Accenture plc - Class A (ACN) — Q4 2021 Earnings Call Transcript

Thank you, operator, and thanks, everyone, for joining us today on our fourth quarter and full fiscal 2021 earnings announcement. As the operator just mentioned, I am Angie Park, Managing Director and Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chair and Chief Executive Officer, and KC McClure, our Chief Financial Officer. We hope you've had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results; KC will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for both the fourth quarter and full fiscal year. Julie will then provide a brief update on our market positioning, before KC provides our business outlook for the first quarter and full fiscal year 2022. We will then take your questions before Julie provides a wrap up at the end of the call. Some of the matters we will discuss on this call, including our business outlook are forward-looking, and as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today we will reference certain non-GAAP financial metrics, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures where appropriate to GAAP in our news release or in the Investor Relations section of our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie.

Thank you, Angie, and everyone, for joining us. Before diving into our results, thank you to our 624,000 incredibly talented people around the world, including over 8,500 managing directors. This past fiscal year, your hard work and dedication to creating value that matters for our clients was unwavering, despite the ongoing and sometimes quite extreme challenges of COVID. We've had a truly extraordinary year, as reflected in our outstanding financial results and in the 360-degree value we delivered beyond our financials. From the over 120,000 promotions and over 31 million training hours, an increase of 43% for our people, to increasing our workforce by approximately 118,000 people, creating significant employment opportunities in our communities, to achieving 46% women on our way to our goal of gender parity by 2025, to our top three ranking in the Refinitiv Global Diversity and Inclusion Index for the fourth consecutive year. To the number one position with our largest ecosystem partners, to the exciting accomplishment of 50% renewable energy now powering our offices and centers globally, to the donation of $54 million in COVID surge relief. In December, we will publish our first-ever annual 360-degree value report to more fully describe the FY'21 value we created in all directions, and we’ll report against three additional key ESG frameworks: SASB, TCFD, and WEF/IBC. We believe that the trust we have from our clients and partners, our continuous innovation, and our ability to consistently attract the best people, including the 56,000 net new hires this past quarter, are directly linked to our commitment to measuring our success by how well we create this 360-degree value for all our stakeholders: clients, people, partners, shareholders, and communities, and on our culture of shared success. Here are some key financial highlights of the year that position us strongly as we begin FY'22. FY'21 demonstrated our leadership in helping our clients achieve compressed transformation, with 72 clients with bookings greater than $100 million compared to 53 last year and 229 diamond clients, our largest client relationships compared to 216 last year. With a 20% increase in bookings to $59 billion, we have strong momentum across all dimensions of our business across geographic markets, industries, and services. Reaching revenues of $50.5 billion, a significant milestone, representing 11% growth, we added $6.2 billion in revenue this year, gaining significant market share with 40 basis points of operating margin expansion, demonstrating, yet again, our ability to grow profitably and at scale. We achieved this profitable growth while investing at a higher level than ever before, with $4.2 billion in acquisitions; $1.1 billion in R&D in assets, platforms, and industry solutions, including growing our portfolio of patents and pending patents to more than 8,200; and total training investment of $900 million. According to BrandZ, our brand value increased 56% to over $64 billion, ranking us number 27 on the prestigious BrandZ's Top 100 Most Valuable Global Brands list. Finally, I want to highlight cloud and our ability to move with agility to serve our clients' needs and capture momentum in the market. At the beginning of FY'21, after investing in cloud for a decade, we saw that the pandemic would dramatically accelerate our clients' move to the cloud. More than technology, the move to the cloud would be about the adoption of a new operating system for future enterprise, a dynamic continuum of capabilities from public to edge to everything in between, opening up radically new ways for companies to work, compete, and drive value. Just over one year ago, we created Accenture Cloud First to capitalize on this momentum, bringing together all of our capabilities from migration to cloud-native development, data AI, industry talent, and change. Accenture Cloud First was the biggest driver of our overall cloud business growth from $12 billion to $18 billion, a 44% increase. KC, over to you.

Thank you, Julie, and thanks to all of you for joining us on today's call. We were very pleased with our results in the fourth quarter, which completes an outstanding year for Accenture and reflect broad-based momentum across all dimensions of our business. Once again, our results reflect our relentless focus to deliver across our three key imperatives for driving superior stakeholder value. So, let me begin by summarizing a few of the highlights of the quarter. Revenue growth of 21% in local currency, at the top end of our guided range, reflects double-digit growth across all markets, all industry groups, and all services. We also continue to extend our leadership position at an accelerated pace, with growth significantly above the market. Operating margin was 14.6%, an increase of 30 basis points for the quarter, reflecting 40 basis points of expansion for the full year. We delivered this expansion while investing significantly in our business and in our people to position us for long-term market leadership. We delivered very strong EPS of $2.20, which represents 29% growth, compared to adjusted EPS last year. And finally, we delivered free cash flow of $2.2 billion, which was driven by continued strong growth and profitability. Now, let me turn to some of the details. New bookings were $15 billion for the quarter, with a book-to-bill of 1.1. Consulting bookings were $8 billion, with a book-to-bill of 1.1. Outsourcing bookings were $7.1 billion, with a book-to-bill of 1.2. We were very pleased with our new bookings, which represent 7% growth in U.S. dollars, with 18 clients with bookings over $100 million. We were also pleased with the strength of bookings across all services, with a book-to-bill of 1 in strategy and consulting, 1.2 in technology services, and 1.1 in operations. Turning now to revenues. Revenues for the quarter were $13.4 billion, a 24% increase in U.S. dollars and 21% in local currency, slightly above our FX-adjusted range as the FX tailwind was 3% compared to the 4% estimated last quarter. Consulting revenues for the quarter were $7.3 billion, up 29% in U.S. dollars and 25% in local currency. Outsourcing revenues were $6.1 billion, up 19% in U.S. dollars and 16% in local currency. Taking a closer look at our service dimensions, strategy and consulting, technology services, and operations, all grew very strong double digits. Turning to our geographic markets, in North America, revenue was 22% in local currency, driven by double-digit growth in consumer goods, retail and travel services, software and platforms, and public service. In Europe, revenues grew 18% in local currency, led by double-digit growth in consumer goods retail and travel services, industrial, and banking and capital markets. Looking closer at the countries, Europe was driven by double-digit growth in the U.K., Germany, France, and Italy. In growth markets, we delivered 21% revenue growth in local currency, driven by double-digit growth in consumer goods, retail, and travel services, banking and capital markets, and high-tech. From a country perspective, growth markets were led by double-digit growth in Japan, Australia, and Brazil. Moving down the income statement, gross margin for the quarter was 33.3%, compared with 31.8% for the same period last year. Sales and marketing expense for the quarter was 11.3%, compared with 10.6% for the fourth quarter last year. General administrative expense was 7.4%, compared to 6.8% for the same quarter last year. Our operating income was $2 billion in the fourth quarter, reflecting a 14.6% operating margin, up 30 basis points compared with Q4 last year. As a reminder, in Q4 last year, we recorded an investment gain that impacted our tax rate and increased EPS by $0.29 for the quarter. The following comparisons exclude this impact and reflect adjusted results. Our effective tax rate for the quarter was 25%, compared with an adjusted effective tax rate of 28.4% for the fourth quarter last year. Diluted earnings per share were $2.20 compared with adjusted EPS of $1.70 in the fourth quarter last year. Days service outstanding were 38 days compared to 36 days last quarter and 35 days in the fourth quarter of last year. Free cash flow for the quarter was $2.2 billion, resulting from cash generated by operating activities of $2.4 billion net of property and equipment additions of $236 million. Our cash balance at August 31 was $8.2 billion, compared with $8.4 billion at August 31 last year, with regard to our ongoing objective to return cash to shareholders. In the fourth quarter, we repurchased or redeemed 3 million shares for $915 million at an average price of $305.61 per share. Also in August, we paid our fourth quarterly cash dividends of $0.88 per share, totaling $558 million, and our Board of Directors declared a quarterly cash dividend of $0.97 per share to be paid on November 15, a 10% increase over last year and approved $3 billion of additional share repurchase authority. Now, I would like to take a moment to summarize our outstanding year. We're extremely pleased with the performance of our business in fiscal year '21, greatly exceeding all aspects of our original outlook that we provided last September. We delivered $59 billion in new bookings, a 20% increase in U.S. dollars over last year, which positions us well as we begin fiscal year '22. Revenues increased a record $6.2 billion, hitting the $50 billion mark, reflecting growth of 11% in local currency for the full year. This result, which is more than double the revenue growth we anticipated at the beginning of the year, showcases our agility and ability to quickly scale to deliver value and outcomes for our clients. Operating margin of 15.1% reflected a 40 basis point expansion over fiscal year '20 above the top-end of our original guided range, even after making continued significant investments in our business and our people. Adjusted earnings per share were $8.80, reflecting 80% growth over adjusted FY'20 EPS and was well above our revenue growth. As a reminder, we adjusted earnings in both years to exclude gains on an investment. Free cash flow of $8.4 billion was significantly above our original guided range, reflecting a free cash flow to net income ratio of 1.5 driven by strong profitability. And finally, we significantly exceeded our original guidance for capital allocation by returning $5.9 billion of cash to shareholders while investing roughly $4.2 billion across 46 acquisitions to acquire critical skills and capabilities in strategic high growth areas of the market. So, again, FY'21 was truly an outstanding year. Momentum continues into fiscal '22 and we're laser-focused on capturing the market opportunities, coupled with a disciplined execution that you and we expect of us. Now, let me turn it back to Julie.

Thanks, KC. Turning to the demand environment, compressed transformation underpinned by cloud and digital continues to drive strong double-digit growth across our business, including for Applied Intelligence, cloud, Industry X, Intelligent operations, Interactive, Intelligent platform services, security, and transformational change management. Technology is the single biggest driver of change in companies today, and the depth, breadth, and scale of our technology capabilities across our services is unmatched. We see the demand environment shaping up for FY'22 to be more of the same, while digital leaders seeking to widen their competitive advantage and companies seeking to leapfrog their cloud and digital transformation are driving momentum in our business. The vast majority of companies are early in their transformation. And whether digital leader, leapfrogger, laggard, or in between, all face multi-year journeys ahead of them because the re-platforming in the cloud and use of new technologies across the enterprise is a once-in-a-digital era profound transformation. Simultaneously, we have ongoing exponential technology change that is accelerating and will create new opportunities, disruptions, and changes for our clients. In addition, growth in parts of our business are by their very nature continuously evolving. For example, Interactive, now a $12.5 billion business growing 15% continues to set a new standard for customer experience, connection, sales, and marketing at the intersection of data, creativity, and technology, and is tied to the ever-changing needs and preferences of B2C and B2B customers. Similarly, Security, now a $4.4 billion business growing 29% is driven by needs related to an ever-expanding digital threat landscape. And with our managed services, we are providing much-needed protection and talent to our clients. Our clients value the depth and breadth of our services for the entire enterprise across strategy and consulting, interactive technology, operations, and industry and functional expertise across 13 industries. Plus the ability to deliver tangible outcomes as well as our strong track record of investing ahead of our clients to anticipate their needs and drive our next ways of growth, such as our early moves in digital, cloud, and security. There remain entire parts of the enterprise where digitization and the move to the cloud have only just begun. In particular, both the things companies make and the way they make things are being dramatically changed by technology, and that is the focus of our Industry X business, which we believe is the next big digital frontier. In fact, a 2021 Gartner survey of Board of Directors indicates that 93% expect that the number one business priority that will see transformational improvement from digital technology is manufacturing, distribution, and supply chain. We have invested for nearly a decade in Industry X and are now at approximately $5 billion in revenue, growing 36%. We look forward to welcoming the 4,200 industry-leading engineers and consultants of Umlaut when the acquisition closes in October. Similarly, sustainability is a critical area for which technology is still evolving. We believe that every business must be a sustainable business, and yet companies are at very early stages of figuring out how to make this shift. Last year, building on years of investment and experience, we launched our sustainability services under our new Chief Responsibility Officer and Global Sustainability Services Lead. We have continued to accelerate our focus in this expanding and changing market and are proud of the work we are doing with leading partners like MasterCard, as we enhance its ability to track and analyze the carbon emissions of their suppliers and help decarbonize the U.K. energy system with clients such as National Grid. We do see a shift in the nature of the demand for our managed services across IT, security, and operations, with these services emerging as one of our most strategic differentiators as companies simultaneously seek greater resilience, face a war for talent, the need to rapidly digitize, and cost pressures. Strategic managed services are increasingly a C-suite priority with Accenture as a trusted partner of choice, increasingly integrated as part of their talent strategy. Table stakes for managed services are efficiency, resiliency, and reliability. We further differentiate in our managed services because they are uniquely informed by our strong strategy and consulting capabilities and deep industry and functional expertise. They benefit from our strong level of investment in digital platforms like SynOps and myWizard, and the seamless integration with our ecosystem partners, as well as due to the incredible pool of talented people our clients can access quickly when partnering with us. For example, we are partnering with Olympus, a leading manufacturer of optical and digital precision technology, to help them drive their transformation to become a global medical technology company. As part of this partnership, we have acquired their Japanese IT subsidiary company, which we will transform to deliver significant IT cost savings to Olympus, as well as upskill their people, combining their knowledge with our talent and technology to lead Olympus's digital transformation. And let me bring to life some more the demand we are seeing. All of these examples bring together the diverse capabilities across Accenture to create tangible value. We are a leader in cloud because we're able to serve our clients across the cloud continuum and create business value. We are partnering with Kubota, a Japanese multinational company, providing solutions leveraging a diverse range of products, technologies, and services in the fields of food, water, and the environment to accelerate Kubota's digital transformation by creating solutions that will enhance the productivity and safety of food, promote circularity of water resources and waste, and improve urban and living environments. We will help create innovative sustainability solutions and a platform applying leading-edge digital technologies, including AI and IoT. Diverse data held across the group will be centralized for easy maintenance and use. We're also modernizing, replacing, and migrating legacy applications to the cloud and strengthening their global computer security incident response team. We are partnering with Jbal, a U.S.-based global manufacturing services company to further enhance their IT infrastructure capabilities through providing infrastructure managed services for digital workplace, network, cloud, and data center support. We're helping Senya, a Finnish insurer offering casualty motor and health and accident services, to implement a cloud-based policy administration system to improve customer service using data and automation to make sales, claims, payments, and policy management processes more user-friendly. This will allow the company to quickly respond to changing market and customer demands and meet its goal of providing the best customer experience in the industry. Compressed transformation is occurring across industries. We're partnering with Unilever, one of the world's largest consumer goods companies, in their digital transformation. Together, we are setting a new industry standard by reinventing technology delivery with cutting-edge automation, delivering cloud migration at scale, the largest ERP migration to the cloud in the industry, and shifting to technology solutions that support their growth strategy. With McCormick, a global leader in flavor in the food industry, where we're partnering on a strategic transformation program encompassing finance, supply chain logistics, and plant maintenance. The new cloud-based platform and innovative data-driven approach will help standardize processes, increase efficiencies, and support their goal of doubling in size quickly. We're helping a European financial institution build the bank of the future and helping them become a next-level innovator. One that is leveraging technology and sustainability to transform multiple parts of their business, drive hyper-personalized customer experiences, and create new lines of business like wealth management and insurance, which is expected to triple digital sales by 2023 and improve their already stellar cost-to-income ratio. At Accenture, we're enabling new experiences in growth and cost transformation across the enterprise and across industries. And a key enabler to these innovative scaled services is the power of our operations capabilities. We are helping Open Fiber, an Italian telecommunications company, design and orchestrate the construction of an ultra-broadband network, which will deliver fiber to 20 million households across Italy. Digitization and automation will help the construction site to proceed faster and more efficiently. With Interactive, we're helping MediaMarktSaturn Retail Group, Europe's leading consumer electronics retailer, transform their digital content capabilities with a state-of-the-art marketing operation. Automation and data insights enabled by SynOps will help deliver more engaging and personalized content while driving millions in savings. Our industry expertise continues to be a core competitive advantage, allowing us to breathe deep industry and cross-industry knowledge enterprise-wide for our clients. I want to recognize in particular our software and platform industry, which is approximately $4 billion in revenue. In Q4 this group celebrated 20 consecutive quarters of double-digit growth, serving as a leading partner to our clients in this hyper-growth industry. KC, back to you.

Thanks, Julie. Now let me turn to our business outlook. For the first quarter fiscal '22, we expect revenues to be in the range of $13.9 billion to $14.35 billion. This assumes the impact of FX will be about positive 0.5%, compared to the first quarter of fiscal '21, and reflects an estimated 18% to 22% growth in local currency. For the full fiscal year '22, based upon how the rates have been trending over the last few weeks, we currently assume the impact of FX on our results, in U.S. dollars, will be approximately negative 0.5% compared to fiscal '21. For the full fiscal '22, we expect our revenue to be in the range of 12% to 15% growth in local currency over fiscal '21, which includes an inorganic contribution of about 5% as we continue to expect to invest about $4 billion in acquisitions. For operating margin, we expect fiscal year '22 to be 15.2% to 15.4%, a 10 to 30 basis point expansion over fiscal '21 results. We expect our annual effective tax rate to be in the range of 23% to 25%. This compares to an adjusted effective tax rate of 23.1% in fiscal '21. For earnings per share, we expect full-year diluted EPS for fiscal '22 to be in the range of $9.90 to $10.18 or 13% to 16% growth over adjusted fiscal '21 results. For the full fiscal '22, we expect operating cash flow to be in the range of $8.2 billion to $8.7 billion, property and equipment additions to be approximately $700 million, and free cash flow to be in the range of $7.5 billion to $8 billion. Our free cash flow guidance reflects a very strong free cash flow to net income ratio of 1.1 to 1.2. Finally, we expect to return at least $6.3 billion through dividends and share repurchases, as we remain committed to returning a substantial portion of cash to our shareholders. With that, let's open it up so that we can take your questions. Angie.

Thanks, KC. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you please provide instructions for those on the call?

Hi, many thanks for letting me the opportunity to ask a question. I had two, if I could. Outstanding set of results and guidance, first of all. I wanted to ask about the cash flow, if I could, guidance. And even at the high end of the range, the cash flow margin would be a pretty significant step down from fiscal '20 and fiscal '21. So, I just wondered, are there any puts and takes within the cash flow guidance that we should be aware of as we're doing our model? Thank you. And I have a quick follow-up to that.

Sure, it's great, thanks. Nice to hear from you, Keith. Yes, so our free cash flow of $7.5 billion to $8 billion reflects a very strong free cash flow to net income ratio of 1.1 to 1.2. And so, we're really pleased with that. It does have slightly higher CapEx expense of $700 million. So, that's one slight difference from over '21. We did have exceptionally strong free cash flow in fiscal year '21 at 1.5 free cash flow to net income ratio, and that is just exceptional performance. It's not unusual for us to have free cash flow guidance at the beginning of the year that is a decrease over what we've done in the previous years. Lastly, we do allow for a slight uptick in DSO in our guidance for next year, which would still be very industry-leading DSO performance.

Okay, excellent. And then Julie, maybe just for you, I think you mentioned this year, you did 46 M&A deals. And you mentioned in the guidance comments that there's quite a bit of M&A, I think, $4 billion in M&A contemplated for this coming fiscal year. How do you think about the integration risk? Accenture has, I would argue, a very special culture. And you're bringing in a lot of new people over the course of the last 12 months and the forward next 12 months. How do you think about the risk of assimilation of these deals? And how do you manage this process? You have a very good track record over the last 10 years, but there is a lot of M&A on the table that you're bringing in the company. I’m just wondering if you could speak to how you think about the risk associated with that to make sure the business keeps moving forward?

Sure. So great question, and thanks, Keith. So, first of all, as you indicated, we've got a really strong track record. And so, this step up in acquisition comes based on years of experience, including and fine-tuning integration, so that's number one. Secondly, our acquisitions happen globally. And then as I've talked about this year, they're pretty evenly balanced. And why is that important? When we switched to our model earlier this year of a geographic-focused model from a P&L perspective, one of the reasons is to allow us as well to be super close to our people. Most of these acquisitions are not global, right? Some are like Umlaut, but, for example, Project Novetta in the federal business is very local. The vast majority are in one or two markets. So, the integration is not like you have this enormous company that's trying to integrate lots of people all over the globe at the same time. We have senior leaders accountable for the acquisitions. And so, we really find the right balance. This is a finely tuned approach for integration. And, of course, we bring on people in acquisition or not all the time. This focus on culture is just part of who we are.

Okay, excellent. Thank you, Julie.

And our next question comes from the line of Lisa Ellis with MoffettNathanson. Please go ahead.

Hi, good morning. Thanks for taking my question. Thinking about the $50 billion revenue milestone, which is pretty amazing. Julie, as you're mapping out the path to $60 billion over the next few years, can you talk about where you see the major sources of incremental revenue looking out from here forward? Thank you.

Great. Well, thanks, Lisa, nice to talk to you. So, first of all, and I talked a little bit about this in the script. We are still very early in the transformation of companies in building just their digital core. For example, if you look at something like SAP, their stats indicate that less than 20% of companies have actually both bought and begun implementing S/4HANA. We see the move to the cloud; roughly 25% to 30% of workload is in the cloud today. So, there's a lot of work ahead, a multiyear journey in actually building the digital core and transforming the way they work. So, we've got many years ahead. Even when you look at who is doing compressed transformation, you have this core of leaders and leapfroggers. But the vast majority of companies are not yet engaged in compressed transformation. Just from a multiyear outlook on the fundamentals of re-platforming and moving to a true digital-enabled enterprise is still in early stages. Then you add on top of that, there are whole parts of the enterprise where even the technologies are really new. So, Industry X is a great example of that. We see that as the next digital frontier, and we're still very, very early. Areas like sustainability, again, technology is early. Every industry has to find its way on sustainability. As we think about our own growth strategy, it starts with what our clients need. We continue to diversify the parts of the enterprise that we're serving, which enables our next wave of growth for us. We continue to innovate and anticipate, like in sustainability, what our clients need. That gives you a flavor of how we're thinking about, both our next ways of growth and the resiliency of our diverse offerings.

Yes, terrific. My follow-up was actually on managed services, which you called out in the prepared remarks. Not really used to thinking about Accenture doing managed services. Can you just elaborate a bit on that? Is this primarily actually infrastructure-related managed services or apps? Or just maybe a little bit more detail on what exactly you're doing in Accenture's differentiation there? Thanks.

So just think about if we have consulting and outsourcing, right? Managed services is just another term for outsourcing. So, if you think about our operations business, which is now about $8 billion, right? All the managed services we provide, everything from finance and accounting to industry-specific services, like we're doing in telecom, in insurance, and marketing services. Then of course, there's our powerful IT services; we've been doing outsourcing for years. The term application outsourcing is an industry term. We have our managed services in security, we acquired Symantec last year. This is a core part of our revenue stream between consulting and outsourcing. What's happening now is the strategic nature of this is increasingly valued as companies are seeking to access digital talent and digitize faster while addressing the war for talent and meeting their needs.

Great, thank you. Thanks a lot and congrats.

Thanks.

Hi, good morning. Thank you. First, got a question on bookings; can you talk about the dynamic in Q4? It looks like outsourcing did tick down for the first time in a while year-over-year. So, just anything to call up there? And then just generally, how do you see the pipeline developing as you think about fiscal '22 bookings levels?

Yes, thanks, Bryan. There's nothing really to point out in terms of Q4 bookings with outsourcing; they can just be a little bit lumpy. It was a very strong performance. Let me just talk a little bit about overall bookings as we head into '22. We feel really good about the momentum in our business. As Julie went through, we had 72 clients with bookings over $100 million this year, and you can see that helping us as we head into FY'22. Our growth forecast is around 18% to 22% in Q1. It does include about 5% in organic contribution, and it's at the top-end of our revenue range, again driven by bookings. We expect solid organic growth in the second half.

Okay, thank you. A follow-up here then on attrition; can you just give us a sense of what you're anticipating for attrition levels back into '22, and any added measures you're taking to try and drive that 19% down?

Yes. Our managed attrition 90% in the fourth quarter was in the zone that we expected at 14% for the year. It has been at 19% before. It's obviously a very hot market right now, but when you peel it back, it continues to be more in the lower part of the pyramid, and it's largely concentrated in India where we really don't have any issues in hiring.

Yes. It's important because you look at a headline number, and then you really have to understand where the attrition is concentrated. At the same time, we are always very focused on ensuring that we're attractive as an employer. We're very pleased that our executive retention is going very well. We're focused on our employee value proposition. Actions like the record number of 120,000 promotions and the training provided are highly valued. Also, our response regarding vaccines has been appreciated. About 85,000 people and their families have been vaccinated directly, in addition to what we're supporting through our carriers. We find that people really appreciate working for a company that creates value, but also leads with values.

Okay, thank you.

Thank you very much. Wanted to ask a couple of quick questions that are a follow-up on the hiring. Your pace of hiring and net has been quite stunning, at least over the last couple of quarters. Can you talk about a little more detail in terms of how you're finding the hiring environment, particularly for newer skill sets? Do you think you need to sustain the recent pace of hiring going forward? And I guess my second question, I'll just throw it in at the same time regarding V&A; you talked about the inorganic contribution and integration, but is this kind of the recent pace that we've seen? Is this also something that you expect to need to sustain and want to maintain on a go-forward basis on whether in terms of the number of deals or amount that you're spending, et cetera? Thanks a lot.

Okay. Thanks for the hiring question. First, in this market of war for talent, we're very pleased with the 56,000 net additional people that we hired in Q4. We see strong momentum continuing into FY'22. The growth rates for the first quarter are at 18% to 22% and for the full year at the top-end at 15%. We were able to accelerate some of our hiring in quarter one, aiming to match talent needs with market demand.

Yes, just to step back. On the people side, we deliberately decided to accelerate hiring in this quarter and next quarter, especially given the market environment and our ability to attract talent. We're not worried about being constrained with respect to personnel. We're able to do that, which differentiates us. Secondly, we made a decision last year and this year in V&A to really invest and take advantage of our ability to invest to serve our clients. We have clients who recognize that when partnering with us, they are engaging with a firm that invests year after year to anticipate their needs.

Thank you. Hi, Julie. Hi, KC, Angie, congratulations on the results and outlook. First question is it seems clear, we're in a very exciting time for IT services. I've had this view for some time now that the acceleration of demand that you're seeing is sustainable for several years. And I don't mean to imply that getting revenue growth is easy. But if you have to worry less about revenue growth, given the investments you've already made, do you have the opportunity to change your financial model as acceleration to get higher gross margins and better G&A leverage? Thoughts on moving to a more non-linear model with solutions, which may be especially important given the 620,000 people?

Yes, I'll start with that. I think, Ashwin, our financial model really remains the same in terms of three key imperatives: grow faster than the market, take share, and generate modest margin expansion while investing at scale in our business and our people. In the last part, I’ll discuss op margin. We're very proud of the 10% to 30% growth that we have planned this year. That implies that we will continue to improve efficiencies in how we run our business, both in terms of client delivery and internally within SG&A.

Yes, I'll briefly add. I'm glad you acknowledge that revenue growth is challenging. Over the last decade, there has been a significant shift in the professional services industry. The exponential technology changes and the need to help clients move faster and more efficiently means that we need to invest significantly. The demand for our services is stemming not just from demand but from the solutions we provide, all the way from strategy to operations across multiple assets. This is a strong differentiator for us.

Got it, got it. Thank you for that. The other question is over the last 18 months, your revenue growth has absorbed the negative impact of less P&E. Is that coming back? Do you have updated thoughts on back to office, what's the assumption for that in your outlook?

So, I'll let KC answer specifically, but I will say it has been a humbling experience. We have all had our hopes of returning numerous times that reverted back to Zoom or Teams. It’s an interesting and new normal. KC, why don’t you outline our assumptions?

Yes, so Ashwin, our revenue guidance of 12 to 15% does not include any specific uptick from reimbursable travel, and any changes in that assumption will be reflected in our guidance. As Julie stated, predicting these increases is challenging. We do have an increased build in particular in the back half of the year for travel costs.

Thanks, guys. Good morning. I wanted to start just with the visibility question. The reason I asked is obviously your cost of currency revenue growth here in Q4 was quite robust. So it wasn't really above the top end of your guidance, whereas in recent quarters, you had been handily exceeding the top end of your expectation. I'm just wondering, is this simply because your visibility has improved, so you've gotten more comfortable, you don't need to put extra cushion into the guidance? Or did some bookings not ramp as fast as expected in the quarter? A related question for fiscal '22 - how is your approach changed versus this time last year, again perhaps because your visibility has improved? Thanks.

Yes, I will answer both questions in really the same way. For the fourth quarter, we were slightly above our FX-adjusted guided range, but we always aim to be at the top end of the range. This year has been a story of unprecedented ramp, and we're pleased we were able to nail down our expectations for the quarter. The same applies to '22; it's not a change in visibility. We always call it as we see it based on our best estimates. We aim high, which is why these ranges are reflected.

Okay, good to know. Just a follow-up, what are your expectations for book-to-bill, in consulting and overall for the first quarter, and for the full fiscal year? What are you thinking about for consulting versus outsourcing revenue growth this year? Thanks, guys. Congrats.

Yes, we feel good about our pipeline as we head into the fiscal year. I would say for Q1 bookings, we feel really good where we are. Historically, we do see some seasonality in Q1, large deals can make things lumpy, but we feel really good about our positioning. For revenue growth this quarter, we expect consulting continuing in strong double-digits, and outsourcing in the double-digit range.

Great, operator, we have time.

For the full year, we see consulting continuing to be strong double digits and outsourcing depending on where we landed, the range will be high single to low double digits.

Great, thanks. Operator, we have time for one more question and then Julie will wrap up the call.

Thank you so much. Really impressive growth at scale here. I wanted to ask on Industry X; it was $5 billion in revenues, up 36%, as I wrote down. Julie said it’s the next frontier here. Does this have potential to be as big as cloud? I'm just trying to think about the sizing of Industry X recognizing it's early, but also its importance.

Yes, I mean I think we're not really sizing that today. I mean, if we think about cloud as the entire enterprise, it's difficult to measure. What we can say is that we consider it the next digital frontier. We are already at $5 billion, but it's super early. Technologies are just starting to come online that are cloud-based. Our work with companies like Vivienne Westwood and Ahlstrom demonstrates the broad range of our services across industries. We do see Industry X as a significant growth driver for the future, even if we're not sizing it yet.

Okay, no worries. Just thought it was interesting because the scope can be quite large. Just my quick follow-up; I know you had a lot of questions on acquisitions. The digital assets are valued quite highly here across the board. Looks like you're still implying a reasonable revenue multiple with your inorganic contribution; have you seen any changes on the valuation side? I know you're still a destination for many companies, but just curious if the valuations have changed in any way?

You’ve seen what valuations have done in general, but I would just mention that we have high hurdle rates for what we expect from business cases. We track this closely, and we’re pleased with our ongoing performance relative to the expectations we set in business cases.

Yes, it's impressive. Thank you both.

Okay, thank you.

All right, well now it's time to wrap up. In closing, I want to thank all of our people and our Managing Directors for what you all do every day. Our people at Accenture and their actions and results in FY'21 have really put us in a terrific position as we go into FY'22 to create even more value ahead. I and the entire leadership team are super excited and confident about what's to come. I'll simply end by thanking all of our shareholders for your continued trust and support. Be well, everyone. Thanks.