ACN · Q1 2026 Earnings

Cautious

Accenture

Reported December 18, 2025

30-second summary

30-second take: Accenture posted Q1 FY26 revenue of $18.74B (+5% USD, +4% local currency), at the high end of the prior $18.1B–$18.75B guide, with $20.9B in new bookings (book-to-bill 1.12x), $2.2B in Advanced AI bookings, and $3.94 adjusted EPS. FY26 revenue (2–5% LC), adjusted EPS ($13.52–$13.90), adjusted operating margin (15.7–15.9%), and FCF ($9.8–10.5B) were all reaffirmed — no raise despite the in-quarter Q1 beat — while GAAP EPS was nudged down to $13.12–$13.50 (from $13.19–$13.57) and GAAP operating margin was trimmed in parallel to 15.2–15.4% (from 15.3–15.5%). The federal headwind range was narrowed to ~1% (from 1%–1.5%), a modest improvement. The single biggest tell: management said this is the last quarter Advanced AI bookings will be broken out, retiring a disclosure metric just as it grew sequentially from $1.8B (Q4) to $2.2B (Q1).

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

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$18.74B	+5.0%	$17.60B	+6.5%
EPS	$3.94	—	$3.03	+30.0%
Gross margin	33.1%	—	31.9%	+120bps
Operating margin	15.3%	—	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

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q1 FY2026	$18.1B to $18.75B	$18.74B	at the high end of guide	Beat
Adjusted EPS	Q1 FY2026	Not explicitly guided for Q1	$3.94	in-line with operational expectations	Beat

New guidance

Metric	Period	Guide	YoY
GAAP Operating Margin	FY2026	15.2% to 15.4%	—
Revenue growth (local currency)	Q2 FY2026	1% to 5%	—
Revenue	Q2 FY2026	$17.35B to $18.	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
GAAP Diluted EPS	FY2026	$13.19 to $13.57	$13.12 to $13.50	−$0.07 to −$0.07 (midpoint narrowed; nominal range overlap)	Raised

Reaffirmed unchanged this quarter: Adjusted Operating Margin (15.7% to 15.9%), Adjusted EPS ($13.52 to $13.90 (5% to 8% increase)), Revenue growth (local currency) (2% to 5%), Revenue growth excluding federal impact (local currency) (3% to 6%), Operating Cash Flow ($10.8B to $11.5B), Free Cash Flow ($9.8B to $10.5B), Capital returns to shareholders (at least $9.3B)

Segment performance

Q1 FY2026

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

Platform metrics

Q1 FY2026

Segment	Q1 FY2026
New Bookings	$20.9B
Advanced AI New Bookings	$2.2B
Book-to-Bill Ratio	1.12x
Days Services Outstanding	51 days

Profitability

Q1 FY2026

Segment	Q1 FY2026
Adjusted Operating Margin	17.0%
Free Cash Flow Margin	8.1%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Americas	$9.08B	+4.0%
EMEA	$6.94B	+4.0%
Asia Pacific	$2.73B	+9.0%
Capital Returned to Shareholders	$3.3B	—
Dividend per Share	$1.63	—

Management tone

Q3 FY25 reorganization announcement → Q4 FY25 cautious FY26 setup with quantified federal headwind → Q1 FY26 confident "AI is now the operating model" reframe.

Two quarters ago management rebranded "GenAI" to "Advanced AI" and signaled the disclosure framework might evolve. This quarter Sweet closed the loop: "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." Retiring a metric while it's growing ($1.8B Q4 → $2.2B Q1) is a deliberate choice — management is telling investors the discrete number is no longer the right lens, and they're willing to give up the optionality of using it as a quarterly bull signal. That conviction cuts both ways: it removes a transparent leading indicator just as the AI-expansionary thesis needs proof points to offset the federal drag.

Three quarters ago the AI narrative was framed around proof-of-concept wins; last quarter around "advanced AI" bookings as a discrete unit; this quarter Sweet said: "The real opportunity is not proving AI works. It is making it work everywhere." The framing has moved from selling AI to operationalizing AI inside the core transformation engagements — consistent with the FY25 print that Advanced AI is increasingly embedded in the same large deals that drive Managed Services growth.

The fixed-price commercial model thread, which surfaced quietly in prior quarters as a margin-protection mechanism, was elevated this quarter into a strategic positioning statement: "In FY25, about 60% of our work was fixed price, which is up about 10 points over the last three years... clients wanting greater certainty in cost and delivery." The shift from incremental observation to competitive-advantage narrative is the cleanest tone change on the call.

Data as competitive moat, not utility: "In the age of AI, data isn't just an input, it's the advantage. That's why we continue to see at least one out of every two advanced AI projects lead to a data project." Last quarter the data narrative was a supporting layer; this quarter it's repositioned as the entry point that makes AI projects economic in the first place. This justifies why management is comfortable retiring the standalone AI disclosure — the data projects it spawns are the real revenue tail.

Macro posture stayed flat. On Citi's discretionary-spend question, Sweet stated explicitly they "are not waiting for discretionary spend to return" and see no near-term catalyst. The FY26 guide is built on transformation-deal momentum, not a cyclical bounce.

Recurring themes management leaned on this quarter:

Advanced AI transitioning from discrete metric to embedded operating model across all workData quality and governance as foundational prerequisite to AI value creationFixed-price commercial model expansion reflecting client demand for certainty and scalePartnership ecosystem expansion with emerging AI/data companies as competitive advantageMarket share gains through positioning on large transformational programsCapital projects and data center infrastructure as new growth vectors adjacent to core AI consulting

Risks management surfaced:

Federal business headwind (1% revenue impact)Foreign exchange volatility (though currently favorable)Early-stage enterprise AI adoption still represents small percentage of client baseClients requiring foundational work before scaling AI across enterpriseBusiness optimization costs and workforce restructuring investments

Q&A highlights

Tinjin Wong · J.P. Morgan

Is there a shift in how enterprises view consulting's role in AI adoption, and what's driving this change? Is there business impact as a result?

Management confirmed a shift driven by enterprise AI being fundamentally different from consumer AI. Enterprises need security, process fixes, data quality improvements, and modern digital cores before AI adoption. Clients are coming to Accenture for foundational work. Bigger deals now include more advanced AI focused on both productivity and growth.

Enterprise AI requires security, process improvements, and data quality fixesMost companies have 'process debt' and 'data debt'Advanced AI is a bigger part of larger deals this quarterTop 10 ecosystem partners outpacing overall growth

Jason Kupferberg · Wells Fargo

When will new AI partnerships (Anthropic, OpenAI, Snowflake) start moving the needle on revenue—next 12 months or longer? Can the trend of revenue outpacing headcount growth be sustained?

Partnerships are part of ecosystem; revenue impact tied to enterprise adoption rates reflected in guidance rather than specific partnership timelines. Revenue per person grew 7% this quarter, primarily driven by talent rotation toward new skills. Growth expected to moderate through the year as hiring continues. The revenue-headcount decoupling trend dates back to RPA introduction and expected to continue but varies quarter-to-quarter.

Revenue per person growth: 7% this quarterTalent rotation driving RPP growth, expecting moderation through FY26Revenue-headcount decoupling trend ongoing since RPA eraPartnership revenue impact reflected in 2-5% FY26 guidance

James Fawcett · Morgan Stanley

What's the mix between proof-of-concept and production AI engagements? Which industries/functions are moving to production? How is pricing evolving on a like-for-like basis?

AI solutions are increasingly embedded in broader business solutions with multiple AI types, not just models. Key production areas: customer service (Virgin Media O2 example), finance, procurement, grid/utilities, pharma R&D. Unlike prior tech waves, all industries have leaders leapfrogging, playing to Accenture's industry expertise. Pricing improving in several business areas; contract profitability showing improved pricing impact in P&L this quarter.

Production deployment in: customer service, finance, procurement, utilities, pharma R&DBanking and insurance showing strongest AI adoptionAll industries now have leapfroggers (different from cloud adoption pattern)Pricing improvements starting to show in contract profitability and P&L

Brian Keene · Citi

When will discretionary spending return? Should investors be hopeful for a turn at calendar year-end? Also, can fixed-price work reach 70-80% given AI tailwinds?

Management stated they are not waiting for discretionary spend to return and have not seen market catalysts for spending improvement. No change in client conversations suggesting imminent discretionary spend increase. Focused on large transformational deals and being positioned for potential tailwinds. Fixed-price commercial models expected to continue evolving; outcome-based pricing emerging. Fixed-price represents competitive advantage and market share gain driver.

60% of work currently fixed-price, up 10 points in 3 yearsNo identified catalyst for discretionary spend recoveryFixed-price deals drive market share gains due to client risk mitigation needsOutcome-based pricing models emerging

Brian Bergen · TD Cowan

What moving parts support the 2-5% FY26 growth guidance after Q1 beat? Why not raise low-end given federal improvement? How does Sora and generative tools impacting SONG margins?

2-5% guidance reflects best view across 3 remaining quarters with strong bookings, large deal backlog, and solid pipe. Federal beat came from stronger execution than anticipated. SONG critical because clients need growth not cost-cutting; Sora is a productivity tool but not a growth driver. Accenture differentiates through integrating tools into broader solutions addressing customer experience, operations, and new product creation.

FY26 guidance: 2-5% (reconfirmed)Federal spending better than anticipated in Q1SONG expected mid-single-digit growthSora viewed as productivity tool, not growth substitute

Answers to last quarter's watch list

Q1 FY26 LC growth vs. 1–5% guide and the $250M optimization charge — Q1 LC growth came in at +4%, near the top of the guided 1–5% band, signaling the FY26 deceleration is more back-half-loaded than front-loaded. Business optimization costs came in at $308M, $58M above the original $250M estimate, and this overshoot was the direct driver of the $0.07 GAAP EPS trim. Adjusted operating margin of 17.0% was unaffected since the costs sit in the adjustments bridge. Status: Mixed — top line on track, optimization costs ran hot

FY26 organic growth disclosure — Management did not provide a tighter quantification of FY26 organic ex-federal on the print. The reaffirmed 2–5% LC and 3–6% LC ex-federal ranges are unchanged, and no new color was offered on the ~1.5% inorganic contribution.

Continue monitoring

Advanced AI bookings disclosure framework — Disclosure changed. Q1 Advanced AI bookings of $2.2B were reported with the explicit statement that this is the last quarter the metric will be broken out, with management framing AI as embedded across the portfolio rather than a separately trackable line. Status: Resolved negatively (for investors who relied on the metric as a leading indicator)

Gross margin direction — Q1 gross margin came in at 33.1%, up +20bps YoY vs. Q1 FY25 (32.9%). A modest improvement that does not yet establish a clean trend break, but is directionally supportive of the FY26 adjusted operating margin expansion thesis.

Continue monitoring

FCF guide vs. FY25 actual — Q1 FCF of $1.51B (8.1% FCF margin) is a seasonally light quarter and is tracking the softer FY26 FCF guide of $9.8–10.5B (vs. FY25 actual $10.87B). DSO rose to 51 days from 47, suggesting working capital is a modest near-term drag, not an operating deterioration. The reaffirmation of the $9.8–10.5B range is consistent with the Q1 trajectory.

Continue monitoring

Federal procurement run-rate — Park noted federal performance in Q1 was stronger than anticipated. The headwind range was narrowed from 1%–1.5% to ~1%, and the 3–6% LC ex-federal range was reaffirmed. No discrete federal revenue or bookings figure was disclosed, but the directional tone improved. Status: Continue monitoring (improving)

What to watch into next quarter

Q2 LC growth landing point inside the 1–5% range: with Q1 at the top of its band and federal trending better than expected, Q2 LC at or above 3% would imply the FY26 reaffirmed guide is conservative and a raise is in play on the Q2 print. Below 3% would validate the reaffirmation as appropriately calibrated.

Adjusted EPS as the new AI lens: with Advanced AI bookings retiring as a standalone disclosure, watch how management quantifies "AI embedded" qualitatively — share of large deals, pricing premium on AI-content engagements, or any new framework for tracking AI's contribution to bookings. The first quarter without the metric is when the messaging substitute becomes visible.

Gross margin sustainability: Q1's 33.1% was +20bps YoY. Whether Q2 holds or extends this YoY improvement is the leading indicator on whether the FY26 adjusted operating margin guide of 15.7–15.9% is achieved through gross margin recovery or only SG&A leverage.

Bookings trajectory below 1.12x: Q1 book-to-bill of 1.12x is healthy but below Q4's 1.2x. A second consecutive quarter of declining book-to-bill — particularly if Consulting book-to-bill softens — would put pressure on the H2 FY26 revenue ramp the reaffirmed guide implicitly requires.

Working capital and DSO: Q1 DSO at 51 days (vs. 47 in Q4) needs to reverse in Q2 for the FY26 FCF guide of $9.8–10.5B to be reachable without back-half heroics.

Federal anniversary timing: management's Q4 framing had the federal headwind anniversarying at the end of Q3 FY26. With the FY26 headwind already narrowed to ~1%, a Q2 print that further walks back federal drag would be the cleanest upgrade case for the reaffirmed guide.

Sources

Accenture Q1 FY26 Form 8-K Earnings Release Exhibit — https://www.sec.gov/Archives/edgar/data/1467373/000146737325000221/q1fy26earnings8-kexhibit.htm
Accenture Q1 FY26 earnings call Q&A (J.P. Morgan, Wells Fargo, Morgan Stanley, Citi, TD Cowen)

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