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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2020

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from             to

Commission File Number: 001-34448

1 Grand Canal Square,

Grand Canal Harbour,

Dublin 2, Ireland

(Address of principal executive offices)

(353) (1) 646-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Class A ordinary shares, par value $0.0000225 per share			ACN			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares of the registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of December 7, 2020 was 661,135,130 (which number includes 26,889,663 issued shares held by the registrant). The number of shares of the registrant’s Class X ordinary shares, par value $0.0000225 per share, outstanding as of December 7, 2020 was 526,879.

Table of Contents

						Page
Part I.			Financial Information			3
Item 1.			Financial Statements			3
			Consolidated Balance Sheets as of November 30, 2020 (Unaudited) and August 31, 2020			3
			Consolidated Income Statements (Unaudited) for the three months ended November 30, 2020 and 2019			4
			Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended November 30, 2020 and 2019			5
			Consolidated Shareholders’ Equity Statement (Unaudited) for the three months ended November 30, 2020 and 2019			6
			Consolidated Cash Flows Statements (Unaudited) for the three months ended November 30, 2020 and 2019			8
			Notes to Consolidated Financial Statements (Unaudited)			9
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			28
Item 4.			Controls and Procedures			28
Part II.			Other Information			29
Item 1.			Legal Proceedings			29
Item 1A.			Risk Factors			29
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3.			Defaults Upon Senior Securities			29
Item 4.			Mine Safety Disclosures			30
Item 5.			Other Information			30
Item 6.			Exhibits			30
Signatures						31

Part I — Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets

November 30, 2020 and August 31, 2020

			November 30, 2020						August 31, 2020
ASSETS			(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents			$	8,594,003					$	8,415,330
Short-term investments			83,148						94,309
Receivables and contract assets			8,547,711						7,846,892
Other current assets			1,401,232						1,393,225
Total current assets			18,626,094						17,749,756
NON-CURRENT ASSETS:
Contract assets			44,517						43,257
Investments			298,906						324,514
Property and equipment, net			1,506,825						1,545,568
Lease assets			3,100,120						3,183,346
Goodwill			8,127,411						7,709,820
Deferred contract costs			715,897						723,168
Deferred tax assets			4,178,723						4,153,146
Other non-current assets			1,669,818						1,646,018
Total non-current assets			19,642,217						19,328,837
TOTAL ASSETS			$	38,268,311					$	37,078,593
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings			$	8,925					$	7,820
Accounts payable			1,513,442						1,349,874
Deferred revenues			3,524,781						3,636,741
Accrued payroll and related benefits			5,179,301						5,083,950
Income taxes payable			445,824						453,542
Lease liabilities			732,878						756,057
Accrued consumption taxes			706,876						662,409
Other accrued liabilities			707,072						712,197
Total current liabilities			12,819,099						12,662,590
NON-CURRENT LIABILITIES:
Long-term debt			59,881						54,052
Deferred revenues			668,267						690,931
Retirement obligation			1,875,976						1,859,444
Deferred tax liabilities			201,376						179,703
Income taxes payable			995,478						930,695
Lease liabilities			2,627,185						2,667,584
Other non-current liabilities			594,833						534,421
Total non-current liabilities			7,022,996						6,916,830
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of November 30, 2020 and August 31, 2020			57						57
Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 660,518,888 and 658,548,895 shares issued as of November 30, 2020 and August 31, 2020, respectively			15						15
Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 526,879 and 527,509 shares issued and outstanding as of November 30, 2020 and August 31, 2020, respectively			—						—
Restricted share units			1,721,681						1,585,302
Additional paid-in capital			7,551,089						7,167,227
Treasury shares, at cost: Ordinary, 40,000 shares as of November 30, 2020 and August 31, 2020; Class A ordinary, 26,898,686 and 24,383,369 shares as of November 30, 2020 and August 31, 2020, respectively			(3,163,841)						(2,565,761)
Retained earnings			13,276,702						12,375,533
Accumulated other comprehensive loss			(1,479,202)						(1,561,837)
Total Accenture plc shareholders’ equity			17,906,501						17,000,536
Noncontrolling interests			519,715						498,637
Total shareholders’ equity			18,426,216						17,499,173
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	38,268,311					$	37,078,593

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

Consolidated Income Statements

For the Three Months Ended November 30, 2020 and 2019

(Unaudited)

			2020						2019
REVENUES:
Revenues			$	11,762,185					$	11,358,958
OPERATING EXPENSES:
Cost of services			7,863,889						7,711,199
Sales and marketing			1,227,176						1,191,123
General and administrative costs			780,451						689,373
Total operating expenses			9,871,516						9,591,695
OPERATING INCOME			1,890,669						1,767,263
Interest income			10,685						27,419
Interest expense			(8,854)						(5,474)
Other income (expense), net			94,367						11,439
INCOME BEFORE INCOME TAXES			1,986,867						1,800,647
Income tax expense			464,810						425,479
NET INCOME			1,522,057						1,375,168
Net income attributable to noncontrolling interest in Accenture Canada Holdings Inc.			(1,700)						(1,741)
Net income attributable to noncontrolling interests – other			(20,081)						(16,459)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC			$	1,500,276					$	1,356,968
Weighted average Class A ordinary shares:
Basic			634,271,482						635,722,309
Diluted			646,879,735						649,389,444
Earnings per Class A ordinary share:
Basic			$	2.37					$	2.13
Diluted			$	2.32					$	2.09
Cash dividends per share			$	0.88					$	0.80

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

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

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

Consolidated Shareholders’ Equity Statement — (continued)

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

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

1. Basis Of Presentation

The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. We use the terms “Accenture,” “we” and “our” in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2020 included in our Annual Report on Form 10-K filed with the SEC on October 22, 2020.

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from those estimates. The Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three months ended November 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2021.

Allowance for Credit Losses - Client Receivables and Contract Assets

We record client receivables and contract assets at their face amounts less an allowance for credit losses. The allowance represents our estimate of expected credit losses based on historical experience, current economic conditions and certain forward-looking information. As of November 30, 2020 and August 31, 2020, the total allowance for credit losses recorded for client receivables and contract assets was $38,315 and $40,277, respectively. The change in the allowance is primarily due to immaterial write-offs and changes in gross client receivables and contract assets.

Concentrations of Credit Risk

Our financial instruments, consisting primarily of cash and cash equivalents, foreign currency exchange rate instruments and client receivables, are exposed to concentrations of credit risk. We place our cash and cash equivalents and foreign exchange instruments with highly-rated financial institutions, limit the amount of credit exposure with any one financial institution and conduct ongoing evaluations of the credit worthiness of the financial institutions with which we do business. Client receivables are dispersed across many different industries and countries; therefore, concentrations of credit risk are limited.

Investments

All available-for-sale securities and liquid investments with an original maturity greater than three months but less than one year are considered to be Short-term investments. Non-current investments consist of equity securities in publicly-traded and privately-held companies and are accounted for using either the equity or fair value measurement alternative method of accounting (for investments without readily determinable fair values).

Our non-current investments are as follows:

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. Our equity method investments consist primarily of an investment in Duck Creek Technologies. As of November 30, 2020 and August 31, 2020, the carrying amount of our investment was $201,810 and $230,219, and the estimated fair value of our approximately 19% and 22% ownership was $850,825 and $956,308, respectively.

We account for the investment under the equity method because we have the ability to influence operations through the combination of our voting power and through other factors, such as representation on the board and our business relationship.

Depreciation and Amortization

As of November 30, 2020 and August 31, 2020, total accumulated depreciation was $2,414,951 and $2,313,731, respectively. See table below for summary of depreciation on fixed assets, deferred transition amortization, intangible assets amortization and operating lease cost for the three months ended November 30, 2020 and 2019, respectively.

Recently Adopted Accounting Pronouncements

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13 (“Topic 326”)

On September 1, 2020, we adopted FASB ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends guidance on recognition and measurement of credit losses and related disclosures. The amendments replace the existing incurred loss impairment model with a methodology to measure and recognize lifetime expected credit losses for all in-scope financial assets, including accounts receivable and contract assets. The adoption did not have an impact on our Consolidated Financial Statements.

See Note 11 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.

Remaining Performance Obligations

We had remaining performance obligations of approximately $19 billion and $20 billion as of November 30, 2020 and August 31, 2020, 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 62% of our remaining performance obligations as of November 30, 2020 as revenue in fiscal 2021, an additional 19% in fiscal 2022, and the balance thereafter.

Contract Estimates

Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were immaterial for the three months ended November 30, 2020 and 2019, respectively.

Contract Balances

Deferred transition revenues were $668,267 and $690,931 as of November 30, 2020 and August 31, 2020, 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 $715,897 and $723,168 as of November 30, 2020 and August 31, 2020, respectively, and are included in Deferred contract costs. Generally, deferred amounts are protected in the event of early termination of the contract 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.

The following table provides information about the balances of our Receivables and Contract assets, net of allowance, and Contract liabilities (Deferred revenues):

Changes in the contract asset and liability balances during the three months ended November 30, 2020, were a result of normal business activity and not materially impacted by any other factors.

Revenues recognized during the three months ended November 30, 2020 that were included in Deferred revenues as of August 31, 2020 were $2.0 billion. Revenues recognized during the three months ended November 30, 2019 that were included in Deferred revenues as of August 31, 2019 were $1.8 billion.

3. Earnings Per Share

Basic and diluted earnings per share are calculated as follows:

(1)Diluted earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis. The income effect does not take into account “Net income attributable to noncontrolling interests - other,” since those shares are not redeemable or exchangeable for Accenture plc Class A ordinary shares.

4. Accumulated Other Comprehensive Loss

The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc:

(1)Reclassifications into net periodic pension and post-retirement expense are recognized in Cost of services, Sales and marketing, General and administrative costs and non-operating expenses.

(2)As of November 30, 2020, $66,522 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.

5. Business Combinations

During the three months ended November 30, 2020, we completed individually immaterial acquisitions for total consideration of $493,354, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.

6. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reportable operating segment are as follows:

Goodwill includes immaterial adjustments related to prior period acquisitions.

Intangible Assets

Our definite-lived intangible assets by major asset class are as follows:

Total amortization related to our intangible assets was $67,207 and $53,372 for the three months ended November 30, 2020 and 2019, respectively. Estimated future amortization related to intangible assets held as of November 30, 2020 is as follows:

The payment of the cash dividends also resulted in the issuance of an immaterial number of additional restricted share units to holders of restricted share units.

Subsequent Event

On December 16, 2020, the Board of Directors of Accenture plc declared a quarterly cash dividend of $0.88 per share on its Class A ordinary shares for shareholders of record at the close of business on January 14, 2021 payable on February 12, 2021. The payment of the cash dividend will result in the issuance of an immaterial number of additional restricted share units to holders of restricted share units.

In the normal course of business, we use derivative financial instruments to manage foreign currency exchange rate risk. Our derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts.

Cash Flow Hedges

For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in Accumulated other comprehensive loss as a separate component of Shareholders’ Equity and is reclassified into Cost of services in the Consolidated Income Statements during the period in which the hedged transaction is recognized. For information related to derivatives designated as cash flow hedges that were reclassified into Cost of services during the three months ended November 30, 2020 and 2019, as well as those expected to be reclassified into Cost of services in the next 12 months, see Note 4 (Accumulated Other Comprehensive Loss) to these Consolidated Financial Statements.

Other Derivatives

Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were net gains of $28,324 and net losses $56,619 for the three months ended November 30, 2020 and 2019, respectively. Gains and losses on these contracts are recorded in Other income (expense), net in the Consolidated Income Statements and are offset by gains and losses on the related hedged items.

Fair Value of Derivative Instruments

The notional and fair values of all derivative instruments are as follows:

We utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. In the Consolidated Balance Sheets, we record derivative assets and liabilities at gross fair value. The potential effect of netting derivative assets against liabilities under the counterparty master agreements is as follows:

9. Income Taxes

We apply an estimated annual effective tax rate to our year-to-date operating results to determine the interim provision for income tax expense. In addition, we recognize taxes related to unusual or infrequent items or resulting from a change in judgment regarding a position taken in a prior year as discrete items in the interim period in which the event occurs.

Our effective tax rates for the three months ended November 30, 2020 and 2019 were 23.4% and 23.6%, respectively. Absent the $119,700 and $60,492 gains on our investment in Duck Creek Technologies and related $22,906 and $10,183 in tax expense, our effective tax rates for the first quarter of fiscal 2021 and 2020 would have been 23.7% and 23.9%, respectively.

10. Commitments and Contingencies

Indemnifications and Guarantees

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

As of November 30, 2020 and August 31, 2020, our aggregate potential liability to our clients for expressly limited guarantees involving the performance of third parties was approximately $848,000 and $832,000, respectively, of which all but approximately $81,000 and $87,000, respectively, may be recovered from the other third parties if we are obligated to make payments to the indemnified parties as a consequence of a performance default by the other third parties. For arrangements with unspecified limitations, we cannot reasonably estimate the aggregate maximum potential liability, as it is inherently difficult to predict the maximum potential amount of such payments, due to the conditional nature and unique facts of each particular arrangement.

To date, we have not been required to make any significant payment under any of the arrangements described above. We have assessed the current status of performance/payment risk related to arrangements with limited guarantees, warranty obligations, unspecified limitations and/or indemnification provisions and believe that any potential payments would be immaterial to the Consolidated Financial Statements, as a whole.

Legal Contingencies

As of November 30, 2020, we or our present personnel had been named as a defendant in various litigation matters. We and/or our personnel also from time to time are involved in investigations by various regulatory or legal authorities concerning matters arising in the course of our business around the world. Based on the present status of these matters, management believes the range of reasonably possible losses in addition to amounts accrued, net of insurance recoveries, will not have a material effect on our results of operations or financial condition.

On July 24, 2019, Accenture was named in a putative class action lawsuit filed by consumers of Marriott International, Inc. (“Marriott”) in the U.S. District Court for the District of Maryland. The complaint alleges negligence by us, and seeks monetary damages, costs and attorneys’ fees and other related relief, relating to a data security incident involving unauthorized access to the reservations database of Starwood Worldwide Resorts, Inc. (“Starwood”), which was acquired by Marriott on September 23, 2016. Since 2009, we have provided certain IT infrastructure outsourcing services to Starwood. On October 27, 2020, the court issued an order largely denying Accenture’s motion to dismiss the claims against us. We continue to believe the lawsuit is without merit and we will vigorously defend it. At present, we do not believe any losses from this matter will have a material effect on our results of operations or financial condition.

11. Segment Reporting

Our reportable segments are our three geographic markets, which are North America, Europe and Growth Markets. Information regarding reportable segments, industry groups and type of work is as follows:

(1)Effective September 1, 2020, we revised the reporting of our industry groups to include amounts previously reported in Other. Prior period amounts have been reclassified to conform with the current period presentation.

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, 2020, 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, 2020.

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 2021” means the 12-month period that will end on August 31, 2021. 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,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” 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. For a discussion of risks and actions taken in response to the coronavirus (COVID-19) pandemic, see the “Overview” below and “Our results of operations have been significantly adversely affected and could in the future be materially adversely impacted by the COVID-19 pandemic.” under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2020. Many of the following risks, uncertainties and other factors identified below are, and will be, amplified by the COVID-19 pandemic.

•Our results of operations have been significantly adversely affected and could in the future be materially adversely impacted by the COVID-19 pandemic.

•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 ongoing, profitable 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 keep our supply of skills and resources in balance 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 could face legal, reputational and financial risks if we fail 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 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 ability to attract and retain business and employees may depend on our reputation in the marketplace.

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

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

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

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

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

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

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

•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.

•Our results of operations and share price could be adversely affected if we are unable to maintain effective internal controls.

•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.

•We might be unable to access additional capital on favorable terms or at all. If we raise equity capital, it may dilute our shareholders’ ownership interest in us.

•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, 2020. 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.

Overview

The COVID-19 pandemic has caused a significant loss of life, disrupted businesses and restricted travel worldwide, causing significant economic disruption and uncertainty. This disruption and uncertainty has had and continues to have a significant adverse impact on our business, operations and financial results. The pandemic impacted almost all aspects of our business and forced us to quickly adapt the way we operate. As described below, we took actions to shift the majority of our workforce to a remote working environment to ensure the continuity of our business, including the sales and delivery of services to our clients, and to respond to a rapidly changing demand environment from our clients.

As a result of the COVID-19 pandemic, we enabled approximately 95% of our global workforce to work from home and suspended substantially all business travel. We continue to implement and evolve our comprehensive plan to return to our and our clients’ offices where permissible, with our people’s safety and the needs of our clients guiding how we manage our phased transition.

For the first quarter of fiscal 2021, our revenues increased 4% in U.S. dollars and 2% in local currency. While this represented slower growth compared to 9% growth in local currency in the first quarter of fiscal 2020, it was an improvement compared to flat revenue growth for the second half of fiscal 2020. We continued to experience reduced demand for our services during the quarter as some clients reprioritized and delayed certain work as a result of the pandemic, particularly in the Travel, Energy, High Tech, Retail and Industrial industries and primarily for our consulting services. We also experienced increased demand in the Public Service, Software & Platforms, Banking & Capital Markets and Life Sciences industries and from clients across all of our industry groups in connection with their digital transformations, the adoption of cloud technologies and security-related services. In this current market, the level of revenues we achieve is based on our ability to deliver market-leading services while deploying skilled teams of professionals effectively.

For further information on the impact to our results for the first quarter of fiscal 2021, please see “Summary of Results” below. For a discussion of risks related to the COVID-19 pandemic, see “Our results of operations have been significantly adversely affected and could in the future be materially adversely impacted by the COVID-19 pandemic.” under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2020.

Summary of Results

Revenues for the first quarter of fiscal 2021 increased 4% in U.S. dollars and 2% in local currency compared to the first quarter of fiscal 2020. This included the impact of a decline in reimbursable travel costs, which reduced revenues approximately 2%. During the first quarter of fiscal 2021, revenue growth in local currency was solid in North America and modest in Growth Markets, partially offset by a slight decline in Europe. We experienced local currency revenue growth that was very strong in Health & Public Service, solid in Financial Services and modest in Communications, Media & Technology, partially offset by a decline in Resources and a modest decline in Products. Revenue growth in local currency was strong in outsourcing, partially offset by a slight decline in consulting during the first quarter of fiscal 2021. The business environment remained competitive, and the changes in demand have led to continued pricing pressure, particularly for our consulting services. We use the term “pricing” to mean the contract profitability or margin on the work that we sell.

In our consulting business, revenues for the first quarter of fiscal 2021 decreased 1% in U.S. dollars and 2% in local currency compared to the first quarter of fiscal 2020. This included the impact of a decline in reimbursable travel costs, which reduced consulting revenues approximately 3%. The decline in consulting revenue in local currency for the first quarter of fiscal 2021 was driven by modest declines in North America and Europe, partially offset by slight growth in Growth Markets. 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.

In our outsourcing business, revenues for the first quarter of fiscal 2021 increased 9% in U.S. dollars and 8% in local currency compared to the first quarter of fiscal 2020. Outsourcing revenue in local currency for the first quarter of fiscal 2021 was led by very strong growth in North America, strong growth in Growth Markets and modest growth in Europe. 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. The majority of our revenues are denominated in currencies other than the U.S. dollar, 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 have in the future 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 weakened against various currencies during the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020,

resulting in favorable currency translation and U.S. dollar revenue growth that was approximately 2% higher than our revenue growth in local currency. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2021, we estimate that our full fiscal 2021 revenue growth in U.S. dollars will be approximately 3% higher than our revenue growth in local currency.

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 client-service personnel, which consists mainly of compensation, subcontractor and other personnel costs, and non-payroll costs on outsourcing 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 non-client-facing personnel, information systems, office space and certain acquisition-related costs.

Utilization for the first quarter of fiscal 2021 was 93%, up from 91% in the first quarter of fiscal 2020. 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 headcount, the majority of which serve our clients, increased to approximately 514,000 as of November 30, 2020, compared to approximately 505,000 as of November 30, 2019. The year-over-year increase in our headcount reflects an overall increase in demand for our services and solutions, as well as headcount added in connection with acquisitions. Attrition, excluding involuntary terminations, for the first quarter of fiscal 2021 was 9%, down from 14% in the first quarter of fiscal 2020. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as means to keep our supply of skills and resources in balance with changes in client demand. In addition, we adjust compensation in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees. For the majority of our personnel, compensation increases become effective December 1st of each fiscal year. We strive to adjust pricing and/or the mix of resources to reduce the impact of compensation increases on our margin. Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to: keep our supply of skills and resources in balance with changes in the types or amounts of services and solutions clients are demanding; recover increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate and utilize new employees.

Gross margin (Revenues less Cost of services as a percentage of Revenues) for the first quarter of fiscal 2021 was 33.1%, compared with 32.1% for the first quarter of fiscal 2020. The increase in gross margin for the first quarter of fiscal 2021 was due to lower non-payroll costs, primarily for travel, partially offset by an increase in labor costs as a percentage of revenues compared to the same period in fiscal 2020.

Sales and marketing and General and administrative costs as a percentage of revenues were 17.1% for the first quarter of fiscal 2021, compared with 16.6% for the first quarter of fiscal 2020. For the first quarter, compared to the same period in fiscal 2020, Sales and marketing costs as a percentage of revenues decreased 10 basis points and General and administrative costs increased 50 basis points, primarily due to higher labor and technology costs as a percentage of revenues.

Operating margin (Operating income as a percentage of revenues) for the first quarter of fiscal 2021 was 16.1%, compared with 15.6% for the first quarter of fiscal 2020.

During the first quarter of fiscal 2021 and 2020, we recorded gains of $120 million and $60 million and related tax expense of $23 million and $10 million, respectively, 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.”

The effective tax rate for the first quarter of fiscal 2021 was 23.4%, compared with 23.6% for the first quarter of fiscal 2020. Absent the investment gains and related tax expense, our effective tax rates for the first quarter of fiscal 2021 and 2020 would have been 23.7% and 23.9%, respectively.

Diluted earnings per share were $2.32 for the first quarter of fiscal 2021, compared with $2.09 for the first quarter of fiscal 2020. The $97 million and $50 million gains on an investment, net of taxes, increased diluted earnings per share by $0.15 and $0.08 during the first quarter of fiscal 2021 and 2020, respectively. Excluding the impact of these gains, diluted earnings per share would have been $2.17 and $2.01 for the first quarter of fiscal 2021 and 2020, respectively.

We have presented our effective tax rate and diluted earnings per share excluding the impact of gains related to an investment for the first quarter of fiscal 2021 and 2020, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior period.

New Bookings

New bookings for the first quarter of fiscal 2021 were $12.9 billion, with consulting bookings of $6.6 billion and outsourcing bookings of $6.3 billion. New bookings for the first quarter of fiscal 2020 were $10.3 billion, with consulting bookings of $6.0 billion and outsourcing bookings of $4.3 billion.

Results of Operations for the Three Months Ended November 30, 2020 Compared to the Three Months Ended November 30, 2019

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)			November 30, 2020						November 30, 2019																		November 30, 2020						November 30, 2019
GEOGRAPHIC MARKETS
North America			$	5,481					$	5,288					4		%				4		%				47		%				47		%
Europe			3,967						3,790						5						(1)						34						33
Growth Markets			2,314						2,281						1						3						20						20
Total			$	11,762					$	11,359					4		%				2		%				100		%				100		%
INDUSTRY GROUPS (1)
Communications, Media & Technology			$	2,334					$	2,245					4		%				3						20		%				20		%
Financial Services			2,346						2,190						7						5						20						19
Health & Public Service			2,212						1,969						12						11						19						17
Products			3,206						3,220						—						(3)						27						28
Resources			1,664						1,734						(4)						(5)						14						15
Total			$	11,762					$	11,359					4		%				2		%				100		%				100		%
TYPE OF WORK
Consulting			$	6,333					$	6,377					(1)		%				(2)		%				54		%				56		%
Outsourcing			5,430						4,982						9						8						46						44
Total			$	11,762					$	11,359					4		%				2		%				100		%				100		%

n/m = not meaningful

Amounts in table may not total due to rounding.

(1)Effective September 1, 2020, we revised the reporting of our industry groups to include amounts previously reported in Other. Prior period amounts have been reclassified to conform with the current period presentation.

Revenues

Revenues were impacted by a reduction of approximately 2% from a decline in revenues from reimbursable travel costs in the first quarter of fiscal 2021 across all markets. The following revenues commentary discusses local currency revenue changes for the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020:

Geographic Markets

•North America revenues increased 4% in local currency, led by growth in Public Service, Software & Platforms, Banking & Capital Markets and Life Sciences. These increases were partially offset by declines in Consumer Goods, Retail & Travel Services, Energy, Chemicals & Natural Resources and High Tech. Revenue growth was driven by the United States.

•Europe revenues decreased 1% in local currency, led by declines in High Tech, Consumer Goods, Retail & Travel Services and Industrial. These decreases were partially offset by growth in Public Service, Software & Platforms and Health. The decline in revenues was driven by Spain and France, partially offset by growth in Italy and Switzerland.

•Growth Markets revenues increased 3% in local currency, led by growth in Banking & Capital Markets, Public Service, Utilities, High Tech and Health. These increases were partially offset by a decline in Consumer Goods, Retail & Travel Services. Revenue growth was driven by Japan, as well as Australia.

Operating Expenses

Operating expenses for the first quarter of fiscal 2021 increased $280 million, or 3%, over the first quarter of fiscal 2020, and decreased as a percentage of revenues to 83.9% from 84.4% during this period.

Operating expenses by category are as follows:

			Three Months Ended
(in millions of U.S. dollars)			November 30, 2020												November 30, 2019												Increase (Decrease)
Operating Expenses			$	9,872					83.9		%				$	9,592					84.4		%				$	280
Cost of services			7,864						66.9						7,711						67.9						153
Sales and marketing			1,227						10.4						1,191						10.5						36
General and administrative costs			780						6.6						689						6.1						91

Amounts in table may not total due to rounding.

Cost of Services

Cost of services for the first quarter of fiscal 2021 increased $153 million, or 2%, over the first quarter of fiscal 2020, and increased as a percentage of revenues to 66.9% from 67.9% during this period. Gross margin for the first quarter of fiscal 2021 increased to 33.1% from 32.1% during the first quarter of fiscal 2020. The increase in gross margin was due to lower non-payroll costs, primarily for travel, partially offset by an increase in labor costs as a percentage of revenues compared to the same period in fiscal 2020.

Sales and Marketing

Sales and marketing expense for the first quarter of fiscal 2021 increased $36 million, or 3%, over the first quarter of fiscal 2020, and decreased as a percentage of revenues to 10.4% from 10.5% during this period.

General and Administrative Costs

General and administrative costs for the first quarter of fiscal 2021 increased $91 million, or 13%, over the first quarter of fiscal 2020, and increased as a percentage of revenues to 6.6% from 6.1% during this period. The increase was primarily due to higher labor and technology costs as a percentage of revenues compared to the same period in fiscal 2020.

Operating Income and Operating Margin

Operating income for the first quarter of fiscal 2021 increased $123 million, or 7%, over the first quarter of fiscal 2020.

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

Amounts in table may not total due to rounding.

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2021 was similar to that disclosed for revenue for each geographic market. The reduction in travel costs during the first quarter of fiscal 2021 had a favorable impact on operating income. The commentary below provides insight into other factors affecting geographic market performance and operating income for the first quarter of fiscal 2021 compared with the first quarter of fiscal 2020:

•North America operating income increased primarily due to outsourcing revenue growth.

•Europe operating income increased primarily due to higher contract profitability.

•Growth Markets operating income decreased as revenue growth was offset by lower consulting contract profitability.

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 first quarter of fiscal 2021, other income (expense), net increased $82,928 over the first quarter of fiscal 2020, primarily due to higher gains on investments and lower foreign 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 rate for the first quarter of fiscal 2021 was 23.4%, compared with 23.6% for the first quarter of fiscal 2020. Absent the $120 million and $60 million gains on an investment and related $23 million and $10 million in tax expense, our effective tax rates for the first quarter of fiscal 2021 and 2020 would have been 23.7% and 23.9%, respectively.

Our provision for income taxes is based on many factors and subject to volatility year to year. We expect the fiscal 2021 annual effective tax rate to be in the range of 23.0% to 25.0%. The effective tax rate for interim periods can vary because of the timing of when certain events occur during the year.

Earnings Per Share

Diluted earnings per share were $2.32 for the first quarter of fiscal 2021, compared with $2.09 for the first quarter of fiscal 2020. The $97 million and $50 million gains on an investment, net of taxes, increased diluted earnings per share by $0.15 and $0.08 during the first quarter of fiscal 2021 and 2020, respectively. Excluding the impact of these gains, diluted earnings per share would have been 2.17 and $2.01 for the first quarter of fiscal 2021 and 2020, respectively. For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

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

Liquidity and Capital Resources

As of November 30, 2020, Cash and cash equivalents was $8.6 billion, compared with $8.4 billion as of August 31, 2020.

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

			Three Months Ended
(in millions of U.S. dollars)			November 30, 2020						November 30, 2019						Change
Net cash provided by (used in):
Operating activities			$	1,603					$	787					$	816
Investing activities			(446)						(166)						(281)
Financing activities			(999)						(948)						(51)
Effect of exchange rate changes on cash and cash equivalents			22						11						11
Net increase (decrease) in cash and cash equivalents			$	179					$	(316)					$	495