Investor Day 2013

Oct 8, 2013

Slides

Let me welcome everybody that has joined us in the webcast as well as those of you back from our brief break. I'm Casey McClure, Managing Director of Investor Relations. For those of you who had joined us today via the webcast, you will be able to find the remarks from the earlier part of the session posted to the Investor Relations section of our website. We expect to have those posted over the next couple of days. I would like to remind you that some of the matters we will discuss in today's constitute forward looking statements related to Accenture's operations and results. We wish to caution investors not to place undue reliance on any such forward looking statements. Any statements other than statements of historical fact may be forward looking statements. These forward looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the presentations and are not a guarantee of our future performance. Such risks and uncertainties include, but are not limited to, general economic conditions and those factors set forth under the Risk Factors section of our Annual Report on Form 10 ks and quarterly reports on Form 10 Q and other documents filed or furnished to the Securities and Exchange Commission. As always, Accenture assumes no obligation to update any statements made in these presentations or to conform such statements to actual results or changes in Accenture's assumptions and expectations. I'd also like to remind you that we will not be providing you with an update for or making comments related to our Q1 of fiscal 'fourteen. With that, let me turn it over to our CFO, David Rowland. Thank you, Casey. Well, let me start by saying how excited I am to have the opportunity to speak with this morning. Of course, I've known many of you in my previous role. And for those of you that I haven't known, I've had the opportunity to meet quite a few of you over the last 4 or 5 months as I've been traveling around, transitioning into the CFO role, but certainly there's nothing like the opportunity to talk to you all at once and to have the opportunity to answer your questions in a live form. You know, I hear our leaders talk about our growth strategy quite often, but I have to say that no matter how many times I hear it, I'm struck by the level of focus, clarity and distinctiveness reflected in our strategy and the degree to which we're truly unique in the breadth and diversity of what we do. But as distinctive and compelling as our strategy is as CFO, I know that it's only meaningful if it ultimately translates into strong financial results and an attractive value proposition for our shareholders. So this morning, I want to anchor back to the business outlook that I provided on our earnings call just 2 weeks ago to provide some additional color around our rationale and to talk more broadly about what we're focused on to drive shareholder value in a way that we think is truly differentiated. And then following my comments, Pierre will join me on my stage, on the stage or on my stage perhaps, for some Q and A where we'll do our best to answer your questions. So let me start by just briefly summarizing the key elements of our business outlook. Starting with bookings, our range of $32,000,000,000 to $35,000,000,000 aligns with our revenue guidance, as you would expect, with an overall book to bill of 1.1 to 1.2, which is very similar to what we delivered in 'thirteen. We expect to see a continued strong contribution from large mega deals as we drive the transformation in business services agenda that you heard about this morning. Regarding revenues, we see a range of 2% to 6% growth in local currency with the midpoint of that range being essentially identical to the 4 0.2% growth that we delivered in 'thirteen. We see continued stronger contribution from outsourcing growth with consulting growth being roughly flattish to modestly stronger than the 1% growth we delivered in 'thirteen. We're targeting continued expansion in our operating margin of 10 to 30 basis points and importantly expect to continue to drive more significant improvements in our underlying cost structure so that we can fund the investment program that Sean alluded to earlier this morning while still delivering our margin expansion. Our EPS range of $4.42 to $4.54 reflects 5% to 8% growth in U. S. Dollars, higher than our revenue growth and includes an FX drag of about 1% as well as a higher tax rate in 'fourteen compared to the unusually low tax rate that we had in 'thirteen. And we see cash flow in the range of $3,200,000,000 to $3,500,000,000 which allows for the possibility of some increase in DSO, but still reflects very strong cash flow in absolute terms. Finally, I've had several people ask me about my philosophy on providing guidance. And let me just say again that our philosophy on setting guidance has not changed at all. We're not trying to be overly conservative or overly aggressive. We're simply trying to be balanced and as always call it as we see it. Since I've been CFO, I've been asked several times about our 3 key financial goals and specifically whether or not they continue to represent our ambition. The answer is yes, but consistent with what you've seen in past years, it doesn't mean that we'll meet all objectives each and every year. For 14 specifically, our guidance has clearly aligned with the first and third objectives, growing faster than the market and maintaining a strong balance sheet and cash flow while returning a substantial amount of our cash to our shareholders via buybacks and dividend. Regarding the second objective, double digit EPS growth, this is a year where our outlook is below double digit growth, but still reflects EPS growth higher than revenue growth. Again, this year we face a headwind with both FX and tax rate and our revenue growth range is a little lower than in past years based on how we see the market growth, and all of that puts us below double digit growth, but just below double digit growth on the upper end of the range. But in a market with higher growth rates than we've seen in 'thirteen and expect to see in 'fourteen and with less of a headwind on FX and tax rate, we certainly think it's possible to deliver double digit growth in years in the future. So these goals, which have been consistent since we've been a public company, continue to guide us going forward and we'll work hard to achieve them over time. So let's talk a little bit more about how we see the market in 2014 and how that shapes our revenue range of 2% to 6%. It goes without saying that this is the element of our guidance that has certainly been the focal point of most of the discussions we've had around earnings. Let me start by saying, as Pierre said this morning, that we are a growth oriented company, and everything you heard today clearly illustrates that point. I can assure you that our management team focuses 20 fourseven on what we need to do to drive profitable growth. It's in our DNA and it's embedded in our culture. As we said on the call, the reality is that market growth as we measure it has slowed in 'thirteen as compared to the previous 2 years and you can see that on the left hand side of this slide. Again, we're talking about market growth using our analytical framework for how we track the addressable market, which we refer to as the basket, where we take roughly 35 to 40 competitors that we have carefully selected out of this large fragmented market, which represents about 40% of the market and we track the growth of Accenture relative to that basket or what we refer to as our addressable market. Importantly, you can also see on the left hand side of this chart, on 13, we continued our trend of growing faster than the market, in fact, 1.7 times the market, while gaining shares, while gaining share in many areas of our business. In terms of the operating groups, to reiterate what we said on the earnings call, H and PS and Financial Services continue to be very well positioned for growth above the Accenture average in FY 'fourteen, but we'll start a little slower in quarter 1 with growth building throughout the year. Products will continue to deliver very consistent and solid performance. And then we have CMT and Resources, which continue to stabilize and are positioned to deliver overall positive growth for the year. So to summarize, we think 2% to 6% is the right range for the market as we see it, but I can assure you that we're working every minute of every day to land as high in that range as we possibly can. And in any event, we're focused on 2 important objectives during this period of lower market growth. First, as we've said many times, to grow faster than the market and take share. And second, as we've also said, to invest for growth so that we're positioned to accelerate on the upturn. And if we can do those two things, we can be confident that we're positioning the business in the best possible way for the long term. But again, we know that all of this is really only relevant if it translates into a strong track record of creating shareholder value. And I think on this front, it's fair to say that we have delivered. As we've matured as a public company, our shareholder value model has evolved from one that was initially solely dependent on share appreciation for the 1st 5 years or so to one that has become increasingly balanced with both share appreciation and dividend return contributing to our value proposition. And that's exactly where we want to be and how we see our model playing out going forward. Revenue growth above market will continue to be a major contributor to our EPS growth, combined with continued modest margin expansion, proactively managing the efficiency of our tax structure and continuing our efforts to reduce the share count over time. And of course, dividends will continue to be an important part of returning cash to shareholders. I think the track record speaks for itself. We've delivered a total shareholder return, CAGR, of 15% since becoming a public company, which is about 3 times the average return for the S and P 500 over that same period. And to further illustrate the point, our strong shareholder return performance has been even more evident in the most recent 3 years. You can see that in the trailing 3 fiscal years, our total shareholder return, CAGR, is 28%, well above both our competitor group and the S and P 500 over that same 3 year period. And while we all know that historical performance does not guarantee future performance, this clearly illustrates that we understand how to drive value for our shareholders by leveraging our strong position in the marketplace and managing our business and our assets in a manner that is shareholder focused and drive strong returns. An important element of our business model and truly a distinguishing characteristic of Accenture is our ability to generate strong cash flows. There are many elements of our business culture that have survived and thrived as we've moved from a partnership, private partnership to a public company. But perhaps one of the most important is our strong owner operator culture and our understanding of the importance of cash. This culture is the key ingredient that has allowed us to manage our DSOs at industry leading levels, which has been a key contributor to our strong cash flow. We've generated roughly 28,000,000,000 dollars of free cash flow since IPO. And throughout that period, we've generated cash flow in excess of our net income. Of course, there are a number of factors that impact the relationship between cash flow and net income in any particular fiscal year, but structurally, we continue to drive a business with very strong cash flows. Most importantly, we know how to put our cash to work in a way that creates value for our shareholders while still investing in the business. As we've discussed before, all of this is underpinned by a very strong capital allocation model, which continues to guide our decisions on how we allocate our capital. The fundamental tenet of the model is that we allocate capital as required to support growth in our business and then return surplus capital to our shareholders through both dividends and buybacks. On the shareholder return front, I announced on our earnings call that we would return a minimum of $3,700,000,000 to shareholders in fiscal 'fourteen. And as part of that, we announced a 15% increase in our first dividend, to be paid out this year. We continue to think in terms of roughly a 2:one ratio of repurchases to dividend, and we believe this ratio gives us the right level of flexibility as we move forward. I think, you would agree that overall our statements and what we're targeting in 'fourteen reflect a continuation of our past track record where we've returned 93% of our free cash flow to shareholders since we've been a public company. And while it's not on this slide, just to round out our capital allocation model, we continue to target roughly 10% of our operating cash flow to capital expenditures, with roughly 15% to acquisitions. And of course, with our cash position, we can ramp up our acquisition capital as we did in 'thirteen should the need arise. So overall, we continue to have a very flexible, sustainable capital allocation model underpinned by strong cash flows and a relatively capital light business. So to briefly summarize, there are really four points that I wanted to reinforce and I want you to take away from my comments. 1st, our three financial goals continue to be very relevant and reflect how we are trying to drive the business going forward, but recognize that we will go through varying cycles of growth just as we have in the past. And as it relates to our 'fourteen guidance, it's in the context of how we see market growth playing out in our fiscal 'fourteen. 2nd, we continue to raise our game investing for growth. We're balancing driving near term results while investing in our business at even higher levels to position us in the best possible way for the long term. 3rd, we have a balanced model for driving shareholder return and a track record for delivering industry leading results. 4th, we know how to generate cash and we know what to do with it. There's no doubt we have to work hard to continue our track record of strong results. We don't take anything for granted and certainly nothing is given to us in the market, but I feel really good about our business, our strategy, our leadership team, our level of focus, and how we're positioned for the future. So with that, let me invite Pierre to join me on the stage and we'll take some of your questions. Many hands being raised. So thanks a lot, David. I mean, you've been crystal clear. Okay. Let's get started. Front to back. Thank you. David Togut with Evercore Partners. David, you alluded to some long term cost savings initiatives in your remarks. Two questions. First is, is there more headroom to expand margins beyond the 10 to 30 basis points you're targeting for fiscal 'fourteen? The answer is that we could do a lot of things to expand margins further if we were just solving for producing results in a current quarter or current year. What we're trying to do is to strike the right balance between having a sustainable level of margin expansion that supports the 3 overriding financial goals that we have while still giving us the capacity to invest in our business to position ourselves for the long term. And so what we've always been about is finding the balance between investing in the business and then driving that modest margin expansion in a sustainable way over time. If we just wanted to turn up the dials and drive higher margin and solve for a quarter or solve for a year, we could always do that, but that's not in the best long term interest. Just as a quick follow-up, what was the backlog, the contracted backlog for Accenture as of August 31st and how much was backlog up year over year? Yes. That question did not get asked on the big call, so I'm glad you asked it here because several people asked it in subsequent discussions and we had not commented. But I think Julie now in this form, I can say anything I want to say, right? So the contracted revenues over the next 12 month period were up about 7% year over year, so above the upper end of our revenue growth range. I will say that we started providing this contracted revenue growth, I don't know, several years ago. And on one hand, we're happy to provide it. On the other hand, I do think that there's probably been some confusion coming from that because that is just one element of the revenue growth equation. We obviously on top of that, it's how does that backlog actually convert to revenue? And then also, you know, the issue of the work that we sell and then the characteristics of that work and the pace and timing at which it converts to revenue. And so it's a multipart equation of which that is one element. But the answer is 7%. Thank you. On your let's yeah, let's take the first row. We will move up. We have time. We have time, so. I'll make a quick question. Steve Lars, UBS. Your capital structure arguably is suboptimal. You have no debt, which is a great position to be in. But is there a point at which you would, in addition to your investment, take your capital return to another level and perhaps use debt to repurchase stock? Or are you keeping the powder dry because of potentially larger M and A? We, as you would expect, you would certainly expect of Accenture, we look at our capital structure real time. And at least once a year we go through and look at our capacity for debt and the logic of using or not using debt with the Finance Committee of our Board. So we look at that, we assess it, we evaluate it, and we do it in a very thoughtful way. The reality is that if you look at what our track record is, we have returned a significant amount of cash to our shareholders through buybacks and dividends and we've done that using the strong cash flow that we have in our business. And as we see it right now, as long as our cash flow supports what we need to do to return cash to shareholders at very healthy levels, while still allowing us to right strategy. The thing about then we think we've got the right strategy. The thing about Accenture is that we have a strong overall financial position And we have a lot of levers that if we ever need them, you know, we could play those things out over time. But we do look at it very thoughtfully. It's, it's something that we, that we do spend some time thinking about. Thank you. Another question? Hey, Keith Bachman from Bank of Montreal. I want to dive in a little bit to the M and A strategy again. First a clarification, it looks like 2 deals that you've just recently done, Procuriant and Acuity are about 100 basis points alone and yet you did 4 or 5 deals at the end of the year and you've guided this year for M and A to be about 100 basis points, but either those 4 or 5 other smaller companies contribute very little to no revenue or it's more than 100 basis points of revenue that you're going to get in FY 'fourteen. I was hoping you could just clarify with the deal that you did last week, was that in the 100 basis points guidance or was that on top of it? And then if we branch out longer term follow to Steve's question, it looks like the growth you're continuing to forecast the growth of the market to be a little slower. Would M and A form in a more important part of your longer term growth? In other words, can investors think about M and A contributing more than 100 basis points, 1 to 2 points as we look out over the next couple of years? Thank you. Maybe I'll give a couple of comps or would you like to start first? Yes, I can just stop maybe answering the second part of your question and then we'll let David how things have been factored in the guidance. But I mean first to make sure we're all on the same page, our growth strategy is organic. We grow organic at Accenture and there is no change with that. So then second is how we're using our capital to accelerate if you will not our growth, the execution of our strategy and through the execution of our strategy we're going to capture more growth. This is a way we're not going to grow inorganic at Accenture. So what we do is, as mentioned by the team, Sean and the others, We are trying to find the new spaces for growth, which is what we highlighted this morning. And then we are using our capital in a very targeted way to identify where there is outside some capabilities, companies that could help us accelerating the access to new markets. This is what we did with in digital marketing with Aventa, Sherwood, Accueli to set a few. So that's what we do. And so far, this is our mental model. We do not have at all the objective to grow inorganic, but to continue using acquisition in a way to execute our strategy and that's going to be a contribution of and grow organic on top of the organic. This is the mental model. And I think it's very well said by Brian in Accenture in Turkey. We don't grow in organic. We made those acquisitions and then we grow significantly on an organic standpoint. You want to answer the first one? Yes. I mean, I would just say very, I guess, very straightly that we just provided guidance a week ago. We don't update guidance during the quarter based on any individual transaction. I mean, if you look at procuring in the context of our overall business, it's big in terms of the type of acquisitions we do, but it's not that big in the context of our overall revenue stream. The other thing I would tell you is that so to be clear, about 1% of revenue is what we said, which is plus or minus. The other thing is, is that we get the question asked a lot, but really without probably defining it so that we know what we're talking to each other about. And so let me just put it out there right now. When we look at inorganic growth, first of all, as Pierre said, we do inorganic as a means to fuel organic growth. Things that we buy, Purium would be a great example, almost from day 1 are embedded in the core of our business. So when we measure inorganic growth, we look at acquisitions that we've done over a trailing 4 quarter, kind of a rolling trailing 4 quarter period, and that's how we think about inorganic. We think of it as inorganic the 1st year post transaction, and then after that, it's just part of our business. And so with that methodology for how we talk about inorganic, our guidance around about 1% is the same. Yeah. I mean, that's good to reflect the way how we are looking at this. And then after 1 year, it's part of the core. That's yes, Rod. Great. Rod Bourgeois here with Sanford Bernstein. A 2 part question about growth, maybe the first part of it for Pierre and the second part for you can arm wrestle over who answers the second part. Yes. And if global GDP growth were to accelerate, call it a couple of 100 basis points, do you feel like Accenture is positioned to return its revenue growth in constant currency back to the upper single digits? So that's the first part of the question. Can you get back to upper single digits growth if the world's economy gets better? And then the second part, in the last year, your fiscal '13 revenue growth was below your original forecast for the year. Was more aggressive competition part of what hurt the growth during the year or was it all due to cyclical factors in certain parts of the world? Yes. Okay. I will let you David maybe answer the second one on what happened last year and whether it was cyclical or other factors. I mean our life would be easier with a stronger economy period. I mean that's what that is. So indeed you have I'm not talking about Accenture but portfolio but the industry, you have a kind of direct correlation between the industrial growth, the GDP growth, the IT market and at the end of the day what we do. So yes, as we speak, we are in a cycle of lower economic growth, I mean, 2.3 in 2013, I mean 2.2, 2.3. And in 2014, I don't believe that the economists are planning anything which is going to be much, much better than this. So we are in this cycle of lower economic growth and indeed you're starting to see how it's reflected in the basket, what we're calling the basket and you see the move to a lower as well growth. So that's why at the end of the day, we are fighting if you will in that environment and our objective is to continue gain share at the core of our business, but at the same time and this is what we wanted to illustrate this morning, we are investing for the future to build stronger position in new territories and new ways of growth. Should the environment be better, we believe that indeed we would benefit from that effect. Yes, on the second one, so I think the question is to what extent did higher increased competition impact our revenue growth in 2013. And I would say that the competitive landscape, as we talked about on the quarterly calls, didn't change. It continued to be highly competitive. And that was not a driver to our revenue results in 2013. The challenge that we had in 2013 is that we had these few concentrated areas of weakness. If you look at our 5 operating groups, which I think is always the best way really to look at our business, and if you take the 3 that grew above the Accenture average, Financial Services, HMPS and Products, those 3 operating groups in total, and these are numbers you could calculate as well, grew 8% at the upper end of the original range that we guided to. What we didn't expect was that CMT and Resources would have negative growth for the year. And you may remember that in the case of those 2 operating groups, we had called out the Q4 of the previous year the fact that they both had large contracts that were winding down. 1, we have referred to the large communications client in Europe. And in the case of resources, we have referred to a couple of large scale programs, 1 down at the end of 12, we thought would be replaced and were not replaced at the level that they expected, we expected. So it was which has nothing to do by the way with anything that is secular in nature. That doesn't have anything to do with Cloud, doesn't have anything to do with SaaS. That is 2 operating groups. And within those operating groups, a couple of industries where we had some concentrated, more challenging characteristics. From a geographic standpoint, Brazil, Southern Europe and Japan. So we had a year, like I don't remember seeing, where we had a little bit more extreme in terms of significant chunks of our business doing very, very well, but a few concentrated areas of weakness that netted out to the number of 4.2% for the year, which was still faster than the market. It was just lower than our original guidance. Yes? Ashwin Shirvaikar from Citi. And thank you for today's presentations. Also a 2 part question on growth. I guess the first one is on M and A. And we've written about your acquisition strategy. We kind of like it. The one part that you did not address today is with regards to what's the right valuation in your mind for the right valuation metrics in your mind for what you pay for these acquisitions? For example, Procurian, you could kind of say 2.5 to 3 times revenues. Is that sort of how you look at it? And the second one, David, in your presentation, the multiple of your growth has decelerated over time. And what is the cause for that in your mind? Yes. I can take I mean, go ahead, Ajay. If all of you have two questions, I mean, it's going to take a little bit longer. But I understand the new trick around the 2 questions now. That's a good try. I mean, good, good, good. I mean, from an M and A standpoint, I'm talking with some of our board members who are part of our finance committee and they are looking at this, as you might imagine, with maximum rigor and discipline. We are very thoughtful to make sure that we are going after the right opportunities and we are paying exactly the right price. Now our philosophy is to go after quality acquisitions. So the point for us is not to pay cheap to have something poor. It's to pay the right price to have a quality acquisition we're going to build on because as you heard, it's for us it's going to be the nucleus, if you will, for future organic growth. So we are really looking for quality acquisition. Now from a multiple standpoint, as you know very well, it really depends on the kind of acquisition you're making. If you're more on a pure people based acquisition, then you're going to be sometime one time the revenue or even less if it's a pure people. Then you if you're going to the 100% software, then you might get to who knows what, you've seen some of the transaction and the multiple might be 5, 6, 7 I mean 10 sometimes. Or you're in the hybrid and organization which are more a mix of people, I mean what we've been doing with the BPO and you're getting to the kind of valuation. So first we're looking at that extremely carefully with the best advisors, if you will, making sure we're looking at the other transaction. Then we are extremely disciplined regarding the business case. And again, I'm looking to our Board members, not making our life easy, but are very fair in questioning us to make sure that we have a robust business case. Of course, we'll not share with you the kind of metrics we are using and the order rates we're putting there, but believe us, they are very strict to understand where we're putting our threshold. So we are extraordinarily disciplined including the look back we're making to the acquisitions. Now again the multiple is just a factor of which segment, people, hybrid or pure software. That's what it is. Yes, on your second question, you are exactly right in your conclusion. And if you think about it, it's pretty intuitive. So our experience has been historically that during periods of lower market growth, our multiple to the market is not as great as it is during more robust periods where the multiple is greater. And intuitively, as you would think about it, the reason is, is more people fighting for a smaller pie. And our ability to more people fighting for a smaller pie and our ability to grow faster than the market while we have done it is a little bit less than what it is in more robust markets. That's been our historical pattern. I think we have one here, then we will move from right to left, which is what we used to do in France as well. A quick one and then a little bit longer one. What percent you have an ambitious goal to distribute or you've historically distributed 90% of cash flow, of free cash flow to shareholders. What percentage of free cash flow is generated domestically to support that strategy, especially since it seems like you're guiding you're going to be distributing more than 100% of your cash flow this coming year? And then a little bit more in detail on the M and A. Should we look at the M and A that you do after guidance is released to be additive to the constant currency guidance or should we thinking that is reducing the organic implicit organic growth rate? And then is the might it be better to guide in an organic constant currency growth rate as opposed to just a constant currency growth rate to make these questions not as frequent or annoying? And then finally, you talk about the guidance I'm counting 4 now. Well, just the guidance of inorganic seems to be 12 months, but is that really the right timeframe given that the written off revenue and backlog is contracted usually longer than 12 months? So, might you want to extend the timeframe when that revenue gets rebooked? So, maybe long questions, but Yes, let me just short answer. I'll just pick off what I remember. The first thing is that we without getting overly specific, we allow for some level of speculative or future acquisitions when we structure our guidance. So I guess I'll leave that one there. In terms of we're not going to guide by organic and inorganic. Truthfully, it's a lot of companies don't even provide the revenue guidance that we provide, much less that level of detail. But that's not a path we're going to go down. I know if there are any others that you want to put on? No, no, no, no. Again, I mean, I see a lot of interest around and I like that around how we're using inorganic in order to accelerate our differentiation and our growth. And again, it's still a good opportunity for us that to the question, are we indeed stepping up a little bit compared to what we used to do in the past to use acquisition as a kind of strategic approach to access to unique capabilities? The answer is yes. Now we've always been very clear that we want to deploy around 15% of our free cash flow every year around acquisitions. This is what we did these last couple of years, a little bit less. And this year, we did a little bit more. But we're still there. It's still the same strategy. And again, the acquisitions we are making are all part of the core in the BPO. They are part of the core. So that's the philosophy we have. And we continue to grow organic on top of this inorganic thing. So yes, we are stepping up. No, we are not changing our philosophy or suddenly we're going to grow inorganic or it's going to have a material impact on our annual growth. It's not a change of that philosophy. We're just stepping up. Yes. I mean, I appreciate the question, but we're not going to talk about sources of cash flow by geographic markets either. I mean, we have a very well thought out, very robust cash management program. Scott Alstrom, our treasurer is here somewhere. But again, that's a level of granularity that we won't comment on. Let's move to I mean, another part. Who's got questions? Raise your hand here. You won't be surprised that I have a question on M and A. Just as it relates to margins, what's your philosophy in terms of when you would expect a recent acquisition to become accretive? And assuming it's not day 1, what are you doing this year to offset the fact that a point or 2 of the 4 points of growth is coming from acquisitions that might be dilutive? And still grow earnings and margins faster than revenue? Yes. I mean the period to margin accretion varies from deal to deal as you would imagine. We don't have a definitive expectation that it gets there by a certain month. We just look at that as one of many considerations when we're looking at the financial metrics of a deal. In terms of what we're doing to absorb any dilutive effect of deals this year, It's all in the mix. When we talk about investments, we talk about investments. One of the buckets of investments we talk about that we include would be the dilutive effect of early stage acquisitions, if you will. And so this headroom that we're creating in our P and L, when we talk about doing that to cover investments, it includes that dilutive effect. And so the things that we focus on in creating efficiency in our P and L are the things that frankly you've heard us talk about in the past. I mean we are constantly working on ways to improve our delivery efficiency and improve our contract margins. We have an ongoing focus on our channel cost, our selling cost efficiency. We have an ongoing focus on our corporate functions, our finance, HR, etcetera. We have a continued focus on the efficiency of our footprint of office space and geographic services around the world. We're looking at how do we evolve our training delivery to the next stage of evolution that will be more effective, but more impactful, but also has some cost efficiency. We look at things like travel. We're a very virtual organization. We embrace virtual technology extensively. You see some illustration of that even here. So we have a lot of things in our cost acquisitions. I mean it's very clear because again I see and why you're asking the question and they are very valid that you've seen a kind of evolution the way we've been deploying our capital. But again, no change. With that level of acquisition, we will not come back on our operating margin expansion. We always said we're going to drive modest margin expansion, return cash to shareholders has been very clear. We do not believe that that level of acquisition is changing anything in our ability to drive modest margin expansion and we believe that we have the opportunity at Accenture every year to drive more efficiency to absorb this. As a routine, you heard Baskar driving efficiency through Intelligent IT in the GD and you have managed what he's doing with the BPO. All of us, what Jorde Blair, our COO together with David and myself, how we're driving more efficiency in operations every day. So we believe we can absorb that level of acquisition without creating any dilution. Yes? Hi. This is Ashish Sabadra from Deutsche Bank. Quick question around the technology transition and does it create any potential pockets of weakness. So the growth initiatives are growing high double digits. They are approaching $1,000,000,000 or higher. But maybe the legacy businesses like the SAP and Oracle may have slowed down a bit cyclical some of its cyclicality. But does that technology transition accentuates in some sense the macro weakness that you're seeing? And if it is, then how long do you expect that pocket of weakness to last before these growth initiatives become big enough to offset any weakness in the legacy businesses? Thanks. Yes. I mean, this is excellent and this is what we're managing that I mean we are managing 1st, I would say cycle of lower growth, which is what we've seen with the basket and so forth. So here our response is of course we will never give up when we see a cycle of lower growth. The point is we are increasing our the response is to be more competitive to win more of what's out there. And this is exactly what again, Bhaskar is doing by making our global delivery network more productive, this is what he said, so we can win more on the traditional, if you will, IT, including ERP on what's out there. And then indeed the second factor if you will we are facing is the technology transition. Here the name of the game is to invest to make sure we are capturing these waves. That was one of the topic of this morning and this is exactly what we do with Accenture Analytics, Accenture Interactive, Accenture Cloud, Accenture Mobility plus the business services we're launching. So we're fighting on the core to improve our win rates and win more what's out there. And we're pleased to see that our pipeline is building up, right David, which is thus the sign that first there is still business out there and second, our ability to win what's going on and then building on the new. So it's an end strategy, if you will. Now when the cycle of lower growth will get back to a cycle of stronger growth, I feel that every year we believe that things are getting a little bit more stable. As I mentioned, all Europe now is less in distress with the sovereign debt. U. S. Has been doing well and the emerging markets were strong. And suddenly, the things are a little bit shifting. Europe is okay. Emerging markets are more questionable here and there. And U. S, you know better than me what's going to happen in the coming days with the government shutdown and debt selling. So you have probably more to respond than me if you know if you can read the mind of your government. Sooner the better would be my answer. Sooner the better. Yes? You made some comments on the market growth. So market grows 2.5%, let's say Accenture grows 3% to 4% over the next couple of years. How does your gross excuse me, your net headcount change with those with that as the backdrop? Versus your global delivery network, does that change under those parameters? Maybe on the mix, I mean, we have over years for also good reason, the mix is shifting with the I mean, with the GDN. So the GDN is representing a higher proportion of the total headcount. But I would not qualify that as anything like a significant shift or an accelerated shift, not at all. It's just clearly evolutionary. I mean, this is what we see, Marty, if you're looking on your patch. We are adding more in the GDN, but we continue to hide in the mature pockets as well as the emerging markets. So I think it's a kind of I would characterize as a slow evolution now from the GDN to the mature or to the more mature markets, I would say. It's a kind of normal evolution based on the evolving part of our business. When you have a little bit of more AO and BPO, which is the case these last couple of years, it's a little bit accelerating the GDN, but there is nothing as a major shift. Yes, nothing to add. We had I've seen any we're getting to the To the better end. To the better end, the final 5 minutes. So if there is the final question because I'm trying to figure out my profound closing. In the past, some of your competitors have taken advantage of downturns, whether they be in certain vertical or region or globally. And they've used that as an opportunity to take a risk to foster market share growth later. Are you taking any of those types of risks now in your go to market philosophy and see a longer term opportunity there? [SPEAKER CARLOS GOMES DA SILVA:] I mean, yes and no, probably more no than yes. I mean, we will never do anything stupid for the sake of taking market share, never ever. And historically, when we looked at what happened in the market, if you're doing a wrong transaction just for the sake of growing, at the end of the day it's going to be a wrong transaction and it's going to impact your financials. So we are not prepared to do anything in that category just for the sake of growing. Now are we taking the opportunity of this lower cycle to accelerate our investments to capture the new wave of growth? Certainly, yes. And we believe that indeed today we have the financial strength, we have the capital, we have no debt, we have the cash and we have the insight to indeed take the opportunities of this market to accelerate our development. So this is where I would put a yes. No, when it comes to are we prepared to take a bad deal for the sake of growth? Never. Now are we prepared to use our capital where we are in a position of strength vis a vis our competitors who might be more for some cash constraint to make the right acquisitions, to make the right investments. This is exactly what we do in that context. Again, I couldn't be more pleased with the acquisition of Procurion because it's putting us in leading in that category. And as a consequence, it's putting in our competitors a little bit more on their would you say that Mike on the back foot? Hills. Hills. Hills. And it's another illustration because some will not have the capital to deploy to make these acquisitions. So yes, we're using our financial strength to accelerate and make those bets. All right, I guess we are getting to the end of this morning. So thank you very much. Again, thanks a lot for joining us. Thanks a lot for participating and thanks a lot for the questions. Again, we see the Investor and Analyst Day as a dialogue more than anything else. It's the opportunity once a year for our leaders to share with you where we are. I hope you appreciate the fact that we are as transparent and direct as possible, and we have just a genuine dialogue with you. I guess it's extremely important, especially at the times of changes. We've seen that the macro clients have new expectations. Our industry as well is in midst of transformation. It is again creating maybe on the short term some tension and pressure on the system and we've seen this year that we didn't have the kind of growth we expected at the end of the day, but on the other hand, it's creating opportunities. And I think this morning we wanted to show you that the world is plenty of opportunities if you have the right insight, if you have the right discipline, if you have the right strategy, but as well if you're focusing on the execution. So at the end of the day, our philosophy for growth is always the same. We want to whatever the cycle is up, whatever the cycle is a little bit down, at the end of the day, Accenture will grow market share, will invest in the future, will try to capture and succeed in capturing new ways of growth, so when the cycle will be up again, we will be better positioned than anyone else in order to succeed and reconnect with higher potential growth. I'm extremely confident about where we are. Again, I believe that we have the right strategy in place and we are executing very well. I guess, as you hear this morning, we have the right leaders and they are all around the world in order to capture I think an incredible position of strength. You mentioned no debt and I'm taking that as a compliment. We have no debt, we have the cash, we have the track record and from a positioning standpoint, again, we're working for the best clients. We have the largest delivery network and we are just excellent in delivering. We are taking leading position in new territories and we're very happy to share that with you this morning. You heard Accenture Interactive, we could have been doing the same with Accenture Mobility. And suddenly you've seen, oh, there is a new Accenture behind the Accenture we know. Very important, at least for me, is we're expanding our relevance in a broader value chain for our clients. We were very well known for covering IT or for covering the enterprise. As you see now, we have moved to the front office in a very robust way and more to come. But as well, at the same time, you'll remember what we said with the partnership with the General Electric or others, we as well want to be more relevant in the field operations. So when I look at it, and as a closing, I would say, in a world where volatility and uncertainty is still the name of the game, what's our response? Diversified portfolio of business. The more diverse you are, the more resilient you're going to be. And when you're in a cycle of lower growth, invest, Invest to capture the new ways of growth more than your competitors. And at the end of the day, 3, run your business with maximum rigor and discipline, which is exactly what we do. So we grow more than the market, we return to our shareholders what they definitely deserve. And we continue to make Accenture the leading organization in our industry. It's not going to be easy. Competition is there. We like to compete, but we like to compete to win. And this is exactly what we will continue to do. So thanks a lot for your confidence. Thanks a lot for participating. I'm sure we will have a continued dialogue in the coming weeks months. You will participate to the earning calls. We will have 101 and see you anyway next year maybe in the same place so you can continue to measure the progress we are doing. But again, I would like to thank the management for the preparation, but for the leadership they're providing to Accenture. And again, thanks to the Board for the support. We are a team. We are on the road and we compete to win. Thanks a lot.