What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-12-19 compared with 2024-06-20 · 116 added, 204 removed, 177 unchanged (64% of the section changed)

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

Revenues for the third quarter of fiscal 2024 decreased 1% in U.S.

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

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

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

Revenue growth in local currency was solid in managed services, partially offset by a slight decline in consulting.

Revenues for the first quarter of fiscal 2025 increased 9% in U.S.

dollars and 8% in local currency compared to the first quarter of fiscal 2024.

During the first quarter of fiscal 2025, revenue growth in local currency was very strong in the Americas, strong in EMEA and solid in Asia Pacific.

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

Revenue growth in local currency was very strong in managed services and strong in consulting.

The business environment is competitive, and we continue to experience 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 third quarter of fiscal 2024 decreased 3% in U.S.

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

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

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.

In addition, clients continue to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to accelerate growth and improve customer experiences.

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 third quarter of fiscal 2024 increased 2% in U.S.

dollars and 4% in local currency compared to the third quarter of fiscal 2023.

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

In our consulting business, revenues for the first quarter of fiscal 2025 increased 7% in U.S.

dollars and 6% in local currency compared to the first quarter of fiscal 2024.

Consulting revenue growth in local currency for the first quarter of fiscal 2025 was driven by very strong growth in the Americas, solid growth in EMEA and modest growth in Asia Pacific.

Our consulting revenue continues to be driven by helping our clients accelerate their reinvention, in particular technology, data, and AI led digital transformations.

This includes moving to the cloud, embedding security and responsible AI across the enterprise and leveraging our change capabilities to help our clients build new skills and drive the successful adoption of new processes and technologies.

In addition, clients continue to be focused on initiatives designed to deliver cost savings and supply chain and operational resilience, as well as projects to accelerate growth and improve customer experiences.

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

In our managed services business, revenues for the first quarter of fiscal 2025 increased 11% in both U.S.

dollars and local currency compared to the first quarter of fiscal 2024.

Managed services revenue growth in local currency for the first quarter of fiscal 2025 was driven by very strong growth in the Americas and EMEA, and solid growth in Asia Pacific.

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

9 unchanged sentences

dollars may be lower.

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

dollar revenue growth that was approximately 2% lower than our revenue growth in local currency.

There was minimal currency translation impact for the nine months ended May 31, 2024 compared to the nine months ended May 31, 2023.

dollar weakened against various currencies during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024, resulting in favorable currency translation and U.S.

dollar revenue growth that was approximately 1% higher than our revenue growth in local currency.

Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2025, we estimate that our full fiscal 2025 revenue growth in U.S.

2 unchanged sentences

Annualized Voluntary Attrition

compared to 91% in the third quarter of fiscal 2023

compared to approximately 732,000 as of May 31, 2023

compared to 13% in the third quarter of fiscal 2023

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

consistent with the first quarter of fiscal 2024

compared to approximately 743,000 as of November 30, 2023

compared to 11% in the first quarter of fiscal 2024

Utilization for the first quarter of fiscal 2025 was 91%, consistent with the first quarter of fiscal 2024.

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 750,000 as of May 31, 2024, compared to approximately 732,000 as of May 31, 2023.

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

For the third quarter of fiscal 2024, annualized attrition, excluding involuntary terminations, was 14%, up from 13% in the third quarter of fiscal 2023.

Our workforce, the majority of which serves our clients, increased to approximately 799,000 as of November 30, 2024, compared to approximately 743,000 as of November 30, 2023.

The year-over-year increase in our workforce reflects demand for our services and solutions, as well as people added in connection with acquisitions.

For the first quarter of fiscal 2025, annualized attrition, excluding involuntary terminations, was 12%, up from 11% in the first quarter of fiscal 2024.

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.

12 unchanged sentences

Dollars Percent

Currency Nine Months Ended Percent

Dollars Percent

(in billions of U.S.

dollars) May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

dollars) November 30, 2024 November 30, 2023

Consulting $ 9.2 $ 8.6 7 % 6 %

14 unchanged sentences

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

Results of Operations for the Three and Nine Months Ended May 31, 2024 Compared to the Three and Nine Months Ended May 31, 2023

Results of Operations for the Three Months Ended November 30, 2024 Compared to the Three Months Ended November 30, 2023

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

1 unchanged sentence

Dollars Percent

Currency Nine Months Ended Percent

Dollars Percent

(in millions of U.S.

dollars) May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

dollars) November 30, 2024 November 30, 2023

Geographic Markets

North America $ 7,834 $ 7,721 1 % 1 % $ 22,774 $ 22,742 — % — %

Americas (1) $ 8,733 $ 8,027 9 % 11 %

EMEA 6,412 5,804 10 6

Growth Markets (1) 2,856 2,972 (4) 8 8,538 8,645 (1) 6

Asia Pacific (1) 2,544 2,394 6 4

Total $ 17,690 $ 16,224 9 % 8 %

10 unchanged sentences

Amounts in table may not total due to rounding.

(1) Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market.

(1) During the first quarter of fiscal 2025, our Latin America market unit moved from Growth Markets to North America.

With this change, North America became the Americas market and Growth Markets became the Asia Pacific market.

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

Geographic Markets

The following revenues commentary discusses the primary drivers of local currency revenue changes by geographic market for the three and nine months ended May 31, 2024 compared to the three and nine months ended May 31, 2023:

North America

• Three Months.

Revenues increased 1% in local currency, led by growth in Public Service, partially offset by a decline in Banking & Capital Markets.

Revenue growth was driven by the United States.

• Nine 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.

• Three Months.

Revenues decreased 2% in local currency, due to declines in Banking & Capital Markets and Communications & Media, partially offset by growth in Public Service.

The decline in revenues was driven by France, partially offset by revenue growth in Italy.

• Nine Months.

Revenues decreased 1% in local currency, due to declines in Communications & Media and Banking & Capital Markets, partially offset by growth in Public Service.

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

Growth Markets

• Three Months.

Revenues increased 8% in local currency, led by growth in Banking & Capital Markets and Industrial.

Revenue growth was driven by Argentina and Japan, partially offset by a decline in Australia.

Argentina revenues grew in local currency primarily due to hyperinflation.

ACCENTURE FORM 10-Q

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

• Nine Months.

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

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.

The following revenues commentary discusses the primary drivers of local currency revenue changes by geographic market for the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024:

• Americas revenues increased 11% in local currency, led by growth in Industrial, Software & Platforms, Banking & Capital Markets and Consumer Goods, Retail & Travel Services.

Revenue growth was driven by the United States, as well as Argentina, which continued to grow in local currency due primarily to hyperinflation.

• EMEA revenues increased 6% in local currency, led by growth in Public Service, Life Sciences and Health, partially offset by a decline in Banking & Capital Markets.

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

• Asia Pacific revenues increased 4% in local currency, led by growth in Utilities, Industrial and Health, partially offset by a decline in Chemicals & Natural Resources.

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

Operating Expenses

Operating expenses for the third quarter of fiscal 2024 decreased $369 million, or 3%, compared to the third quarter of fiscal 2023, and decreased as a percentage of revenues to 84.0% from 85.8% during this period.

Operating expenses for the nine months ended May 31, 2024 increased $19 million compared to the nine months ended May 31, 2023, and decreased as a percentage of revenues to 85.1% from 85.7% during this period.

Operating expenses for the first quarter of fiscal 2025 increased $1,082 million, or 8%, compared to the first quarter of fiscal 2024, and decreased as a percentage of revenues to 83.3% from 84.2% during this period.

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

9 unchanged sentences

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

ACCENTURE FORM 10-Q

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

Operating expenses by category are as follows:

Three Months Ended Nine Months Ended

Three Months Ended

(in millions of U.S.

dollars) May 31, 2024 May 31, 2023 Increase

(Decrease) May 31, 2024 May 31, 2023 Increase

dollars) November 30, 2024 November 30, 2023 Increase

Operating Expenses $ 14,741 83.3 % $ 13,659 84.2 % $ 1,082

5 unchanged sentences

Cost of Services

Cost of services for the third quarter of fiscal 2024 decreased $67 million, or 1%, from the third quarter of fiscal 2023, and remained flat as a percentage of revenues at 66.6% during this period.

Gross margin for the third quarter of fiscal 2024 remained flat as a percentage of revenues at 33.4% compared to the third quarter of fiscal 2023 as lower labor costs were offset by higher non-payroll costs, primarily for travel.

Cost of services for the nine months ended May 31, 2024 increased $89 million over the nine months ended May 31, 2023, and decreased as a percentage of revenues to 67.4% from 67.7% during this period.

Gross margin for the nine months ended May 31, 2024 increased to 32.6% compared to 32.3% during the nine months ended May 31, 2023.

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

Cost of services for the first quarter of fiscal 2025 increased $1,090 million, or 10%, over the first quarter of fiscal 2024, and increased as a percentage of revenues to 67.1% compared to 66.4% during this period.

Gross margin for the first quarter of fiscal 2025 decreased as a percentage of revenues to 32.9% from 33.6% during the first quarter of fiscal 2024.

The decrease in gross margin was primarily due to higher subcontractor costs and the impact of our business optimization actions which reduced severance costs in gross margin during the first quarter of fiscal 2024.

Sales and Marketing

Sales and marketing expense for the third quarter of fiscal 2024 increased $12 million, or 1%, over the third quarter of fiscal 2023, and increased as a percentage of revenues to 10.6% compared to 10.5% during this period.

Sales and marketing expense for the nine months ended May 31, 2024 increased $239 million, or 5%, over the nine months ended May 31, 2023, and increased as a percentage of revenues to 10.5% compared to 10.1% during this period.

The increase as a percentage of revenues for the nine months ended May 31, 2024 was due to higher selling and other business development costs compared to the same period in fiscal 2023.

Sales and marketing expense for the first quarter of fiscal 2025 increased $101 million, or 6%, over the first quarter of fiscal 2024, and decreased as a percentage of revenues to 10.2% from 10.5% during this period primarily due to lower labor costs.

General and Administrative Costs

General and administrative costs for the third quarter of fiscal 2024 decreased $44 million, or 4%, from the third quarter of fiscal 2023, and decreased as a percentage of revenues to 6.3% from 6.5% during this period.

General and administrative costs for the nine months ended May 31, 2024 decreased $51 million, or 2%, from the nine months ended May 31, 2023, and decreased as a percentage of revenues to 6.5% from 6.7% during this period.

General and administrative costs for the first quarter of fiscal 2025 increased $30 million, or 3%, over the first quarter of fiscal 2024, and decreased as a percentage of revenues to 6.0% from 6.4% during this period primarily due to lower labor costs, partially offset by an increase in non-payroll costs.

Business Optimization Costs

During the third quarter of fiscal 2024 and 2023, we recorded business optimization costs of $77 million and $347 million, respectively, primarily for employee severance.

During the nine months ended May 31, 2024 and 2023, we recorded business optimization costs of $332 million and $591 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.”

ACCENTURE FORM 10-Q

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

During the second quarter of fiscal 2023, we initiated actions to streamline our operations, transform our non-billable corporate functions and consolidate our office space to reduce costs.

We recorded a total of $1.5 billion related to these actions, primarily for employee severance, which have been completed as of August 31, 2024.

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, and, with respect to effective tax rate and diluted earnings per share, the impact of an investment gain recorded in 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.

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 as we believe doing so facilitates understanding as to the impact of this item 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.

1 unchanged sentence

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

Three Months Ended Nine Months Ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three Months Ended

November 30, 2024 November 30, 2023

(in millions of U.S.

4 unchanged sentences

Margin Increase

(Decrease) Operating

Income Operating

Margin Operating

Income Operating

Margin Increase

North America $ 1,365 17 % $ 1,241 16 % $ 124 $ 3,682 16 % $ 3,375 15 % $ 307

Americas (1) $ 1,377 16 % $ 1,293 16 % $ 84

EMEA 1,036 16 824 14 212

Growth Markets (1) 516 18 448 15 68 1,458 17 1,509 17 (52)

Asia Pacific (1) 535 21 448 19 87

Total $ 2,948 16.7 % $ 2,565 15.8 % $ 384

Amounts in table may not total due to rounding.

(1) During the first quarter of fiscal 2025, our Latin America market unit moved from Growth Markets to North America.

With this change, North America became the Americas market and Growth Markets became the Asia Pacific market.

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

Operating income for the third quarter of fiscal 2024 increased $272 million, or 12%, compared with the third quarter of fiscal 2023.

Operating margin for the third quarter of fiscal 2024 was 16.0%, compared with 14.2% for the third quarter of fiscal 2023.

Operating income for the nine months ended May 31, 2024 increased $345 million, or 5%, compared with the nine months ended May 31, 2023.

Operating margin for the nine months ended May 31, 2024 was 14.9%, compared with 14.3% for the nine months ended May 31, 2023.

Geographic Markets

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the three and nine months ended May 31, 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 nine months ended May 31, 2024 compared with the three and nine months ended May 31, 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 and higher acquisition-related costs.

• Nine 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 and higher acquisition-related costs .

• Three Months.

Operatin g income increased primarily due to lower business optimization costs and lower labor costs, partially offset by declines in consulting contract profitability and consulting revenues in local currency .

• Nine 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, and lower labor costs, partially offset by declines in consulting revenues in local currency and consulting contract profitability .

Growth Markets

• Three Months.

Opera ting income increased primarily due to lower business optimization costs and revenue growth in local currency, partially offset by the negative impact of foreign currency exchange rates which resulted in a decline in U.S.

dollar revenues.

• Nine Months.

Operating income decreased as revenue growth in local currency and lower business optimization costs were 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.

Operating income for the first quarter of fiscal 2025 increased $384 million, or 15%, compared with the first quarter of fiscal 2024.

Operating margin for the first quarter of fiscal 2025 was 16.7%, compared with 15.8% for the first quarter of fiscal 2024.

ACCENTURE FORM 10-Q

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

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

The business optimization costs reduced operating margin for the third quarter of fiscal 2024 and 2023 by 40 and 210 basis points, respectively .

Adjusted operating margin for the third quarter of fiscal 2024 increased 10 basis points to 16.4% compared with the third quarter of fiscal 2023.

The business optimization costs reduced operating margin for the nine months ended May 31, 2024 and 2023 by 70 and 130 basis points, respectively.

Adjusted op erating margin for the nine months ended May 31, 2024 remained flat at 15.6% compared with the nine months ended May 31, 2023.

Geographic Markets

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2025 was similar to that disclosed for revenue for each geographic market.

Additionally, costs associated with our business optimization actions did not impact fiscal 2025 operating income as the actions were completed in fiscal 2024.

The commentary below provides insight into other factors affecting geographic market performance and operating income for the first quarter of fiscal 2025 compared with the first quarter of fiscal 2024:

• Americas operatin g income increased primarily due to revenue growth, partially offset by a decline in contract profitability.

• EMEA operatin g income increased primarily due to revenue growth, partially offset by a decline in consulting contract profitability.

• Asia Pacific opera ting income increased primarily due to revenue growth, partially offset by a decline in contract profitability.

Operating Income and Operating Margin Excluding Fiscal 2024 Business Optimization Costs (Non-GAAP)

The business optimization costs reduced operating margin for the first quarter of fiscal 2024 by 90 basis points .

Operating margin for the first quarter of fiscal 2025 remained flat compared to adjusted operating margin for the first quarter of fiscal 2024 of 16.7%.

Three Months Ended

May 31, 2024 May 31, 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 $ 1,365 $ (4) $ 1,361 17 % $ 1,241 $ 96 $ 1,338 17 % $ 24

EMEA (2) 750 75 825 14 670 167 838 14 (13)

Growth Markets (2) 516 6 522 18 448 83 531 18 (9)

Total $ 2,631 $ 77 $ 2,708 16.4 % $ 2,359 $ 347 $ 2,706 16.3 % $ 2

Nine Months Ended

May 31, 2024 May 31, 2023

November 30, 2024 November 30, 2023

(in millions of U.S.

dollars) Operating

Income (GAAP) Business

Optimization (1) Operating

Income (Non-GAAP) Operating

(Non-GAAP) Operating

Income (GAAP) Operating

(GAAP) Operating

Income (GAAP) Business

2 unchanged sentences

Margin (Non-GAAP) Increase

North America $ 3,682 $ 47 $ 3,729 16 % $ 3,375 $ 273 $ 3,648 16 % $ 81

Americas (2) $ 1,377 16 % $ 1,293 $ 50 $ 1,343 17 % $ 34

EMEA 1,036 16 824 71 894 15 142

Growth Markets (2) 1,458 54 1,512 18 1,509 110 1,619 19 (107)

Asia Pacific (2) 535 21 448 19 467 20 68

Total $ 2,948 16.7 % $ 2,565 $ 140 $ 2,705 16.7 % $ 244

1 unchanged sentence

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

(2) Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market.

(2) During the first quarter of fiscal 2025, our Latin America market unit moved from Growth Markets to North America.

With this change, North America became the Americas market and Growth Markets became the Asia Pacific market.

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

Interest Income

Interest income for the third quarter of fiscal 2024 was $54 million, a decrease of $28 million from the third quarter of fiscal 2023.

Interest income for the nine months ended May 31, 2024 was $221 million, an increase of $44 million over the nine months ended May 31, 2023.

The decrease for the third quarter of fiscal 2024 was primarily due to lower cash balances compared to the third quarter of fiscal 2023.

The increase for the nine months ended May 31, 2024 was primarily due to higher interest rates compared to the nine months ended May 31, 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 nine months ended May 31, 2024, Other income (expense), net decreased $221 million and $197 million from the three and nine months ended May 31, 2023, respectively, primarily due to lower gains on investments.

Interest income for the first quarter of fiscal 2025 was $76 million, a decrease of $26 million, or 25%, from the first quarter of fiscal 2024.

The decrease was primarily due to lower interest rates and a lower average cash balance.

Income Tax Expense

The effective tax rates for the third quarter of fiscal 2024 and 2023 were 25.4% and 22.2%, respectively.

The higher effective tax rate for the third quarter of fiscal 2024 was primarily due to the tax impact in the prior year from an investment gain and higher expense from adjustments to prior year tax liabilities.

The effective tax rates for the nine months ended May 31, 2024 and 2023 were 22.6% and 22.1%, respectively.

The higher effective tax rate for the nine months ended May 31, 2024 was primarily due to the tax impact in the prior year from an investment gain.

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

Excluding the business optimization costs of $77 million and related reduction in tax expense of $24 million, our adjusted effective tax rate was 25.5% for the third quarter of fiscal 2024.

Excluding the business optimization costs of $347 million and related reduction in tax expense of $80 million, and the investment gain of $253 million and related tax expense of $9 million , our adjusted effective tax rate was 24.0% for the third quarter of fiscal 2023 .

ACCENTURE FORM 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations 31

Excluding the business optimization costs of $332 million and related reduction in tax expense of $86 million, our adjusted effective tax rate was 22.8% for the nine months ended May 31, 2024 .

Excluding the business optimization costs of $591 million and related reduction in tax expense of $132 million, and the investment gain of $253 million and related tax expense of $9 million , our adjusted effective tax rate was 22.7% for the nine months ended May 31, 2023 .

The effective tax rates for the first quarter of fiscal 2025 and 2024 were 21.6% and 23.2%, respectively.

The lower effective tax rate was primarily due to higher benefits from adjustments to prior year tax liabilities.

Income Tax Expense Excluding Fiscal 2024 Business Optimization Costs (Non-GAAP)

The business optimization costs of $140 million and related reduction in tax expense of $34 million had an immaterial impact on our adjusted effective tax rate for the first quarter of fiscal 2024 .

Earnings Per Share

Diluted earnings per share were $3.04 for the third quarter of fiscal 2024, compared with $3.15 for the third quarter of fiscal 2023.

Diluted earnings per share were $8.77 for the nine months ended May 31, 2024, compared with $8.62 for the nine months ended May 31, 2023.

Diluted earnings per share were $3.59 for the first quarter of fiscal 2025, compared with $3.10 for the first quarter of fiscal 2024.

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

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

The business optimization costs of $54 million, net of related taxes, decreased diluted earnings per share by $0.08 for the third quarter of fiscal 2024.

Adjusted diluted earnings per share were $3.13 for the third quarter of fiscal 2024.

The business optimization costs of $267 million, net of related taxes, decreased diluted earnings per share by $0.42 and the investment gain of $244 million, net of related taxes, increased diluted earnings per share by $0.38 for the third quarter of fiscal 2023.

Adjusted diluted earnings per share were $3.19 for the third quarter of fiscal 2023.

The business optimization costs of $247 million, net of related taxes, decreased diluted earnings per share by $0.39 for the nine months ended May 31, 2024.

Adjusted diluted earnings per share were $9.16 for the nine months ended May 31, 2024.

The business optimization costs of $459 million, net of related taxes, decreased diluted earnings per share by $0.72 and the investment gain of $244 million, net of related taxes, increased diluted earnings per share by $0.38 for the nine months ended May 31, 2023.

Adjusted diluted earnings per share were $8.96 for the nine months ended May 31, 2023.

Three Months Ended Nine Months Ended

May 31, 2024 As Reported $ 3.04 $ 8.77

ACCENTURE FORM 10-Q

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

Earnings Per Share Excluding Fiscal 2024 Business Optimization Costs (Non-GAAP)

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

Adjusted diluted earnings per share were $3.27 for the first quarter of fiscal 2024.

Three Months Ended

November 30, 2023 As Reported $ 3.10

Business optimization costs 0.22

Tax effect of business optimization costs (1) (0.05)

May 31, 2024 As Adjusted $ 3.13 $ 9.16

May 31, 2023 As Reported $ 3.15 $ 8.62

Business optimization costs 0.54 0.93

Gain on an investment (0.40) (0.40)

Tax effect of business optimization costs and gain on an investment (1) (0.11) (0.19)

May 31, 2023 As Adjusted $ 3.19 $ 8.96

Amounts in table may not total due to rounding.

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

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

Three Months Ended Nine Months Ended

May 31, 2023 As Adjusted $ 3.19 $ 8.96

Non-operating income — 0.11

Operating results — 0.10

November 30, 2023 As Adjusted $ 3.27

November 30, 2024 As Reported $ 3.59

(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 adjustments were recorded.

The increase in diluted earnings per share for the first quarter of fiscal 2025 compared to adjusted diluted earnings per share for the first quarter of fiscal 2024 was due to the following factors:

Three Months Ended

November 30, 2023 As Adjusted $ 3.27

Higher revenue and operating results 0.29

Lower effective tax rate 0.07

Lower share count 0.01

Effective tax rate (0.07) (0.01)

Net income attributable to noncontrolling interests (0.01) (0.03)

May 31, 2024 As Adjusted $ 3.13 $ 9.16

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 32

Lower non-operating income (0.05)

November 30, 2024 As Reported $ 3.59

Liquidity and Capital Resources

As of May 31, 2024, Cash and cash equivalents was $5.5 billion, compared with $9.0 billion as of August 31, 2023.

As of November 30, 2024, Cash and cash equivalents was $8.3 billion, compared with $5.0 billion as of August 31, 2024.

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

Nine Months Ended

Three Months Ended

(in millions of U.S.

dollars) May 31, 2024 May 31, 2023 Change

dollars) November 30, 2024 November 30, 2023 Change

Net cash provided by (used in):

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Operating activities:

The $373 million decrease in operating cash flows was primarily due to changes in operating assets and liabilities, partially offset by higher net income.

The $524 million increase in operating cash flows was primarily due to higher net income and changes in operating assets and liabilities.

Investing activities:

The $4,259 million increase in cash used was primarily due to higher spending on business acquisitions.

The $470 million decrease in cash used was primarily due to lower spending on business acquisitions.

For additional information, see Note 5 (Business Combinations) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Financing activities:

The $530 million increase in financing cash flows was primarily due to net proceeds from borrowings, partially offset by increases in the net purchases of shares and cash dividends paid.

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

The $4,304 million increase in financing cash flows was primarily due to net proceeds from borrowings.

For additional information, see Note 9 (Borrowings and Indebtedness) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

We believe that our current and longer-term working capital, investments and other general corporate funding requirements will be satisfied for the next twelve months and thereafter through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.

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

Substantially all of our cash is held in jurisdictions where there are no regulatory restrictions or material tax effects on the free flow of funds.

Domestic cash inflows for our Irish parent, principally dividend distributions from lower-tier subsidiaries, have been sufficient to meet our historic cash requirements, and we expect this to continue into the future.

Borrowing Facilities

For information about borrowing facilities, see Note 9 (Borrowings and Indebtedness) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Borrowings and Indebtedness

On September 30, 2024, we filed a registration statement on Form S-3, pursuant to which Accenture plc’s wholly owned finance subsidiaries Accenture Capital and Accenture Global Capital DAC may issue debt securities.

As of November 30, 2024, we had outstanding long-term debt in the form of senior unsecured notes issued by Accenture Capital in an aggregate principal amount of $5 billion, which mature from 2027 through 2034.

Accenture plc fully and unconditionally guarantees these notes, as well as all future debt securities that may be issued by these entities.

For additional information regarding our outstanding borrowings, credit facilities and other debt, see Note 9 (Borrowings and Indebtedness) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Share Purchases and Redemptions

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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 nine months ended May 31, 2024 is as follows:

Our share purchase activity during the three months ended November 30, 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 nine months ended May 31, 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.

(2) During the three months ended November 30, 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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Management’s Discussion and Analysis of Financial Condition and Results of Operations 33

We intend to continue to use a significant portion of cash generated from operations for share repurchases during the remainder of fiscal 2025.

13 unchanged sentences

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