Ladies and gentlemen, thank you for standing by. Welcome to Accenture's Third Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Managing Director, Head of Investor Relations, Katie O'Conor. Please go ahead.

Thank you, operator, and thanks everyone for joining us today on our third-quarter fiscal 2024 earnings announcement. As the operator just mentioned, I'm Katie O'Conor, Managing Director, Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chair and Chief Executive Officer, and KC McClure, our Chief Financial Officer. We hope you've had an opportunity to review the news release we 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 balance sheet, along with some key operational metrics for the third quarter. Julie will then provide a brief update on our market positioning before KC provides our business outlook for the fourth quarter and full fiscal year 2024. 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 are subject to known and unknown risks and uncertainties, including but not limited to, those factors set forth in today's news release and as 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, Katie, and everyone joining. And thank you to our 750,000 people around the world who work every day to deliver 360-degree value for all our stakeholders. Before we get into the quarter, I want to thank KC, who's been an excellent partner for these last five years, and our three other extraordinary leaders who are stepping down in the next two quarters, Jean-Marc, Ellyn, and Paul. Each have given over 36 years of service and demonstrated strong stewardship in developing outstanding successors, including Angie, who you all know from her former role as Head of Investor Relations, who will succeed KC on December 1. As always, we are executing a smooth leadership transition to the next generation with our strong bench of great leaders. Now, on to the quarter. I am pleased this quarter to bring to life yet again the resilience and agility of our business, as our actions to remain laser-focused on our clients' needs and quickly adapt to market conditions can be seen in our results, which are building a foundation for stronger growth as we go into Q4 and next fiscal year. As you know, this fiscal year, our client spending developed differently than we expected at the beginning of the fiscal year. And these conditions continue, with clients prioritizing large-scale transformations, which convert to revenue more slowly, while limiting discretionary spending, particularly in smaller projects, with delays in decision-making and a slower pace of spending as well. In response, we have moved quickly to adjust by leveraging our unique strengths, our end-to-end services, including deep industry and functional expertise that enable these large-scale transformations, or what we call reinventions. We're also leveraging our deep technology expertise and ecosystem partnerships and our learning machine and culture that gives us the agility to shift to new areas of demand, including, for example, GenAI while continuing to invest at scale for future growth. Here is how these strengths and our strategy are demonstrating results three quarters into the fiscal year. With our clients prioritizing large-scale transformations, we have accelerated our strategy to be the reinvention partner of our clients. Our success is reflected in our bookings of $21.1 billion, including another 23 clients with quarterly bookings greater than $100 million, bringing the total of such clients with these bookings to 92 year-to-date, seven more than last year at this time. This focus on being the reinvention partner is an important part of our strategy to return to stronger growth. As we enter next year, as this work ramps, the revenue from these large-scale bookings is expected to continue to layer in throughout the year, and we are also well-positioned to capture increases in discretionary spend when it comes back because of the strategic positioning these deals bring at our clients. We also have leaned into the new area of growth, GenAI, which is comprised of smaller projects as our clients primarily are in experimentation mode, and this quarter we hit two important milestones. With over $900 million in new GenAI bookings this quarter, we now have $2 billion in GenAI sales year-to-date, and we have also achieved $500 million in revenue year-to-date. This compares to approximately $300 million in sales and roughly $100 million in revenue from GenAI in FY 2023. Leading in GenAI positions us to help our clients take the actions needed to reinvent and to benefit from GenAI, which frequently means large-scale transformations. We are also taking an early lead with an eye toward long-term leadership in this critical technology, which is still in the early stages of maturity and adoption, despite its rapid evolution. We have built our expertise in making strategic acquisitions over the last decade, leveraging a strong balance sheet, and we have used this expertise to expand into new growth areas, scale in hot areas and geographies, and continue to build strength in our industry and functional consulting. We deployed $2.3 billion of capital across our geographic markets in Q3 across 12 acquisitions, bringing the total number of acquisitions to 35 with invested capital of $5.2 billion year-to-date as compared to $2.5 billion for the entire FY 2023. As a learning organization and talent creator, we continue to invest in our people with approximately 13 million training hours this quarter. This averages 19 hours per person, representing an increase predominantly due to GenAI as we continue to prepare our workforce for the infusion of GenAI across our business in the coming years. We also continue to steadily increase our data and AI workforce, reaching approximately 55,000 skilled data and AI practitioners against our goal of doubling our data and AI workforce from 40,000 to 80,000 by the end of FY 2026. We continue to take market share on a rolling four-quarter basis against our basket of our closest global publicly traded competitors, which is how we calculate market share, with revenues of $16.5 billion for the quarter, up 1.4% in local currency and slightly above the midpoint of our FX adjusted range. We expanded adjusted operating margin by 10 basis points and delivered free cash flow of $3 billion. I want to congratulate our 97,000 people we have promoted around the world through June 1, including 702 to Managing Director and 64 to Senior Managing Director, reflecting our commitment to providing vibrant career paths. We are recognized as a Top 10 Place to Work in 10 countries, representing more than 70% of our people, number two in Argentina, Brazil, and the Philippines, number four in Singapore, number five in Costa Rica, Finland, and Indonesia, number seven in the US, and number 10 in Chile on the Great Place to Work list of Best Workplaces and number two on Business Today's Best Companies to Work For in India. And in recognition of our strong brand, we are proud to earn the number 20 position on Kantar BrandZ's prestigious Top 100 Most Valuable Global Brands list, our highest rank to date, with an 11% increase in brand value to $81.9 billion. Our scale across strategy, consulting, technology, and operations, and our breadth and depth across industries and functions make us uniquely capable of helping our clients reinvent using technology, data, AI, and new ways of working. Before turning to KC, I want to give a little more color on our acquisitions this quarter, which yet again demonstrate the strategic importance of both our ability to invest and our expertise in identifying, attracting, and integrating great companies joining Accenture. Let's start with new areas of growth. We completed our acquisition of Udacity to scale our technology learning and training services and to help our clients reskill and upskill their people. Udacity is a critical part of our LearnVantage digital learning platform, which we announced last quarter as a new area of growth for the future. Building on our expertise in customer-focused consulting, we invested to help drive our clients' growth agendas. We acquired Unlimited, an award-winning customer engagement agency with a deep understanding of human behavior as evidenced by its proprietary human understanding lab and AI-powered data insights platform. We acquired The Lumery in Australia, a marketing technology consultancy that helps leading organizations deliver seamless customer experiences and transform their marketing services. It provides industry and platform consulting services, including marketing, advisory, and planning, implementation across entire technology stacks, operational excellence, and simplification. We closed our acquisition of GemSeek in Bulgaria, a leading customer experience analytics provider helping global businesses understand customers through insights, analytics, and AI-powered predictive models. And we closed MindCurv, a global digital cloud-native digital experience and data analytics company specializing in composable software, digital engineering, and commerce services. Now, let's turn to scaling and hot industries. We acquired Cognosante, a provider of innovative technology solutions for US federal health, defense, intelligence, and civilian agencies. With this acquisition, federal services is creating a new federal health portfolio for its business. We invested in Customer Management IT and SirfinPA, which will provide the public sector with technology, support, and justice and public safety in Italy. We see public service and, in particular, health, intelligence, and defense as highly strategic industry focus areas globally for the next several years. And we invested in Teamexpat, focusing on testing integration for lithography systems in the semiconductor industry, another attractive industry segment. Our investment in Flo Group, a leading European consultancy and Oracle business partner, who specializes in global supply chain logistics is helping us scale in supply chain, also a major growth area. Finally, we're scaling in attractive geographic markets. We acquired CLIMB, a technology-based consultancy based in Japan, where we continue to experience very strong revenue growth.

Thank you, Julie. And thanks to all of you for taking the time to join us on today's call. We are pleased with our Q3 results, which were in line with our expectations and reflect continued investment at scale. We continue to serve as a trusted partner for our clients while running our business with rigor and discipline. Now, let me summarize a few of the highlights for the quarter. Revenues grew 1.4% local currency with mid-single-digit growth or higher in seven of our 13 industries, including public service, industrial, high-tech, life sciences, energy, utilities, and health. We also continue to see improvement in our CMT industry group. And we continue to take smart share. As a reminder, we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of significant acquisitions to the date of their last publicly available results on a rolling four-quarter basis. Adjusted operating margin was 16.4%, an increase of 10 basis points over Q3 last year, and includes continued significant investments in our people and our business. Finally, we delivered free cash flow of $3 billion and returned $2.2 billion to shareholders through repurchases and dividends. Year-to-date, we've invested $5.2 billion across 35 acquisitions. With those high-level comments, let me turn to some of the details, starting with new bookings. New bookings were $21.1 billion for the quarter, representing 22% growth in US dollars and 26% growth in local currency, with an overall book-to-bill of 1.3. Consulting bookings were $9.3 billion with a book-to-bill of 1.1. Managed services bookings were $11.8 billion with a book-to-bill of 1.5. Turning now to revenues. Revenues for the quarter were $16.5 billion, a 1% decline in US dollars and a 1.4% increase in local currency, and slightly above the midpoint of our FX adjusted guidance range, as the FX headwind was approximately 2% compared to the 1% headwind estimated at the beginning of the quarter. Consulting revenues for the quarter were $8.5 billion, a decline of 3% in US dollars and a decline of 1% in local currency. Managed services revenues were $8 billion, up 2% US dollars and up 4% local currency. Taking a closer look at our service dimensions, technology services and strategy and consulting grew low single digits and operations was flat. Turning to our geographic markets, in North America, revenue grew 1% local currency, led by growth in public service, partially offset by decline in banking and capital markets. In EMEA, revenues declined 2% local currency with growth in public service, offset by declines in banking and capital markets and communications and media. Revenue growth in Italy was offset by a decline in France. In growth markets, revenue grew 8% local currency, led by growth in banking and capital markets and industrial. Revenue growth was driven by Argentina and Japan, partially offset by a decline in Australia. Moving down the income statement, gross margin for the quarter was 33.4%, consistent with the same period last year. Sales and marketing expense for the quarter was 10.6%, compared to 10.5% for the third quarter last year. General and administrative expense was 6.3%, compared to 6.5% for the same quarter last year. Before I continue, I want you to note that in Q3 of FY 2024 and FY 2023, we recorded $77 million and $347 million in costs associated with our business optimization actions, respectively. These costs decreased operating margin by 40 basis points and EPS by $0.08 this quarter and operating margin by 210 basis points and EPS by $0.42 in Q3 of last year. In Q3 of last year, we also recognized a gain on our investment in Duck Creek Technologies, which impacted our tax rate and increased EPS by $0.38. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating income was $2.7 billion in the third quarter, reflecting an adjusted operating margin of 16.4%, an increase of 10 basis points from adjusted operating margin in the third quarter of last year. Our adjusted effective tax rate for the quarter was 25.5%, compared with an adjusted effective tax rate of 24% for the third quarter last year. Adjusted diluted earnings per share were $3.13, compared with adjusted diluted EPS of $3.19 in the third quarter last year. Days sales outstanding were 43 days, compared to 43 days last quarter and 42 days in the third quarter of last year. Free cash flow for the quarter was $3 billion, resulting from cash generated by operating activities of $3.1 billion, net of property and equipment additions of $124 million. Our cash balance at May 31 was $5.5 billion, compared with $9 billion at August 31. With regard to our ongoing objective to return cash to shareholders. In the third quarter we repurchased or redeemed 4.3 million shares for $1.4 billion, an average price of $320.41 per share. As of May 31, we had approximately $3.3 billion of share repurchase authority remaining. Also in May, we paid a quarterly cash dividend of $1.29 per share for a total of $811 million. This represents a 15% increase over last year. And our board of directors declared a quarterly cash dividend of $1.29 per share to be paid on August 15, a 15% increase over last year. In closing, we feel good about our results in Q3 and are now working hard to deliver Q4. We remain focused on capturing growth opportunities while continuing to invest in our business for long-term market leadership. Now let me turn it back to Julie.

Thank you, KC. As I mentioned earlier, we're seeing more of the same in terms of the demand environment. Now let me give a little context on how we're executing our strategy to be the reinvention partner of choice and why we're uniquely positioned to be helping our clients on AI. It is important to remember that while there is a near universal recognition now of the importance of AI, which is at the heart of reinvention, the ability to use GenAI at scale varies widely with clients on a continuum. With those which have strong digital cores genuinely seeking to move more quickly, while most clients are coming to the realization of the investments needed to truly implement AI across the enterprise, starting with a strong digital core from migrating applications and data to the cloud, building a new cognitive layer, implementing modern ERP and applications across the enterprise to a strong security layer. And nearly all clients are finding it difficult to scale GenAI projects because the AI technology is a small part of what is needed. To reinvent using technology, data, and AI, you must also change your processes and ways of working, rescale and upscale your people, and build new capabilities around responsible AI, all with a deep understanding of industry, function, and technology to unlock the value. And many clients need to first find more efficiencies to enable scaled investment in their digital cores and all these capabilities, particularly in data foundations. In short, GenAI is acting as a catalyst for companies to more aggressively go after cost, build the digital core, and truly change the ways they work, which creates significant opportunity for us. And this is why clients are coming to us. We are able to help our clients with this AI rotation because of our broad services across strategy and consulting technology and operations, as well as everything customer through Song and digital manufacturing and engineering through Industry X and our relevance across the functions of the enterprises and 13 industries. Our privileged position in the technology ecosystem has never been more important. We are working closely with our ecosystem partners to help our clients understand the right data and AI backbone that is needed and how to achieve tangible business value. Now let me give you a few examples of the complex work of reinvention and building a digital core. We are partnering with Currys, a leading European technology retailer to unlock new growth and cost savings by accelerating its adoption of new technologies. First, we will move their operations from a legacy data center to a new cloud platform using pre-built and customized solutions to create a powerful digital core. This unified data foundation allows us to deploy automation and generative AI in key growth areas, such as repair centers, customer service, e-commerce, procurement, and in-store experiences, delivering faster, more efficient services to their customers. The move to a new platform supports the company's sustainability goals, reducing energy consumption by transitioning to a more efficient cloud infrastructure. Now, Currys' employees will be empowered to serve their customers better by offering high-touch experiences, both online and in-stores. We're working with Independence Health Group, IHG, a leading health organization headquartered in Southeastern Pennsylvania on a transformation journey to modernize end-to-end operations, improving the way they serve current and future generations of customers. We will help migrate nearly 2 million members to a new digital-first platform, expected to drive immediate improvements in existing business processes. This will lay the foundation to leverage advanced technology and generative AI to proactively manage members' health. We are also helping reskill and retrain their operations staff, creating opportunities for employee development. With this reinvention, Independence continues its ongoing efforts to increase service quality, improve experiences, and enable better health outcomes, positioning them for new areas of growth in the rapidly changing healthcare landscape. Digital core work also requires deep industry expertise as we work with our clients to design the right tech, data, and AI to reinvent their enterprise and their industry. We are helping Macy's, an iconic American retailer with a technology modernization effort. As a strategic technology execution partner, we will migrate their mainframe systems to a cloud platform, a move that will enhance their operational efficiency and scalability. This will allow Macy's to be more agile and enable growth. We are helping the Central Bank of the United Arab Emirates, the regulatory body responsible for the country's banking and insurance sector with a digital transformation to strengthen the financial system's stability and contribute to growth, innovation, and diversification in the sector, in line with the UAE's national vision. Our program will deliver advanced analytics along with AI-driven automation to improve supervisory capabilities and streamline activities for licensed financial institutions by creating best-in-class processes to support regulatory compliance. We will also modernize the bank's enterprise data management by implementing a single unified portal to provide a holistic view of the financial services ecosystem, all of which will enhance the UAE's position as a global financial center. We are partnering with Virgin Media O2, a leading carrier services provider in the UK to support regional businesses to realize the promise of 5G, opening new revenue streams and stimulating growth in the telco market. We will bring to market solutions built on our edge orchestration platform, which combines edge computing, data AI, GenAI, and embedded security. This will enable use cases such as quality inspections, safe workplace management, and behavior monitoring to improve operations and customer experience. Whether it's enabling safe communication on building sites, creating a fan experience while handling crowds and busy venues, or supporting vital devices and clinician workflow in healthcare, Virgin Media O2 can now offer businesses a range of flexible, secure, and affordable solutions that boost efficiency, growth, and performance. And with our managed services and customer operations, we can work together with Virgin Media O2 to scale this growth. Security is a critical part of reinvention in the digital core. We saw continued very strong double-digit growth in our security business this quarter. We are partnering with the US Navy to enhance its cybersecurity operations with cutting-edge capabilities that will strengthen its data security posture and support mission readiness. More than ever, data and information are critically important to national security. Our solution sets are configured to provide defensive cyber operations across Navy networks to help safeguard digital assets and mission operations. Together, we will help ensure the US Navy can combat evolving cyber threats, protect our sailors at sea, and defend American interests around the world. Once clients have a strong foundation, they can explore new opportunities to drive growth and efficiencies with GenAI. We are helping a leading global food and beverage company who already built a strong digital core as part of its reinvention journey to now leverage the power of generative AI to create new value. Together, we developed a digital shelf console pilot, a GenAI engine that accelerates content creation for e-commerce and optimizes it to drive sales. The engine empowers marketers to audit and customize content at scale, expected to reduce time to deliver one year's worth of content to just eight working days and save costs of up to 80% quickly and effectively. Once they scale, this enables the company to produce more targeted content with significant time and cost efficiency, increase sales, and transform customer experiences. We have partnered with National Australia Bank, one of the country's largest financial institutions to strategically implement and scale generative AI to create material value at speed, enhance relationship-driven customer service, and drive operational efficiencies. We worked on a methodical build of a secure and robust GenAI platform built within the bank's existing strategic data platform with the creation of 200 generative AI use cases in backlog. To date, over 20 use cases have been tested across the bank with eight of these enterprise-grade pilots underway and a number of those scaling and already delivering value. We also co-created a methodology for delivering GenAI projects from experiments to scalable deployment, ensuring each stage delivers tangible business benefits. While doing so, National Australia Bank and Accenture are putting safety at the core of the approach through responsible AI and risk policies alongside developing in-house AI expertise and literacy. One of the areas of richest opportunities for our clients is customer experience transformation, which uses the unique capabilities of Song across creative customer insights and deep technology expertise. Song grew mid-single digits this quarter. We are helping Saudia Airlines, the national flag carrier of Saudi Arabia, to launch an innovative digital platform to transform the travelers experience. Powered by GenAI, the platform will provide a one-stop solution enabling customers to seamlessly plan their journeys, book flights, and modify their trips in just a few words, all while providing a personalized and conversational experience. The platform is continuously evolving and will integrate more services over time. This modernization will support Saudia Airlines' vision of redefining the standards of travel in a digital world. We continue to see strong demand for digital manufacturing and engineering services. Industry X grew high single digits in Q3. We are supporting a large Asia-Pacific automobile manufacturer on their reinvention towards software-defined vehicles. We will help accelerate software development and create a software center of excellence to optimize quality, cost pressures, and delivery times. This center of excellence will manage four key workstreams, advanced driver assistance systems, in-vehicle infotainment, electrical and electronics, and powertrain. By leveraging our expertise and strategic partnerships, we are empowering them to strengthen and evolve its in-vehicle software, providing advanced functions and services throughout the vehicle's lifecycle. This enables the company to drive innovation, enhance driver and passenger experiences, and realize the full potential of software-defined vehicles. And we will continue to leverage all of our strengths to manage the current macro conditions and constrained spending while investing in leadership for the future. Back to you, KC.

Thanks, Julie. Now turning to our business outlook. For the fourth quarter of fiscal 2024, we expect revenues to be in the range of $16.05 billion to $16.65 billion. This assumes the impact of FX will be about negative 2% compared to the fourth quarter of fiscal 2023 and reflects an estimated 2% to 6% growth in local currency. For the full fiscal year 2024, based upon how the rates have been trending over the last few weeks, we now expect the impact of FX on our results in US dollars will be negative 0.7 compared to fiscal 2023. For the full fiscal 2024, we now expect our revenues to be in the range of 1.5% to 2.5% of growth in local currency over fiscal 2023, which assumes an inorganic contribution approaching 3%. We continue to expect business optimization actions to impact fiscal 2024 GAAP operating margin by 70 basis points and EPS by $0.56. For adjusted operating margin, we continue to expect fiscal 2024 to be 15.5%, a 10 basis point expansion of fiscal 2023 results. We now expect our adjusted annual effective tax rate to be in the range of 23.5% to 24.5%. This compares to an adjusted effective tax rate of 23.9% in fiscal 2023. We now expect our full year adjusted earnings per share for fiscal 2024 to be in the range of $11.85 to $12, or 2% to 3% growth over fiscal 2023 results. For the full fiscal 2024, we continue to expect operating cash flow to be in the range of $9.3 billion to $9.9 billion, property and equipment additions to be approximately $600 million, and free cash flow to be in the range of $8.7 billion to $9.3 billion. Our free cash flow guidance continues to reflect a very strong free cash flow to net income ratio of 1.2. Finally, we continue to expect to return at least $7.7 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 we can take your questions. Katie?

Thanks, KC. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you provide instructions for those on the call?

Thank you. Your first question comes from the line of Tien-tsin Huang from JPMorgan. Please go ahead.

Thank you, and congratulations to KC and Angie. I'm excited for both of you. I wanted to ask Julie about the possibility of stronger growth next year. Could you elaborate on that at a high level? I understand there are many factors at play. On one hand, there's a significant backlog and many large deals, along with strong inorganic growth. However, the sector is facing challenges due to weak discretionary spending and uncertainty from upcoming global elections in the second half of the year. While I know you can't provide formal guidance until next year and consensus is around 6%, could you share some high-level considerations to keep in mind as we adjust our outlook for next year? Thank you.

Thank you for the question, Tien-tsin. Let's focus on our growth strategy and the insights we've gained three quarters into the year, especially since expectations at the start of this year were different regarding spending developments. So, what have we done? We've responded to client needs, which include major transformations. Consequently, we've accelerated our focus on these large transformation deals, resulting in seven more clients this year who have booked over $100 million compared to this time last year. While these may convert to revenue gradually, we are on an upward trend, and they will eventually contribute significantly. Our distinct position in the market allows us to handle these large-scale transformations since they require a mix of services, including our managed services and industry expertise. Clients are particularly interested in these transformations with a focus on GenAI. They want to partner with someone who understands GenAI to help them move forward quickly. Our reinvention strategy has been in place for a couple of years, and you can see its impact this quarter with an increase in clients with significant bookings compared to last year. Additionally, we are also focusing on growth in smaller deals, as discretionary spending remains tight, especially for smaller projects. We've identified GenAI as a new growth area and have successfully pivoted our workforce. Our specialists in data and AI have grown from 40,000 to 55,000, with a target of 80,000 by the end of 2026. We are also investing in training our staff to understand GenAI, which is crucial even in transformations that may not directly involve it. This effort is reflected in our bookings this quarter, reaching $2 billion, compared to $300 million last year and $500 million in revenue previously, making it meaningful progress. Last year, we only generated $100 million in this space, and we intend to keep capitalizing on GenAI's potential. It's serving as a catalyst that helps us identify necessary actions for the business. To conclude, while we are still prioritizing investments, our focus on GenAI is leading to new data initiatives as businesses realize the potential of this technology. We feel optimistic about our readiness as spending picks up in the future. Lastly, we are also committed to making acquisitions that will spur organic growth, emphasizing that we are strategically investing for future growth. We will be transparent about our outlook for FY 2025, and we want to affirm that our strategy is effective, and these deals will scale up.

Yes, maybe I'll just add, Tien-tsin, just how we feel just within this fiscal year. So, we're very pleased with where we landed in Q3. When you look to Q4, we do have, and you see that in our growth rate, a clear uptick in our growth rate for the fourth quarter. And I think importantly included in that is the expectation that our consulting type of work in Q4, Tien-tsin, will return to growth and that we haven't had growth in consulting type of work since Q2 of last year.

Good. No, thank you both for that. I'll be less wordy with my follow-up. Just on the inorganic piece, can this pace continue?

I’ll let Julie discuss the addition here. But regarding our capital allocation, we have consistently emphasized our ability to invest and seize market opportunities whenever they arise, and that remains unchanged. We have demonstrated this across various business cycles. Notably, this approach allows us to maintain all aspects of our capital allocation, including share buybacks and dividends. From a financial perspective, we have a solid balance sheet and can adjust our capital allocation as needed.

Yes, Tien-tsin, and I think we'll make the decision as we go into next year as to what level we want to drive for next year. So, I think we'll comment next quarter.

That's perfect. I know you've been able to amplify the growth of what you bought. So, that's why I asked. Thank you.

Thank you.

Your next question comes from the line of Dave Koning from Baird. Please go ahead.

Yes. Hey, guys. Thanks so much. One thing I noticed, debt was up to $1.6 billion or so. Sequentially, it was the highest. Really, in 20 years, you've almost had no debt, and you have a lot of cash. So, I guess, what's the strategy around borrowing money now? And maybe it's just geographic cash positions, too.

Yes, that's a great question. At the beginning of the year, we had $9 billion in cash, and now we're at about $5.5 billion. We do have some debt, but it's relatively small for a company of our size. We established a credit facility during the pandemic, which we still have in place. This facility also amounts to about $5.5 billion and spans five years. What you're seeing, Dave, is that we are simply utilizing some of that credit facility as part of our normal treasury operations.

Okay. And maybe just as a follow-up, margins this year up at the lower end of kind of normal and certainly scale, just the growth this year being a little slower, maybe the acquisitions. And just as we kind of look forward, the margin puts and takes, how should we think that with acquisition spending maybe a little higher, does the next few quarters remain kind of putting a little pressure on margins or how should we think of just the moving parts of margins going forward?

Sure. I'll focus my comments on this year, 2024, and highlight our current position and ongoing assumptions. We mentioned last quarter that we anticipate a 10 basis points increase in operating margin, and I can confirm that we maintain this outlook for the full year. We are confident in this goal. Our business is managed with a focus on operating margin, and regarding gross margin and pricing, we emphasize the margins on the services we provide. It's crucial to recognize that we have been diligent in our operations at Accenture, effectively managing higher selling costs as expected. We are proud of our record $60 billion in bookings and acknowledge the pricing pressures we are facing across the business. Overall, we feel positive about our performance. For instance, in the first quarter, we achieved 1% growth along with 20 basis points of margin expansion. This quarter, we again grew by 1% and achieved 10 basis points of margin expansion. We are pleased with how we operate our business with diligence and discipline.

Great. Thanks and nice bookings.

Thank you.

Thank you.

Your next question comes from the line of Bryan Keane from Deutsche Bank. Please go ahead.

Hi, guys. Good morning and congrats, KC. A great run at Accenture. You were awesome. So, I want to ask on managed services on the bookings, the $11.8 billion, that was an outsized number. How much of that is new bookings versus renewals? And maybe give us some flavor on what caused that spike in growth.

Certainly. I can provide some details about our numbers. We achieved record bookings for managed services, which, as we've discussed, are primarily driven by larger transformational deals. To clarify, these significant deals include both consulting and managed services work, with a larger emphasis on managed services as expected. This year, we reached 92 bookings, which is seven more than last year, and we also saw robust managed services bookings in Q3. While we don't provide a detailed breakdown of new vs. extended bookings, we generally maintain a healthy mix of both throughout the year in our business.

Yes. To add a bit of context, Bryan, Virgin Media O2 is a strong example of our reinvention efforts. We're utilizing our Edge platform to assist O2 in delivering new services, while also enhancing their customer operations to support their growth and scalability. Currently, clients are seeking both growth and transformation, as well as efficiency. Additionally, this illustrates our commitment to integrating GenAI. We've previously discussed our myWizard platform for managed services, which has now evolved into Gen Wizard. We're witnessing that our proactive use of GenAI where applicable is truly distinguishing our technology managed services. Our primary goal is to enable our clients to accelerate their progress by leveraging our expertise and digital investments, facilitating their transformation and reinvention at a quicker pace, and this focus is evident.

Got it. And just a follow-up, just looking at some of the dimensions breakout, when I look at operations being flat, just any call-outs for that. I know it was negative last quarter, so it's turned a little bit here, but just trying to understand the growth there and the prospects. Thanks.

We are very pleased that there was an improvement this quarter, as this is a strategic aspect of our business. It's really a two-way street. We remain the leader in finance and accounting, and we are once again embracing GenAI to help set our platform apart. Our clients are expressing a clear need to further digitize their operations, particularly within the enterprise, and they are enthusiastic about our capacity to support them over time. Although we are still in the early stages of implementing GenAI, it will assist in the development of our SynOps platform, reducing the need for them to build independently by collaborating with us. We see this as a significant competitive advantage. Additionally, we continue to expand into areas that are central to our clients’ industries, such as claims and underwriting in insurance, supply chain for consumer goods and industrial sectors, and core banking in financial services. Overall, we are optimistic about our business and its future prospects.

Thank you.

Thank you.

Your next question comes from the line of Rod Bourgeois from DeepDive Equity Research. Please go ahead.

Hey guys, and very best wishes to KC as well. Julie, you mentioned that the demand environment is sort of more of the same. At the same time, it appears you've seen some growth mending in certain key areas. I'm particularly interested in the growth improvement in the CMT vertical and in strategy and consulting. Can you talk about what's enabling those growth improvements and a sense of the outlooks for CMT and S&C? Thanks.

I want to commend our entire team for their efforts with our clients in CMT. As we've discussed recently, we are beginning to see outcomes like the Virgin Media O2 deal. Our teams are collaborating closely with clients to understand their needs and are concentrating on eliminating technology debt, which is essential for leveraging new technologies. They are also dedicated to implementing these new technologies. While still on a smaller scale, we have several clients actively exploring GenAI and are emphasizing efficiency. Across the board, the industry faced challenges, but we have been focused on where our clients need assistance, which is reflected in our results. In strategy and consulting, our emphasis remains on understanding our clients' needs. We have redirected more resources toward cost management and strategy, with cost reduction being a significant theme. We continue to see growth in implementing modern ERP platforms with a focus on the digital core. At Accenture, we are not just about technology; we are the leading player among technology ecosystem partners, but our clients want quicker implementations and require industry expertise. The script included numerous examples of how we are deploying these platforms within an industry context. Cost reduction combined with cloud data platforms and industry and functional expertise is where we are seeing growth, and we are committed to increasing our efforts and focus on addressing our clients' purchasing needs.

Great. Thanks for that. And you're seeing revenue mix incrementally shift into managed services, and I'm curious if you think some of that mix shift towards managed services is due to secular forces, or are you purely seeing that mix shift as just a cyclical phenomenon?

Yes, I think the main driver is the larger deals that incorporate elements of both the sector and cyclical factors. It really comes down to the significance of the larger deal.

So just think about Accenture is very uniquely positioned in this market. Clients are prioritizing large scale transformations. And doing those and getting the efficiencies and moving faster, managed services is a highly strategic component of being able to do that. And this is where Accenture, with such scale in both strategy, in both consulting type of work with managed services is really able to lean into what are clients buying now.

Got it. Thank you.

Your next question comes from the line of Bryan Bergin from TD Cowen. Please go ahead.

Hi. Good morning and congrats KC and the other leaders on the retirements and appointments. First question I wanted to ask on the consulting existing revenue base performance, can you just talk about how base business runoff kind of progressed within the minus 1% local currency performance? I heard your comment on the Q4 consulting or just returning to growth. I'm trying to understand if that's a reflection of sustainable stabilization potentially and really gauge whether you're reaching a point where the new consulting bookings conversion should more than offset the existing base runoff moving ahead.

Yes, Brian, regarding what we will discuss about Q4, I understand your reference to base runoff. However, we don’t view it in those terms. Instead, we focus on our booked and backlog figures, as well as new sales coming in. So, considering those two aspects, we evaluate year-over-year, looking at both what we have already sold for the next quarter and what we observe in our pipeline, as well as how we anticipate those sales converting to revenue. That’s our approach to assess our overall expectations. We are also very pleased that consulting is expected to return to growth, which is a milestone we haven't achieved in several quarters. We will provide further comments regarding next year in September.

Okay. And then bookings, obviously, very solid here. Can you just comment on pipeline and any bookings expectations worth calling out for Q4?

Yes. Overall, we feel positive about our pipeline. We do not provide guidance for next quarter's bookings, but we are optimistic.

Thanks.

Your next question comes from the line of James Faucette from Morgan Stanley. Please go ahead.

Great. Thank you very much. I wanted to follow up on the acquisition activity. It's obviously been really robust, providing a lot of good opportunities. Can you give us any sense collectively across the acquisitions you've been doing and maybe what you are looking at in terms of what the growth rates of those businesses are generally or collectively when you do the acquisitions? And I know there's a target to accelerate those, how the growth rates tend to change as those companies are absorbed into Accenture, even if directionally.

Yes, in response to your question about our acquisitions, we focus on companies that typically present higher growth opportunities. Each acquisition comes with an established growth rate that we evaluate, and we also incorporate significant synergy targets that have a high standard for performance. Integration plays a crucial role because having a solid business case is only part of the process; the real challenge lies in how we effectively integrate these businesses to achieve the desired outcomes. Our strong track record shows our capability in this area. If you look at our acquisition activities over the past five years, you will notice how we have managed to sustain and enhance our growth during that period, effectively contributing to our organic growth.

Got it. One area you've focused on, as mentioned in the prepared remarks, is the government and healthcare sector, which has shown strong growth. How should we consider this segment's long-term or medium-term potential for growth, and what investments are you planning to make to sustain this momentum? Thank you.

Thanks. We are very optimistic about that sector. There is significant transformation occurring in public service, particularly with health and defense as major contributors. Infrastructure support is substantial, whether through the IRA in the U.S. or similar initiatives in the EU. Additionally, digital transformation in public service and health is still in its early stages, and we believe now is the right time for advancements, as reflected in our results. We are confident in our investments, which we approach similarly across all our industries. It's important to note that we have 13 industry groups, and our diversification is crucial for both resilience and growth strategies. Our investment approach varies based on growth trajectories, and this quarter, we have significantly increased our investment in public service, as we anticipate substantial growth in this area over the next several years.

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

Okay. That question comes from the line of Keith Bachman from BMO. Please go ahead.

Hi. Thank you very much. First, congratulations to Casey and Paul on your transition. I have a question that I'll ask together for efficiency. Julie, I'll direct this to you. Firstly, regarding BPO, a competitor recently mentioned that pricing has been under significant pressure lately. Do you agree with that assessment? I'm also curious about the reasons behind this pricing pressure and how it might affect future growth. Secondly, I wanted to ask about Song. I appreciate your comment on mid-single digit growth. How do you envision generative AI impacting your digital agency over the next 12 to 24 months? I ask this because we also work closely with companies like Adobe, and they believe generative AI will have a considerable effect on digital agencies. Some agencies are even discussing seat reductions related to the value of generative AI. I would love to hear your thoughts on how generative AI might influence the growth potential of Song. That's all from me. Thank you.

Great. KC, why don't you quickly cut pricing, and then I'll do Song.

Keith, regarding pricing, we've been discussing this for a while now. You are right that we've experienced ongoing pricing pressure across our entire business. That's how I would address your question. Overall, the market is tight, which is typically what you would expect to see.

Yes, it's overall is a tight market. So that's what you normally see. On Song, here's where we are so unique, because our business is not an agency business, right? The agencies are part of an incredibly differentiated value proposition where you have creative and technology and digital and by the way managed services. And so, we see this as a huge opportunity because we are embracing it as fast as possible to help our clients get value, but we put it together with all of these other services. So we were happy to see the uptick in growth this quarter with Song and long term where we really think it's great. And remember, this is our playbook, right? We embrace technology. We've done it in every wave. We've done it when we did managed services. Remember in 2015, we had SynOps and myWizard. Our business is to help our clients be more efficient and grow. That is what we do. And we use technology in how we deliver it. And we help them use technology and how they operate. And so, we see GenAI as yet another way that we're going to embrace it. We're going to be fast. And we're going to do what we do for clients. And that is a very exciting opportunity, so we feel really good about our Song business. Great. So, thanks everyone for the questions and the time today. In closing I want to again, as always, thank all of our shareholders for your continued trust and support, and all of our people for what you're doing for our clients and for each other every day. Thanks so much for joining.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.