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ACN · Q4 2025
ACN · Q2 2026

ACN · Q1 2026 Earnings

Cautious

Accenture

Reported December 18, 2025

30-second summary

30-second take: Q1 revenue of $18.74B (+5% LC, top end of the $18.1–18.75B guide) and adjusted EPS of $3.94 cleared the bar, with bookings of $20.9B (book-to-bill 1.12x) and Advanced AI bookings of $2.2B in the quarter. But FY26 adjusted guidance was reaffirmed unchanged — not raised — while GAAP EPS guidance was narrowed and the midpoint nudged ~$0.07 lower; the Q2 guide of $17.35–18.0B (1–5% LC) keeps the deceleration story alive. The biggest tell is qualitative: management announced this is the last quarter they'll disclose Advanced AI bookings as a separate line, calling the metric "less meaningful" — a framing that doubles as conviction and as removing a number bears were tracking.

Headline numbers

EPS

Q1 FY2026

$3.94

Revenue

Q1 FY2026

$18.74B

+5.0% YoY

Gross margin

Q1 FY2026

33.1%

Free cash flow

Q1 FY2026

$1.51B

Operating margin

Q1 FY2026

15.3%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$18.74B+5.0%$17.60B+6.5%
EPS$3.94—$3.03+30.0%
Gross margin33.1%—31.9%+120bps
Operating margin15.3%—15.1%+20bps
Free cash flow$1.51B—$3.80B-60.3%

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ1 FY2026$18.1B to $18.75B$18.74Bat high end of guideBeat

New guidance

MetricPeriodGuideYoY
Non-GAAP EPSQ1 FY2026$3.94—
GAAP Operating MarginFY202615.2% to 15.4%—
RevenueQ2 FY2026$17.35B to $18.0B—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
GAAP EPS
FY2026
$13.19 to $13.57$13.12 to $13.50midpoint lowered by ~$0.06 (from $13.38 to $13.31)Raised

Reaffirmed unchanged this quarter: Adjusted EPS ($13.52 to $13.90), Revenue Growth (Local Currency) (2% to 5%), Revenue Growth excluding Federal Business (Local Currency) (3% to 6%), Adjusted Operating Margin (15.7% to 15.9%), Effective Tax Rate (23.5% to 25.5%), Operating Cash Flow ($10.8B to $11.5B), Free Cash Flow ($9.8B to $10.5B), Capital Return to Shareholders (at least $9.3B)

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
Consulting$9.41B+3.0%
Managed Services$9.33B+7.0%
Financial Services$3.6B+12.0%
Communications, Media & Technology$3.1B+8.0%
Products$5.74B+4.0%

Platform metrics

Q1 FY2026
SegmentQ1 FY2026
New Bookings$20.9B
Advanced AI New Bookings$2.2B
Book-to-Bill Ratio1.12x
Days Sales Outstanding51 days
Clients with >$100M Quarterly Bookings33
Headcount~784,000

Profitability

Q1 FY2026
SegmentQ1 FY2026
Adjusted Operating Margin17.0%
Free Cash Flow Margin8.1%

Other KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
Americas$9.08B+4.0%
EMEA$6.94B+4.0%
Asia Pacific$2.73B+9.0%

Management tone

Customer optimization hangover → AI experiments → AI-driven reinvention → AI as the operating model.

Two quarters ago Advanced AI was a discrete bookings line management was eager to disclose; last quarter it was rebranded from "GenAI" to "Advanced AI" with hints the framework would evolve; this quarter management announced disclosure ends here. The anchor quote: "This will be the last quarter in which we share these specific metrics... it has become less meaningful to isolate the data specifically for advanced AI, as it does not reflect how the demand is evolving on the ground." The framing is one of mainstreaming — Advanced AI is now embedded across nearly everything — but it also removes the cleanest external scorecard bears had on AI revenue conversion. Both readings are valid; subscribers should weight conviction and disclosure-management roughly equally.

The fixed-price commercial model has shifted from a delivery lever to a structural moat across three calls. Last quarter Sweet framed it as an AI-pricing accretive vehicle; this quarter she anchored it as the central competitive advantage: "About 60% of our work was fixed price, which is up about 10 points over the last three years. This reflects the increasing role of our proprietary platforms over a long period of time and clients wanting greater certainty in cost and delivery." The shift from "fixed-price is growing" to "fixed-price is the moat" signals management views proprietary platforms as the defensible position against pure-play AI consultancies and hyperscaler professional services arms.

Data has been re-elevated from input to strategic prerequisite. A year ago data was discussed as plumbing for cloud and AI projects; this quarter the framing was "In the age of AI, data isn't just an input, it's the advantage," with management noting "at least one out of every two advanced AI projects lead to a data project." This re-positions data work as the on-ramp to AI monetization rather than a separate practice, and explains why management is comfortable retiring the Advanced AI bookings line — the adjacent data pull-through is the more durable metric, even if it's harder to disclose cleanly.

Partnership strategy has migrated from "top 10 ecosystem partners outpacing growth" to an explicitly broader posture. Sweet noted Accenture has been "expanding and in some cases forming new partnerships with emerging AI and data companies." This is consistent with the AI commodification thesis — model leadership rotates, so betting on the top-10 alone is no longer sufficient. The acknowledgement is itself a change.

The discretionary spend narrative remains stuck. Sweet flatly told Citi: "We're not waiting for discretionary spend to come back." That's the same posture as Q4. The bull case is now entirely about reinvention deal flow and AI scaling, not a macro tailwind.

Recurring themes management leaned on this quarter:

Advanced AI scaling from proof-of-concept to enterprise-wide embedded deploymentData quality and platform modernization as foundational requirement for AI value realizationExpanded ecosystem partnerships beyond top 10 to cover emerging AI/data capabilities and industry-specific functionsFixed-price commercial model expansion reflecting proprietary platform maturity and client demand for cost certaintySecurity as fastest-growing business segment, critical enabler for enterprise AI scalingCapital projects and data center infrastructure as adjacent growth opportunity through acquisitions (DLB, Sobin)

Risks management surfaced:

Federal business decline (1-2% headwind on revenues)Foreign exchange volatility (partially offset by guidance assumptions)Discretionary spend pace remaining at same levels; no acceleration despite AI demandAdvanced AI adoption remains nascent at scale despite growing demand; only 1,300 clients of 9,000 have initiated projectsBusiness optimization costs higher than original estimates ($58M above Q1 plan)

Q&A highlights

Tinjin Wong · J.P. Morgan

Shift in consulting industry's role in AI adoption - why now and what's driving the change? Impact on business activity?

Enterprise AI fundamentally different from consumer AI due to security, process, and data requirements. Clients have process debt and data debt. Large deals show advanced AI as bigger component, but growth and cost both matter. Ecosystem partnerships with top 10 partners outpacing overall growth.

Advanced AI is bigger part of larger deals this quarterGrowth with top 10 ecosystem partners outpacing overall growthEnterprise adoption dependent on clients having right security, processes, data, and modern digital core

Jason Kupferberg · Wells Fargo

When will new AI partnerships (Anthropic, OpenAI, Snowflake) start moving revenue needle - next 12 months or longer? Also, revenue growth outpacing headcount growth - is this sustainable and what's driving it?

Partnerships are part of ecosystem reflecting overall market and enterprise adoption. Revenue per person grew 7% this quarter, primarily driven by talent rotation hiring for new skills. Expect RPP growth to moderate as new hires come on. Revenue-headcount divergence has been ongoing since RPA introduction and expected to continue.

Revenue per person growth: 7% this quarterTalent rotation focused on new skill hiringRPP growth expected to moderate through remainder of yearRevenue-headcount divergence ongoing since RPA introduction

James Fawcett · Morgan Stanley

Mix of proof-of-concept vs. full production AI engagements? Which industries and types moving to production? And pricing dynamics on like-for-like basis and margin implications?

Models embedded in solutions combining classical AI, RPA, and advanced AI. Production scaling in customer service, finance, procurement (good data quality). Harder areas include core value chain (grid, utilities, pharma R&D). Contract profitability improving as pricing benefits showing up in P&L.

Production scaling in customer service, finance, procurementContract profitability improving with better pricingPricing improvements showing up in P&L this quarterAdvanced AI in largest deals includes significant customer service component

Brian Keene · Citi

Status of discretionary spend recovery and outlook for next year? Also, with 60% fixed-price work now 10 points higher in 3 years, can it reach 70-80%? How do you balance savings with clients vs. keeping internally?

Not waiting for discretionary spend to come back; delivering results despite no change in market. CEOs are resolute on delivering despite macro headwinds. No visible catalyst for change in discretionary spending. Fixed-price work provides competitive advantage in market where clients need certainty. Pricing model historically passes productivity savings from technology deployment to clients while retaining value.

60% of work currently fixed-price (up 10 points in 3 years)No change in discretionary spend conversationsFixed-price commercial model has existed since introduction of technology and RPAExpect commercial models to continue evolving toward outcome-based approaches

Kevin McVeigh · UBS

Advanced AI serving 1,300 of 9,000 clients (14%) vs 6% revenue and 9% bookings - should this be used as leading indicator or goalpost for scaling? And 17.3% Q1 margin is highest ever - drivers and outlook?

14% client penetration not meant as new metric; shows rapid movement with 100 clients initiating per quarter, very early stage. Should not draw correlations between client count and revenue/bookings percentages yet. Op margin expanded 30bps in Q1, reconfirming 10-30bps guidance for full year. Margin affected by investment levels throughout year.

Advanced AI with 1,300 of 9,000 clients (14%)100 clients initiating Advanced AI per quarter30 basis points operating margin expansion Q1Reconfirming 10-30 basis points op margin expansion guidance for full year

Answers to last quarter's watch list

Q1 FY26 LC growth vs. 1–5% guide and the $250M optimization charge — Q1 LC growth landed at +5%, the top end of the guide, signaling the FY26 deceleration is back-half-loaded (federal anniversary at end of Q3). The optimization charge ran $58M above the original Q1 plan — not catastrophic, but it explains the small GAAP EPS guide trim.
Resolved positively
FY26 organic growth disclosure — Management reaffirmed FY26 LC growth at 2–5% and ex-federal at 3–6%, with ~1.5% inorganic contribution still implied. Organic ex-federal math is unchanged from Q4: midpoint ~3%, low end ~1.5%. No tighter disclosure was offered.
Not resolved
Advanced AI bookings disclosure framework — Management explicitly announced this is the last quarter Advanced AI bookings ($2.2B) will be disclosed as a separate line, calling the metric "less meaningful." This is the disclosure change Q4's brief flagged as itself being a signal.
Resolved negatively
Gross margin direction — Q1 gross margin came in at 33.1%, which compares to FY25 full-year 31.9% but is below the Q1 FY25 print (typically 33.5%+). The Q1 read isn't decisive on the FY trajectory; the seasonal Q1 step-up is intact but the YoY direction looks flat-to-down.
Continue monitoring
FCF guide vs. FY25 actual — Q1 FCF of $1.51B (8.1% margin) is a soft seasonal print but consistent with the reaffirmed $9.8–10.5B FY guide; OCF guide reaffirmed at $10.8–11.5B. No beat signal yet, no deterioration signal either. DSO at 51 days (vs. 47 at year-end) is the only friction point.
Continue monitoring
Federal procurement run-rate — Management reaffirmed the ex-federal LC growth band of 3–6% and the ~1% federal headwind embedded in FY26. The Q1 print at +5% LC overall implies federal is tracking roughly to plan, but no discrete federal datapoint was disclosed.
Continue monitoring

What to watch into next quarter

Q2 LC growth vs. 1–5% guide: with Q1 at the top of its guide and Q2 guided to the same band, watch whether Q2 lands ≥+3% LC (back-half-loaded deceleration intact) or below (federal+macro drag accelerating). The Q2 FX tailwind of ~+3.5% means the USD print could mask LC weakness.

Adjusted operating margin trajectory after Q1's 17.0%: Q1 is seasonally peak; FY guide is 15.7–15.9%. Watch whether Q2 margin lands above 15.5% (signaling upside to the FY range) or below (signaling business optimization overruns continue beyond the $58M Q1 number).

New AI disclosure framework: Sweet committed to continuing to share partnership strategy and "how we're growing new businesses." Watch what replaces the Advanced AI bookings line — a qualitative narrative is bearish for transparency; a new quantified metric (e.g. AI-influenced bookings, partner ecosystem revenue) is the bull case.

Federal contribution at the Q3 anniversary: management expects the federal headwind to anniversary at the end of Q3 FY26. Q2 is the last "headwind quarter" — watch whether management quantifies federal bookings or revenue trajectory more explicitly to set up the comp reset.

DSO and FCF conversion: DSO at 51 days vs. 47 at year-end is a 4-day extension. If Q2 DSO extends further while FCF tracks behind the implied FY ramp, the reaffirmed $9.8–10.5B guide gets harder to defend.

Revenue per person normalization: Park guided RPP growth to moderate from Q1's +7% as new hires onboard. Watch whether Q2 RPP holds above +4% (talent rotation playing out as planned) or compresses faster (mix shift to lower-utilization roles).

Sources

  1. Accenture Q1 FY2026 Form 8-K Earnings Release Exhibit — https://www.sec.gov/Archives/edgar/data/1467373/000146737325000221/q1fy26earnings8-kexhibit.htm
  2. Accenture Q1 FY2026 earnings call prepared remarks and Q&A (CEO Julie Sweet, CFO Angie Park)

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