10-QPeriod: Q3 FY2013

Accenture plc Quarterly Report for Q3 Ended May 31, 2013

Filed June 28, 2013For Securities:ACN

Summary

Accenture plc's (ACN) third-quarter fiscal year 2013 report shows modest revenue growth, with net revenues increasing by 1% 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 million 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 $1.21 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.

Financial Highlights

53 data points
Beta

Revenue

$7.71B

31.6% Gross Margin

Net Income

$810.26M

10.5% Net Margin

EPS (Diluted)

$1.21

Total Assets

$16.52B

Cash & Equivalents

$5.94B

Free Cash Flow

$1.41B

Financial Statements
Beta
Revenue$7.71B
Cost of Revenue$5.27B
Gross Profit$2.44B
Operating Expenses$6.57B
Operating Income$1.14B
Interest Expense$3.59M
Net Income$810.26M
EPS (Basic)$1.25
EPS (Diluted)$1.21
Shares Outstanding (Basic)650.63M
Shares Outstanding (Diluted)715.63M

Key Highlights

  • 1Net 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).
  • 2Operating income rose 8% to $1.142 billion, aided by a $49.7 million reorganization benefit, which also positively impacted operating margin.
  • 3Diluted earnings per share increased to $1.21 from $1.03 in the prior year's comparable quarter.
  • 4Headcount grew to approximately 266,000 employees as of May 31, 2013, reflecting increased demand for services.
  • 5The company repurchased $1.24 billion of Accenture plc Class A ordinary shares and other programs during the first nine months of FY13.
  • 6Consulting 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.
  • 7The company maintained a strong liquidity position with $5.9 billion in cash and cash equivalents as of May 31, 2013.

Frequently Asked Questions

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).

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.

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.

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.