Accenture

Accenture’s moat is grounded in trusted brand and reputation with large enterprises and governments, high switching costs embedded in multi-year managed services and platform operations, and efficient scale enabled by global delivery and top-tier alliances with Microsoft, AWS, Google Cloud, SAP, Salesforce and others.

The Accenture–Microsoft–Avanade alliance, majority-owned by Accenture, is a long-standing differentiator that deepens access to talent, certifications and co-innovation. These factors support industry-leading returns on capital and large-account penetration.

Risks include generative AI automating portions of coding and process work and increased competition from hyperscaler professional services and Indian IT peers, but Accenture’s AI investments and Reinvention Services structure position it to capture the demand shift rather than be displaced.

Morningstar also assesses Accenture as a wide-moat business due to intangible assets and switching costs, aligning with our view.

Pricing power is solid but not absolute. Brand credibility, mission-critical work and long-term managed services contracts allow periodic rate-card increases and mix shift to higher-value work. FY2025 adjusted operating margin was 15.6 percent, with modest expansion despite wage inflation and optimization charges.

However, client procurement cycles and competition limit unilateral price hikes, and AI-enabled delivery efficiencies may pressure labor-based pricing even as they expand scope. Overall, we see moderate and improving pricing power as AI use-cases scale and as Accenture monetizes proprietary assets and platforms within managed services.

Accenture benefits from a balanced mix of consulting and recurring managed services (roughly half of FY2025 revenue from Managed Services), diversified across Americas, EMEA, and Asia Pacific and five industry groups. Bookings were 80.6 billion dollars in FY2025 with a 1.2 book-to-bill, supporting revenue visibility.

Guidance for FY2026 is for 2 to 5 percent revenue growth (3 to 6 percent excluding U.S. federal), reflecting macro and federal-spend headwinds but still indicating steady demand. Social chatter around quarterly results often focuses on bookings volatility rather than franchise health, which is typical for the sector.

Overall, predictability is strong for a people-based services firm, anchored by multi-year managed services and broad client roster.

The balance sheet is robust. Cash was 11.5 billion dollars at Aug 31, 2025. As of May 31, 2025, the company had 5.0 billion dollars of senior notes outstanding (maturing 2027 to 2034) plus about 0.1 billion dollars of commercial paper, implying a substantial net cash position and minimal refinancing risk given strong FCF.

FY2025 free cash flow was 10.87 billion dollars on 11.47 billion dollars operating cash flow and 0.6 billion dollars capex, reflecting excellent cash conversion and asset-light economics. These metrics provide considerable resilience through cycles.

Management consistently returns capital while investing for growth.

In FY2025, Accenture returned 8.3 billion dollars to shareholders (4.6 billion dollars in buybacks and 3.7 billion dollars in dividends) and increased the quarterly dividend to 1.63 dollars payable November 14, 2025. It also executed approximately 23 acquisitions (~1.5 billion dollars) and continued targeted venture investments in AI startups (e.g., Opaque, Snorkel, YearOne, CLIKA) to enhance capabilities.

We view the M&A program as disciplined and capability-focused, though frequent acquisitions require integration rigor. Share-based compensation is present but offset by buybacks, with total shares outstanding around 622 million at year-end. Overall, capital allocation is shareholder-friendly and balanced.

Chair and CEO Julie Sweet has led Accenture since 2019, stewarding the pivot to data and AI and the new Reinvention Services structure. Angie Park became CFO on December 1, 2024, after nearly three decades at Accenture, providing continuity in financial discipline.

Leadership changes announced June 20, 2025, elevate Manish Sharma to Chief Services Officer and reorganize execution to accelerate AI-led delivery. We view governance and bench strength as strong and culturally aligned with long-term compounding.