What factors drive ACN's earnings surprises?

Accenture's (ACN) earnings surprise for the second quarter of fiscal year 2025 was $0.01 per share, which is relatively small compared to the company's overall performance. However, this surprise can still provide insights into the factors that drive ACN's earnings:

1. **Revenue Growth**: Accenture's revenues increased by 5% in U.S. dollars and 8.5% in local currency for the quarter. This growth is broad-based, reflecting strong performance across geographic markets, industry groups, and types of work. The company reported new bookings of $20.9 billion, which, although flat in local currency, decreased by 3% in U.S. dollars. This decline in U.S. dollars was offset by flat new bookings in local currency, indicating stability in local market performance.
2. **Strategic Focus**: Accenture's strategic focus on artificial intelligence (AI) and digital transformation is evident in the $1.4 billion in new bookings for GenAI. This highlights the company's ability to capitalize on emerging trends and technological advancements, which has contributed to its growth.
3. **Operating Margin Improvement**: The company's operating margin improved to 13.5%, reflecting increased efficiency and profitability. This improvement, although modest, indicates effective cost management and operational effectiveness.
4. **Free Cash Flow and Shareholder Returns**: Accenture reported free cash flow of $2.68 billion and repurchased or redeemed 4.0 million shares for a total of $1.4 billion. These actions demonstrate the company's commitment to returning value to shareholders, which can positively influence earnings as it reflects the company's financial health and strategic allocation of capital.

In conclusion, Accenture's earnings surprise is driven by strong revenue growth, strategic focus on high-growth areas like AI, operating margin improvement, and effective capital management. These factors combined contribute to the company's ability to exceed earnings expectations.