Accenture Q3 2026 Earnings Call |Mid-Market Edge Launch Outlined as AI Tailwinds Drive 9% EPS Growth

Thank you, Alexia, and everyone joining us this morning. And thank you to our more than 798,000 people for your extraordinary work. Before Angie takes you through the detailed numbers, I will give you some color on the quarter and on the progress we're making on our growth strategy. In Q3, we delivered strong results with broad-based revenue growth across geographic markets, industry groups, and types of work, and once again took significant market share, underscoring the relevance of our services and our strong competitive position. To put our performance in context, we added approximately $1 billion in revenue in Q3 over FY25 and $3.4 billion year-to-date over the same period last year. We also delivered strong margin expansion, EPS growth, and free cash flow, while continuing to invest in our business and our people. This quarter, we had 30 clients with quarterly bookings over $100 million, bringing us to 104 of such bookings year-to-date, a 13% increase over the same period last year. This is one of the best indicators of the depth of our client relationships and the scale of the reinvention programs we are helping deliver. I also want to give you context on two factors that impacted our results this quarter. First, we were impacted by the conflict in the Middle East. We saw revenue impact of approximately $100 million compared to our expectations, which is all consulting type of work, split evenly between the direct impact on our Middle East business and indirect effects outside of the region. In the last few weeks of the quarter, we saw this indirect impact globally in products and to a lesser degree in resources, mostly in discretionary spend. In addition, sales in the Middle East were impacted by approximately $400 million and also in EMEA due to longer decision-making. Second, a couple of our large managed services opportunities moved into FY27 for company-specific reasons. Now, on acquisitions, because of the exciting OT cybersecurity acquisitions we announced today, which I'll talk about in a moment, we now expect to deploy approximately $9 billion of capital this year based on the anticipated closing dates of the acquisitions. We are also adding important capabilities in other strategic areas of growth, including our recently announced acquisitions of Elf Health, a service-led digital health platform in Italy, and Wailer, a leading creator and social agency in the Americas. I am also thrilled to congratulate our approximately 124,000 people who were promoted this fiscal year, a 30% increase over last year, including more than 900 who were promoted to managing director. Our people make the difference in our ability to deliver our results and value to our clients. All in all, we are pleased with how we're executing in this environment. Now, let's turn to how we're executing our growth strategy to be the reinvention partner of choice for our clients and the leader in the widespread adoption of AI. We believe that AI will be a tailwind for us and our industry as it scales because it is a catalyst for reinvention and is creating new opportunities for growth and efficiency for our clients and for us. We are building a stronger foundation every quarter for us to win as AI adoption scales. We're starting to see clients with more advanced digital cores move to larger AI transformation programs. You can see this demand in several significant AI-focused wins across multiple industries and markets, which we publicly announced with companies like British Telecom Group, Mitsubishi Chemical, NSK, Perios, Stellantis, Tepco, Vodafone, and the Women's Tennis Association. The major theme of all of these programs is that we are moving clients from using AI to running on AI. We're also seeing more clients move from pilots to production. This quarter we saw another 100 clients initiate advanced AI projects with us. We have announced a number of expansions of partnerships with our top 10 ecosystem partners in AI and data, and our revenue growth from these partners continues to outpace our overall growth. We are also on track to more than double our bookings from our key emerging AI and data partners compared with FY25, including Anthropic, Databricks, Gemini, Mistral AI, Nvidia, OpenAI, Palantir, and Snowflake. We are deepening these partnerships around specific areas of opportunity where we can combine their technology with Accenture's industry, functional, and delivery expertise. Now, let's talk about our big move in OT security to create a platform-led growth business with a non-FTE commercial model. We are acquiring a majority stake in Dragos, a leading platform for operational technology or OT cybersecurity, along with RunZero, a leading vulnerability and exposure assessment firm, and NetRise, a leader in device security. Together, these acquisitions will create a first-of-its-kind OT security platform that lets clients see threats, find vulnerabilities, and fix them before it becomes a crisis. Cyber is a key enabler for AI. We cannot have an AI revolution without critical infrastructure, and you cannot have those without OT security, which is where today the world is most vulnerable. The urgency is real. AI and geopolitical risk are accelerating the need for cybersecurity adoption for the operational technology that underpins critical infrastructure and industrial operations, such as power grids, pipelines, manufacturing distribution facilities, and data centers. Dragos, which is the anchor of our strategy, has strong ecosystem relationships with our top ecosystem partners, including AWS, CrowdStrike, Microsoft, Palo Alto, and ServiceNow, which we will leverage to scale. Our expansion into the OT cyber platform business builds on our strong foundation of cybersecurity services, including OT. We have grown our services organically and inorganically over the last decade from roughly $700 million in FY16 to $10 billion in fiscal 2025, a 35% CAGR over the period, four times that of Accenture's over the same period. This investment more than triples our total addressable market in OT security, which is growing double digit. We're also expanding our total addressable market by going after a new exciting customer segment, the mid-market. We estimate that the mid-market, which we look at as companies with between $300 million and $3 billion of revenue, is a $240 billion addressable market for us, growing high single digits. That is why we are launching a new business next week called Accenture Edge. This business will embed Accenture's large enterprise expertise and ecosystem relationships and business solutions designed specifically for the mid-market. We see that companies in this segment face many of the same technology, data, AI, cybersecurity, and productivity challenges as large enterprises. But they often need solutions that are faster to deploy, more repeatable, and right-sized for their scale. This segment is also an important priority for our ecosystem partners, which see strong demand and want to partner with us because we can bring scale, consistency, and delivery quality to a fragmented services market. Accenture Edge will also include seamless integration with Accenture's joint venture with Microsoft, Avanade. Avanade will continue to serve as the provider of Microsoft platform services to mid-market clients. Together, these actions show how we are building a strong foundation for us to win in AI, expanding our addressable market across new growth areas and client segments, and evolving towards more non-FTE revenue over time. We believe this positions Accenture well for our next phase of growth. Over to you, Angie.

Thank you, Angie. When I look at the breadth of work we signed just this quarter across industries and parts of the enterprise, it is staggering. The reason is that we are truly the only company that can cover at scale everything from the AI and technology foundation to reinventing nearly every part of the enterprise. We bring a track record of delivering results for decades and deep, trusted relationships, as seen in the fact that 195 of our top 200 clients have been clients for more than 10 years. We are working with McDonald's, one of the world's most iconic restaurant brands, serving more than 70 million customers every day, as we support key elements of their ongoing transformation. Together, we've partnered across the enterprise with a particular focus on finance and people modernization and customer loyalty. This foundation is helping McDonald's become faster, more innovative, and efficient as they continue to grow and stay competitive. Stay tuned for the next Reinvented with Accenture episode on CNBC in the coming weeks featuring McDonald's Chairman and CEO Chris Kempczinski. Now, let's double-click on demand in the quarter. Clients continue to invest in the foundations needed to scale AI. This includes strengthening their digital core through cloud, data, security, and operating model transformation. A lot of our reinvention work today is helping clients get ready for AI, and data remains a critical enabler with at least one out of every two advanced AI projects continuing to lead to a data project. Second, clients continue to look to reinvent faster, leverage our proprietary platforms and expertise, and achieve greater efficiencies and growth, including through managed services across the enterprise. We're seeing the nature of these programs with managed services evolve, with clients asking for more consulting and AI expertise within them. Exactly the shift we've been positioning for. Bath and Body Works is a great example of our work in managed services. We're expanding our partnership, consolidating fragmented processes across critical business functions into a unified managed services model with GenAI embedded throughout and humans in the lead. The result is automation replacing manual effort, faster speed to market, and significant cost savings and productivity gains that Bath and Body Works can reinvest directly into growth. Another area of strong demand are the AI enablers we've been investing in, from capital projects to data centers to cybersecurity, one of our largest AI enablers. As I mentioned earlier, OT security is one of the hottest areas driven by AI, cyber threats, and geopolitical risk. We are seeing net demand in our services business as clients look to protect the physical infrastructure that keeps their operations and communities running. For example, we're helping one of the largest electric utilities in North America secure its electrical grid, protecting power infrastructure that serves more than 10 million people. Building on a decade-long cybersecurity partnership, we are extending our work beyond traditional IT into the physical infrastructure. Finally, clients with more advanced digital cores are starting to take on larger AI programs, exciting green shoots. A great example is BT Group, one of our UK clients where our long-standing relationship is expanding into a new AI partnership for BT Business. We're embedding AI directly into the core of how they operate. AIOps capabilities with autonomous agents will detect, route, and resolve incidents with self-healing that accelerates how quickly issues are resolved. The result will be fewer disruptions, faster resolution, and a more resilient network. As we look at the opportunity to scale AI, we're a partner of choice because we're delivering tangible results. For example, Cox Communications, the largest private broadband company in the United States, worked with us to drive growth and efficiency across marketing, sales, and service. Together, we built an AI engine that validates and enriches leads, generates personalized campaign content, and automates brand and legal validations. Lead accuracy jumped from 13% to 97%. Campaign speed to market improved by 55% and marketing content teams are 40% more productive. This is what AI ROI looks like in practice, not a pilot, but a production-grade commercial engine delivering results at scale. Banco Bradesco, one of Brazil's largest financial institutions, is another great example. Together, we built a single unified platform that orchestrates the entire journey from dealer portal and customer origination through government database checks, credit validation, and loan processing. Bradesco grew its vehicle financing portfolio 7.3% quarter over quarter with the unified platform a key enabler of that performance. With that, over to you, Angie.

Yeah, thanks, Brian. Because the indirect impact really started in the last few weeks and mostly in discretionary spend, we do think that there will be more impact in Q4, which is why we're saying that more of the range is in play. In these areas, it's not clear how fast things will change, particularly because some of the industries are dealing with longer-term issues. So, think about automotive, where we have a large presence. They were already challenged, and now with the higher gas prices, that's added to it. So it's difficult, of course, to predict and even exactly how it's all going to play out. But because we started seeing it really in the last few weeks on the indirect impact, we do think that's more in the range of play. The impact in the Middle East, again, it just depends on how quickly people start to focus on growing. So Q4, that's how we're seeing Q4.

Thanks.

Thanks, Pin-Jen. Exactly. This is about long-term growth and it's really a massive market when you start to think about how everything's going to the physical world. Physical AI is coming. Everything's going to be connected. And so, you can't have an AI revolution unless you have critical infrastructure and unless you secure when you start moving into physical AI. And you can't have that without OT security. 95% of spend in the past has been about IT security and OT security is a much bigger market and critical need. And we're starting from a $10 billion cybersecurity services business that we've built over the last 10 years organically and inorganically, a 35% CAGR. And we've been in OT security all along. In terms of the platform itself, Dragos has an excellent platform. The addition of NetRise and RunZero is just enhancing an already strong platform. And what companies today do is they have a bunch of fragmented contracts. They have to contract here and contract there and stitch it together. So, day one, just the first thing is it's one contract. And then we'll enhance the platform, which Dragos has a ton of experience because they've been building that platform. So, we don't see risk at all in terms of stitching it. And day one, we're already making companies a lot happier because they can have one buy, not three. This is what we view as really a massive opportunity because it's meeting such a critical need. And it is simply you cannot succeed in AI unless you've got security.

Yeah, and Jason, the consulting bookings growth is very much driven towards the fundamentals that we continue to see, which is clients saying we really actually have to reinvent, meaning we're not just in our managed services deals looking for just efficiencies. We've seen a three-quarter trend now of more consulting work in those large programs for managed services because our clients are asking us to help them use AI and change the processes, to do more change management, to really embed new ways of working. And so we're seeing that consulting grow in a lot of these larger deals that also include managed services, and it's a direct result of our strategy that says this is not a technology play, it's a business play.

Yeah, and Kevin, in terms of just the profile of that revenue, what you're seeing is that we are moving into higher growth areas. So, we're really excited about the cybersecurity acquisitions that we just announced. That's $208 million ARR growing at 48%. So, that's just an example of how we're using the acquisitions to move into higher growth areas, and they have a different profile in terms of their commercial model. One of the things that I've said consistently is that in things that our clients have been buying in services for a long time, it's going to take a while to change the buying patterns, which is why we're making these acquisitions. But it's much easier to go into new categories or to provide new kinds of value and switch to non-FTE models. And so, you've seen that with what we just did with cybersecurity. You saw that with Ookla. We announced Elf Health this week in Italy. That's also a services and platform combination. And so, we're going to continue to move ourselves into non-FTE in part by these acquisitions that will then drive organic growth.

No, in fact, it should amplify that because we're really going to go after, you know, we've done a great job with Microsoft, and we now are even putting more resources into focusing on the mid-market. And so, there's going to be a lot of pull-through across the board. Avanade has been super successful. We have been making some acquisitions in this area. The way we go to market there is really ecosystem-led, but what we can now do is say we're in with one ecosystem partner, and there's another opportunity, it's much easier to pull them in, which is why we think it'll amplify what we're doing with Avanade. And there's a seamless integration to make sure that that's what we're doing, but we're also doing it in a much more efficient and focused way because our clients in the mid-market don't need the same client coverage model that we use for larger enterprises. And that's what's really exciting about this. And when you think about it, the industry has had this challenge now for a few years on discretionary spend, which is really smaller deals. And going into the mid-market in a big way is going to allow us to structurally offset the challenge on the discretionary spend for large enterprises through this. So, we're really excited. It's obviously early days, but we've got a great track record with Avanade, and we think it'll amplify Microsoft and the other ecosystem partners that the mid-market needs.

Yes, so Jim, one of the things we're clearly seeing, in fact, we have a whole practice that we're starting to grow now, is on how to help clients optimize their use of tokens. It feels a lot like the cloud scenarios that we remember when people were moving to the cloud and then they were like, oh wait a minute, we're spending a lot more on the cloud than we thought, and we built a whole FinOps practice on helping optimize cloud. So, we definitely think that we're seeing that with the clients and they're coming to us because we're doing a really good job ourselves of being able to know how you use the tokens, which models you use for which problems. And that's something we've been focused on since the very beginning. It's also helping because we have delivered real ROI and our clients are seeing the spend but they're struggling with the ROI. And so it's helping us there. And at the same time there's a certain amount of spending that's going to happen and so we're not seeing it be material to impact the spend on services today. And if anything, we think it's going to drive more to use services. And that's how we're seeing it develop. And one of the things that we're really focused on is expanding our TAM in other ways. Because the budgets haven't been, even with the AI, they're spending it differently but they haven't been increasing, and that's why moving into cyber security platform business more than triples our total addressable market in OT security. The mid-market is a massive TAM that we're now going to, and that's not been a focus of ours other than generally. So we are really focused on expanding our TAM while we're capturing more of the AI spend.

Yes, so we are definitely seeing at our clients this convergence between services and software and specifically areas where it requires domain knowledge, requires deep understanding of the enterprise. And so OT security is perfect. We integrate with all of our other tech ecosystem partners, but it really requires supply chain and engineering and so many skills beyond security. So, we are going to continue to look at those opportunities because particularly as the technology and AI changes so much, clients are looking for more and more opportunities to not have to build things, to not have to try to figure it out themselves. And these are areas where we're embedding expertise and data. And that's kind of like our focus with that real expertise. And so in addition to looking at it for acquisitions, we're also going to be building more and more and we've already started with our ecosystem partners where we're basically going to have IP together that creates solutions that also drives our services. And we're building them ourselves. Like for example, our tokenomics platform internally we're now taking to clients and that's a platform we built to optimize tokens. So, the strategy is around acquiring and partnering and building. And you should expect that because those are the opportunities we see in the market for growth that we'll continue to focus there. As well as AI enablers, right? So, cybersecurity, capital projects, data centers.

Absolutely, David. And we see that building every quarter. So, think about our clients with $100 million of bookings or more, it's 104 nine months in, that's 13% more than last year at this time. We called out that we're starting to see the AI large enterprise programs where they're not just use cases, but really embedding it, and British Telecom Group is a great example. Stellantis is a great example. Stellantis is across their manufacturing. British Telecom is across their operations. And when we look at the AI projects themselves, while still small, it's been a steady increase in the average size. So, you're seeing that and you're seeing that we're starting to have those green shoots of where clients have much more mature digital cores where we've helped them, then the next step of these bigger AI programs. And that fundamental building of every quarter is continuing. The demand is the same, right? It's getting ready for AI and then deploying AI. So, we're really optimistic because we believe AI is going to be a tailwind as it scales for us and the industry.

Thank you.

Hey James. So first of all, our acquisitions are going to continue to be a mix of services, services and products, and products. We are skewing however toward where we see the demand, which is in areas where we uniquely have the domain expertise the clients need. It's usually triggered by AI, and that's what we're seeing. So we're skewing our acquisitions to where we see the biggest growth opportunities right now, and where we see the biggest growth opportunities on the product side are in these areas that are being triggered by AI. We're also continuing to do services acquisitions, but again in the higher growth areas, and we have seen higher valuations even for the services acquisitions like the data centers. But it's also paying off for growth. So if you think about what we did with DLB Associates, that acquisition they're growing very high double digits. So think about our acquisitions as getting into higher growth areas meeting where the biggest opportunity is and shifting us to more non-FTE. So the valuations on the services we're seeing are kicking up because they're in demand, and then we have different valuations for software and products. And we're being very transparent so that you can understand. And by the way, Angie never gives you something early for '27, and we wanted to give you that on the acquisitions to kind of help you think about the impact.

Sure, Jamie. So, first of all, our clients really do buy solutions, and so we don't think of it as like strategy or this kind of thing. But I think what you're getting at is sort of like what are the types of areas? So, for example, digital manufacturing, cybersecurity, change management embedded in bigger programs, marketing because it's driving growth. And so, think about what's driving this is where clients can get more growth and or efficiency. So, of course, consulting's also going up like how do you look across the enterprise. So, it's pretty broad-based in terms of the functions, but it's all places where you can really get an ROI. Clients are very focused on whatever the kind of work, whether it's AI or not, in tangible results. And that's why clients come to us, right? When you have clients doing $100 million worth of things, you don't sign those kinds of deals unless you have confidence that you're going to get results. And that's a real theme in our competitive differentiation and why we're taking market share is across the board clients are focused whatever kind of work on clear ROI.

So thank you everyone. In closing, I want to thank all of our shareholders for your continued trust and support. And I want to thank all of our reinventors for everything you do every day for our clients and our communities. We'll talk to you next quarter.