What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-03-21 compared with 2023-12-19 · 195 added, 122 removed, 197 unchanged (62% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations 24

Revenues for the first quarter of fiscal 2024 increased 3% in U.S.

dollars and 1% in local currency compared to the first quarter of fiscal 2023.

During the first quarter of fiscal 2024, revenue growth in local currency was solid in Growth Markets and modest in EMEA, partially offset by a slight decline in North America.

We experienced local currency revenue growth that was very strong in Health & Public Service, strong in Resources, slight in Products and flat in Financial Services, partially offset by a significant decline in Communications, Media & Technology.

Revenue growth in local currency was solid in managed services, partially offset by a modest decline in consulting during the first quarter of fiscal 2024.

Revenues for the second quarter of fiscal 2024 were flat in both U.S.

dollars and local currency compared to the second quarter of fiscal 2023.

During the second quarter of fiscal 2024, revenue growth in local currency was strong in Growth Markets, while North America was flat and EMEA had a modest decline.

We experienced local currency revenue growth that was very strong in Health & Public Service, solid in Resources and flat in Products, offset by declines in Communications, Media & Technology and Financial Services.

Revenue growth in local currency was modest in managed services, offset by a modest decline in consulting.

The business environment is competitive, and we have been experiencing lower pricing across the business.

We define pricing as contract profitability or margin on the work that we sell.

In our consulting business, revenues for the first quarter of fiscal 2024 were flat in U.S.

dollars and decreased 2% in local currency compared to the first quarter of fiscal 2023.

The decline in consulting revenue in local currency for the first quarter of fiscal 2024 was driven by modest declines in North America and EMEA, while Growth Markets was flat.

In our consulting business, revenues for the second quarter of fiscal 2024 decreased 3% in both U.S.

dollars and local currency compared to the second quarter of fiscal 2023.

The decline in consulting revenue in local currency for the second quarter of fiscal 2024 was driven by a decline in EMEA and a modest decline in North America, partially offset by modest growth in Growth Markets.

Our consulting revenue continues to be driven by helping our clients accelerate their digital transformation, including moving to the cloud, embedding security across the enterprise and adopting new technologies.

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While we continue to experience demand for these services, we are seeing a slower pace and level of client spending, especially for smaller contracts with a shorter duration.

In our managed services business, revenues for the first quarter of fiscal 2024 increased 6% in U.S.

dollars and 5% in local currency compared to the first quarter of fiscal 2023.

Managed services revenue in local currency for the first quarter of fiscal 2024 was driven by very strong growth in Growth Markets and EMEA, while North America was flat.

In our managed services business, revenues for the second quarter of fiscal 2024 increased 3% in both U.S.

dollars and local currency compared to the second quarter of fiscal 2023.

Managed services revenue growth in local currency for the second quarter of fiscal 2024 was driven by very strong growth in Growth Markets, solid growth in EMEA and slight growth in North America.

We continue to experience growing demand to assist clients with application modernization and maintenance, cloud enablement and cybersecurity-as-a-service.

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dollars may be lower.

dollar weakened against various currencies during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, resulting in favorable currency translation and U.S.

dollar strengthened against various currencies during the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023, resulting in unfavorable currency translation and U.S.

dollar revenue growth that was approximately 0.5% lower than our revenue growth in local currency.

dollar weakened against various currencies during the six months ended February 29, 2024 compared to the six months ended February 28, 2023, resulting in favorable currency translation and U.S.

dollar revenue growth that was approximately 0.5% higher than our revenue growth in local currency.

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Annualized Voluntary Attrition

consistent with the first quarter of fiscal 2023

compared to approximately 738,000 as of November 30, 2022

compared to 13% in the first quarter of fiscal 2023

Utilization for the first quarter of fiscal 2024 was 91%, consistent with the first quarter of fiscal 2023.

compared to 91% in the second quarter of fiscal 2023

compared to approximately 738,000 as of February 28, 2023

compared to 12% in the second quarter of fiscal 2023

Utilization for the second quarter of fiscal 2024 was 92%, compared to 91% in the second quarter of fiscal 2023.

We hire to meet current and projected future demand.

We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our operating expenses.

Our workforce, the majority of which serves our clients, increased to approximately 743,000 as of November 30, 2023, compared to approximately 738,000 as of November 30, 2022.

Our workforce, the majority of which serves our clients, increased to approximately 742,000 as of February 29, 2024, compared to approximately 738,000 as of February 28, 2023.

The year-over-year increase in our workforce reflects people added in connection with acquisitions and hiring for specific skills.

For the first quarter of fiscal 2024, annualized attrition, excluding involuntary terminations, was 11%, down from 13% in the first quarter of fiscal 2023.

For the second quarter of fiscal 2024, annualized attrition, excluding involuntary terminations, was 13%, up from 12% in the second quarter of fiscal 2023.

We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 25

In addition, we adjust compensation to provide market relevant pay based on the skills of our people and locations where we operate.

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We strive to adjust pricing as well as drive cost and delivery efficiencies, such as changing the mix of people and utilizing technology, to reduce the impact of compensation increases on our margin and contract profitability.

ACCENTURE FORM 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations 23

Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to:

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and/or effectively assimilate new employees.

Operating Expenses

The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs.

Cost of services is primarily driven by the cost of people serving our clients, which consists mainly of compensation, subcontractor and other payroll costs, and non-payroll costs such as facilities, technology and travel.

Cost of services includes a variety of activities such as:

contract delivery;

recruiting and training;

software development;

and integration of acquisitions.

Sales and marketing costs are driven primarily by:

compensation costs for business development activities;

marketing- and advertising-related activities;

and certain acquisition-related costs.

General and administrative costs primarily include costs for people that are non-client-facing, information systems, office space and certain acquisition-related costs.

Gross margin (Revenues less Cost of services as a percentage of Revenues) for the first quarter of fiscal 2024 was 33.6%, compared with 32.9% for the first quarter of fiscal 2023.

The increase in gross margin for the first quarter of fiscal 2024 was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel.

Sales and marketing and General and administrative costs as a percentage of revenues were 16.9% for the first quarter of fiscal 2024 compared with 16.5% for the first quarter of fiscal 2023.

For the first quarter of fiscal 2024 compared to the same period in fiscal 2023, Sales and marketing costs increased 70 basis points due to higher selling and other business development costs as a percentage of revenues.

For the first quarter of fiscal 2024 compared to the same period in fiscal 2023, General and administrative costs decreased 20 basis points as a percentage of revenues.

During the three months ended November 30, 2023, we recorded $140 million in business optimization costs, primarily for employee severance.

For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Operating margin (Operating income as a percentage of Revenues) for the first quarter of fiscal 2024 was 15.8%, compared with 16.5% for the first quarter of fiscal 2023.

The business optimization costs recorded during the three months ended November 30, 2023 reduced operating margin by 90 basis points.

Excluding these costs, operating margin for the three months ended November 30, 2023 increased 20 basis points to 16.7%.

Effective Tax Rate

The effective tax rates for the first quarter of fiscal 2024 and 2023 were 23.2% and 23.3%, respectively.

The business optimization costs of $140 million and related reduction in tax expense of $34 million for the three months ended November 30, 2023 had an immaterial impact on our effective tax rate.

Earnings Per Share

Diluted earnings per share were $3.10 for the first quarter of fiscal 2024, compared with $3.08 for the first quarter of fiscal 2023.

The $106 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.17 for the first quarter of fiscal 2024.

Excluding these impacts, diluted earnings per share were $3.27 for the first quarter of fiscal 2024.

Non-GAAP Financial Measures

For fiscal 2024, we have presented operating income, operating margin, effective tax rate and diluted earnings per share excluding the business optimization costs, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior periods.

While we believe that this non-GAAP financial information is useful in evaluating our operations, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.

ACCENTURE FORM 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations 24

Three Months Ended Percent

Dollars Percent

Currency Six Months Ended Percent

Dollars Percent

(in billions of U.S.

dollars) November 30, 2023 November 30, 2022

dollars) February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Consulting $ 10.5 $ 10.7 (1) % (1) % $ 19.1 $ 18.8 2 % 1 %

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 26

Results of Operations for the Three Months Ended November 30, 2023 Compared to the Three Months Ended November 30, 2022

Results of Operations for the Three and Six Months Ended February 29, 2024 Compared to the Three and Six Months Ended February 28, 2023

Revenues by geographic market, industry group and type of work are as follows:

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Dollars Percent

Currency Percent of Revenues

for the Three Months Ended

Currency Six Months Ended Percent

Dollars Percent

(in millions of U.S.

dollars) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

dollars) February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Geographic Markets (1)

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Prior period amounts have been reclassified to conform with the current period presentation.

The following revenues commentary discusses local currency revenue changes for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023:

Geographic Markets

• North America revenues decreased 1% in local currency, due to declines in Communications & Media, Software & Platforms and Banking & Capital Markets.

The following revenues commentary discusses local currency revenue changes by geographic market for the three and six months ended February 29, 2024 compared to the three and six months ended February 28, 2023:

North America

• Three Months.

Revenues were flat in local currency, as growth in Public Service was offset by declines in Banking & Capital Markets, Software & Platforms and Communications & Media.

• Six Months.

Revenues decreased 1% in local currency, due to declines in Software & Platforms, Banking & Capital Markets and Communications & Media.

These decreases were partially offset by growth in Public Service.

The decline in revenues was driven by the United States.

• EMEA revenues increased 2% in local currency, led by growth in Public Service and Banking & Capital Markets.

These increases were partially offset by a decline in Communications & Media.

Revenue growth was driven by Italy, Austria and France, partially offset by a decline in the United Kingdom.

• Growth Markets revenues increased 5% in local currency, led by growth in Chemicals & Natural Resources, Public Service, and Banking & Capital Markets.

Revenue growth was driven by Japan.

Operating Expenses

Operating expenses for the first quarter of fiscal 2024 increased $505 million, or 4%, compared to the first quarter of fiscal 2023, and increased as a percentage of revenues to 84.2% compared to 83.5% during this period.

The increase as a percentage of revenues is primarily due to business optimization costs of $140 million recorded during the first quarter of fiscal 2024.

• Three Months.

Revenues decreased 2% in local currency, due to declines in Communications & Media and Banking & Capital Markets.

These decreases were partially offset by growth in Public Service.

The decline in revenues was driven by the United Kingdom, France and Ireland, partially offset by revenue growth in Italy.

• Six Months.

Revenues were flat in local currency, as growth in Public Service was offset by declines in Communications & Media and Consumer Goods, Retail & Travel Services.

Revenues were driven by increases in Italy and Austria, offset by declines in the United Kingdom and Ireland.

ACCENTURE FORM 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations 27

Growth Markets

• Three Months.

Revenues increased 6% in local currency, led by growth in Banking & Capital Markets, Industrial, Public Service and Chemicals & Natural Resources.

Revenue growth was driven by Japan and Argentina, partially offset by declines in Australia and Brazil.

Argentina revenues grew in local currency due to hyperinflation, but declined slightly in U.S.

• Six Months.

Revenues increased 5% in local currency, led by growth in Chemicals & Natural Resources, Banking & Capital Markets, Public Service and Industrial.

Revenue growth was driven by Japan and Argentina, partially offset by declines in Brazil and Australia.

Argentina revenues grew in local currency due to hyperinflation, but declined slightly in U.S.

Operating Expenses

Operating expenses for the second quarter of fiscal 2024 decreased $116 million, or 1%, compared to the second quarter of fiscal 2023, and decreased as a percentage of revenues to 87.0% from 87.7% during this period.

Operating expenses for the six months ended February 29, 2024 increased $388 million, or 1%, compared to the six months ended February 28, 2023, and remained flat as a percentage of revenues at 85.6% during this period.

The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs.

Cost of services includes a variety of activities such as:

contract delivery;

recruiting and training;

software development;

and integration of acquisitions.

Sales and marketing costs are driven primarily by compensation costs for business development activities;

marketing- and advertising-related activities;

and certain acquisition-related costs.

General and administrative costs primarily include costs for people that are non-client-facing, information systems, office space and certain acquisition-related costs.

Operating expenses by category are as follows:

Three Months Ended

Three Months Ended Six Months Ended

(in millions of U.S.

dollars) November 30, 2023 November 30, 2022 Increase

dollars) February 29, 2024 February 28, 2023 Increase

(Decrease) February 29, 2024 February 28, 2023 Increase

Operating Expenses $ 13,753 87.0 % $ 13,870 87.7 % $ (116) $ 27,413 85.6 % $ 27,024 85.6 % $ 388

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Cost of Services

Cost of services for the first quarter of fiscal 2024 increased $215 million, or 2%, over the first quarter of fiscal 2023, and decreased as a percentage of revenues to 66.4% from 67.1% during this period.

Gross margin for the first quarter of fiscal 2024 increased as a percentage of revenues to 33.6% over 32.9% during the first quarter of fiscal 2023.

The increase in gross margin was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel compared to the same period in fiscal 2023.

Cost of services for the second quarter of fiscal 2024 decreased $58 million, or 1%, from the second quarter of fiscal 2023, and decreased as a percentage of revenues to 69.1% from 69.4% during this period.

Gross margin for the second quarter of fiscal 2024 increased as a percentage of revenues to 30.9% compared to 30.6% during the second quarter of fiscal 2023.

The increase in gross margin was primarily due to lower labor costs compared to the same period in fiscal 2023.

Cost of services for the six months ended February 29, 2024 increased $156 million, or 1%, over the six months ended February 28, 2023, and decreased as a percentage of revenues to 67.8% from 68.3% during this period.

Gross margin for the six months ended February 29, 2024 increased to 32.2% compared to 31.7% during the six months ended February 28, 2023.

The increase in gross margin was primarily due to lower labor costs, including lower subcontractor costs compared to the same period in fiscal 2023.

Sales and Marketing

Sales and marketing expense for the first quarter of fiscal 2024 increased $160 million, or 10%, over the first quarter of fiscal 2023, and increased as a percentage of revenues to 10.5% over 9.8% during this period due to higher selling and other business development costs as a percentage of revenues.

Sales and marketing expense for the second quarter of fiscal 2024 increased $68 million, or 4%, over the second quarter of fiscal 2023, and increased as a percentage of revenues to 10.3% compared to 9.9% during this period.

Sales and marketing expense for the six months ended February 29, 2024 increased $227 million, or 7%, over the six months ended February 28, 2023, and increased as a percentage of revenues to 10.4% compared to 9.9% during this period.

The increase as a percentage of revenues for the three and six months ended February 29, 2024 was due to higher selling and other business development costs as a percentage of revenues compared to the same period in fiscal 2023.

General and Administrative Costs

General and administrative costs for the first quarter of fiscal 2024 decreased $10 million, or 1%, from the first quarter of fiscal 2023, and decreased as a percentage of revenues to 6.4% from 6.6% during this period.

General and administrative costs for the second quarter of fiscal 2024 increased $3 million over the second quarter of fiscal 2023, and increased as a percentage of revenues to 6.9% compared to 6.8% during this period.

General and administrative costs for the six months ended February 29, 2024 decreased $6 million from the six months ended February 28, 2023, and decreased as a percentage of revenues to 6.6% from 6.7% during this period.

ACCENTURE FORM 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations 28

Business Optimization Costs

During the first quarter of fiscal 2024, we recorded business optimization costs of $140 million, primarily for employee severance.

During the second quarter of fiscal 2024 and 2023, we recorded business optimization costs of $115 million and $244 million, respectively, primarily for employee severance.

During the six months ended February 29, 2024, and February 28, 2023, we recorded business optimization costs of $255 million and $244 million, respectively, primarily for employee severance.

For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Non-GAAP Financial Measures

We have presented operating income, operating margin, effective tax rate and diluted earnings per share on a non-GAAP or "adjusted" basis exclu ding the business optimization costs recorded in fiscal 2024 and fiscal 2023, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior periods.

Operating Income and Operating Margin

Operating income for the first quarter of fiscal 2024 decreased $28 million, or 1%, from the first quarter of fiscal 2023.

Operating margin for the first quarter of fiscal 2024 was 15.8%, compared with 16.5% for the first quarter of fiscal 2023.

The business optimization costs reduced operating margin by 90 basis points.

Excluding these costs, operating margin for the first quarter of fiscal 2024 increased 20 basis points to 16.7%.

Operating income and operating margin for each of the geographic markets are as follows:

Three Months Ended

November 30, 2023 November 30, 2022

Three Months Ended Six Months Ended

February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

(in millions of U.S.

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Margin Increase

(Decrease) Operating

Income Operating

Margin Operating

Income Operating

Margin Increase

North America $ 1,060 14 % $ 824 11 % $ 237 $ 2,317 16 % $ 2,134 14 % $ 183

5 unchanged sentences

Prior period amounts have been reclassified to conform with the current period presentation.

Operating income for the second quarter of fiscal 2024 increased $102 million, or 5%, compared with the second quarter of fiscal 2023.

Operating margin for the second quarter of fiscal 2024 was 13.0%, compared with 12.3% for the second quarter of fiscal 2023.

Operating income for the six months ended February 29, 2024 increased $74 million, or 2%, compared with the six months ended February 28, 2023.

Operating margin for the six months ended February 29, 2024 was 14.4%, flat with the six months ended February 28, 2023.

Geographic Markets

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the three and six months ended February 29, 2024 was similar to that disclosed for revenue for each geographic market.

The commentary below provides insight into other factors affecting geographic market performance and operating income, including the impact of foreign currency exchange rates where significant, for the three and six months ended February 29, 2024 compared with the three and six months ended February 28, 2023:

North America

• Three Months.

Operatin g income increased primarily due to lower business optimization costs and lower labor costs, partially offset by a decline in consulting contract profitability.

• Six Months.

Operating i ncome increased primarily due to lower business optimization costs and lower labor costs, partially offset by a decline in consulting contract profitability.

• Three Months.

Operatin g income decreased primarily due to higher business optimization costs as well as a decline in consulting revenues and consulting contract profitability.

• Six Months.

Operating incom e increased primarily due to the positive impact of foreign currency exchange rates which resulted in an increase in U.S.

dollar revenues, partially offset by higher business optimization costs.

Growth Markets

• Three Months.

Opera ting income decreased as revenue growth in local currency was more than offset by lower contract profitability and the negative impact of foreign currency exchange rates which resulted in a decline in U.S.

dollar revenues.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 29

• Six Months.

Oper ating income decreased as revenue growth in local currency was more than offset by lower contract profitability, higher business optimization costs and the negative impact of foreign currency exchange rates which resulted in a decline in U.S.

dollar revenues.

Operating Income and Operating Margin Excluding Business Optimization Costs (Non-GAAP)

The business optimization costs reduced operating margin for the second quarter of fiscal 2024 and 2023 by 70 and 150 basis points, respectively .

Adjusted operating margin for the second quarter of fiscal 2024 decreased 10 basis points to 13.7% compared with the second quarter of fiscal 2023.

The business optimization costs reduced operating margin for both the six months ended February 29, 2024 and February 28, 2023 by 80 basis points.

Adjusted op erating margin for the six months ended February 29, 2024 remained flat at 15.2% compared with the six months ended February 28, 2023.

Three Months Ended

November 30, 2023 November 30, 2022

February 29, 2024 February 28, 2023

(in millions of U.S.

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(Non-GAAP) Operating

Income (GAAP) Operating

Margin (GAAP) Increase

Income (GAAP) Business

Optimization (1) Operating

Income (Non-GAAP) Operating

Margin (Non-GAAP) Increase

North America $ 1,060 $ 5 $ 1,065 14 % $ 824 $ 177 $ 1,001 14 % $ 64

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Total $ 2,046 $ 115 $ 2,162 13.7 % $ 1,945 $ 244 $ 2,189 13.8 % $ (27)

Amounts in table may not total due to rounding.

Six Months Ended

February 29, 2024 February 28, 2023

(in millions of U.S.

dollars) Operating

Income (GAAP) Business

Optimization (1) Operating

Income (Non-GAAP) Operating

(Non-GAAP) Operating

Income (GAAP) Business

Optimization (1) Operating

Income (Non-GAAP) Operating

Margin (Non-GAAP) Increase

North America $ 2,317 $ 51 $ 2,368 16 % $ 2,134 $ 177 $ 2,311 15 % $ 57

EMEA (2) 1,353 156 1,509 13 1,342 41 1,383 13 126

Growth Markets (2) 942 48 990 17 1,062 26 1,088 19 (98)

Total $ 4,611 $ 255 $ 4,866 15.2 % $ 4,538 $ 244 $ 4,782 15.2 % $ 84

Amounts in tables may not total due to rounding.

(1) Costs recorded in connection with our business optimization initiatives, primarily for employee severance.

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Prior period amounts have been reclassified to conform with the current period presentation.

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2024 was similar to that disclosed for revenue for each geographic market.

In addition, during the first quarter of fiscal 2024 each geographic market’s operating income was unfavorably impacted by business optimization costs.

The commentary below provides insight into other factors affecting geographic market performance and operating income, including the impact of foreign currency exchange rates where significant, for the first quarter of fiscal 2024 compared with the first quarter of fiscal 2023:

• North America operating income was relatively flat year-over-year as a decline in consulting revenue and lower contract profitability was offset by lower labor costs.

• EMEA operating income increased primarily due to managed services revenue growth in local currency and the positive impact of foreign currency exchange rates which resulted in an increase in U.S.

dollar revenues.

• Growth Markets operating income decreased as revenue growth was more than offset by lower contract profitability and an increase in selling and other business development costs as a percentage of revenues.

Interest Income

Interest income for the first quarter of fiscal 2024 was $102 million, an increase of $57 million over the first quarter of fiscal 2023.

The increase was primarily due to higher cash balances and interest rates.

Interest income for the second quarter of fiscal 2024 was $65 million, an increase of $15 million over the second quarter of fiscal 2023.

Interest income for the six months ended February 29, 2024 was $167 million, an increase of $72 million over the six months ended February 28, 2023.

The increase for the three and six months ended February 29, 2024 was primarily due to higher interest rates compared to the three and six months ended February 28, 2023.

Other Income (Expense), net

Other income (expense), net primarily consists of foreign currency gains and losses, non-operating components of pension expense, as well as gains and losses associated with our investments.

During the three and six months ended February 29, 2024, Other income (expense), net decreased $31 million and $24 million from the three and six months ended February 28, 2023, respectively, primarily due to higher gains on investments, partially offset by higher foreign currency exchange losses.

For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements."

Income Tax Expense

The effective tax rates for the first quarter of fiscal 2024 and 2023 were 23.2% and 23.3%, respectively.

The business optimization costs of $140 million and related reduction in tax expense of $34 million for the three months ended November 30, 2023 had an immaterial impact on our effective tax rate.

The effective tax rates for the second quarter of fiscal 2024 and 2023 were 18.4% and 20.4%, respectively.

The lower effective tax rate for the second quarter of fiscal 2024 was primarily due to higher tax benefits from share-based payments.

The effective tax rates for the six months ended February 29, 2024 and February 28, 2023 were 21.1% and 22.0%, respectively.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 30

Income Tax Expense Excluding Business Optimization Costs (Non-GAAP)

Excluding the business optimization costs of $115 million and $244 million, and related reduction in tax expense of $28 million and $52 million, our adjusted effective tax rates were 18.8% and 20.4% for the second quarter of fiscal 2024 and 2023, respectively.

Excluding the business optimization costs of $255 million and $244 million, and related reduction in tax expense of $62 million and $52 million, our adjusted effective tax rates were 21.2% and 22.0% for the six months ended February 29, 2024 and February 28, 2023, respectively.

Earnings Per Share

Diluted earnings per share were $3.10 for the first quarter of fiscal 2024, compared with $3.08 for the first quarter of fiscal 2023.

The $106 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.17.

Excluding these impacts, diluted earnings per share were $3.27 for the first quarter of fiscal 2024.

Diluted earnings per share were $2.63 for the second quarter of fiscal 2024, compared with $2.39 for the second quarter of fiscal 2023.

Diluted earnings per share were $5.73 for the six months ended February 29, 2024, compared with $5.47 for the six months ended February 28, 2023.

For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

The increase in diluted earnings per share was due to the following factors:

Earnings Per Share

Q1 FY23 As Reported $ 3.08

Higher revenue and operating results 0.14

Higher non-operating income 0.05

Lower share count 0.01

Higher net income attributable to noncontrolling interests (0.01)

Q1 FY24 As Adjusted $ 3.27

Earnings Per Share Excluding Business Optimization Costs (Non-GAAP)

The business optimization costs of $87 million and $193 million, net of related taxes, decreased diluted earnings per share by $0.14 and $0.30 for the second quarter of fiscal 2024 and 2023, respectively.

Adjusted diluted earnings per share were $2.77 and $2.69 for the second quarter of fiscal 2024 and 2023, respectively.

The business optimization costs of $193 million, net of related taxes, decreased diluted earnings per share by $0.30 for both the six months ended February 29, 2024 and February 28, 2023.

Adjusted diluted earnings per share were $6.04 and $5.77 for the six months ended February 29, 2024 and February 28, 2023, respectively.

Three Months Ended Six Months Ended

February 29, 2024 As Reported $ 2.63 $ 5.73

Business optimization costs 0.18 0.40

Q1 FY24 As Reported $ 3.10

Tax effect of business optimization costs (1) (0.04) (0.10)

February 29, 2024 As Adjusted $ 2.77 $ 6.04

February 28, 2023 As Reported $ 2.39 $ 5.47

Business optimization costs 0.38 0.38

Tax effect of business optimization costs (1) (0.08) (0.08)

February 28, 2023 As Adjusted $ 2.69 $ 5.77

Amounts in table may not total due to rounding.

(1) The income tax effect of business optimization costs includes both the current and deferred income tax impact and was calculated by using the relevant tax rate of the country where the costs were recorded.

Changes in adjusted diluted earnings per share were due to the following factors:

Three Months Ended Six Months Ended

February 28, 2023 As Adjusted $ 2.69 $ 5.77

Non-operating income 0.06 0.11

Effective tax rate 0.06 0.06

Lower share count — 0.01

Net income attributable to noncontrolling interests (0.01) (0.01)

Operating results (0.03) 0.10

February 29, 2024 As Adjusted $ 2.77 $ 6.04

ACCENTURE FORM 10-Q

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Liquidity and Capital Resources

As of November 30, 2023, Cash and cash equivalents was $7.1 billion, compared with $9.0 billion as of August 31, 2023.

As of February 29, 2024, Cash and cash equivalents was $5.1 billion, compared with $9.0 billion as of August 31, 2023.

Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are summarized in the following table:

Three months ended

Six Months Ended

(in millions of U.S.

dollars) November 30, 2023 November 30, 2022 Change

dollars) February 29, 2024 February 28, 2023 Change

Net cash provided by (used in):

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Operating activities:

The $3 million increase in operating cash flows was primarily due to higher net income, partially offset by changes in operating assets and liabilities.

The $226 million decrease in operating cash flows was primarily due to changes in operating assets and liabilities, partially offset by higher net income.

Investing activities:

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Financing activities:

The $125 million decrease in cash used was primarily due to a decrease in the net purchases of shares, partially offset by an increase in cash dividends paid.

The $225 million increase in cash used was primarily due to an increase in cash dividends paid.

For additional information, see Note 7 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

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Borrowing Facilities

As of November 30, 2023, we had the following borrowing facilities:

As of February 29, 2024, we had the following borrowing facilities:

(in millions of U.S.

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The facility is subject to annual commitment fees.

As of November 30, 2023, we had $100 million of commercial paper outstanding and backed by this facility, with a weighted-average effective interest rate of 5.4%.

Under the borrowing facilities described above, we had an aggregate of $1,099 million of letters of credit outstanding as of November 30, 2023.

We also had $100 million of commercial paper outstanding as of November 30, 2023.

As of February 29, 2024, we had $100 million of commercial paper outstanding and backed by this facility, with a weighted-average effective interest rate of 5.4%.

Under the borrowing facilities described above, we had an aggregate of $1,037 million of letters of credit outstanding as of February 29, 2024.

We also had $100 million of commercial paper outstanding as of February 29, 2024.

The amount of commercial paper and letters of credit outstanding reduces the available borrowing capacity under these facilities.

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exchangeable shares held by current and former members of Accenture Leadership and their permitted transferees.

Our share purchase activity during the three months ended November 30, 2023 is as follows:

Our share purchase activity during the six months ended February 29, 2024 is as follows:

Accenture plc Class A

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These shares are held as treasury shares by Accenture plc and may be utilized to provide for select employee benefits, such as equity awards to our employees.

(2) During the three months ended November 30, 2023, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under those plans.

(2) During the six months ended February 29, 2024, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under those plans.

These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis