What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-10-16 compared with 2025-10-10 · 41 added, 48 removed, 262 unchanged (25% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice.

Only the non-cancelable portion of these contracts is included in our remaining performance obligations disclosed in Note 2 (Revenues) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.” Accordingly, a significant portion of what we consider contract bookings is not included in our remaining performance obligations.

Supplementary Data.” Accordingly, a significant portion of what we consider contract bookings is not included in our remaining performance obligations.

Critical Accounting Policies and Estimates

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We release stranded tax effects from Accumulated other comprehensive loss using the specific identification approach for our defined benefit plans and the portfolio approach for other items.

ACCENTURE 2025 FORM 10-K

Management's Discussion and Analysis of Financial Condition and Results of Operations 35

No taxes have been provided on undistributed foreign earnings that are planned to be indefinitely reinvested.

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We currently do not foresee any event that would require us to distribute these indefinitely reinvested earnings.

For additional information, see Note 11 (Income Taxes) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

ACCENTURE 2026 FORM 10-K

Management's Discussion and Analysis of Financial Condition and Results of Operations

additional information, see Note 11 (Income Taxes) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

As a matter of course, we are regularly audited by various taxing authorities, and sometimes these audits result in proposed assessments where the ultimate resolution may result in us owing additional taxes.

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Total Revenues $ 74,183 $ 69,673 6 % 5 %

(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.

Amounts in table may not total due to rounding.

Geographic Markets

The following revenues commentary discusses the primary drivers of local currency revenue changes by geographic market for fiscal 2026 compared to fiscal 2025:

• Americas revenues increased 9% in local currency, led by growth in Banking & Capital Markets, Industrials and Software & Platforms.

• Americas revenues increased 4% in local currency, led by growth in Banking & Capital Markets, Software & Platforms, High Tech and Industrials, partially offset by a decline in Public Service, including our U.S.

federal business.

Revenue growth was driven by the United States.

• EMEA revenues increased 6% in local currency, led by growth in Public Service, Life Sciences, Insurance, Health and Consumer Goods, Retail & Travel Services.

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

• Asia Pacific revenues increased 4% in local currency, led by growth in Utilities, Banking & Capital Markets, Public Service and Insurance, partially offset by a decline in Chemicals & Natural Resources.

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

• EMEA revenues increased 4% in local currency, led by growth in Public Service, Banking & Capital Markets and Software & Platforms, partially offset by a decline in Energy.

Revenue growth was driven by the United Kingdom and Italy.

• Asia Pacific revenues increased 8% in local currency, led by growth in Banking & Capital Markets, Public Service, Communications & Media and Insurance.

Revenue growth was driven by Japan, Australia and Singapore.

Operating Expenses

Operating expenses for fiscal 2025 increased $4,147 million over fiscal 2024, and increased as a percentage of revenues to 85.3% from 85.2% in fiscal 2024.

Operating expenses for fiscal 2026 increased $3,330 million over fiscal 2025, and decreased as a percentage of revenues to 84.6% from 85.3% in fiscal 2025.

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

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Cost of Services

Cost of services for fiscal 2025 increased $3,703 million, or 8%, over fiscal 2024, and increased as a percentage of revenues to 68.1% over 67.4% during this period.

Gross margin for fiscal 2025 decreased as a percentage of revenues to 31.9% from 32.6% during fiscal 2024.

The decrease in gross margin was primarily due to higher payroll costs.

Cost of services for fiscal 2026 increased $2,970 million, or 6%, over fiscal 2025, and decreased as a percentage of revenues to 68.0% from 68.1% during this period.

Gross margin for fiscal 2026 increased as a percentage of revenues to 32.0% from 31.9% during fiscal 2025.

The increase in gross margin was primarily due to lower payroll costs, partially offset by an increase in non-payroll costs.

Sales and Marketing

Sales and marketing expense for fiscal 2025 increased $197 million, or 3%, over fiscal 2024, and decreased as a percentage of revenues to 10.1% from 10.6% during this period due to lower payroll and non-payroll costs.

Sales and marketing expense for fiscal 2026 increased $200 million, or 3%, over fiscal 2025, and decreased as a percentage of revenues to 9.8% from 10.1% during this period due to lower payroll costs, including selling and business development costs.

General and Administrative Costs

General and administrative costs for fiscal 2025 increased $70 million, or 2%, over fiscal 2024, and decreased as a percentage of revenues to 6.2% from 6.6% during this period primarily due to lower payroll costs.

General and administrative costs for fiscal 2026 increased $468 million, or 11%, over fiscal 2025, and increased as a percentage of revenues to 6.5% from 6.2% during this period due to higher non-payroll costs.

Business Optimization Costs

During the fourth quarter of fiscal 2025, we initiated business optimization actions and recorded $615 million in related costs, which includes $344 million related to a talent rotation that we are making in a compressed timeline, as well as asset impairments of approximately $271 million primarily related to the divestiture of two acquisitions that are no longer aligned with our strategic priorities.

During fiscal 2024, we recorded business optimization costs of $438 million associated with actions initiated in fiscal 2023 and completed in fiscal 2024, primarily for employee severance.

For additional information, see Note 1 (Summary of Significant Accounting Policies) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

During the first quarter of fiscal 2026, we completed our six-month business optimization program and recorded $308 million and $615 million during fiscal 2026 and 2025, respectively, primarily for employee severance.

For additional information, see Note 16 (Segment Reporting) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

Non-GAAP Financial Measures

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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.

ACCENTURE 2025 FORM 10-K

Management's Discussion and Analysis of Financial Condition and Results of Operations 38

Operating income for fiscal 2026 increased $1,180 million, or 12%, compared with fiscal 2025.

Operating margin for fiscal 2026 was 15.4%, compared with 14.7% for fiscal 2025.

ACCENTURE 2026 FORM 10-K

Management's Discussion and Analysis of Financial Condition and Results of Operations

Geographic Markets

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during fiscal 2026 was similar to that disclosed for revenue for each geographic market.

Additionally, operating costs for our geographic markets increased in line with revenues.

Additionally, payroll costs for our geographic markets increased in line with revenues, except as described below.

The commentary below provides insight into other factors affecting geographic market performance and operating income for fiscal 2026 compared with fiscal 2025:

• Americas operating income increased due to revenue growth, partially offset by higher business optimization costs.

• EMEA operating income increased due to revenue growth and lower business optimization costs.

• Asia Pacific operating income increased due to revenue growth and lower business optimization costs.

• Americas operating income increased due to revenue growth, lower payroll costs as a percentage of revenue and lower business optimization costs, partially offset by higher non-payroll costs.

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

dollar revenues, partially offset by higher non-payroll costs.

• Asia Pacific operating income decreased as revenue growth was offset by higher non-payroll costs, including higher facilities and technology costs.

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

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Total $ 11,406 $ 308 $ 11,714 15.8 % $ 10,226 $ 615 $ 10,841 15.6 % $ 873

Amounts in table may not total due to rounding.

(1) Costs recorded in connection with business optimization actions initiated in fiscal 2025, including $344 million for employee severance associated with headcount reductions we are making in a compressed timeline and $271 million for asset impairments primarily related to the divestiture of two acquisitions in the Americas that are no longer aligned with our strategic priorities.

(2) Costs recorded in connection with business optimization actions initiated in fiscal 2023 and completed in fiscal 2024, primarily for employee severance.

(3) 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.

Amounts in tables may not total due to rounding.

(1) Costs recorded in connection with business optimization actions initiated during the fourth quarter of fiscal 2025 and completed during the first quarter of fiscal 2026, primarily for employee severance.

Interest Income

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Interest expense for fiscal 2026 was $303 million, an increase of $75 million over fiscal 2025.

The increase was primarily due to an increase in long-term debt.

The increase was primarily due to a higher average long-term debt balance.

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 fiscal 2025, Other income (expense), net decreased $47 million, or 43%, from fiscal 2024, primarily due to higher gains on investments.

During fiscal 2026, Other expense, net increased $31 million, or 48%, over fiscal 2025, primarily due to lower gains on investments.

Income Tax Expense

The effective tax rate for fiscal 2026 was 25.1%, compared with 23.7% for fiscal 2025.

The higher effective tax rate was primarily due to reduced tax benefits from share-based payments.

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

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Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests reflects the income earned or expense incurred attributable to the equity interest that some current and former members of Accenture Leadership and their permitted transferees have in our Accenture Canada Holdings Inc.

See “Business—Organizational Structure.” Noncontrolling interests also include amounts primarily attributable to noncontrolling shareholders in our Avanade Inc.

Net income attributable to noncontrolling interests reflects the income earned or expense incurred attributable to the equity interest that some former members of Accenture leadership and their permitted transferees have in our Accenture Canada Holdings Inc.

Noncontrolling interests also include amounts primarily attributable to noncontrolling shareholders in our Avanade Inc.

Net income attributable to Accenture plc represents the income attributable to the shareholders of Accenture plc.

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Lower share count 0.33

Lower effective tax rate 0.01

Lower non-operating income (0.10)

Higher effective tax rate (0.24)

2026 As Adjusted $ 13.97

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Operating activities:

The $2,343 million increase in operating cash flows was primarily due to higher net income and lower cash outflows for certain compensation payments compared to the prior year.

The $889 million increase in operating cash flows was primarily due to higher net income and the timing of vendor accruals and payments in accounts payable, partially offset by higher net client balances (receivables and contract assets net of deferred revenue) and the timing of miscellaneous accruals and payments in other current and non-current liabilities.

Investing activities:

The $5,042 million decrease in cash used was primarily due to lower spending on business acquisitions.

For additional information, see Note 6 (Business Combinations and Dispositions) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

The $3,617 million increase in cash used was primarily due to higher spending on business acquisitions.

For additional information, see Note 6 (Business Combinations) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

Financing activities:

The $3,115 million decrease in cash used was primarily due to higher net proceeds from borrowings.

The $2,366 million increase in cash used was primarily due to higher net purchases of shares, partially offset by higher net proceeds from borrowings.

For additional information, see Note 14 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”

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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 August 31, 2025 , 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.

As of August 31, 2026 , we had outstanding long-term debt in the form of fixed-rate senior unsecured notes and floating-rate senior unsecured notes issued by Accenture Capital in an aggregate principal amount of $10 billion, which mature from 2027 through 2036.

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 10 (Borrowings and Indebtedness) to our Consolidated Financial Statements under Item 8, “Financial Statements and supplementary Data.”

ACCENTURE 2026 FORM 10-K

Management's Discussion and Analysis of Financial Condition and Results of Operations

Share Purchases and Redemptions

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Total $ 2,857

Amounts in table may not total due to rounding.

(1) Amounts do not include recourse that we may have to recover termination fees or penalties from clients.

9 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-K

Item 7. Management’s Discussion and Analysis