01—Abstract
Summary
Summary of the 10-Q filed December 19, 2013. Cited figures are marked; the original filing is the authoritative source.
Accenture plc's (ACN) fiscal Q1 2014 report for the period ending November 29, 2013, indicates a period of steady growth and operational efficiency.
Net revenues increased by 2% in U.S. dollars (3% in local currency) to $7.36 billiona, driven by strong performance in the Outsourcing segment, which saw a 5% increase in net revenues (6% in local currency), while Consulting revenues remained flat in local currency but saw a 1% decrease in U.S. dollars. The company demonstrated improved profitability with operating income up 4% to $1.09 billion and operating margin expanding to 14.8% from 14.5% in the prior year period. This was supported by a higher gross margin of 33.3% and effective cost management, with cost of services as a percentage of net revenues decreasing.
The company also saw a beneficial reduction in its effective tax rate to 25.1%b. Accenture continued its strategic investments through acquisitions, notably the pending acquisition of Procurian Inc., aimed at enhancing its service offerings and market position. The company also maintained a strong commitment to returning capital to shareholders through share repurchases and dividends, underscoring its financial health and confidence in future performance.
02—Key points
Key Highlights
- Net revenues grew 2% year-over-year to $7.36 billion (3% in local currency), indicating continued demand for Accenture's services.
- Outsourcing segment showed robust growth, with net revenues up 5% year-over-year (6% in local currency), highlighting a shift in client preference towards ongoing operational services.
- Operating income increased by 4% to $1.09 billion, with operating margin expanding to 14.8% from 14.5% in the prior year, demonstrating improved profitability.
- Gross margin improved to 33.3% from 32.8%, reflecting effective cost management and better contract profitability.
- Diluted earnings per share (EPS) increased to $1.15 from $1.06, a notable improvement driven by higher operating results, reorganization benefits, and a lower effective tax rate.
- Accenture repurchased shares totaling $686 million and paid $630 million in dividends during the quarter, signaling a commitment to shareholder returns.
- The company announced the acquisition of Procurian Inc. for $375 million, a strategic move to enhance its procurement business process outsourcing capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2014, Accenture plc kept $0.10.
- Revenue$7.80B100.0%
- Cost of revenue−$5.35B68.6%
- Gross profit$2.45B31.4%
- Operating costs−$1.36B17.4%
- Operating income$1.09B14.0%
- Interest, other & tax−$339.3M4.3%
- Net income$751.8M9.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2014filed December 19, 2013Financial Statements
Q1 FY2014 against Q1 FY2013
| Line item | Q1 FY2014Q1 FY2013 | Change |
|---|---|---|
| Revenue | $7.80B$7.67B | +1.7% |
| Cost of Revenue | $5.35B$5.30B | +0.9% |
| Gross Profit | $2.45B$2.37B | +3.5% |
| Operating Expenses | $6.71B$6.62B | +1.3% |
| Operating Income | $1.09B$1.05B | +4.0% |
| Interest Expense | $3.66M$4.55M | −19.6% |
| Net Income | $751.85M$698.82M | +7.6% |
| EPS (Basic) | $1.18$1.09 | +8.3% |
| EPS (Diluted) | $1.15$1.06 | +8.5% |
| Shares Outstanding (Basic) | 636.70M639.66M | −0.5% |
| Shares Outstanding (Diluted) | 698.27M717.07M | −2.6% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue performance in Q1 Fiscal Year 2014?
Accenture reported a 2% increase in net revenues to $7.36 billion for the first quarter of fiscal year 2014, compared to $7.22 billion in the prior year period. In local currency, this represented a 3% increase. The Outsourcing segment was a key driver of this growth, with net revenues up 5% year-over-year.
How did Accenture's profitability change in this quarter?
Profitability improved significantly. Operating income rose by 4% to $1.09 billion, and the operating margin expanded to 14.8% from 14.5% in the same quarter last year. This was supported by an improved gross margin of 33.3% and a lower effective tax rate of 25.1%.
What is the significance of the Procurian acquisition announced?
The acquisition of Procurian Inc. for $375 million, announced shortly after the quarter end, is a strategic move to bolster Accenture's capabilities in procurement business process outsourcing. This acquisition is expected to enhance its service offerings and expand its market reach in this area.
How is Accenture managing its capital and returning value to shareholders?
Accenture demonstrated a strong commitment to shareholder returns by repurchasing approximately $686 million of its Class A ordinary shares and paying $630 million in cash dividends during the quarter. The company also has a substantial authorization for future share repurchases, indicating continued focus on capital allocation.
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