01—Abstract
Summary
Summary of the 10-Q filed December 18, 2009. Cited figures are marked; the original filing is the authoritative source.
Accenture plc's first quarter fiscal year 2010 filing (period ending November 30, 2009) reflects a challenging economic environment impacting revenues.
Net revenues decreased by 11%a in U.S. dollars and 12% in local currency compared to the prior year quarter, primarily driven by reduced client demand in consulting and outsourcing services. The company experienced a 15% decline in consulting net revenues and a 4% decrease in outsourcing net revenues. Despite the revenue headwinds, Accenture demonstrated resilience through effective cost management and improved operational efficiency.
Operating income saw a slight decrease of 8%, but operating margin improved to 13.9% from 13.5% year-over-year, driven by a better gross margin. The company maintained a strong cash position, with cash and cash equivalents at $4.0 billionb, though down from $4.5 billion at the previous fiscal year-end. Shareholder returns were supported by a $0.75 per share dividend payment, and the company continued its share repurchase program with significant authorization remaining.
02—Key points
Key Highlights
- Net revenues declined 11% year-over-year to $5.38 billion, impacted by a weak economic environment affecting client spending on consulting and outsourcing.
- Consulting net revenues decreased by 15% and outsourcing net revenues decreased by 4% compared to the prior year quarter.
- Operating margin improved to 13.9% from 13.5% year-over-year, demonstrating effective cost management despite revenue pressures.
- Diluted Earnings Per Share (EPS) decreased to $0.67 from $0.74 in the prior year quarter, impacted by lower revenues and a higher effective tax rate.
- The company maintained a solid liquidity position with $4.0 billion in cash and cash equivalents.
- Accenture declared a cash dividend of $0.75 per share and continued its share repurchase program, underscoring its commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Accenture plc kept $0.08.
- Revenue$5.75B100.0%
- Cost of revenue−$3.96B69.0%
- Gross profit$1.78B31.0%
- Operating costs−$1.04B18.1%
- Operating income$746.4M13.0%
- Interest, other & tax−$301.6M5.2%
- Net income$444.8M7.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed December 18, 2009Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $5.75B$6.47B | −11.2% |
| Cost of Revenue | $3.96B$4.58B | −13.5% |
| Gross Profit | $1.78B$1.89B | −5.5% |
| Operating Expenses | $5.00B$5.66B | −11.6% |
| Operating Income | $746.41M$814.77M | −8.4% |
| Interest Expense | $4.48M$3.40M | +31.8% |
| Net Income | $444.82M$479.87M | −7.3% |
| EPS (Basic) | $0.70$0.77 | −9.1% |
| EPS (Diluted) | $0.67$0.74 | −9.5% |
| Shares Outstanding (Basic) | 631.53M622.24M | +1.5% |
| Shares Outstanding (Diluted) | 774.56M797.87M | −2.9% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decline in this quarter?
The primary driver of the revenue decline was the continued adverse impact of the economic downturn on clients' businesses, leading to reduced spending on consulting and outsourcing services. Clients remained cautious about initiating new projects and expanding existing ones.
How did Accenture manage its profitability given the revenue decrease?
Accenture managed its profitability through effective cost management and operational efficiencies. This included a focus on cost of services (gross margin improved), and while Sales and Marketing expenses increased as a percentage of revenue, General and Administrative costs decreased. These actions led to an improvement in the operating margin despite lower revenues.
What is the outlook for the company given the current economic conditions?
While the economic downturn continued to impact the business, management noted that they expect some moderation of the adverse effects in certain areas. The company's strong utilization rates and active hiring in certain markets suggest they are adapting to demand shifts and preparing for potential future growth.
How is Accenture returning capital to shareholders?
Accenture declared a cash dividend of $0.75 per share. Additionally, the company has a significant share repurchase authorization, with approximately $4.46 billion remaining as of November 30, 2009, indicating a continued focus on returning capital to shareholders through dividends and buybacks.
06—Continue