10-QPeriod: Q2 FY2014

Accenture plc Quarterly Report for Q2 Ended Feb 28, 2014

Filed March 27, 2014For Securities:ACN

Summary

Accenture plc's (ACN) Form 10-Q filing for the period ending February 28, 2014, reveals a slight increase in net revenues of 1% 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% 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.

Financial Highlights

53 data points
Beta

Revenue

$7.57B

29.5% Gross Margin

Net Income

$671.30M

8.9% Net Margin

EPS (Diluted)

$1.03

Total Assets

$16.36B

Cash & Equivalents

$3.68B

Free Cash Flow

$216.21M

Financial Statements
Beta
Revenue$7.57B
Cost of Revenue$5.34B
Gross Profit$2.23B
Operating Expenses$6.62B
Operating Income$951.28M
Interest Expense$4.35M
Net Income$671.30M
EPS (Basic)$1.06
EPS (Diluted)$1.03
Shares Outstanding (Basic)635.93M
Shares Outstanding (Diluted)693.56M

Key Highlights

  • 1Net revenues increased by 1% (3% in local currency) year-over-year for both the three and six-month periods ending February 28, 2014.
  • 2Outsourcing net revenues showed robust growth of 4-5% year-over-year, while consulting net revenues were flat or slightly decreased.
  • 3Operating income decreased by 18% for the three-month period and 8% for the six-month period compared to the prior year.
  • 4Operating 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.
  • 5The company acquired Procurian Inc. for $386.3 million, significantly increasing its goodwill balance by $302.6 million.
  • 6Cash and cash equivalents decreased from $5.6 billion to $3.7 billion, reflecting strong investment in acquisitions and increased share repurchases and dividends.
  • 7Diluted 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.

Frequently Asked Questions

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.

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.

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.

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.