Accenture's Q1 Revenue Up 6%, Net Income Dips Amid Optimization Costs

Ticker: ACN · Form: 10-Q · Filed: 2025-12-18T00:00:00.000Z

Sentiment: mixed

Topics: Consulting, IT Services, Earnings, Restructuring, Share Buybacks, Cash Flow, Financial Performance

Related Tickers: ACN, IBM, CTS, CACI, TCS

TL;DR

**Accenture's revenue growth is overshadowed by a net income dip and heavy restructuring costs, signaling a strategic pivot that's expensive in the short term but could pay off long-term.**

AI Summary

Accenture plc reported revenues of $18.74 billion for the three months ended November 30, 2025, a 6% increase from $17.69 billion in the same period last year. Despite this revenue growth, net income attributable to Accenture plc decreased by 2.96% to $2.21 billion from $2.28 billion in the prior year, primarily due to higher operating expenses, including $307.54 million in business optimization costs. Operating income also saw a slight decline to $2.87 billion in Q1 fiscal 2026 from $2.95 billion in Q1 fiscal 2025. The company completed a six-month business optimization program in Q1 fiscal 2026, incurring $923 million in total costs, with $628 million for employee severance and $295 million for asset impairments related to divested acquisitions in the Americas. Cash and cash equivalents significantly decreased by $1.83 billion to $9.65 billion at November 30, 2025, compared to $11.48 billion at the beginning of the period, largely driven by $2.33 billion in share repurchases and $1.01 billion in cash dividends paid. Remaining performance obligations increased to approximately $35 billion as of November 30, 2025, up from $34 billion as of August 31, 2025, with 54% expected to be recognized as revenue in fiscal 2026.

Why It Matters

Accenture's revenue growth signals continued demand for its consulting services, but the dip in net income and significant business optimization costs highlight ongoing restructuring efforts to maintain competitiveness. For investors, the substantial share repurchases of $2.33 billion indicate a commitment to returning capital, yet the decline in cash and cash equivalents warrants attention. Employees may face further impacts from optimization programs, as evidenced by the $628 million in severance costs. Customers could benefit from a more streamlined and strategically focused Accenture, while the broader market will watch how these efficiency initiatives translate into future profitability and market share in a dynamic tech and consulting landscape.

Risk Assessment

Risk Level: medium — The company reported a decrease in net income attributable to Accenture plc by 2.96% to $2.21 billion, alongside a significant $307.54 million in business optimization costs for the quarter. Cash and cash equivalents decreased by $1.83 billion, from $11.48 billion to $9.65 billion, primarily due to $2.33 billion in share repurchases and $1.01 billion in cash dividends paid, indicating substantial cash outflow despite positive operating cash flow.

Analyst Insight

Investors should monitor Accenture's next few quarters closely to assess if the $923 million business optimization program yields improved profitability and operational efficiency. While the 6% revenue growth is positive, the decline in net income and significant cash outflow for share repurchases suggest a need for careful evaluation of future earnings quality and cash flow generation.

Financial Highlights

revenue
$18.74B
total Assets
$64.70B
total Debt
$5.15B
net Income
$2.21B
eps
$3.54
cash Position
$9.65B
revenue Growth
+6%

Revenue Breakdown

SegmentRevenueGrowth
Americas
EMEA
Asia Pacific

Key Numbers

Key Players & Entities

FAQ

What were Accenture's revenues for the first quarter of fiscal year 2026?

Accenture plc reported revenues of $18.74 billion for the three months ended November 30, 2025, marking a 6% increase compared to $17.69 billion in the same period of the prior fiscal year.

How did Accenture's net income change in Q1 FY26 compared to the previous year?

Net income attributable to Accenture plc decreased by 2.96% to $2.21 billion for the three months ended November 30, 2025, down from $2.28 billion in the corresponding period of fiscal year 2025.

What were the primary drivers behind the decrease in Accenture's net income?

The decrease in net income was primarily driven by higher operating expenses, including $307.54 million in business optimization costs incurred during the three months ended November 30, 2025.

What was the total cost of Accenture's business optimization program?

Accenture completed a six-month business optimization program in the first quarter of fiscal 2026, incurring a total of $923 million. This included $628 million for employee severance and $295 million for asset impairments.

How much cash and cash equivalents did Accenture have at the end of Q1 FY26?

As of November 30, 2025, Accenture's cash and cash equivalents stood at $9.65 billion, a decrease of $1.83 billion from $11.48 billion at the beginning of the period.

What impact did share repurchases have on Accenture's cash flow?

Accenture's purchases of shares amounted to $2.33 billion during the three months ended November 30, 2025, representing a significant cash outflow and a key factor in the reduction of cash and cash equivalents.

What are Accenture's remaining performance obligations?

Accenture had remaining performance obligations of approximately $35 billion as of November 30, 2025. The company expects to recognize about 54% of these as revenue in fiscal 2026 and an additional 20% in fiscal 2027.

What new accounting pronouncements will affect Accenture's future disclosures?

Accenture will be impacted by ASU No. 2023-09 (Improvements to Income Tax Disclosures) effective fiscal 2026, ASU No. 2024-03 (Disaggregation of Income Statement Expenses) effective fiscal 2028, and ASU No. 2025-06 (Targeted Improvements to the Accounting for Internal-Use-Software) effective fiscal 2029.

Did Accenture increase its cash dividends per share?

Yes, Accenture increased its cash dividends per share to $1.63 for the three months ended November 30, 2025, up from $1.48 in the same period of the prior fiscal year.

What is the significance of the business optimization costs for Accenture?

The $307.54 million in business optimization costs, part of a larger $923 million program, indicates Accenture's strategic efforts to streamline operations and divest non-core assets, aiming for long-term efficiency and alignment with strategic priorities, despite the short-term impact on net income.

Risk Factors

Industry Context

Accenture operates in the IT services and consulting industry, a highly competitive landscape characterized by rapid technological advancements and evolving client needs. Key trends include the increasing demand for digital transformation, cloud migration, artificial intelligence, and data analytics services. Companies like Accenture compete with other global consultancies, IT service providers, and specialized niche firms.

Regulatory Implications

Accenture is subject to various regulations globally, including data privacy laws (e.g., GDPR, CCPA) and financial reporting standards (e.g., U.S. GAAP, SEC regulations). Compliance with these regulations is critical to avoid penalties and maintain stakeholder trust. The company is also monitoring new accounting pronouncements that could impact future disclosures.

What Investors Should Do

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Key Dates

Glossary

Remaining Performance Obligations
The total amount of the transaction price for contracts where work has not yet been performed and revenue has not been recognized. This includes the non-cancelable portion of contracts. (Indicates future revenue potential, with $35 billion expected to be recognized as revenue in fiscal 2026.)
Business Optimization Costs
Expenses incurred as part of a program to improve business efficiency, including employee severance and asset impairments. (Totaled $923 million in Q1 FY26, significantly impacting net income.)
Treasury Shares
Shares that a company has repurchased from the open market. These are held by the company and not outstanding. (Accenture held 44.99 million Class A ordinary treasury shares as of Nov 30, 2025, reflecting share repurchase activities.)
Deferred Revenues
Revenue that has been received by the company but not yet earned, as the goods or services have not been delivered or performed. (Current deferred revenues were $5.49 billion as of Nov 30, 2025, a decrease from $6.07 billion at Aug 31, 2025.)
Contract Assets
Represents the company's right to consideration in exchange for goods or services that the company has transferred to a customer. It arises when the company has performed but has not yet an unconditional right to payment. (Total current contract assets were $2.07 billion as of Nov 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Accenture reported a 6% increase in revenue to $18.74 billion. However, net income attributable to Accenture plc saw a 2.96% decrease to $2.21 billion, primarily due to $307.54 million in business optimization costs incurred in Q1 FY26. Operating income also declined slightly. Cash and cash equivalents decreased significantly due to substantial share repurchases and dividend payments, while remaining performance obligations showed a modest increase, indicating continued future revenue potential.

Filing Stats: 4,496 words · 18 min read · ~15 pages · Grade level 15.6 · Accepted 2025-12-18 06:44:29

Key Financial Figures

Filing Documents

Financial Information

Part I. Financial Information 3

Financial Statements

Item 1. Financial Statements 3 Consolidated Balance Sheets as of November 3 0 , 2025 (Unaudited) and August 31, 20 25 3 Consolidated Income Statements (Unaudited) for the three months ended November 3 0 , 2025 and 2024 4 Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended November 3 0 , 2025 and 2024 5 Consolidated Shareholders' Equity Statement (Unaudited) for the three months ended November 3 0 , 2025 and 20 24 6 Consolidated Cash Flows Statements (Unaudited) for the three months ended November 3 0 , 2025 and 2024 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 31

Controls and Procedures

Item 4. Controls and Procedures 31

Other Information

Part II. Other Information 32

Legal Proceedings

Item 1. Legal Proceedings 32

Risk Factors

Item 1A. Risk Factors 32

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 32

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 33

Other Information

Item 5. Other Information 33

Exhibits

Item 6. Exhibits 33

Signatures

Signatures 34 Table of Contents Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts) ACCENTURE FORM 10-Q 3

— Financial Information

Part I — Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets November 30, 2025 and August 31, 2025 November 30, 2025 August 31, 2025 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 9,649,405 $ 11,478,729 Short-term investments 5,906 5,945 Receivables and contract assets 16,006,709 14,985,073 Other current assets 2,404,674 2,430,942 Total current assets 28,066,694 28,900,689 NON-CURRENT ASSETS: Contract assets 188,147 180,362 Investments 803,000 721,260 Property and equipment, net 1,558,316 1,566,374 Lease assets 2,758,958 2,740,321 Goodwill 22,621,663 22,536,416 Deferred contract costs 1,045,856 1,025,391 Deferred tax assets 3,690,039 3,791,215 Intangibles 2,331,615 2,410,755 Other non-current assets 1,634,175 1,522,114 Total non-current assets 36,631,769 36,494,208 TOTAL ASSETS $ 64,698,463 $ 65,394,897 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt and bank borrowings $ 113,676 $ 114,484 Accounts payable 2,971,647 2,695,589 Deferred revenues 5,494,732 6,073,170 Accrued payroll and related benefits 7,937,214 8,084,214 Income taxes payable 665,737 701,219 Lease liabilities 729,244 729,003 Other accrued liabilities 1,984,271 1,954,418 Total current liabilities 19,896,521 20,352,097 NON-CURRENT LIABILITIES: Long-term debt 5,031,646 5,034,169 Deferred revenues 727,393 642,361 Retirement obligation 1,828,303 1,858,499 Deferred tax liabilities 459,236 471,931 Income taxes payable 1,329,110 1,291,921 Lease liabilities 2,327,433 2,305,210 Other non-current liabilities 1,176,539 1,197,742 Total non-current liabilities 12,879,660 12,801,833 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of November 30, 2025 and August 31, 2025 57 57 Class A ordinary shares, par value $ 0.0000225 per share, 20,000,000,000 shares authorized, 660,352,923 and 657,964,764 shares issued as of November 30

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 9 1. Basis of Presentation The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. We use the terms "Accenture," "we" and "our" in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2025 included in our Annual Report on Form 10-K filed with the SEC on October 10, 2025. The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management's best knowledge of current events and actions that we may undertake in the future, actual results may differ from those estimates. The Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three months ended November 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2026. Allowance for Credit Losses—Client Receivables and Contract Assets As of November 30, 2025 and August 31, 2025, the

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 10 Depreciation and Amortization As of November 30, 2025 and August 31, 2025, total accumulated depreciation was $ 2,988,124 and $ 2,926,630 , respectively. See table below for a summary of depreciation on fixed assets, deferred transition amortization, intangible assets amortization and operating lease cost for the three months ended November 30, 2025 and 2024, respectively. Three Months Ended November 30, 2025 November 30, 2024 Depreciation $ 143,583 $ 133,099 Amortization—Deferred transition 80,940 85,324 Amortization—Intangible assets 152,447 160,214 Operating lease cost 203,801 186,529 Other 1,020 4,174 Total depreciation, amortization and other $ 581,791 $ 569,340 Business Optimization During the first quarter of fiscal 2026, we completed our six-month business optimization program. We recorded a total of $ 923 million under the program, including $ 628 million of employee severance associated with headcount reductions we made in a compressed timeline, as well as asset impairments of $ 295 million primarily related to the divestiture of two acquisitions in the Americas that are no longer aligned with our strategic priorities. Total b usiness optimization costs by reportable operating segment for the three months ended November 30, 2025 and August 31, 2025 were as follows: Three Months Ended November 30, 2025 August 31, 2025 Americas $ 66,749 $ 420,469 EMEA 169,811 131,980 Asia Pacific 70,981 62,875 Total business optimization costs $ 307,541 $ 615,324 New Accounting Pronouncements On December 14, 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. T

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 11 2. Revenues Disaggregation of Revenue See Note 12 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues. Remaining Performance Obligations We had remaining performance obligations of approximately $ 35 billion and $ 34 billion as of November 30, 2025 and August 31, 2025, respectively. Our remaining performance obligations represent the amount of transaction price for which work has not been performed and revenue has not been recognized. The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice. Under Topic 606, only the non-cancelable portion of these contracts is included in our performance obligations. Additionally, our performance obligations only include variable consideration if we assess it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. Based on the terms of our contracts, a significant portion of what we consider contract bookings is not included in our remaining performance obligations. We expect to recognize approximately 54 % of our remaining performance obligations as of November 30, 2025 as revenue in fiscal 2026, an additional 20 % in fiscal 2027, and the balance thereafter. Contract Estimates Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were immaterial for the three months ended November 30, 2025 and 2024, respectively. Contract Balances Deferred transition revenues were $ 727,393 and $ 642,361 as of November 30, 2025 and August 31, 2025, respectively, and are included in Non-current deferred revenues. Costs related to these activities are also deferred and are expensed as the services are provided. Deferred transiti

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 12 3. Earnings Per Share Basic and diluted earnings per share are calculated as follows: Three Months Ended November 30, 2025 November 30, 2024 Basic earnings per share Net income attributable to Accenture plc $ 2,211,561 $ 2,278,894 Basic weighted average Class A ordinary shares 619,307,086 625,676,922 Basic earnings per share $ 3.57 $ 3.64 Diluted earnings per share Net income attributable to Accenture plc $ 2,211,561 $ 2,278,894 Net income attributable to noncontrolling interests in Accenture Canada Holdings Inc. (1) 2,083 2,170 Net income for diluted earnings per share calculation $ 2,213,644 $ 2,281,064 Basic weighted average Class A ordinary shares 619,307,086 625,676,922 Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1) 583,286 595,837 Diluted effect of employee compensation related to Class A ordinary shares 6,044,996 8,185,818 Diluted effect of share purchase plans related to Class A ordinary shares 107,672 197,833 Diluted weighted average Class A ordinary shares (2) 626,043,040 634,656,410 Diluted earnings per share $ 3.54 $ 3.59 (1) Diluted earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one -for-one basis. The income effect does not take into account "Net income attributable to noncontrolling interests - other," since those shares are not redeemable or exchangeable for Accenture plc Class A ordinary shares. (2) The weighted average diluted shares outstanding for the calculation of diluted earnings per share excludes an immaterial amount of shares issuable upon the vesting of restricted stock units because their effects were antidilutive. Table of Contents

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 13 4. Accumulated Other Comprehensive Loss The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc: Three Months Ended November 30, 2025 November 30, 2024 Foreign currency translation Beginning balance $ ( 1,060,062 ) $ ( 1,295,743 ) Foreign currency translation ( 181,886 ) ( 486,087 ) Income tax benefit (expense) 5,805 1,030 Portion attributable to noncontrolling interests 2,908 10,074 Foreign currency translation, net of tax ( 173,173 ) ( 474,983 ) Ending balance ( 1,233,235 ) ( 1,770,726 ) Defined benefit plans Beginning balance ( 195,940 ) ( 254,172 ) Reclassifications into net periodic pension and post-retirement expense 82,373 ( 17,680 ) Income tax benefit (expense) ( 15,490 ) 1,907 Portion attributable to noncontrolling interests ( 63 ) 15 Defined benefit plans, net of tax 66,820 ( 15,758 ) Ending balance ( 129,120 ) ( 269,930 ) Cash flow hedges Beginning balance ( 209,377 ) ( 4,827 ) Unrealized gain (loss) ( 53,907 ) 14,598 Reclassification adjustments into Cost of services 29,354 ( 7,477 ) Income tax benefit (expense) ( 115 ) ( 11,036 ) Portion attributable to noncontrolling interests 23 4 Cash flow hedges, net of tax ( 24,645 ) ( 3,911 ) Ending balance (1) ( 234,022 ) ( 8,738 ) Accumulated other comprehensive loss $ ( 1,596,377 ) $ ( 2,049,394 ) (1) As of November 30, 2025, $ 140,853 of net unrealized losses related to derivatives designated as cash flow hedges is expected to be reclassified into Cost of services in the next twelve months. Table of Contents

Notes To Consolidated Financial Statements

Notes To Consolidated Financial Statements (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) ACCENTURE FORM 10-Q 14 5. Business Combinations During the three months ended November 30, 2025, we completed individually immaterial acquisitions for total consideration of $ 307,040 , net of cash acquired. The pro forma effects of these acquisitions on our operations were not material. 6. Goodwi

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