In this paragraph, the operator introduces the Accenture's Second Quarter Fiscal 2024 Earnings Conference Call and explains the format of the call. Katie O'Conor, Managing Director and Head of Investor Relations, will be hosting the call and will be joined by Julie Sweet, Chair and CEO, and KC McClure, CFO. The agenda for the call includes an overview of the results, financial details, market positioning update, and business outlook. The speakers will also address potential risks and uncertainties that could affect the company's performance.

During the conference call, Accenture will discuss certain non-GAAP financial measures and provide reconciliations to GAAP on their website. CEO Julie Sweet is pleased with the company's performance in a challenging economic climate, citing their strong relationships with clients, ability to handle complex work, and strategic investments for future growth. The company had a record number of large transformational wins and saw significant growth in their GenAI business. They are also focused on doubling their data and AI workforce by 2026. In the last quarter, they had $21.6 billion in bookings, including their highest ever in North America.

In the third paragraph, the company discusses their revenue for the quarter and their efforts to return to growth. They also mention their investments in strategic areas and their recognition as a top company in their industry.

In the fourth paragraph, the company highlights their recognition as one of the World's Most Ethical Companies for the 17th year in a row. They also discuss their growth strategy of investing in higher-growth areas and expanding into new ones, with a strong track-record of success. In North America, they have invested in supply-chain and acquired Navisite and Work & Co to help clients with cloud services and digital products. In EMEA, they have invested in 6point6, Redkite, and Vocatus to help clients with digital capabilities and growth strategies. In good markets, they have acquired Rabbit's Tale and [GIC] (ph) to expand marketing and customer experience capabilities.

Accenture's ability to invest in organic growth is a competitive advantage, and they have announced a $1 billion investment in Accenture LearnVantage to provide technology learning and training services for clients. They have also acquired Udacity, a digital education pioneer, which is expected to bring in $100 million in revenue annually. This investment enhances their position as a reinvention partner and aligns with the top priority of CEO's to invest in talent. For example, they are helping Merck launch a Generative AI training program for their employees to develop digital leaders. Merck's investment in their people aligns with their commitment to using science to improve lives. Overall, Accenture is pleased with their results in the second quarter and continues to invest to strengthen their leadership position.

In the sixth paragraph of the article, the author discusses the financial results of the company, stating that revenues were flat in local currency, with growth in six of the 13 industries. The CMT industry group improved, but there is still pressure. The company continues to take market share and compares its financial results to its closest global competitors. Adjusted operating margin decreased slightly and adjusted EPS grew by 3%. The company invested in acquisitions and returned money to shareholders. New bookings declined by 2% and revenues were flat at $15.8 billion. Consulting revenues also declined by 3%.

In the second quarter, managed service revenues for the company increased by 3% in both US dollars and local currency. Revenue growth was driven by growth markets, particularly in Japan and Argentina. However, there were declines in certain geographic markets such as the United Kingdom, France, and Ireland. Gross margin and marketing expenses increased slightly compared to the same period last year. General and administrative expenses also increased slightly. It should be noted that costs associated with business optimization actions in the previous two years had a significant impact on operating margin and EPS. Adjusted operating income for the quarter was $2.2 billion with an adjusted operating margin of 13.7%, a slight decrease from the same period last year.

The adjusted effective tax rate for the quarter was lower compared to the same quarter last year, resulting in higher adjusted diluting earnings per share. Days services outstanding decreased from the previous quarter, and free cash flow was $2 billion. The company's cash balance decreased from the previous quarter, and they have repurchased 3.8 million shares and paid a quarterly cash dividend. The company remains focused on growth opportunities and investing for long-term market leadership. The demand environment is uncertain due to various factors, but all strategies are leading to technology and reinvention for clients.

The article discusses how companies are prioritizing larger transformations, such as building out their digital core and implementing AI, to improve productivity and focus on growth. The author emphasizes the importance of having a strong digital core and understanding industry and function in order to successfully use AI. However, many clients are struggling to scale AI due to the complexity and investment required. The company mentioned in the article is well-positioned to assist with these transformations due to their broad range of services and expertise in various industries. The author also mentions the importance of being part of the technology ecosystem, particularly in the rapidly evolving field of generative AI.

IBM is working closely with its partners to help clients understand the importance of data and AI in achieving tangible business value. They are currently working with Mondelez International to reinvent their digital core and modernize their finance and supply-chain capabilities. This will lead to faster product availability and increased sales and profitability. Cloud is a key component of this digital core, and IBM is also helping Riyadh Air become the world's first fully cloud-based airline, equipped with enhanced cyber security and AI-driven operations to deliver a seamless and personalized travel experience for customers and employees.

The company is partnering with Belden to help them become a platform business and use edge to cloud technology to collect and analyze real-time data for operational efficiencies. This partnership will also help Belden become a key player in the digital twin domain. The company is also helping its clients leverage the power of AI quickly through its AI Navigator and AI switchboard tools. Additionally, the company is working with Telstra to simplify and modernize their data ecosystem to become AI powered.

Telstra is modernizing and consolidating their data sources to create a secure and governed data and AI core. This will allow them to quickly scale bespoke Generative AI capabilities and develop responsible and secure AI frameworks. They are also working with clients, such as ExxonMobil and Best Buy, to transform customer experiences and drive growth through the use of data and Generative AI. Additionally, Accenture has entered into a partnership with Best Buy for lifecycle management and field service support, further showcasing their commitment to helping clients achieve superior customer experiences, operational efficiencies, and growth.

The company has seen strong growth in its security business and is working with a utility company to enhance their security capabilities. They are also experiencing demand for digital manufacturing and engineering services and are working with a global leader in the home textile industry to implement a cloud-enabled digital core. This will help standardize, digitize, and automate processes and operations for more efficient inventory management and better customer experiences. The company is also promoting carbon footprint compliance and creating a market for environmentally conscious products and services.

In the third quarter of fiscal 2024, the company expects revenues to be between $16.25 billion and $16.85 billion, with a negative impact from foreign exchange rates and a potential positive growth in local currency. For the full fiscal year 2024, the company expects revenues to grow by 1-3% in local currency, with a flat impact from foreign exchange rates. Business optimization actions are expected to impact operating margin and EPS, and the company anticipates a 10 basis point expansion in adjusted operating margin. The adjusted effective tax rate is expected to be between 22.5% and 24.5%, and adjusted earnings per share for fiscal 2024 are expected to be between $11.97 and $12.20, representing a 3-5% growth over fiscal 2023 results.

The company expects operating cash flow to remain steady for fiscal 2024, with a strong ratio of free cash flow to net income. They also plan to return a significant amount of cash to shareholders. During a Q&A session, the CEO was asked about the current state of IT services spending. She stated that it is hard to predict, but they have seen a tightening of spending at their clients in January.

The company has seen a trend towards more budget constraints and smaller projects in the past 90 days, but they are still taking market share and seeing momentum in their strategy to be a reinvention partner. They have a record number of clients with bookings over $100 million, showing the importance of technology-led transformation. The company sees a lot of opportunities ahead in areas like cloud, data and AI, re-platforming, and security. They are focused on meeting clients where they are and prioritizing large transformational deals. The industry is strong because all clients need to undergo technology transformation and reinvention. The company has seen early interest in GenAI, with $1 billion in sales in the first six months of the year, the fastest they have ever seen in an emerging technology.

The paragraph discusses how clients understand the importance of AI and how Accenture is well-positioned to help with the reinvention of enterprises. The company's strong bookings over $100 million show resilience during the current period, and they are confident in their ability to catch pent-up demand as spending increases. Accenture is also investing inorganic growth to capture more growth in the future.

During a conference call, Bryan Keane from Deutsche Bank asked about Accenture's projected growth for the third and fourth quarters. KC McClure, an Accenture representative, confirmed that their guidance suggests a 1% to 3% growth for the full year, with a potential ramp-up to 6% in the fourth quarter. When asked about the disconnect between the need for clients to update their data for AI and the lack of corresponding demand, Julie Sweet, another Accenture representative, explained that clients are constrained in their spending and are prioritizing their budget, causing a substitution rather than an addition to their budget. This is due to uncertain macro conditions.

The speaker discusses the importance of having a strong data foundation and modern platforms in order to successfully implement AI and drive transformations. They mention that many clients are not yet ready for this and that it presents an opportunity for Accenture. The speaker also mentions the timeline for preparing and implementing new solutions, but does not provide a specific timeline.

Julie Sweet discusses the company's strategy for capturing the growth opportunity from Generative AI, which includes being the first-mover in helping clients use the technology and using it to serve clients. This strategy has been successful in previous technology evolutions and has already resulted in record bookings for the company. By investing early and being a leader in the field, the company is well-positioned to capture all the opportunities in the market and enhance their competitive position.

The use of GenAI allows for differentiation and cost savings for clients, which frees up investment capacity for reinvention. The company is positioning itself as a partner for clients in using technology and AI for productivity and growth. The slower layering in of larger deals may impact volume of smaller deals, but the company is confident in meeting their 1% to 3% guidance for the full year. The company's ability to invest and focus on organic growth, as well as their investments in acquisitions, will drive growth in the back half of the year.

The company has seen growth from larger transformation deals and expects this to continue in the second half of the year. Their strategy, which focuses on meeting client needs and making strategic acquisitions, has contributed to this success. They anticipate consulting work to remain steady and managed services to grow in the mid-single digits. The company's investments may impact margin expansion in the short term, but they are confident in their profitability and are continuing to invest in their business and employees. They expect a 10 basis point expansion in margins for the second half of the year.

Julie Sweet discusses the importance of continued investment in people and business, with an expected EPS of 3-5% for the year. She also mentions that the company benefited from higher non-operating income in the first half of the year due to a higher cash balance, but that this may decrease in the second half. There is uncertainty surrounding when clients will release spending programs and lean back into shorter cycle work, as they have just set budgets and are waiting for the uncertain macro to stabilize. It is also noted that the company's fiscal year ends in August.

The speaker, Bryan Bergin, asks a question about the growth potential of GenAI for the company. Julie Sweet responds by stating that they see GenAI as a driver of growth in a similar way to prior technology waves. She also mentions that their clients are still in the process of building out their digital core and that there is a lot of potential for growth. The next question from Dave Koning is about whether the company is seeing clients take on more technology internally due to low attrition rates and the importance of technology during the pandemic. Julie Sweet confirms that their clients have been advised to invest in technology internally.

The speaker, Jamie Friedman, asks a big picture question to Julie Sweet about Accenture's role in the technology industry. Sweet had previously given a detailed answer about technology architectures and innovation, but Friedman notes that other parts of the tech industry are doing better than services.

Julie Sweet discusses the impact of uncertain macro conditions on tech spending, specifically in regards to services. She explains that services are more easily dialed back compared to technology licenses, making them a target for cost-cutting during budget constraints. However, she notes that this is a normal occurrence and not unique to the current situation. Despite this, Accenture has seen record spending with $40 billion in bookings for the first half of the year. The call concludes with a final question from Jamie Friedman before wrapping up.

Julie Sweet and KC discussed the impact of GenAI capabilities on existing bookings and backlog, which has not shown any significant changes. Sweet also talked about the LearnVantage and Udacity deal, which is critical for clients as talent is the number one agenda item for CEOs. LearnVantage provides training for all levels of employees to make informed decisions on AI and become more knowledgeable in new technologies.

The paragraph discusses how Accenture and Udacity are working together to provide a learn-and-do approach for clients, using learning science and real project work. This partnership is seen as highly strategic and will help Accenture be a reinvention partner for their clients. Additionally, Accenture has a managed service to help companies manage their internal learning services. This partnership also allows Accenture to fulfill their responsibility of bringing their employees along the journey of AI and upskilling.

In paragraph 29, Julie Sweet expresses the importance of their Board and their commitment to doing the right thing. She thanks shareholders for their trust and support and assures them that they are working to continue earning that trust. The conference call then concludes.

This summary was generated with AI and may contain some inaccuracies.