01—Abstract
Summary
Summary of the 10-Q filed June 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Accenture plc's (ACN) third-quarter fiscal year 2013 report shows modest revenue growth, with net revenues increasing by 1%a in U.S. dollars and 3% in local currency compared to the prior year's quarter.
This growth was primarily driven by a solid performance in outsourcing services, which saw a 4% increase in U.S. dollars and 7% in local currency, while consulting revenues experienced a slight decline. Profitability saw a significant boost from a $49.7 millionb reorganization benefit recognized during the quarter, contributing to an 8% increase in operating income and a 70 basis point improvement in operating margin.
Diluted earnings per share rose to $1.21c from $1.03 in the prior year, partly due to this benefit. The company also highlighted continued investment in its workforce, with headcount increasing to approximately 266,000, and a strong commitment to returning capital to shareholders through share repurchases and dividends.
02—Key points
Key Highlights
- Net revenues increased by 1% year-over-year to $7.198 billion in Q3 FY13, with outsourcing revenue showing a 4% increase (7% in local currency).
- Operating income rose 8% to $1.142 billion, aided by a $49.7 million reorganization benefit, which also positively impacted operating margin.
- Diluted earnings per share increased to $1.21 from $1.03 in the prior year's comparable quarter.
- Headcount grew to approximately 266,000 employees as of May 31, 2013, reflecting increased demand for services.
- The company repurchased $1.24 billion of Accenture plc Class A ordinary shares and other programs during the first nine months of FY13.
- Consulting revenues declined slightly (down 2% in USD, flat in local currency) year-over-year, driven by reduced client spending on shorter-term projects and a shift towards longer-duration contracts.
- The company maintained a strong liquidity position with $5.9 billion in cash and cash equivalents as of May 31, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Accenture plc kept $0.11.
- Revenue$7.71B100.0%
- Cost of revenue−$5.27B68.4%
- Gross profit$2.44B31.6%
- Operating costs−$1.30B16.8%
- Operating income$1.14B14.8%
- Interest, other & tax−$331.7M4.3%
- Net income$810.3M10.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed June 28, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $7.71B$7.64B | +0.9% |
| Cost of Revenue | $5.27B$5.27B | 0.0% |
| Gross Profit | $2.44B$2.37B | +2.8% |
| Operating Expenses | $6.57B$6.58B | −0.2% |
| Operating Income | $1.14B$1.06B | +7.7% |
| Interest Expense | $3.59M$3.50M | +2.6% |
| Net Income | $810.26M$689.22M | +17.6% |
| EPS (Basic) | $1.25$1.07 | +16.8% |
| EPS (Diluted) | $1.21$1.03 | +17.5% |
| Shares Outstanding (Basic) | 650.63M645.76M | +0.8% |
| Shares Outstanding (Diluted) | 715.63M729.53M | −1.9% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue performance in Q3 FY13?
Accenture reported net revenues of $7.198 billion for the third quarter of fiscal year 2013, a 1% increase in U.S. dollars and a 3% increase in local currency compared to the same period in fiscal year 2012. Outsourcing revenues grew by 4% in U.S. dollars (7% in local currency), while consulting revenues saw a 2% decrease in U.S. dollars (flat in local currency).
How did Accenture's profitability fare in Q3 FY13?
Operating income increased by 8% to $1.142 billion. This improvement was partly due to a $49.7 million reorganization benefit. The operating margin expanded to 15.9% from 14.8% in the prior year's quarter, benefiting from the reorganization gain and improved outsourcing contract profitability.
What is the outlook for consulting versus outsourcing revenues?
The company noted that outsourcing revenue growth was solid, driven by demand for transformational projects. Conversely, consulting revenues declined slightly year-over-year. This trend is expected to continue in the near term, with clients prioritizing cost savings and operational efficiency, leading to a higher demand for outsourcing and a lower demand for short-term consulting projects.
How is Accenture managing its workforce and expenses?
Accenture proactively manages its workforce size and composition to balance client demand. Headcount grew to approximately 266,000 as of May 31, 2013. The company also focuses on cost management, with operating expenses as a percentage of revenue decreasing slightly year-over-year. Sales and marketing expenses as a percentage of net revenues increased due to higher business development costs.
06—Continue