and technology to our clients, provide our people with marketable skills, and reinvent our services using GenAI. We increased our data and AI workforce to approximately 72,000, continuing progress against our goal of 80,000 by the end of FY2026. We continue to invest in creating and maintaining thriving communities, which is a component of our long-term growth strategy. This quarter in India, we launched a transformative hospitality skilling program in collaboration with our client, Marriott International, which prepares disadvantaged youth for entry-level jobs in the hospitality sector, including training for digital skills. Because we help our clients execute on some of their most important priorities and we need to attract and retain the best people, recognition of Accenture as an ethical and admired company is critical for our clients' confidence and to attract these great talents. We are pleased that we have been recognized by Ethosphere as one of the world's most ethical companies for the 18th year in a row. And for the third consecutive year, we ranked number one in our industry and among the top five overall and just capitals, America's most just companies. In addition, thanks to our clients, partners, and the wider business community, we earned the number one position in our industry for the 12th year in a row and number 30 overall, our highest name on Fortune's list of the world's most admired companies. Now for two updates. First, Accenture Federal Services. Federal represented approximately 8% of our global revenue and 16% of our America's revenue in FY24. As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue. In addition, recently, the General Service Administration has instructed all federal agencies to review their contracts with the top 10 highest paid consulting firms contracting with the U.S. government, which includes Accenture Federal Services. The GSA's guidance would determinate contracts that are not deemed mission critical by the relevant federal agencies. While we continue to believe our work for federal clients is mission critical, we anticipate ongoing uncertainty as the government's priorities evolve and these assessments unfold. Based on our significant experience across federal and commercial clients, we see major opportunities over time for us to help consolidate, modernize, and reinvent the federal government to drive a whole new level of efficiency. Second, in recent weeks, we are seeing an elevated level of what was already significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter FY25 earnings report in December. At the same time, we believe the fundamentals of our industry remain strong and we are very well positioned with our clients because all strategies continue to lead to reinvention through new ways of working, tech, data, and AI. We are confident in executing our strategy to help clients reinvent. As you would expect, we are laser focused on bringing tremendous value to our clients. Our strengths lie in our agility as the market we operate in changes utilizing our deep client and ecosystem relationships, and our leading position in Gen AI and technology more broadly. We are also well diversified across markets, industries, and types of work, which enables us to continue to lead in a changing market context as we have done before. Over to you, Angie.