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

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended August 31, 2022, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended August 31, 2022.

We use the terms “Accenture,” “we,” “our” and “us” in this report to refer to Accenture plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “fiscal 2023” means the 12-month period that will end on August 31, 2023. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.

We use the term “in local currency” so that certain financial results may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of business performance. Financial results “in local currency” are calculated by restating current period activity into U.S. dollars using the comparable prior year period’s foreign currency exchange rates. This approach is used for all results where the functional currency is not the U.S. dollar.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our operations, results of operations and other matters that are based on our current expectations, estimates, assumptions and projections. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “aspires,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook,” “goal,” “target,” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to those identified below.

Business Risks

• Our results of operations have been, and may in the future be, adversely affected by volatile, negative or uncertain economic and political conditions and the effects of these conditions on our clients’ businesses and levels of business activity.

• Our business depends on generating and maintaining client demand for our services and solutions, including through the adaptation and expansion of our services and solutions in response to ongoing changes in technology and offerings, and a significant reduction in such demand or an inability to respond to the evolving technological environment could materially affect our results of operations.

• If we are unable to match people and their skills with client demand around the world and attract and retain professionals with strong leadership skills, our business, the utilization rate of our professionals and our results of operations may be materially adversely affected.

• We face legal, reputational and financial risks from any failure to protect client and/or Accenture data from security incidents or cyberattacks.

• The markets in which we operate are highly competitive, and we might not be able to compete effectively.

• Our ability to attract and retain business and employees may depend on our reputation in the marketplace.

• Our environmental, social and governance (ESG) commitments and disclosures may expose us to reputational risks and legal liability.

• If we do not successfully manage and develop our relationships with key ecosystem partners or if we fail to anticipate and establish new alliances in new technologies, our results of operations could be adversely affected.

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Financial Risks

• Our profitability could materially suffer if we are unable to obtain favorable pricing for our services and solutions, if we are unable to remain competitive, if our cost-management strategies are unsuccessful or if we experience delivery inefficiencies or fail to satisfy certain agreed-upon targets or specific service levels.

• Changes in our level of taxes, as well as audits, investigations and tax proceedings, or changes in tax laws or in their interpretation or enforcement, could have a material adverse effect on our effective tax rate, results of operations, cash flows and financial condition.

• Our results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates.

• Changes to accounting standards or in the estimates and assumptions we make in connection with the preparation of our consolidated financial statements could adversely affect our financial results.

Operational Risks

• As a result of our geographically diverse operations and strategy to continue to grow in key markets around the world, we are more susceptible to certain risks.

• If we are unable to manage the organizational challenges associated with our size, we might be unable to achieve our business objectives.

• We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.

Legal and Regulatory Risks

• Our business could be materially adversely affected if we incur legal liability.

• Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business.

• Our work with government clients exposes us to additional risks inherent in the government contracting environment.

• If we are unable to protect or enforce our intellectual property rights, or if our services or solutions infringe upon the intellectual property rights of others or we lose our ability to utilize the intellectual property of others, our business could be adversely affected.

• We are incorporated in Ireland and Irish law differs from the laws in effect in the United States and might afford less protection to our shareholders. We may also be subject to criticism and negative publicity related to our incorporation in Ireland.

For a more detailed discussion of these factors, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2022. In addition, the timing and amount of costs related to our business optimization actions and the nature and extent of benefits realized from such actions are subject to uncertainties and other factors, including local country consultation processes and regulations, and may differ from our current expectations and estimates. Our forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to update any forward-looking statements.

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Overview

Accenture is a leading global professional services company, providing a broad range of services and solutions across Strategy & Consulting, Technology, Operations, Industry X and Song. We serve clients in three geographic markets: North America, Europe and Growth Markets (Asia Pacific, Latin America, Africa and the Middle East). We combine our strength in technology with industry experience, functional expertise and global delivery capability to help the world’s leading businesses, governments and other organizations build their digital core, optimize their operations, accelerate revenue growth and enhance citizen services—creating tangible value at speed and scale.

Our results of operations are affected by economic conditions, including macroeconomic conditions, the overall inflationary environment and levels of business confidence. There continues to be significant economic and geopolitical uncertainty in many markets around the world, which has impacted and may continue to impact our business. These conditions have slowed the pace and level of client spending for smaller contracts with a shorter duration, especially for our consulting services. From an industry perspective, we are also experiencing reduced demand particularly in our Communications, Media & Technology industry group.

Key Metrics

Key metrics for the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022 are included below. We have presented operating margin and diluted earnings per share on a non-GAAP or “adjusted” basis to exclude the impact of $347 million in business optimization costs and, with respect to diluted earnings per share, the impact of a $253 million investment gain recorded during the third quarter of fiscal 2023. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

• Revenues of $16.6 billion, representing 3% growth in U.S. dollars and 5% growth in local currency;

• New bookings of $17.2 billion, an increase of 2% in U.S. dollars and 4% in local currency;

• Operating margin of 14.2%, compared to 16.1% in the third quarter of fiscal 2022; adjusted operating margin expanded 20 basis points to 16.3%;

• Diluted earnings per share of $3.15, compared to $2.79 in the third quarter of fiscal 2022; adjusted earnings per share increased 14% to $3.19; and

• Cash returned to shareholders of $1.5 billion, including share purchases of $789 million and dividends of $708 million.

Revenues

						Three Months Ended									Percent Increase (Decrease) U.S. Dollars						Percent Increase (Decrease) Local Currency
(in billions of U.S. Dollars)						May 31, 2023			May 31, 2022
Geographic Markets			North America			$	7.7		$	7.6					1		%				2		%
Europe			5.6			5.4						5						7
Growth Markets			3.2			3.2						1						9
Total Revenues			$	16.6		$	16.2					3		%				5		%
Industry Groups (1)			Communications, Media & Technology			$	2.9		$	3.2					(11)		%				(8)		%
Financial Services			3.1			3.1						2						5
Health & Public Service			3.3			2.9						12						14
Products			5.0			4.8						3						6
Resources			2.3			2.1						8						12
Total Revenues			$	16.6		$	16.2					3		%				5		%
Type of Work			Consulting			$	8.7		$	9.0					(4)		%				(1)		%
Managed Services (2)			7.9			7.1						10						13
Total Revenues			$	16.6		$	16.2					3		%				5		%

Amounts in table may not total due to rounding.

(1)Effective June 1, 2022, we revised the reporting of our industry groups for the movement of Aerospace & Defense from Communications, Media & Technology to Products. Prior period amounts have been reclassified to conform with the current period presentation.

(2)Previously referred to as our outsourcing business.

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Revenues for the third quarter of fiscal 2023 increased 3% in U.S. dollars and 5% in local currency compared to the third quarter of fiscal 2022. Revenues for the nine months ended May 31, 2023 increased 4% in U.S. dollars and 10% in local currency compared to the nine months ended May 31, 2022. During the third quarter of fiscal 2023, revenue growth in local currency was strong in Growth Markets and Europe and modest in North America. We experienced local currency revenue growth that was very strong in Health & Public Service and Resources, strong in Products and solid in Financial Services, partially offset by a decline in Communications, Media & Technology. Revenue growth in local currency was very strong in managed services, partially offset by a slight decline in consulting during the third quarter of fiscal 2023. In the third quarter of fiscal 2023, pricing, which we define as the contract profitability or margin on the work that we sell, was lower in some areas of our business.

In our consulting business, revenues for the third quarter of fiscal 2023 decreased 4% in U.S. dollars and 1% in local currency compared to the third quarter of fiscal 2022. Consulting revenues for the nine months ended May 31, 2023 decreased 1% in U.S. dollars and increased 4% in local currency compared to the nine months ended May 31, 2022. The decline in consulting revenue in local currency for the third quarter of fiscal 2023 was driven by a modest decline in North America, partially offset by modest growth in Growth Markets, while Europe was flat. Our consulting revenue continues to be driven by helping our clients accelerate their digital transformation, including moving to the cloud, embedding security across the enterprise and adopting new technologies. In addition, clients continue to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to accelerate growth and improve customer experiences. While we continue to experience demand for these services, we are seeing a slower pace and level of client spending, especially for smaller contracts with a shorter duration.

In our managed services business, revenues for the third quarter of fiscal 2023 increased 10% in U.S. dollars and 13% in local currency compared to the third quarter of fiscal 2022. Managed services revenues for the nine months ended May 31, 2023 increased 11% in U.S. dollars and 16% in local currency compared to the nine months ended May 31, 2022. Managed services revenue in local currency for the third quarter of fiscal 2023 was driven by very strong growth in Growth Markets and Europe and strong growth in North America. We continue to experience growing demand to assist clients with application modernization and maintenance, cloud enablement and managed security services. In addition, clients continue to be focused on transforming their operations through data and analytics, automation and artificial intelligence to drive productivity and operational cost savings.

As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange rate fluctuations. While a significant portion of our revenues are in U.S. dollars, the majority of our revenues are denominated in other currencies, including the Euro, Japanese yen and U.K. pound. There continues to be volatility in foreign currency exchange rates. Unfavorable fluctuations in foreign currency exchange rates have had and could in the future have a material effect on our financial results. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be higher. If the U.S. dollar strengthens against other currencies, resulting in unfavorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be lower. The U.S. dollar strengthened against various currencies during the three and nine months ended May 31, 2023 compared to the three and nine months ended May 31, 2022, resulting in unfavorable currency translation and U.S. dollar revenue growth that was approximately 2.5% and 5.5% lower, respectively, than our revenue growth in local currency. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2023, we estimate that our full fiscal 2023 revenue growth in U.S. dollars will be approximately 4% lower than our revenue growth in local currency.

People Metrics

Utilization						Workforce						Annualized Voluntary Attrition
91%						732,000						13%
consistent with the third quarter of fiscal 2022						compared to approximately 710,000 as of May 31, 2022						compared to 20% in the third quarter of fiscal 2022

Utilization for the third quarter of fiscal 2023 was 91%, consistent with the third quarter of fiscal 2022. We hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our operating expenses. Our workforce, the majority of which serves our clients, increased to approximately 732,000 as of May 31, 2023, compared to approximately 710,000 as of May 31, 2022. The year-over-year increase in our workforce reflects people added in connection with acquisitions and hiring for specific skills.

For the third quarter of fiscal 2023, annualized attrition, excluding involuntary terminations, was 13%, down from 20% in the third quarter of fiscal 2022. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand.

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In addition, we adjust compensation in order to attract and retain appropriate numbers of qualified employees. For the majority of our people, compensation increases became effective December 1st of fiscal 2023. Given the overall inflationary environment, compensation has increased faster than in prior years. We strive to adjust pricing as well as drive cost and delivery efficiencies, such as changing the mix of people and utilizing technology, to reduce the impact of compensation increases on our margin and contract profitability.

Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to: match people and skills with the types or amounts of services and solutions clients are demanding; recover or offset increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate new employees.

Operating Expenses

The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs. Cost of services is primarily driven by the cost of people serving our clients, which consists mainly of compensation, subcontractor and other payroll costs, and non-payroll costs on managed services contracts. Cost of services includes a variety of activities such as: contract delivery; recruiting and training; software development; and integration of acquisitions. Sales and marketing costs are driven primarily by: compensation costs for business development activities; marketing- and advertising-related activities; and certain acquisition-related costs. General and administrative costs primarily include costs for people that are non-client-facing, information systems, office space and certain acquisition-related costs.

Gross margin (Revenues less Cost of services as a percentage of Revenues) for the third quarter of fiscal 2023 was 33.4%, compared with 32.9% for the third quarter of fiscal 2022. Gross margin for the nine months ended May 31, 2023 was 32.3% compared with 32.0% for the nine months ended May 31, 2022. The increase in gross margin for the third quarter of fiscal 2023 and nine months ended May 31, 2023 was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel.

Sales and marketing and General and administrative costs as a percentage of revenues were 17.0% for the third quarter of fiscal 2023 and 16.8% for the nine months ended May 31, 2023, compared with 16.8% for the third quarter of fiscal 2022 and 16.6% for the nine months ended May 31, 2022. For the third quarter of fiscal 2023 and nine months ended May 31, 2023, compared to the same period in fiscal 2022, Sales and marketing costs increased 20 and 30 basis points, respectively, due to higher selling and other business development costs as a percentage of revenues. For the third quarter of fiscal 2023 and nine months ended May 31, 2023, compared to the same period in fiscal 2022, General and administrative costs were flat and decreased 10 basis points, respectively, as a percentage of revenues.

During the three and nine months ended May 31, 2023, we recorded $347 million and $591 million in business optimization costs, respectively, primarily for employee severance. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Operating margin (Operating income as a percentage of Revenues) for the third quarter of fiscal 2023 was 14.2%, compared with 16.1% for the third quarter of fiscal 2022. Operating margin for the nine months ended May 31, 2023 was 14.3%, compared with 15.4% for the nine months ended May 31, 2022. The business optimization costs recorded during the three and nine months ended May 31, 2023 reduced operating margin by 210 and 130 basis points, respectively. Excluding these costs, operating margin for both the three and nine months ended May 31, 2023 increased 20 basis points to 16.3% and 15.6%, respectively.

Other Income (Expense), net

During the three and nine months ended May 31, 2023, we recorded a gain of $253 million related to our investment in Duck Creek Technologies. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Effective Tax Rate

The effective tax rates for the third quarter of fiscal 2023 and 2022 were 22.2% and 27.1%, respectively. The effective tax rates for the nine months ended May 31, 2023 and 2022 were 22.1% and 23.8%, respectively. Absent the business optimization costs of $347 million and $591 million and related reduction in tax expense of $80 million and $132 million, as well as an investment gain of $253 million and related tax expense of $9 million, our effective tax rates for the three and nine months ended May 31, 2023 were 24.0% and 22.7%, respectively.

Earnings Per Share

Diluted earnings per share were $3.15 for the third quarter of fiscal 2023, compared with $2.79 for the third quarter of fiscal 2022. Diluted earnings per share were $8.62 for the nine months ended May 31, 2023, compared with $8.11 for the nine months ended May 31, 2022. The $267 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.42 and the $244 million investment gain, net of related taxes, increased diluted earnings per share by $0.38 for the third quarter of fiscal 2023. Excluding these impacts, diluted earnings per share were $3.19 for the third quarter of fiscal 2023. The $459 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.72 and the $244

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million investment gain, net of related taxes, increased diluted earnings per share by $0.38 for the nine months ended May 31, 2023. Excluding these impacts, diluted earnings per share were $8.96 for the nine months ended May 31, 2023.

Non-GAAP Financial Measures

For fiscal 2023, we have presented effective tax rates and diluted earnings per share excluding the business optimization costs and investment gain, as well as operating income and operating margin excluding the business optimization costs, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior periods. While we believe that this non-GAAP financial information is useful in evaluating our operations, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.

New Bookings

			Three Months Ended									Percent Increase (Decrease) U.S. Dollars						Percent Increase (Decrease) Local Currency
(in billions of U.S. dollars)			May 31, 2023			May 31, 2022
Consulting			$	8.9		$	9.1					(2)		%				1		%
Managed Services (1)			8.3			7.8						6						9
Total New Bookings			$	17.2		$	17.0					2		%				4		%

Amounts in table may not total due to rounding.

(1)Previously referred to as our outsourcing business.

			Nine Months Ended									Percent Increase (Decrease) U.S. Dollars						Percent Increase (Decrease) Local Currency
(in billions of U.S. dollars)			May 31, 2023			May 31, 2022
Consulting			$	27.7		$	29.4					(6)		%				(1)		%
Managed Services (1)			27.9			23.9						17						22
Total New Bookings			$	55.6		$	53.3					4		%				10		%

(1)Previously referred to as our outsourcing business.

We provide information regarding our new bookings, which include new contracts, including those acquired through acquisitions, as well as renewals, extensions and changes to existing contracts, because we believe doing so provides useful trend information regarding changes in the volume of our new business over time. New bookings can vary significantly quarter to quarter depending in part on the timing of the signing of a small number of large managed services contracts. The types of services and solutions clients are demanding and the pace and level of their spending may impact the conversion of new bookings to revenues. For example, managed services bookings, which are typically for multi-year contracts, generally convert to revenue over a longer period of time compared to consulting bookings.

Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. New bookings involve estimates and judgments. There are no third-party standards or requirements governing the calculation of bookings. We do not update our new bookings for material subsequent terminations or reductions related to bookings originally recorded in prior fiscal years. New bookings are recorded using then-existing foreign currency exchange rates and are not subsequently adjusted for foreign currency exchange rate fluctuations.

The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice. Only the non-cancelable portion of these contracts is included in our remaining performance obligations disclosed in Note 2 (Revenues) to our Consolidated Financial Statements under Item 1, “Financial Statements.” Accordingly, a significant portion of what we consider contract bookings is not included in our remaining performance obligations.

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Results of Operations for the Three Months Ended May 31, 2023 Compared to the Three Months Ended May 31, 2022

Revenues by geographic market, industry group and type of work are as follows:

			Three Months Ended												Percent Increase (Decrease) U.S. Dollars						Percent Increase (Decrease) Local Currency						Percent of Revenues for the Three Months Ended
(in millions of U.S. dollars)			May 31, 2023						May 31, 2022												May 31, 2023						May 31, 2022
Geographic Markets
North America			$	7,721					$	7,614					1		%				2		%				47		%				47		%
Europe			5,615						5,350						5						7						34						33
Growth Markets			3,228						3,195						1						9						19						20
Total			$	16,565					$	16,159					3		%				5		%				100		%				100		%
Industry Groups (1)
Communications, Media & Technology			$	2,880					$	3,223					(11)		%				(8)		%				17		%				20		%
Financial Services			3,138						3,079						2						5						19						19
Health & Public Service			3,266						2,917						12						14						20						18
Products			4,968						4,806						3						6						30						30
Resources			2,311						2,134						8						12						14						13
Total			$	16,565					$	16,159					3		%				5		%				100		%				100		%
Type of Work
Consulting			$	8,693					$	9,032					(4)		%				(1)		%				52		%				56		%
Managed Services (2)			7,872						7,126						10						13						48						44
Total			$	16,565					$	16,159					3		%				5		%				100		%				100		%

Amounts in table may not total due to rounding.

(1)Effective June 1, 2022, we revised the reporting of our industry groups for the movement of Aerospace & Defense from Communications, Media & Technology to Products. Prior period amounts have been reclassified to conform with the current period presentation.

(2)Previously referred to as our outsourcing business.

Revenues

The following revenues commentary discusses local currency revenue changes for the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022:

Geographic Markets

• North America revenues increased 2% in local currency, led by growth in Public Service for our U.S. federal business, Health and Utilities. These increases were partially offset by declines in Communications & Media, High Tech, Software & Platforms and Banking & Capital Markets. Revenue growth was driven by the United States.

• Europe revenues increased 7% in local currency, led by growth in Banking & Capital Markets, Industrial and Public Service. Revenue growth was driven by Italy, Germany and France.

• Growth Markets revenues increased 9% in local currency, led by growth in Public Service, Chemicals & Natural Resources and Banking & Capital Markets. Revenue growth was led by Japan.

Operating Expenses

Operating expenses for the third quarter of fiscal 2023 increased $650 million, or 5%, compared to the third quarter of fiscal 2022, and increased as a percentage of revenues to 85.8% compared to 83.9% during this period. The increase as a percentage of revenues is primarily due to business optimization costs of $347 million recorded during the third quarter of fiscal 2023.

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Operating expenses by category are as follows:

			Three Months Ended
(in millions of U.S. dollars)			May 31, 2023												May 31, 2022												Increase (Decrease)
Operating Expenses			$	14,205					85.8		%				$	13,556					83.9		%				$	650
Cost of services			11,036						66.6						10,844						67.1						191
Sales and marketing			1,739						10.5						1,661						10.3						78
General and administrative costs			1,084						6.5						1,051						6.5						34
Business optimization costs			347						2.1						—						—						347

Amounts in table may not total due to rounding.

Cost of Services

Cost of services for the third quarter of fiscal 2023 increased $191 million, or 2%, over the third quarter of fiscal 2022, and decreased as a percentage of revenues to 66.6% from 67.1% during this period. Gross margin for the third quarter of fiscal 2023 increased as a percentage of revenues to 33.4% over 32.9% during the third quarter of fiscal 2022. The increase in gross margin was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel compared to the same period in fiscal 2022.

Sales and Marketing

Sales and marketing expense for the third quarter of fiscal 2023 increased $78 million, or 5%, over the third quarter of fiscal 2022, and increased as a percentage of revenues to 10.5% over 10.3% during this period due to higher selling and other business development costs.

General and Administrative Costs

General and administrative costs for the third quarter of fiscal 2023 increased $34 million, or 3%, over the third quarter of fiscal 2022, and remained flat as a percentage of revenues at 6.5% during this period.

Business Optimization Costs

During the third quarter of fiscal 2023, we recorded business optimization costs of $347 million, primarily for employee severance. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Operating Income and Operating Margin

Operating income for the third quarter of fiscal 2023 decreased $244 million, or 9%, from the third quarter of fiscal 2022. Operating margin for the third quarter of fiscal 2023 was 14.2%, compared with 16.1% for the third quarter of fiscal 2022. The business optimization costs reduced operating margin by 210 basis points. Excluding these costs, operating margin for the third quarter of fiscal 2023 increased 20 basis points to 16.3%.

Operating income and operating margin for each of the geographic markets are as follows:

			Three Months Ended
			May 31, 2023												May 31, 2022
(in millions of U.S. dollars)			Operating Income						Operating Margin						Operating Income						Operating Margin						Increase (Decrease)
North America			$	1,241					16		%				$	1,380					18		%				$	(139)
Europe			632						11						694						13						(62)
Growth Markets			486						15						530						17						(43)
Total			$	2,359					14.2		%				$	2,603					16.1		%				$	(244)

Amounts in table may not total due to rounding.

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Operating Income and Operating Margin Excluding Business Optimization Costs (Non-GAAP)

			Three Months Ended
			May 31, 2023																								May 31, 2022
(in millions of U.S. dollars)			Operating Income (GAAP)						Business Optimization (1)						Operating Income (Non-GAAP)						Operating Margin (Non-GAAP)						Operating Income (GAAP)						Operating Margin (GAAP)						Increase (Decrease)
North America			$	1,241					$	96					$	1,338					17		%				$	1,380					18		%				$	(42)
Europe			632						166						798						14						694						13						104
Growth Markets			486						84						571						18						530						17						41
Total			$	2,359					$	347					$	2,706					16.3		%				$	2,603					16.1		%				$	103

Amounts in table may not total due to rounding.

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

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the third quarter of fiscal 2023 was similar to that disclosed for revenue for each geographic market. In addition, during the third quarter of fiscal 2023 each geographic market’s operating income was unfavorably impacted by business optimization costs. The commentary below provides insight into other factors affecting geographic market performance and operating income for the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022:

• North America operating income decreased as revenue growth was more than offset by lower consulting contract profitability as well as higher selling and other business development costs as a percentage of revenues.

• Europe operating income increased primarily due to revenue growth.

• Growth Markets operating income increased primarily due to revenue growth, partially offset by an increase in selling and other business development costs as a percentage of revenues.

Interest Income

Interest income for the third quarter of fiscal 2023 was $82 million, an increase of $73 million over the third quarter of fiscal 2022. The increase was primarily due to higher interest rates.

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 third quarter of fiscal 2023, other income (expense), net increased $211 million over the third quarter of fiscal 2022, primarily due to higher gains on investments. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Loss on Disposition of Russia Business

We recorded a loss from the disposal of our business in Russia of $96 million during the third quarter of fiscal 2022.

Income Tax Expense

The effective tax rates for the third quarter of fiscal 2023 and 2022 were 22.2% and 27.1%, respectively. Absent the business optimization costs of $347 million and related reduction in tax expense of $80 million, and the investment gain of $253 million and related tax expense of $9 million, our effective tax rate was 24.0% for the three months ended May 31, 2023. The lower effective tax rate for the third quarter of fiscal 2023 was primarily due to lower tax expense from changes in the geographic distribution of earnings and higher benefits from adjustments to prior year tax liabilities.

Earnings Per Share

Diluted earnings per share were $3.15 for the third quarter of fiscal 2023, compared with $2.79 for the third quarter of fiscal 2022. The $267 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.42 and the $244 million investment gain, net of related taxes, increased diluted earnings per share by $0.38 for the third quarter of fiscal 2023. Excluding these impacts, diluted earnings per share were $3.19 for the third quarter of fiscal 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.”

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The increase in diluted earnings per share was due to the following factors:

			Earnings Per Share
Q3 FY22 As Reported			$	2.79
Higher revenue and operating results			0.12
Loss on disposition of Russia business recorded in fiscal 2022			0.15
Lower effective tax rate (excluding loss on disposition of Russia business)			0.09
Higher non-operating income (excluding loss on disposition of Russia business)			0.04
Lower share count			0.01
Higher net income attributable to noncontrolling interests			(0.01)
Q3 FY23 As Adjusted			$	3.19
Gain on an investment, net of tax			0.38
Business optimization costs			(0.42)
Q3 FY23 As Reported			$	3.15

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Results of Operations for the Nine Months Ended May 31, 2023 Compared to the Nine Months Ended May 31, 2022

Revenues by geographic market, industry group and type of work are as follows:

			Nine Months Ended												Percent Increase (Decrease) U.S. Dollars						Percent Increase (Decrease) Local Currency						Percent of Revenues for the Nine Months Ended
(in millions of U.S. dollars)			May 31, 2023						May 31, 2022												May 31, 2023						May 31, 2022
Geographic Markets
North America			$	22,742					$	21,598					5		%				6		%				47		%				47		%
Europe			15,988						15,460						3						12						33						33
Growth Markets			9,397						9,112						3						14						20						20
Total			$	48,127					$	46,171					4		%				10		%				100		%				100		%
Industry Groups (1)
Communications, Media & Technology			$	8,745					$	9,119					(4)		%				1		%				18		%				20		%
Financial Services			9,104						8,869						3						9						19						19
Health & Public Service			9,290						8,334						11						15						19						18
Products			14,353						13,797						4						10						30						30
Resources			6,634						6,052						10						16						14						13
Total			$	48,127					$	46,171					4		%				10		%				100		%				100		%
Type of Work
Consulting			$	25,416					$	25,747					(1)		%				4		%				53		%				56		%
Managed Services (2)			22,710						20,424						11						16						47						44
Total			$	48,127					$	46,171					4		%				10		%				100		%				100		%

Amounts in table may not total due to rounding.

(1)Effective June 1, 2022, we revised the reporting of our industry groups for the movement of Aerospace & Defense from Communications, Media & Technology to Products. Prior period amounts have been reclassified to conform with the current period presentation.

(2)Previously referred to as our outsourcing business.

Revenues

The following revenues commentary discusses local currency revenue changes for the nine months ended May 31, 2023 compared to the nine months ended May 31, 2022:

Geographic Markets

• North America revenues increased 6% in local currency, led by growth in Public Service for our U.S. federal business, Health and Utilities. These increases were partially offset by a decline in Communications & Media. Revenue growth was driven by the United States.

• Europe revenues increased 12% in local currency, led by growth in Industrial, Banking & Capital Markets and Public Service. Revenue growth was driven by Germany, Italy and France.

• Growth Markets revenues increased 14% in local currency, led by growth in Banking & Capital Markets, Public Service and Chemicals & Natural Resources. Revenue growth was led by Japan.

Operating Expenses

Operating expenses for the nine months ended May 31, 2023 increased $2,158 million, or 6%, compared to the nine months ended May 31, 2022, and increased as a percentage of revenues to 85.7% compared to 84.6% during this period. The increase as a percentage of revenues is primarily due to business optimization costs of $591 million recorded during the nine months ended May 31, 2023.

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Operating expenses by category are as follows:

			Nine Months Ended
(in millions of U.S. dollars)			May 31, 2023												May 31, 2022												Increase (Decrease)
Operating Expenses			$	41,230					85.7		%				$	39,072					84.6		%				$	2,158
Cost of services			32,577						67.7						31,415						68.0						1,161
Sales and marketing			4,852						10.1						4,530						9.8						322
General and administrative costs			3,210						6.7						3,126						6.8						83
Business optimization costs			591						1.2						—						—						591

Amounts in table may not total due to rounding.

Cost of Services

Cost of services for the nine months ended May 31, 2023 increased $1,161 million, or 4%, over the nine months ended May 31, 2022, and decreased as a percentage of revenues to 67.7% from 68.0% during this period. Gross margin for the nine months ended May 31, 2023 increased to 32.3% over 32.0% during the nine months ended May 31, 2022. The increase in gross margin was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel compared to the same period in fiscal 2022.

Sales and Marketing

Sales and marketing expense for the nine months ended May 31, 2023 increased $322 million, or 7%, over the nine months ended May 31, 2022, and increased as a percentage of revenues to 10.1% over 9.8% during this period due to higher selling and other business development costs.

General and Administrative Costs

General and administrative costs for the nine months ended May 31, 2023 increased $83 million, or 3%, over the nine months ended May 31, 2022, and decreased as a percentage of revenues to 6.7% from 6.8% during this period.

Business Optimization Costs

During the nine months ended May 31, 2023, we recorded business optimization costs of $591 million, primarily for employee severance. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Operating Income and Operating Margin

Operating income for the nine months ended May 31, 2023 decreased $202 million, or 3%, compared with the nine months ended May 31, 2022. Operating margin for the nine months ended May 31, 2023 was 14.3%, compared with 15.4% for the nine months ended May 31, 2022. The business optimization costs reduced operating margin by 130 basis points. Excluding these costs, operating margin for the nine months ended May 31, 2023 increased 20 basis points to 15.6%.

Operating income and operating margin for each of the geographic markets are as follows:

			Nine Months Ended
			May 31, 2023												May 31, 2022
(in millions of U.S. dollars)			Operating Income						Operating Margin						Operating Income						Operating Margin						Increase (Decrease)
North America			$	3,375					15		%				$	3,715					17		%				$	(340)
Europe			1,895						12						1,970						13						(75)
Growth Markets			1,627						17						1,414						16						213
Total			$	6,897					14.3		%				$	7,099					15.4		%				$	(202)

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Operating Income and Operating Margin Excluding Business Optimization Costs (Non-GAAP)

			Nine Months Ended
			May 31, 2023																								May 31, 2022
(in millions of U.S. dollars)			Operating Income (GAAP)						Business Optimization (1)						Operating Income (Non-GAAP)						Operating Margin (Non-GAAP)						Operating Income (GAAP)						Operating Margin (GAAP)						Increase (Decrease)
North America			$	3,375					$	273					$	3,648					16		%				$	3,715					17		%				$	(67)
Europe			1,895						207						2,102						13						1,970						13						132
Growth Markets			1,627						111						1,738						18						1,414						16						324
Total			$	6,897					$	591					$	7,488					15.6		%				$	7,099					15.4		%				$	389

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

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the nine months ended May 31, 2023 was similar to that disclosed for revenue for each geographic market. In addition, during the nine months ended May 31, 2023 each geographic market’s operating income was unfavorably impacted by business optimization costs. The commentary below provides insight into other factors affecting geographic market performance and operating income, including the impact of foreign currency exchange rates where significant, for the nine months ended May 31, 2023 compared with the nine months ended May 31, 2022:

• North America operating income decreased as revenue growth was more than offset by higher labor costs, including an increase in selling and other business development costs as a percentage of revenues.

• Europe operating income increased due to revenue growth in local currency, partially offset by the negative impact of foreign currency exchange rates.

• Growth Markets operating income increased primarily due to higher contract profitability and revenue growth in local currency, partially offset by the negative impact of foreign currency exchange rates.

Interest Income

Interest income for the nine months ended May 31, 2023 was $177 million, an increase of $155 million over the nine months ended May 31, 2022. The increase was primarily due to higher interest rates.

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 nine months ended May 31, 2023, other income (expense), net increased $176 million over the nine months ended May 31, 2022, primarily due to higher gains on investments, partially offset by foreign currency exchange losses. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements."

Loss on Disposition of Russia Business

We recorded a loss from the disposal of our business in Russia of $96 million during the nine months ended May 31, 2022.

Income Tax Expense

The effective tax rates for the nine months ended May 31, 2023 and 2022 were 22.1% and 23.8%, respectively. Absent the business optimization costs of $591 million and related reduction in tax expense of $132 million, and the investment gain of $253 million and related tax expense of $9 million, our effective tax rate was 22.7% for the nine months ended May 31, 2023. The lower effective tax rate for the nine months ended May 31, 2023 was primarily due to lower tax expense from changes in the geographic distribution of earnings and higher benefits from adjustments to prior year tax liabilities, partially offset by lower tax benefits from share-based payments.

Earnings Per Share

Diluted earnings per share were $8.62 for the nine months ended May 31, 2023, compared with $8.11 for the nine months ended May 31, 2022. The $459 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.72 and the $244 million investment gain, net of related taxes, increased diluted earnings per share by $0.38 for the nine months ended May 31, 2023. Excluding these impacts, diluted earnings per share were $8.96 for the nine months ended May 31, 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.”

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ACCENTURE FORM 10-Q						Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34

The increase in diluted earnings per share was due to the following factors:

			Earnings Per Share
FY22 As Reported			$	8.11
Higher revenue and operating results			0.46
Loss on disposition of Russia business recorded in fiscal 2022			0.15
Higher non-operating income (excluding loss on disposition of Russia business)			0.10
Lower effective tax rate (excluding loss on disposition of Russia business)			0.09
Lower share count			0.07
Higher net income attributable to noncontrolling interests			(0.02)
FY23 As Adjusted			$	8.96
Gain on an investment, net of tax			0.38
Business optimization costs			(0.72)
FY23 As Reported			$	8.62

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ACCENTURE FORM 10-Q						Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			35

Liquidity and Capital Resources

As of May 31, 2023, Cash and cash equivalents was $8.5 billion, compared with $7.9 billion as of August 31, 2022.

Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are summarized in the following table:

			Nine Months Ended
(in millions of U.S. dollars)			May 31, 2023						May 31, 2022						Change
Net cash provided by (used in):
Operating activities			$	6,115					$	5,751					$	364
Investing activities			(1,255)						(2,852)						1,597
Financing activities			(4,165)						(4,210)						45
Effect of exchange rate changes on cash and cash equivalents			(49)						(154)						105
Net increase (decrease) in cash and cash equivalents			$	646					$	(1,465)					$	2,110

Amounts in table may not total due to rounding.

Operating activities: The $364 million increase in operating cash flows was primarily due to higher net income as well as higher collections on net client balances (receivables from clients, contract assets and deferred revenues), partially offset by higher spending on certain compensation payments.

Investing activities: The $1,597 million decrease in cash used was primarily due to lower spending on business acquisitions and higher proceeds from the sale of businesses and investments. For additional information, see Note 5 (Business Combinations) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Financing activities: The $45 million decrease in cash used was primarily due to a decrease in the net purchases of shares as well as an increase in net proceeds from share issuances, partially offset by an increase in cash dividends paid. For additional information, see Note 7 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

We believe that our current and longer-term working capital, investments and other general corporate funding requirements will be satisfied for the next twelve months and thereafter through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.

Substantially all of our cash is held in jurisdictions where there are no regulatory restrictions or material tax effects on the free flow of funds. Domestic cash inflows for our Irish parent, principally dividend distributions from lower-tier subsidiaries, have been sufficient to meet our historic cash requirements, and we expect this to continue into the future.

Borrowing Facilities

As of May 31, 2023, we had the following borrowing facilities, including the issuance of letters of credit, to support general working capital purposes:

(in millions of U.S. dollars)			Facility Amount						Borrowings Under Facilities
Syndicated loan facility			$	3,000					$	—
Separate, uncommitted, unsecured multicurrency revolving credit facilities			1,755						—
Local guaranteed and non-guaranteed lines of credit			246						—
Total			$	5,001					$	—

Under the borrowing facilities described above, we had an aggregate of $1,028 million of letters of credit outstanding as of May 31, 2023. We have a short-term commercial paper financing program backed by our $3 billion syndicated credit facility. As of May 31, 2023, we had no commercial paper outstanding.

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ACCENTURE FORM 10-Q						Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			36

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 nine months ended May 31, 2023 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)			9,623,466						$	2,647					—						$	—
Other share purchase programs			—						—						13,935						4
Other purchases (2)			2,486,767						675						—						—
Total			12,110,233						$	3,322					13,935						$	4

(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 nine months ended May 31, 2023, 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 2023. 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			37