01—Abstract
Summary
Summary of the 10-Q filed March 27, 2014. Cited figures are marked; the original filing is the authoritative source.
Accenture plc's (ACN) Form 10-Q filing for the period ending February 28, 2014, reveals a slight increase in net revenues of 1%a in U.S. dollars (3% in local currency) for both the three and six-month periods compared to the prior year.
This growth was primarily driven by the outsourcing segment, which saw a 4-5%b increase, while consulting revenues remained flat or slightly decreased. The company's operating income and margins experienced a notable decline compared to the prior year, partly due to the absence of significant one-time benefits recorded in the prior year's comparable periods, as well as pricing pressures and increased investments. Despite these pressures, Accenture demonstrated a strong cash flow from operations and continued its share repurchase program.
02—Key points
Key Highlights
- Net revenues increased by 1% (3% in local currency) year-over-year for both the three and six-month periods ending February 28, 2014.
- Outsourcing net revenues showed robust growth of 4-5% year-over-year, while consulting net revenues were flat or slightly decreased.
- Operating income decreased by 18% for the three-month period and 8% for the six-month period compared to the prior year.
- Operating margin declined to 13.3% for the quarter and 14.1% for the year-to-date period, down from 16.5% and 15.5% respectively, largely due to the absence of prior-year benefits.
- The company acquired Procurian Inc. for $386.3 million, significantly increasing its goodwill balance by $302.6 million.
- Cash and cash equivalents decreased from $5.6 billion to $3.7 billion, reflecting strong investment in acquisitions and increased share repurchases and dividends.
- Diluted earnings per share decreased to $1.03 for the quarter and $2.18 for the six months, impacted by prior-year tax benefits and reorganization benefits.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2014, Accenture plc kept $0.09.
- Revenue$7.57B100.0%
- Cost of revenue−$5.34B70.5%
- Gross profit$2.23B29.5%
- Operating costs−$1.28B16.9%
- Operating income$951.3M12.6%
- Interest, other & tax−$280.0M3.7%
- Net income$671.3M8.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2014filed March 27, 2014Financial Statements
Q2 FY2014 against Q2 FY2013
| Line item | Q2 FY2014Q2 FY2013 | Change |
|---|---|---|
| Revenue | $7.57B$7.49B | +1.0% |
| Cost of Revenue | $5.34B$5.26B | +1.4% |
| Gross Profit | $2.23B$2.23B | 0.0% |
| Operating Expenses | $6.62B$6.33B | +4.5% |
| Operating Income | $951.28M$1.16B | −18.3% |
| Interest Expense | $4.35M$3.64M | +19.4% |
| Net Income | $671.30M$1.10B | −39.1% |
| EPS (Basic) | $1.06$1.70 | −37.6% |
| EPS (Diluted) | $1.03$1.65 | −37.6% |
| Shares Outstanding (Basic) | 635.93M649.52M | −2.1% |
| Shares Outstanding (Diluted) | 693.56M715.71M | −3.1% |
05—Questions
Frequently Asked Questions
How did Accenture's revenue performance compare to the previous year in this quarter?
Accenture reported a modest increase in net revenues. For the three and six months ended February 28, 2014, net revenues grew by 1% in U.S. dollars and 3% in local currency compared to the same periods in the prior fiscal year.
What drove the revenue growth, and were there any segment-specific trends?
Revenue growth was primarily driven by the outsourcing business, which saw an increase of 4-5% year-over-year. Consulting revenues remained relatively flat or saw a slight decrease, indicating a shift in client demand towards outsourcing services.
What factors led to the decrease in operating income and operating margin?
The decrease in operating income and margin was significantly influenced by the absence of substantial one-time benefits, such as tax audit settlements and reorganization benefits, that were recognized in the prior year's comparable periods. Additionally, pricing pressures and increased investments in acquisitions and offerings contributed to the margin compression.
What was the impact of acquisitions on the company's financial position?
Accenture acquired Procurian Inc. for $386.3 million, which notably increased the company's goodwill balance by $302.6 million. Other smaller acquisitions also contributed to an increase in goodwill. These acquisitions demonstrate the company's strategy to enhance its service offerings.
06—Continue