Ladies and gentlemen, thank you for standing by, and welcome to Accenture's Fourth Quarter Fiscal 2020 Earnings Call. [Operator Instructions]. And I would now like to turn the conference over to your host, Angie Park, Managing Director, Head of Investor Relations. Please go ahead.

Thank you, operator, and thanks, everyone, for joining us today on our fourth quarter and full fiscal 2020 earnings announcement. As the operator just mentioned, I'm Angie Park, Managing Director, Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chief Executive Officer; and KC McClure, our Chief Financial Officer. We hope you've had an opportunity to review the news release issued a short time ago. Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results. KC will take you through the financial details, including the income statement and the balance sheet, along with some key operational metrics for both the fourth quarter and full fiscal year. Julie will then provide a brief update on our market positioning before KC provides our business outlook for the first quarter and full fiscal year 2021. We will then take your questions before Julie provides a wrap-up at the end of the call. Some of the matters we'll discuss on this call, including our business outlook, are forward-looking and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors set forth in today's news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures where appropriate, to GAAP in our news release or in the Investor Relations section of our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now let me turn the call over to Julie.

Thank you, Angie, and thank you, everyone, for joining us. Fiscal '20 results demonstrate the relevance of our growth strategy, the resilience of our business and our people, our operational rigor and discipline, the power of the relationships we have with the world's leading companies and ecosystem partners, and our ability to pivot rapidly to meet the needs of our clients and new ways of operating. Fiscal year '20 also demonstrated the unique advantages of our long track record of focusing on being a responsible business, from our commitment to inclusion and diversity that has helped make us an innovation-led company, to our focus on investing in our people and their skills, to the way we live our core values, all of which help make us the trusted partner that our clients have turned to in the face of the ongoing global health, economic, and social crisis. And if there was ever any doubt, we clearly demonstrated that scale matters. We are unique in our industry for the scale of our digital, cloud, and security capabilities, and for our leadership in all the services critical to building a company's digital core, transforming its operations, and accelerating growth with our four services of strategy and consulting, interactive, technology and operations, as well as our deep industry experience and data and artificial intelligence capabilities. We are also unique in the scale we have with large client relationships and across 13 industry groups with a global footprint. This scale has been core to our resilience in the second half of FY '20. Let me share a few highlights. We are now approximately 70% in 'the New'—digital, cloud, and security, just when the need for these services, already high, accelerated dramatically as a result of COVID-19. In fact, in FY '21, we will no longer measure 'the New' as 'the New' is now our core. As of March 1, with the new growth model, we have embedded digital everywhere. We will continue to share color on our growth drivers, including cloud and security, as we continue to invest in these large, high-growth market opportunities. We ended FY '20 with 216 Diamond clients, which represent our largest client relationships, a net increase of 15 over the prior year. We transitioned seamlessly to our new growth model with a new global management committee to increase our agility in bringing together the power of our multiservice teams to our clients and to create greater opportunities for our people. The new model and team successfully passed a challenging test, navigating the pandemic and emerging stronger. More on that later. We committed to stronger bookings in Q4, and we delivered with our second highest bookings ever in the fourth quarter, finishing the year with a record $50 billion of sales. In FY '20, we continued to increase our investments for the future at scale with $1.5 billion in acquisitions, $871 million in R&D in our assets, platforms, and solutions, including growing our portfolio of patents and pending patents to over 7,900 and delivering a 6% increase in training hours for our 500,000 people, while reducing our training cost by 11% to $866 million due to our digital learning platforms. We are now 45% women, on track for our 2025 goal of a 50-50 gender balance. This month, we announced ambitious new goals to increase our African American and Black and Hispanic American and Latinx communities in the U.S. Despite the unprecedented uncertainty and volatility, with the pandemic declared only a few days before we had to give guidance for Q3, we called it like we saw it for each of Q3 and Q4 and delivered within our guidance. For the full year, we delivered either within or above our guided range and continued to deliver growth ahead of market modest margin expansion and record free cash flow. Our resilience begins with an exceptional leadership team and our incredibly talented and dedicated people. Before I turn over to KC, I want to thank each of them for what has truly been an exceptional year that we should all be proud of. KC, over to you.

Thank you, Julie, and thanks to all of you for joining us on today's call. We were pleased with our overall results in the fourth quarter, which were within our guided range and aligned with our expectations. Our results reinforce our distinctive position in the marketplace and reflect the diversity of our business. Once again, these results illustrate Accenture's unique ability to run our business with discipline and deliver significant value for our shareholders in an uncertain environment. Let me begin by summarizing a few of the highlights of the quarter. Revenues declined 1% in local currency, in line with our guided range. This includes a reduction of approximately 2 percentage points from a decline in revenues from reimbursable travel costs. Importantly, aligned with our growth imperatives, we continued to take significant market share for both the quarter and the year. The diversity of our business continues to serve us well. From an industry perspective, consistent with last quarter, approximately 50% of our revenues came from seven industries that were less impacted by the pandemic and, in aggregate, grew high-single digits, with continued double-digit growth in Public Service, Software & Platforms, and Life Sciences. At the same time, as we expected, we saw continued pressure from clients in highly impacted industries, which include travel; retail; energy; high tech, including aerospace and defense; and industrial. While performance varied, this group collectively represents over 20% of our revenues and declined mid-teens. Operating margin was 14.3%, an increase of 10 basis points for the quarter and the full year. We continue to drive sustainable margin expansion while making significant investments in our business and our people to extend our market leadership. We continue to benefit from lower spend on travel, meetings, and events. Finally, we delivered free cash flow of $3 billion, which surpassed our expectations, driven by superior Days Sales Outstanding management. Now let me turn to some of the details. New bookings were $14 billion for the quarter, our second highest on record, and reflect 9% growth with a book-to-bill of 1.3. Consulting bookings were $6.5 billion with a book-to-bill of 1.1. Outsourcing bookings of $7.5 billion were a record with a book-to-bill of 1.5. Bookings continue to be dominated by strong demand for digital, cloud, and security-related services, which we estimate represented approximately 70% of our new bookings. We were very pleased that we delivered on our expectations of strong bookings this quarter, and they came in as we expected with strong bookings in technology and operations and lower bookings in strategy and consulting. Turning now to revenues. Revenues for the quarter were $10.8 billion, a 1% decline in local currency and 2% decline in U.S. dollars, including a reduction of approximately 2% from a decline in revenues from reimbursable travel costs. Consulting revenues for the quarter were $5.7 billion, a decline of 8% in both local currency and U.S. dollars, which includes a reduction of approximately 3% from a decline in revenues from reimbursable travel costs. Outsourcing revenues were $5.2 billion, up 7% in local currency and 6% in U.S. dollars. Digital, cloud, and security-related services grew low-single digits. Taking a closer look at our service dimensions, Operations grew high-single digits. Technology services grew mid-single digits. Strategy and consulting services declined low teens. Before I give color on our markets, the industry dynamics that I've mentioned previously played out in a similar fashion across all three. In North America, revenue growth was flat in local currency. In Europe, revenue declined 5% in local currency. We saw mid-single-digit growth in Italy, slight growth in Germany, with continued declines in the U.K. In the Growth Markets, we delivered 3% revenue growth in local currency, led by double-digit growth in Japan and high single-digit growth in Brazil. Moving down the income statement, gross margin for the quarter was 31.8% compared with 31.1% for the same period last year. Sales and marketing expense for the quarter was 10.6%, consistent with the fourth quarter last year. General and administrative expenses were 6.8% compared to 6.2% for the same quarter last year. Operating income was $1.5 billion in the fourth quarter, reflecting a 14.3% operating margin, up 10 basis points compared with Q4 last year. Before I continue, I'd like to highlight an investment gain that impacted our tax rate and increased EPS by $0.29 for the fourth quarter and $0.43 for the full year. Of this $0.43 gain, $0.27 was factored into the full year EPS guidance provided in June, and a quarterly reconciliation can be found on our website. The following comparisons exclude this impact and reflect adjusted results. Our adjusted effective tax rate for the quarter was 28.4% compared with an effective tax rate of 26.6% for the fourth quarter last year. Adjusted diluted earnings per share were $1.70 compared to EPS of $1.74 in the fourth quarter last year. For the full fiscal year, adjusted earnings per share were $7.46, which was $0.03 above our adjusted guidance range for the year. Days service outstanding were 35 days compared to 41 days last quarter and 40 days in the fourth quarter of last year. Free cash flow for the quarter was $3 billion, resulting from cash generated by operating activities of $3.2 billion, net of property and equipment additions of $189 million. Our cash balance at August 31 was $8.4 billion compared with $6.1 billion at August 31 last year. With regards to our ongoing objective to return cash to shareholders, in the fourth quarter, we repurchased or redeemed 2.6 million shares for $590 million at an average price of $225.25 per share. Also in August, we paid our fourth quarterly cash dividend of $0.80 per share for a total of $509 million. Our Board of Directors declared a quarterly cash dividend of $0.88 per share to be paid on November 13, a 10% increase over last year, and approved $5 billion of additional share repurchase authority. Reflecting our results for the full year, we started with strong momentum in the first half and quickly adjusted and reset with the onset of the pandemic. We delivered approximately $50 billion in new bookings, reflecting a 10% increase over last year, setting two record highs this year. We continued to provide guidance on our business throughout the year and, importantly, delivered revenues within our guided range at 4%, significantly taking market share. We delivered on our commitment of margin expansion even with lower top-line growth and fully continued all elements of our capital allocation, with $1.5 billion of investments in acquisitions, a record $7.6 billion of free cash flow and returned $5 billion of cash to shareholders, exceeding our outlook provided last September. In closing with fiscal year '20 behind us, we are proud of how we managed our business and delivered for our clients, our people, our shareholders, our partners, and our communities in what was truly an unprecedented fiscal year. We feel really good about our positioning for fiscal '21. Now let me turn it back to Julie.

Thank you, KC. From an overall demand perspective, the trends that we discussed last quarter are continuing. Companies need to accelerate their digital transformation across their enterprises and move to the cloud; address cost pressures, which vary by industry but are universal; build resilience; adjust their operations and customer engagement to a remote-everything environment; and find new sources of growth. Now I will give you a little more color on the depth and breadth of our ability to deliver value to our clients in this environment through the lens of some of our 17 clients with new bookings over $100 million in Q4. Then I will turn to fiscal year '21. Diebold Nixdorf, a global leader in services, software, and hardware for the banking and retail industries, and Accenture have extended a strategic agreement to accelerate Diebold Nixdorf's multiyear digital and cloud transformation program, which includes streamlining its finance, human resource, IT, and sales systems. The collaboration will unlock approximately $50 million of incremental savings through 2023 while improving business productivity, consolidating operations, and enabling investment in innovation and growth opportunities. Prudential Financial, a financial wellness leader and premier active global investment manager, has entered into an agreement with Accenture to transform its group insurance operating model by redesigning its processes, operations, and technology to create simple, intuitive interactions between brokers, customers, and employees that enhance financial wellness. New digital solutions designed by Accenture Interactive and powered by artificial intelligence and analytics from our SynOps platform and our operations team will provide more data-driven, seamless, and human-centered experiences in onboarding, billing, and claims processes, enhancing user satisfaction and, ultimately, revenue growth. Halliburton, a leading global provider of products and services to the energy industry, Accenture and Microsoft entered into a five-year strategic agreement to advance Halliburton's digital capabilities in Microsoft Azure. Halliburton will complete its move to cloud-based digital platforms, drive additional business agility, reduce capital expenditures, and strengthen its customer offerings while also achieving sustainability benefits by migrating all of its physical data centers to Azure. A leading global automotive company has selected Accenture to migrate 55% of its applications over 18 months to the cloud, working with its ecosystem partners for the public cloud, AWS, GCP, and HPE for its hybrid cloud. This work will address both cost pressures and the need to transform its IT infrastructure to address obsolescence and provide digital experiences. These examples are noteworthy for their diversity across industries, complexity requiring multiservice teams, strong ecosystem partnerships, and using our assets, platforms, and solutions. Many involve us delivering what we call 360-degree value because we are creating agility, helping reskill our clients' employees, or helping reduce their carbon footprint with the move to the cloud, in addition to delivering clear financial value. Stepping back for a moment, our clients were being impacted by unprecedented change before COVID-19. Then came COVID-19, giving a whole new meaning to unprecedented and requiring our clients to change virtually every aspect of their business faster than ever before, and they are turning to us to help embrace that need for change and become stronger. Turning to fiscal year '21, our own formula for market leadership is enduring. We continually transform our business and embrace change to create more value for our clients with incredibly talented people. We view fiscal year '21 as turning a page. We are no longer navigating a crisis. We are facing a new reality, and we plan on returning to pre-COVID growth rates by the second half of this fiscal year, and we are ready. We are emerging from the second half of fiscal year '20 stronger than when we entered, which was our strategy. As a leadership team, we set five measures of what stronger means, and we have met each of them. First, did we grow market share faster than pre-COVID? Check. We grew at approximately four times the market in H2 as compared to two times the market in H1. And as a reminder, when we say market, we were referring to our basket of publicly traded companies. Second, did we execute on our big deal pipeline in H2 despite the crisis, which would be a proxy for enhancing our role as the trusted transformation partner? Check. In fact, we had three more clients with over $100 million of bookings in H2 compared to H1 of this year. Third, did we capture new growth opportunities? Check. We have had substantial new bookings in the health and public sector, such as the 10 states in the U.S. where we are doing contact tracing in remote collaboration services, as well as cloud, security, supply chain, and digital manufacturing, which helped offset a portion of the severe impact on some of our clients. Fourth, did we continue to invest in our business and our people? Check. Not only did we invest significantly in our business and increase our training hours, but we also created the capacity to pay our people meaningful bonuses for fiscal year '20 performance and are planning for a significant level of promotions in our upcoming December promotion cycle. All of this, we believe, will distinguish us from our competitors. Fifth, did we continue to deliver consistently on our shareholder commitments? Check. We also reduced structural costs through our new growth model and took measures to accelerate our fiscal year '21 usual level of performance management-related exits of around 5% each fiscal year to preserve our talented workforce for the future while positioning ourselves for modest margin expansion and continued investment in our business in fiscal year '21. Before KC gives you more details on our FY '21 outlook, I want to touch on Accenture Cloud first, which is an example of how we anticipate client needs and then act at speed and at scale. Last week, we announced the creation of Accenture Cloud First and a $3 billion investment over three years, which will be funded by prioritizing our expected investments across the business. Accenture Cloud First is a new multiservice group of 70,000 cloud professionals with more than 100,000 people providing cloud-related services, which brings together the full power and breadth of Accenture's industry and technology capabilities, ecosystem partnerships, and deep commitment to upskilling clients' employees and to responsible business with the singular focus of enabling organizations to move to the cloud with greater speed and achieve greater value for all their stakeholders at this critical time. We have been building our cloud capabilities for the last decade and are a leader with approximately $12 billion in cloud revenue for FY '20, growing double digits, which includes our SaaS capabilities delivered through our Intelligent Platform Services business. This positioned us well to recognize that COVID-19 has created a new inflection point that requires every company to dramatically accelerate the move to the cloud as a foundation for digital transformation to build the resilience, new experiences and products, trust, speed, and structural cost reduction that the ongoing health, economic and societal crisis demands and that a better future for all requires. Post-COVID leadership requires that every business become a cloud-first business, quickly moving from today's approximately 20% in the cloud to 80%. This is a once-in-a-digital-era massive replatforming of global business. Accenture Cloud First works seamlessly with our Intelligent Platform Services, which focuses on our SaaS capabilities and are an important part of replatforming global businesses. Recent wins include working with a leading consumer goods manufacturer on a global deployment of SAP S/4HANA, initially focusing on their central finance system and building a new digital backbone for the entire supply chain in China, from purchasing to direct-to-consumer sales; working with the U.S. Air Force to establish a new cloud-based common infrastructure for its Oracle Enterprise Resources Planning program; working with a bank on the integration of their front office operations and enhancing customer relationships powered by Salesforce; and working with a top higher education research institution to implement Workday to transform their HR capabilities to drive real-time data analytics and become a strategic partner across the organization. For example, for a public service agency, we collaborated with ServiceNow to rapidly implement a cloud-enabled workflow solution, enabling millions of citizens to access government services while complying with dynamic pandemic health safety guidelines. Now over to you, KC.

Thanks, Julie. Before I get into our business outlook, as I did last quarter, I would like to remind you that given the coronavirus pandemic, there are a number of factors that we may not be able to accurately predict, including the duration and magnitude of the impact, the pace of recovery, as well as those described in our most recent quarterly filings. With that said, let me now turn to our business outlook. For the first quarter of fiscal '21, we expect revenues to be in the range of $11.15 billion to $11.55 billion. This assumes the impact of FX will be about a positive 1.5% compared to the first quarter of fiscal '20. It also reflects an estimated negative 3% to flat growth in local currency and includes a reduction of approximately 2 percentage points from a decline in revenue from reimbursable travel costs. For the full fiscal year '21, based on how the rates have been trending over the last few weeks, we currently assume the impact of FX on our results in U.S. dollars will be approximately positive 2% compared to fiscal '20. For the full fiscal '21, we expect our revenue to be in the range of 2% to 5% growth in local currency over fiscal '20, including approximately negative 1% from a decline in revenues from reimbursable travel based on a 2% reduction in the first half of the year and no material impact in the second half of the year. A couple of key points that are helpful to understand our guidance. We expect our growth will be lower in H1, with Q1 and Q2 ranges being similar, and we expect we will reconnect with higher growth in H2 in the range of high single digits to low double digits. For operating margin, we expect fiscal year '21 to be 14.8% to 15%, a 10 to 30 basis point expansion over fiscal '20 results. We expect our annual effective tax rate to be in the range of 23% to 25%. This compares to an adjusted effective tax rate of 23.9% in fiscal '20. For earnings per share, we expect full year diluted EPS for fiscal '21 to be in the range of $7.80 to $8.10 and or 5% to 9% growth over adjusted fiscal '20 results. For the full fiscal '21, we expect operating cash flow to be in the range of $6.35 billion to $6.85 billion; property and equipment additions to be approximately $650 million; and free cash flow to be in the range of $5.7 billion to $6.2 billion. Our free cash flow guidance reflects a very strong free cash flow to net income ratio of 1.1 to 1.2. Finally, we expect to return at least $5.3 billion through dividends and share repurchases as we remain committed to returning a substantial portion of our cash to our shareholders. With that, let's open it up so that we can take your questions. Angie?

Thanks, KC. [Operator Instructions]. Operator, would you provide instructions for those on the call?

[Operator Instructions]. Our first question today will come from the line of Tien-Tsin Huang of JPMorgan.

I wanted to -- you gave a lot of good information here. It sounds like strategy and consulting services saw the biggest rate of change exiting the year, a little bit more pressure. I know operations improved. So I'm curious about the visibility and the outlook for strategy and consulting in fiscal '21. I presume that's going to see probably a nice recovery in the second half, based on your comments there. And are you over-indexed at all in strategy and consulting to some of the industries impacted by the pandemic?

Thanks, Tien-Tsin, for your question. So let me talk about what we see for growth in strategy and consulting, and then Julie can pass on some additional color. First, when we look at strategy and consulting, we really do see that it's held up in this environment because it is really critical to our differentiation in the places where our clients are continuing to invest. If we look at the actual results, strategy and consulting, they came in really as we expected in Q4. You're right; it does follow a very similar pattern from an industry perspective, Tien-Tsin, where we see pressure in strategy and consulting in the most highly impacted industries in the market. Now in terms of the dynamics for growth, we see the same dynamics in the first quarter that we're seeing from an industry perspective in strategy and consulting growth in the first quarter as we saw in the fourth quarter, and that should play out pretty similarly in the first half. But we do see recovery and reconnecting with growth in the back half of the year. Let me just hand it over to Julie for some more comments.

Yes. Tien-Tsin, I think what's important—it’s just so we’re not over-indexed in strategy and consulting versus the rest of our business and industries, and it's how it's kind of worked with sort of 20% in severe industries, etc. As I talked about last quarter, right, when you think about strategy and consulting, it's a huge differentiator in these transformational deals, and I'll talk about that in a minute. And as I said, the leading companies right now are very focused. Some of the smaller work that you would do to incubate and start doing things, companies are saying, and we're telling companies, focus on the big rocks that you need to do, right. What's playing out in the market isn't about a weakness in strategy and consulting; it's a reflection of how our clients are thinking about their businesses and what they need. I'm actually quite pleased with how well strategy and consulting is holding up. The thing that's the most important is that this is how we're delivering 17 clients with over $100 million in bookings because each of these big transformations requires this deep understanding of industry and functions. You see that in other places. For example, the Bank of England, we announced a deal there where we're helping them with their high-value payments infrastructure to support resilience and innovation, right. Digital payments and instant payments were huge before the crisis. As you know, it's changed dramatically. Because we understand the industry, we have cross-industry expertise in how digital payments are being used, right, as well as the understanding of data and technology; those things come together to create this new system that improves resiliency, customer experience, access to data and end-to-end risk management. No one can do that, right, with all of those skills.

Next question is from Lisa.

Yes, following up a little bit on—well, a related question to Tien-Tsin's question about consulting. Can you talk a little bit about—just looking like, obviously, revenue is down in the quarter, but then bookings in consulting are very strong. I guess a follow-up on that is what are you seeing clients kind of commit to in the current environment on the consulting side of things? Like meaning, what's their willingness to commit on these kind of new, more strategic projects in the current environment? I'll leave it there, and then I have a follow-up.

So Lisa, and again, I know all of you think very much about strategy and consulting and then the technology and operations separately. But in fact, as I've said consistently, including pre-COVID, we think about our services together. Let me just give you an example of one of the most severely impacted industries, energy. Last week, I'm with the CEO and the leadership team of one of our major clients, and the meeting goes like this: The first part of the meeting is, thank you, Accenture, for helping us save money in finance and accounting operations because we lowered what they needed to create some help for their cost pressures. The next part of the meeting is all about the IT modernization that we signed during Q3, right, which includes strategy and consulting. It includes our application outsourcing, maintenance, and it includes other technology services, right. That was about—they have to continue to build their digital core; they need it to help with cost, but it's also about moving to the cloud. It's about creating those capabilities. The third part of the meeting was around some pilots that we're trying to shape with them that include strategy and consulting, where the criteria is we need to turn them faster. So there are small pilots all about innovation, right. The criteria we're helping them say is, well, what should we do that will get more return, right, because they've got to balance. We think about this as what are the needs of the client and how do we bring these services to deal with their short-term, their longer-term transformation and also thinking very quickly about how they can innovate to get nearer-term returns. Does that help kind of bring that together in terms of how they're thinking?

Yes. Yes. And then my follow-up, this is a kind of broader industry question. But we're looking at—you know we typically think of Accenture, given your scale, as sort of a bellwether for the industry, and we are looking at kind of historical times in history when we've seen this bifurcation between IT spending and GDP. You're running kind of flattish on revenues, which is very impressive given that GDP is running down mid- to high-single digits. Those times in the history have always been when there's been a really big disruption on the technology side: the Internet, personal computers, whatnot. Do you feel like—and this is again a question because I know you're in client meetings all day every day. Do you feel like the shift to digital happening right now because of the pandemic is kind of similar to those situations and that we're seeing sort of that level of dislocation or change at the enterprise level in terms of their investments in technology?

Yes. And Lisa, that's exactly what's happening. Because remember, before the crisis, there was exponential technology change, right. I mean, just in January, we were talking about the big inflection point. Remember, it was back in 2013 that we first said every business is a digital business. So that was happening pre-COVID. What COVID has done—we thought it would take a decade. It's now shortened to what we think is more like five years. That's why we announced Accenture Cloud First last week because we think this is right now the once in a digital era moment where we are rapidly moving to a complete replatforming of global business. It is hugely significant and that's why having invested since 2014 when we first created digital in these capabilities is what's helping us, as you say, do so well in this incredibly challenging macro environment.

Great. Thank you, Lisa.

We'll go next to the line of Jason Kupferberg of Bank of America.

I just had kind of a two-part question, so maybe I'll ask it upfront. If we look at the growth in 'the New' here in Q4, it was up low single digits, and it was less of a premium in the growth rate there relative to the overall corporate growth than we saw last quarter. I just wanted to get a sense of whether or not that was in line with your expectations. And then, can you just more broadly comment like across consulting and outsourcing, what you're seeing in terms of the pace of converting bookings to revenue? How that's factoring into your thought process, especially for the outlook in the first half of fiscal '21?

Yes. Let me cover the first question. In terms of the growth of 'the New', so it did hold up very well, and it really came in as we had expected, right. Remember, 'the New' now is 70% of our business. When we talked about 'the New' and you remember this well when we put this in, the point of it was really to make sure that we were resilient in the pace of change. If you go through and look back at what we did in 2015, where it was a third of the business, it's now 70% of our business. That really has provided us with a position of strength. When we talked about our new growth model on March 1, we embedded digital everywhere. Overall, we feel good about our positioning in 'the New.' On the second question around how are things bleeding into revenue, this has a 2% headwind from reimbursable revenues. That also has a 3% impact in consulting. That is unique and unusual to the situation. The dynamics that we saw, we talked in Q3, about the higher—more impacted industries being where we said, 20% feeling a little more pressure on growth. That's going to play out pretty similar in Q4, and we see that playing out in the beginning part of H1 this year. We will build back our business in Q1 to Q2 based on our guided range that we provided. Just to be clear, the guided range for Q1 of negative 3% to 0% implies stability in the growth that we saw in Q4, stability at the bottom end, and improvement at anywhere else in the range.

We'll go next to the line of Bryan Keane of Deutsche Bank.

I had kind of a similar question, and so let me ask it a different way. The dichotomy between strong bookings, up 9% in Q4, but revenue is dropping down 1% in constant currency; that gap is the biggest, I recall, in the company's history. Because bookings are so strong, but it doesn't quite translate to revenue. Other factors I'm thinking about are potentially pricing and if there were any cancellations. Maybe there's a high amount of renewals in there. Just thinking about the quarter itself—the dichotomy—maybe you can comment on that.

Yes. Let me just take your question, Bryan, and I want to talk about connecting the point of bookings and the top line revenue growth. I talked a little bit about the duration when I was speaking with Jason on his question. Let me round it out by looking at how we see all of these bookings connecting to revenue growth. I did touch on what happened in Q3 and how we improved from those lows in Q4. I want to look at the second half because it's going to get to your question on bookings. We do see different growth dynamics in the second half of fiscal '21, and we expect to reconnect with higher growth. When we say higher growth, at the bottom end of our range, that's high single digits; at the top end, it's low double digits. There are four main drivers that we see for connecting with this higher-level growth in the back half. First, we expect some improvement in the macroeconomic environment, which doesn't mean we assume another macroeconomic shock. The second thing we see, and this gets to your question, we will see more of the benefit from the significant transformation deals that we sold over the last few quarters in the back half of the year. The third point is, at the same time, that's when we expect strategy and consulting to reconnect with growth. Finally, we will benefit from an easier comparison in the back half of the year. We're going to anniversary the headwind from reimbursable revenue. That has affected 2% in the first half of the year. We have structured ourselves to manage our business without a significant increase in travel.

Our next question will come from the line of Ashwin Shirvaikar of Citi.

So good results. Good results and comments, pretty directionally consistent with what we essentially said. Thank you for the clarification regarding the trajectory. I just want to put maybe a couple of finer points on it, if you don't mind. You're essentially saying, on one of those elements, the step-up in demand for 'the New,' you're already seeing in terms of conversations, bookings, pipeline building, all of that. The meat of it can potentially kick in when budgets are nailed down by your clients next calendar year because it just takes time for large enterprises to move from a plan to do something over 5, 7 years to do it over 3 to 5 years, right? And the clarification on that is consultants traveling on projects with clients, you do not expect that to come back. Is that more of a fiscal '21 thing? Or is that just like the new reality?

Yes. So let me take just the last question and a point on the first question and then hand it over to Julie. So about, how we see demand in terms of our pipeline and bookings in FY '21, we have a strong pipeline coming into the year, even after doing the $14 billion of bookings in Q4. Just as we look at how that's going to play out over the year, we do see Q1 being a little lighter and building throughout the year; that’s our typical pattern. And on the last point, I just want to be clear on the assumption I'm making on revenue in the back half of the year. We've been talking about this headwind from travel, so I wanted to be really clear about the assumption that I'm making in revenue: we are not assuming an uplift in the back half of the year.

Yes, which means, of course, H1, we've still got the headwinds in terms of the comparison. It’s like the sunsets. But we're not saying, hey, we're just going to get on. We're going to get an uplift. It could be an upside, right, but just on the demand side, you do have it right, Ashwin, in that there are certain things we're doing immediately, while we have these bigger conversations that we're doing. That's how you saw 17 clients last quarter. We're continuing to shape a lot of these bigger things. If you take supply chain, for example, with one client, they needed immediate forecasting help because it's a pharma client that had to get PPE. We worked quickly with SAP to put an integrated business planning, help with forecasting, and decrease critical shortages, while we're talking about a broader transformation of the supply chain. Same thing for a leading health and personal care company; they needed a transportation management system, which we partnered with Blue Yonder to put in to immediately address the issues about getting goods to different places. But we're talking about shaping an entire transformation of the supply chain to build in the resilience and get the data and the analytics right. That's happening in cloud as well; it’s why we're doing Accenture Cloud First. We're doing immediate things, but we're shaping these bigger transformations while working with public hyperscalers on the hybrid cloud, working with hyperscalers as well as HPE, VMware, and Cisco, who are incredibly important partners as we shape this.

Got it. And then the second question on cash flow. It's solid in the quarter, continues to be—projections look pretty good for next year. I know cash flow has always been a strong point for Accenture, but these levels of cash conversion are still quite impressive. I had to ask, has something changed? Or is it perhaps related to single factors like lower variable comp? Is it sustainable at this level?

Yes. Thanks for the question on free cash flow. You're right, I mean we had record free cash flow of $7.6 billion in the year, which surpassed even our expectations. Why is that? Really, it's due to just stellar billing and collections this year. We have industry-leading Days Sales Outstanding (DSO), right. You know us well. We were usually around 40 days. We closed at 35 days, which we haven't seen those levels since fiscal 2015. We did all that during a liquidity crisis, during a pandemic, so I think that's very impressive. It just goes to the rigor and discipline that our team has and how we run the business. That was a 1.5 free cash flow to net income ratio. As you know, we guide free cash flow. You know how strong we perform. The bottom end of our range usually declines, and what you see this year is that we have all of our ranges decline over what we did last year. I just want to give you some context. When we look back at our industry-leading DSO, we've added at least five days to get back into 40 days of DSO; the way free cash flow works is it's that change of five days, and that's almost $1 billion, it's like $800 million-plus of a change in free cash flow, just getting ourselves back to that level.

We'll go next to the line of James Faucette of Morgan Stanley.

Just two quick questions from me. First, we've talked a lot about the engagement with customers and what they're looking for from Accenture. But I'm wondering if you can provide any color as to what we're seeing in terms of decision cycles and times around those. If those are seeing any improvement, etc.? And my second question is related to inorganic contribution. I think you mentioned that you're expecting some level of inorganic contribution is built into your guidance. Can you just clarify what that looks like? And I guess more importantly, as we think about all the change and the type of work you're doing for your clients, should we expect that level of inorganic contribution to persist into the future beyond fiscal year '21?

Thanks for the question. For next year, we do have 2% inorganic revenue contribution factored into our guidance with up to $1.7 billion of spend. I won't guide into future years in terms of what we're going to do, but obviously, the D&A is a key part of our capital allocation. We have no planned changes to our capital allocation approach. I'm going to hand it over to Julie to talk about any other color.

On the decision-making, what's happening is what you'd expect to happen. Everyone had to make fast decisions on how to navigate the crisis. So there are some things that are happening at lightning speed, right. When you must figure out your supply chain or get up on Teams quickly, you do that. We've seen some acceleration in the transformation deals, right, because they need to move faster. In other places, clients where we had three things teed up, they said, let's do this one, and then let's wait and see on these others. So I would just say it's very contextual right now, and it varies by industry. We're also going into budgets for the end of the—due in the fall season. That will be, and that will see how that plays out as well.

Okay. Operator, we have time for one more question, and then Julie will wrap up the call.

And that will come from the line of Bryan Bergin of Cowen.

I just got one here for you. So on margin, how should we be thinking about your comfort level in your typical margin expansion range? Can you also comment on how work-from-home implications may play into that?

One of our key financial imperatives is to expand and give modest margin expansion while investing at scale in our business and in our people. And we did this, you saw, Bryan, even in fiscal year '20 with lower revenue growth ranges. We feel comfortable that we can continue to create the flexibility and investment to do our investments in talent, to do the investments in the business. Julie talked about how excited we are in Cloud First. Our focus is the normal rigor and discipline needed to create that margin capacity to invest back while keeping within our 10 to 30 basis points of expansion.

On remote work from home, right, that's—we're going to be working differently, but it's going to be constantly evolving. For example, we've got about 1,400 clients worldwide, where our people are back at the clients. We're encouraging our people to come into the offices concerning collaboration. We're back to approving travel. Now it's massively restricted because you're not going to go to a place where you're quarantined. We have some people who have childcare issues and health issues, and that's the reality. We're going to continue to navigate that. We were already so remote that we're good at navigating that. But that's all about the new reality.

Okay. And KC, you said 2% inorganic for fiscal '21. Was that 1% or 2% in fiscal '20 as well?

Yes. It was 2% in fiscal '20.

Great. So we're excited to turn the page and deliver for our clients, people, shareholders, ecosystem partners, and communities in FY '21. We call this shared success, and it is a mindset we strive to live every day. Thank you to our people and leaders for how you come together to deliver on these commitments and shared success, and a special thank you to our shareholders for your continued trust and support. Be well, everyone, and thank you for joining.

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