10-QPeriod: Q1 FY2010

Accenture plc Quarterly Report for Q1 Ended Nov 30, 2009

Filed December 18, 2009For Securities:ACN

Summary

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% 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 billion, 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.

Financial Highlights

54 data points
Beta

Revenue

$5.75B

31.0% Gross Margin

Net Income

$444.82M

7.7% Net Margin

EPS (Diluted)

$0.67

Total Assets

$12.18B

Cash & Equivalents

$4.00B

Free Cash Flow

$184.29M

Financial Statements
Beta
Revenue$5.75B
Cost of Revenue$3.96B
Gross Profit$1.78B
Operating Expenses$5.00B
Operating Income$746.41M
Interest Expense$4.48M
Net Income$444.82M
EPS (Basic)$0.70
EPS (Diluted)$0.67
Shares Outstanding (Basic)631.53M
Shares Outstanding (Diluted)774.56M

Key Highlights

  • 1Net revenues declined 11% year-over-year to $5.38 billion, impacted by a weak economic environment affecting client spending on consulting and outsourcing.
  • 2Consulting net revenues decreased by 15% and outsourcing net revenues decreased by 4% compared to the prior year quarter.
  • 3Operating margin improved to 13.9% from 13.5% year-over-year, demonstrating effective cost management despite revenue pressures.
  • 4Diluted 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.
  • 5The company maintained a solid liquidity position with $4.0 billion in cash and cash equivalents.
  • 6Accenture declared a cash dividend of $0.75 per share and continued its share repurchase program, underscoring its commitment to returning capital to shareholders.

Frequently Asked Questions

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.

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.

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.

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.