Accenture plc - Quarter Report: 2024 February (Form 10-Q)

Deferred tax expense (benefit)()()Other, net() Change in assets and liabilities, net of acquisitions —Receivables and contract assets, current and non-current()()Other current and non-current assets()()Accounts payable()()Deferred revenues, current and non-current Accrued payroll and related benefits()()Income taxes payable, current and non-current()()Other current and non-current liabilities()()Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment()()Purchases of businesses and investments, net of cash acquired()()Proceeds from the sale of businesses and investments Other investing, net Net cash provided by (used in) investing activities()()CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of shares Purchases of shares()()Proceeds from (repayments of) debt, net()()Cash dividends paid()()Other financing, net()()Net cash provided by (used in) financing activities()()Effect of exchange rate changes on cash and cash equivalents()()NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS()()

CASH AND CASH EQUIVALENTS, beginning of period

CASH AND CASH EQUIVALENTS, end of period

$ $ SUPPLEMENTAL CASH FLOW INFORMATION:Income taxes paid, net$ $

The accompanying Notes are an integral part of these Consolidated Financial Statements.


Table of Contents	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

and $, respectively. The change in the allowance is primarily due to immaterial write-offs and changes in gross client receivables and contract assets.

$ Investments without readily determinable fair values Total non-current investments$ $

For investments in which we can exercise significant influence but do not control, we use the equity method of accounting. Equity method investments are initially recorded at cost and our proportionate share of gains and losses of the investee are included as a component of Other income (expense), net.


Table of Contents	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

and $, respectively. $ $ $ Amortization - Deferred transition Amortization - Intangible assets Operating lease cost Other Total depreciation, amortization and other$ $ $ $

Business Optimization

During the second quarter of fiscal 2023, we initiated actions to streamline our operations, transform our non-billable corporate functions and consolidate our office space to reduce costs. We recorded $ billion in fiscal 2023 related to these actions and expect to record approximately $ million in fiscal 2024 for a total of $ billion, primarily related to employee severance. The actual amount and timing of severance and other personnel costs are dependent in part upon local country consultation processes and regulations and may differ from our current expectations and estimates.

$ $ $ EMEA (1) Growth Markets (1) Total business optimization costs$ $ $ $

(1)Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.


Table of Contents	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

billion and $ billion as of February 29, 2024 and August 31, 2023, 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 % of our remaining performance obligations as of February 29, 2024 as revenue in fiscal 2024, an additional % in fiscal 2025, 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 and six months ended February 29, 2024 and February 28, 2023, respectively.

Contract Balances

Deferred transition revenues were $ and $ as of February 29, 2024 and August 31, 2023, 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 transition costs were $ and $ as of February 29, 2024 and August 31, 2023, respectively, and are included in Deferred contract costs. Generally, deferred transition costs are recoverable under the contract in the event of early termination and are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows of the related contract are not sufficient to recover the carrying amount of contract assets.

$ Contract assets (current) Receivables and contract assets, net of allowance (current) Contract assets (non-current) Deferred revenues (current) Deferred revenues (non-current)

Changes in the contract asset and liability balances during the six months ended February 29, 2024 were a result of normal business activity and not materially impacted by any other factors.

Revenues recognized during the three and six months ended February 29, 2024 that were included in Deferred revenues as of November 30, 2023 and August 31, 2023 were $ billion and $ billion, respectively. Revenues recognized during the three and six months ended February 28, 2023 that were included in Deferred revenues as of November 30, 2022 and August 31, 2022 were $ billion and $ billion, respectively.


Table of Contents	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

$ $ $ Basic weighted average Class A ordinary shares Basic earnings per share$ $ $ $ Diluted earnings per shareNet income attributable to Accenture plc$ $ $ $ Net income attributable to noncontrolling interests in Accenture Canada Holdings Inc. (1) Net income for diluted earnings per share calculation$ $ $ $ Basic weighted average Class A ordinary shares Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1) Diluted effect of employee compensation related to Class A ordinary shares Diluted effect of share purchase plans related to Class A ordinary shares Diluted weighted average Class A ordinary shares Diluted earnings per share$ $ $ $


Table of Contents	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		15

)$()$()$() Foreign currency translation() () Income tax benefit (expense) ()() () Portion attributable to noncontrolling interests () () Foreign currency translation, net of tax() () Ending balance()()()()Defined benefit plans Beginning balance()()()() Reclassifications into net periodic pension and
post-retirement expense Income tax benefit (expense)()()()() Portion attributable to noncontrolling interests()()()() Defined benefit plans, net of tax Ending balance()()()()Cash flow hedges Beginning balance ()() Unrealized gain (loss) () () Reclassification adjustments into Cost of services() () Income tax benefit (expense) () () Portion attributable to noncontrolling interests() () Cash flow hedges, net of tax () () Ending balance (1) () ()Accumulated other comprehensive loss$()$()$()$()

of net unrealized gains 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 (In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q		16

, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.

$ $ $ EMEA (1) () Growth Markets (1) () Total$ $ $()$

Goodwill includes immaterial adjustments related to prior period acquisitions.

Intangible Assets

$()$ $ $()$ Technology () () Patents () () Other () () Total$ $()$ $ $()$

Total amortization related to our intangible assets was $ and $ for the three and six months ended February 29, 2024, respectively. Total amortization related to our intangible assets was $ and $ for the three and six months ended February 28, 2023, respectively.

2025 2026 2027 2028 Thereafter Total$


Table of Contents	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		17

October 12, 2023$ October 10, 2023$ $ February 15, 2024 January 18, 2024 January 16, 2024 %$84

Amounts in tables may not total due to rounding.

(1)Costs recorded in connection with our business optimization initiatives, primarily for employee severance.

(2)Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.

Interest Income

Interest income for the second quarter of fiscal 2024 was $65 million, an increase of $15 million over the second quarter of fiscal 2023. Interest income for the six months ended February 29, 2024 was $167 million, an increase of $72 million over the six months ended February 28, 2023. The increase for the three and six months ended February 29, 2024 was primarily due to higher interest rates compared to the three and six months ended February 28, 2023.

Other Income (Expense), net

Other income (expense), net primarily consists of foreign currency gains and losses, non-operating components of pension expense, as well as gains and losses associated with our investments. During the three and six months ended February 29, 2024, Other income (expense), net decreased $31 million and $24 million from the three and six months ended February 28, 2023, respectively, primarily due to higher gains on investments, partially offset by higher foreign currency exchange losses. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements."

Income Tax Expense

The effective tax rates for the second quarter of fiscal 2024 and 2023 were 18.4% and 20.4%, respectively. The lower effective tax rate for the second quarter of fiscal 2024 was primarily due to higher tax benefits from share-based payments. The effective tax rates for the six months ended February 29, 2024 and February 28, 2023 were 21.1% and 22.0%, respectively.


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ACCENTURE FORM 10-Q	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Income Tax Expense Excluding Business Optimization Costs (Non-GAAP)

Excluding the business optimization costs of $115 million and $244 million, and related reduction in tax expense of $28 million and $52 million, our adjusted effective tax rates were 18.8% and 20.4% for the second quarter of fiscal 2024 and 2023, respectively. Excluding the business optimization costs of $255 million and $244 million, and related reduction in tax expense of $62 million and $52 million, our adjusted effective tax rates were 21.2% and 22.0% for the six months ended February 29, 2024 and February 28, 2023, respectively.

Earnings Per Share

Diluted earnings per share were $2.63 for the second quarter of fiscal 2024, compared with $2.39 for the second quarter of fiscal 2023. Diluted earnings per share were $5.73 for the six months ended February 29, 2024, compared with $5.47 for the six months ended February 28, 2023. For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Earnings Per Share Excluding Business Optimization Costs (Non-GAAP)

The business optimization costs of $87 million and $193 million, net of related taxes, decreased diluted earnings per share by $0.14 and $0.30 for the second quarter of fiscal 2024 and 2023, respectively. Adjusted diluted earnings per share were $2.77 and $2.69 for the second quarter of fiscal 2024 and 2023, respectively. The business optimization costs of $193 million, net of related taxes, decreased diluted earnings per share by $0.30 for both the six months ended February 29, 2024 and February 28, 2023. Adjusted diluted earnings per share were $6.04 and $5.77 for the six months ended February 29, 2024 and February 28, 2023, respectively.


	Three Months Ended		Six Months Ended
February 29, 2024 As Reported	$	2.63	$	5.73

Amounts in table may not total due to rounding.

(1)This facility, which matures on April 24, 2026, provides unsecured, revolving borrowing capacity for general corporate capital purposes, including the issuance of letters of credit and short-term commercial paper. Borrowings under this facility will accrue interest at the applicable risk-free rate plus a spread. We continue to be in compliance with relevant covenant terms. The facility is subject to annual commitment fees. As of February 29, 2024, we had $100 million of commercial paper outstanding and backed by this facility, with a weighted-average effective interest rate of 5.4%.

Under the borrowing facilities described above, we had an aggregate of $1,037 million of letters of credit outstanding as of February 29, 2024. We also had $100 million of commercial paper outstanding as of February 29, 2024. The amount of commercial paper and letters of credit outstanding reduces the available borrowing capacity under these facilities.


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ACCENTURE FORM 10-Q	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Share Purchases and Redemptions

The Board of Directors of Accenture plc has authorized funding for our publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares and for purchases and redemptions of Accenture plc Class A ordinary shares and Accenture Canada Holdings Inc. exchangeable shares held by current and former members of Accenture Leadership and their permitted transferees.

Our share purchase activity during the six months ended February 29, 2024 is as follows:


	Accenture plc Class A Ordinary Shares			Accenture Canada Holdings Inc. Exchangeable Shares
(in millions of U.S. dollars, except share amounts)	Shares	Amount		Shares	Amount
Open-market share purchases (1)	5,659,433	$	1,863	—	$	—
Other share purchase programs	—	—		18,684	6
Other purchases (2)	1,892,301	644		—	—
Total	7,551,734	$	2,507	18,684	$	6

(1)We conduct a publicly announced open-market share purchase program for Accenture plc Class A ordinary shares. These shares are held as treasury shares by Accenture plc and may be utilized to provide for select employee benefits, such as equity awards to our employees.

(2)During the six months ended February 29, 2024, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under those plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.

We intend to continue to use a significant portion of cash generated from operations for share repurchases during the remainder of fiscal 2024. The number of shares ultimately repurchased under our open-market share purchase program may vary depending on numerous factors, including, without limitation, share price and other market conditions, our ongoing capital allocation planning, the levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic and/or business conditions, and board and management discretion. Additionally, as these factors may change over the course of the year, the amount of share repurchase activity during any particular period cannot be predicted and may fluctuate from time to time. Share repurchases may be made from time to time through open-market purchases, in respect of purchases and redemptions of Accenture Canada Holdings Inc. exchangeable shares, through the use of Rule 10b5-1 plans and/or by other means. The repurchase program may be accelerated, suspended, delayed or discontinued at any time, without notice.

Off-Balance Sheet Arrangements

In the normal course of business and in conjunction with some client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients with respect to certain matters.

To date, we have not been required to make any significant payment under any of the arrangements described above. For further discussion of these transactions, see Note 10 (Commitments and Contingencies) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Significant Accounting Policies

See Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”


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ACCENTURE FORM 10-Q	Item 3. Quantitative and Qualitative Disclosures About Market Risk	33

Item 3. Quantitative and Qualitative Disclosures About Market Risk

During the six months ended February 29, 2024, there were no material changes to the information on market risk exposure disclosed in our Annual Report on Form 10-K for the year ended August 31, 2023. For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, 2023, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended August 31, 2023.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the principal executive officer and the principal financial officer of Accenture plc have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the second quarter of fiscal 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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ACCENTURE FORM 10-Q	Part II — Other Information	34

Part II — Other Information

Item 1. Legal Proceedings

The information set forth under “Legal Contingencies” in Note 10 (Commitments and Contingencies) to our Consolidated Financial Statements under Part I, Item 1, “Financial Statements,” is incorporated herein by reference.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2023 (the “Annual Report”). There have been no material changes to the risk factors disclosed in our Annual Report.

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

Purchases of Accenture plc Class A Ordinary Shares

The following table provides information relating to our purchases of Accenture plc Class A ordinary shares during the second quarter of fiscal 2024.


Period	Total Number of Shares Purchased	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3)
					(in millions of U.S. dollars)
December 1, 2023 — December 31, 2023	1,075,866	$	341.21	864,166	$	5,114
January 1, 2024 — January 31, 2024	1,799,089	350.56		708,412	4,861
February 1, 2024 — February 29, 2024	866,846	369.88		647,417	4,621
Total (4)	3,741,801	$	352.35	2,219,995

(1)Average price paid per share reflects the total cash outlay for the period, divided by the number of shares acquired, including those acquired by purchase or redemption for cash and any acquired by means of employee forfeiture.

(2)Since August 2001, the Board of Directors of Accenture plc has authorized and periodically confirmed a publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares. During the second quarter of fiscal 2024, we purchased 2,219,995 Accenture plc Class A ordinary shares under this program for an aggregate price of $788 million. The open-market purchase program does not have an expiration date.

(3)As of February 29, 2024, our aggregate available authorization for share purchases and redemptions was $4,621 million which management has the discretion to use for either our publicly announced open-market share purchase program or the other share purchase programs. Since August 2001 and as of February 29, 2024, the Board of Directors of Accenture plc has authorized an aggregate of $50.1 billion for share purchases and redemptions by Accenture plc and Accenture Canada Holdings Inc.

(4)During the second quarter of fiscal 2024, Accenture purchased 1,521,806 Accenture plc Class A ordinary shares in transactions unrelated to publicly announced share plans or programs. These transactions consisted of acquisitions of Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under our various employee equity share plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.

Item 3. Defaults Upon Senior Securities

None.


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ACCENTURE FORM 10-Q	Part II — Other Information	35

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Trading Arrangements

During the second quarter of fiscal 2024, no executive officer or director or any Rule 10b5-1 trading arrangements (as defined in Item 408(a) of Regulation S-K) or non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits

Exhibit Index:


Exhibit Number						Exhibit
3.1						Amended and Restated Memorandum and Articles of Association of Accenture plc (incorporated by reference to Exhibit 3.1 to Accenture plc’s 8-K filed on February 7, 2018)

10.1*						Form of Director Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share Incentive Plan (filed herewith)

10.2*						Form of Key Executive Performance-Based Award Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share Incentive Plan (filed herewith)

10.3*						Form of Accenture Leadership Performance Equity Award Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share Incentive Plan (filed herewith)

10.4*						Form of Voluntary Equity Investment Program Matching Grant Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share Incentive Plan (filed herewith)

10.5*						Form of CEO Discretionary Grant Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share Incentive Plan (filed herewith)

10.6*						Form of Key Executive Performance-Based Award Restricted Share Unit Agreement in France (filed herewith)

10.7*						Form of Accenture Leadership Performance Equity Award Restricted Share Unit Agreement in France (filed herewith)

10.8*						Amended and Restated Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.1 to Accenture plc's 8-K filed on January 31, 2024)

10.9*						Amended and Restated Accenture plc 2010 Employee Share Purchase Plan (incorporated by reference to Exhibit 10.2 to Accenture plc’s 8-K filed on January 31, 2024)

31.1						Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2						Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1						Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2						Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101						The following financial information from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended February 29, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of February 29, 2024 (Unaudited) and August 31, 2023, (ii) Consolidated Income Statements (Unaudited) for the three and six months ended February 29, 2024 and February 28, 2023, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended February 29, 2024 and February 28, 2023, (iv) Consolidated Shareholders’ Equity Statement (Unaudited) for the three and six months ended February 29, 2024 and February 28, 2023, (v) Consolidated Cash Flows Statements (Unaudited) for the six months ended February 29, 2024 and February 28, 2023 and (vi) the Notes to Consolidated Financial Statements (Unaudited)


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ACCENTURE FORM 10-Q	Part II — Other Information	36


104						The cover page from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended February 29, 2024, formatted in Inline XBRL (included as Exhibit 101)


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ACCENTURE FORM 10-Q	Signatures	37

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: March 21, 2024


			ACCENTURE PLC

			By:			/s/ KC McClure
			Name:			KC McClure
			Title:			Chief Financial Officer
						(Principal Financial Officer and Authorized Signatory)

Accenture plc - Quarter Report: 2024 February (Form 10-Q)

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