01—Abstract
Summary
Summary of the 10-Q filed June 26, 2014. Cited figures are marked; the original filing is the authoritative source.
Accenture plc (ACN) reported its third-quarter fiscal year 2014 results, ending May 31, 2014.
The company demonstrated solid revenue growth, with net revenues increasing by 7% in U.S. dollars and local currency to $7.74 billiona for the quarter. This growth was driven by an increase in both consulting and outsourcing services, with outsourcing showing particularly strong performance at 10% growth in U.S. dollars. The company's financial position remained robust, though cash and cash equivalents saw a decrease compared to the prior fiscal year-end, largely due to significant share repurchases and dividend payments.
For the nine-month period, net revenues grew 3% in U.S. dollars to $22.23 billionb. While overall revenue growth was positive, operating income for the nine-month period decreased year-over-year, partly due to the absence of certain one-time benefits recorded in the prior year.
Diluted earnings per share for the nine months also saw a decrease compared to the prior year, again influenced by the prior year's favorable non-recurring items. Investors should note the company's continued investment in acquisitions, as evidenced by the increase in goodwill on the balance sheet, and its ongoing commitment to returning capital to shareholders through share repurchases and dividends.
02—Key points
Key Highlights
- Net revenues increased by 7% year-over-year to $7.74 billion for the third quarter of fiscal 2014.
- Outsourcing services revenue grew by 10% year-over-year in U.S. dollars during the third quarter.
- Consulting services revenue increased by 6% year-over-year in U.S. dollars for the third quarter.
- Total assets increased to $17.0 billion as of May 31, 2014, from $16.9 billion at the end of fiscal 2013.
- Goodwill increased significantly to $2.35 billion from $1.82 billion, driven by acquisitions including Procurian Inc.
- Diluted earnings per share for the third quarter were $1.26, an increase from $1.21 in the prior year.
- Cash and cash equivalents decreased to $4.05 billion from $5.63 billion, reflecting significant cash deployment in share repurchases and dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2014, Accenture plc kept $0.10.
- Revenue$8.24B100.0%
- Cost of revenue−$5.70B69.2%
- Gross profit$2.54B30.8%
- Operating costs−$1.36B16.5%
- Operating income$1.18B14.3%
- Interest, other & tax−$361.4M4.4%
- Net income$817.3M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2014filed June 26, 2014Financial Statements
Q3 FY2014 against Q3 FY2013
| Line item | Q3 FY2014Q3 FY2013 | Change |
|---|---|---|
| Revenue | $8.24B$7.71B | +6.9% |
| Cost of Revenue | $5.70B$5.27B | +8.2% |
| Gross Profit | $2.54B$2.44B | +4.0% |
| Operating Expenses | $7.06B$6.57B | +7.5% |
| Operating Income | $1.18B$1.14B | +3.2% |
| Interest Expense | $4.29M$3.59M | +19.6% |
| Net Income | $817.34M$810.26M | +0.9% |
| EPS (Basic) | $1.29$1.25 | +3.2% |
| EPS (Diluted) | $1.26$1.21 | +4.1% |
| Shares Outstanding (Basic) | 633.13M650.63M | −2.7% |
| Shares Outstanding (Diluted) | 691.04M715.63M | −3.4% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue performance for the third quarter of fiscal 2014?
Accenture reported net revenues of $7.74 billion for the third quarter of fiscal 2014, representing a 7% increase in both U.S. dollars and local currency compared to the same period in the prior year. This growth was broad-based across operating groups and driven by both consulting and outsourcing services.
How did the company's profitability fare in this quarter?
For the third quarter, operating income was $1.179 billion, a 3% increase year-over-year. However, operating margin slightly decreased to 15.2% from 15.9% in the prior year, influenced by factors such as pricing pressures and higher payroll costs. Diluted earnings per share increased to $1.26 from $1.21 in the prior year's quarter.
What is the impact of acquisitions on Accenture's balance sheet?
Accenture's balance sheet reflects a notable increase in goodwill, rising to $2.35 billion as of May 31, 2014, up from $1.82 billion at the end of fiscal 2013. This increase is primarily attributed to acquisitions made during the period, most notably Procurian Inc., which added significant intangible assets and goodwill.
How did Accenture manage its cash and shareholder returns?
The company generated $1.84 billion in net cash from operating activities for the nine months ended May 31, 2014. However, cash and cash equivalents decreased to $4.05 billion due to substantial investments in share repurchases (approximately $1.77 billion in Class A shares) and dividends paid ($1.25 billion), reflecting a continued strategy to return capital to shareholders.
06—Continue