10-QPeriod: Q1 FY2011

Accenture plc Quarterly Report for Q1 Ended Nov 30, 2010

Filed December 20, 2010For Securities:ACN

Summary

Accenture plc reported solid revenue growth for the first quarter of fiscal year 2011, with net revenues increasing by 12% in U.S. dollars and 14% in local currency, reaching $6.05 billion. This performance marks a significant turnaround from the previous year's downturn, with all operating groups except Health & Public Service showing strong year-over-year growth. The company's consulting and outsourcing businesses both saw increased net revenues, indicating a broader market recovery and continued demand for Accenture's services. Profitability saw a slight dip in gross margin to 32.2% from 33.1% year-over-year, attributed to higher costs associated with growth, including increased subcontractor and training expenses, as well as higher compensation. Despite this, operating income increased by 11% to $827 million. The company's effective tax rate also decreased to 28.3% from 30.5%, contributing to an increase in diluted earnings per share to $0.81 from $0.67.

Financial Highlights

52 data points
Beta

Revenue

$6.48B

30.0% Gross Margin

Net Income

$534.71M

8.3% Net Margin

EPS (Diluted)

$0.81

Total Assets

$12.87B

Cash & Equivalents

$4.16B

Free Cash Flow

$30.92M

Financial Statements
Beta
Revenue$6.48B
Cost of Revenue$4.53B
Gross Profit$1.94B
Operating Expenses$5.65B
Operating Income$826.93M
Interest Expense$4.74M
Net Income$534.71M
EPS (Basic)$0.84
EPS (Diluted)$0.81
Shares Outstanding (Basic)637.30M
Shares Outstanding (Diluted)743.71M

Key Highlights

  • 1Net revenues increased 12% to $6.05 billion for the first quarter of fiscal 2011, compared to $5.38 billion in the prior year, signaling a robust recovery.
  • 2Strong growth was observed across most operating segments, with Financial Services, Resources, Products, and Communications & High Tech showing double-digit local currency growth.
  • 3Consulting net revenues grew 14% to $3.57 billion, while outsourcing net revenues increased 10% to $2.48 billion, demonstrating demand in both service lines.
  • 4Operating income increased 11% year-over-year to $827 million, though operating margin slightly decreased to 13.7% from 13.9% due to higher cost of services.
  • 5Diluted earnings per share (EPS) rose to $0.81 from $0.67 in the prior year, driven by revenue growth, lower weighted average shares, and a reduced effective tax rate.
  • 6The company's headcount increased significantly to approximately 211,000 employees as of November 30, 2010, reflecting increased demand for services.
  • 7Accenture maintained a strong liquidity position with $4.2 billion in cash and cash equivalents as of November 30, 2010.

Frequently Asked Questions

Accenture reported a strong rebound in revenue for the first quarter of fiscal year 2011. Net revenues increased by 12% in U.S. dollars and 14% in local currency, reaching $6.05 billion, up from $5.38 billion in the same period last year. This growth was driven by broad-based demand across most of its operating segments.

While net revenues and operating income saw increases, the gross margin slightly decreased to 32.2% from 33.1% year-over-year. This was primarily due to higher costs associated with increased business activity, such as higher subcontractor and training expenses, as well as increased compensation costs. However, operating income still grew 11% to $827 million.

Both segments showed positive growth. Consulting net revenues increased by 14% to $3.57 billion, and outsourcing net revenues grew by 10% to $2.48 billion. The company indicated that market demand has improved and expects continued growth in most areas, driven by client initiatives focused on cost savings, performance improvement, and growth objectives.

Accenture has increased its workforce by 20% year-over-year to approximately 211,000 employees to meet rising demand. The company actively manages its workforce size, attrition, and hiring to balance skills and client demand. While costs for services and sales and marketing increased, general and administrative costs decreased as a percentage of revenue due to cost management efforts, including utilizing lower-cost locations.