01—Abstract
Summary
Summary of the 10-Q filed December 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Accenture plc (ACN) reported solid performance for the first quarter of fiscal year 2015, ending November 29, 2014.
Net revenues grew by 7%a in U.S. dollars and 10% in local currency, indicating strong demand across most of its business segments and geographic regions. The company saw particularly robust growth in its outsourcing services, which increased by 11% in U.S. dollars and 14% in local currency, driven by client focus on operational transformation and cost savings. Profitability metrics showed a slight pressure on gross margin, which decreased to 32.2% from 33.3% year-over-year, mainly due to higher labor costs and increased subcontractor usage.
However, operating margin improved to 15.0% from 14.8%, driven by efficiencies in sales and marketing, and general and administrative costs. Diluted Earnings Per Share (EPS) increased by $0.14 to $1.29b, reflecting overall improved operational results and a reduction in weighted average shares outstanding.
02—Key points
Key Highlights
- Net revenues increased 7% year-over-year in USD to $7.9 billion, with a stronger 10% growth in local currency, signaling healthy demand.
- Outsourcing services showed significant strength, with net revenues up 11% in USD and 14% in local currency.
- Diluted Earnings Per Share (EPS) rose to $1.29, a 13% increase from $1.15 in the prior year's comparable quarter.
- Operating income grew 9% to $1.19 billion, and operating margin slightly improved to 15.0% from 14.8%.
- Gross margin experienced a slight decline to 32.2% from 33.3% due to increased labor costs, including higher subcontractor utilization.
- The company maintained a strong liquidity position with $4.5 billion in cash and cash equivalents and significant available borrowing facilities.
- Accenture repurchased approximately $571 million of its Class A ordinary shares under its open-market share purchase program during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2015, Accenture plc kept $0.10.
- Revenue$8.34B100.0%
- Cost of revenue−$5.80B69.6%
- Gross profit$2.54B30.4%
- Operating costs−$1.35B16.2%
- Operating income$1.19B14.2%
- Interest, other & tax−$356.2M4.3%
- Net income$831.5M10.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed December 18, 2014Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $8.34B$7.80B | +7.0% |
| Cost of Revenue | $5.80B$5.35B | +8.5% |
| Gross Profit | $2.54B$2.45B | +3.7% |
| Operating Expenses | $7.16B$6.71B | +6.7% |
| Operating Income | $1.19B$1.09B | +8.9% |
| Interest Expense | $2.81M$3.66M | −23.2% |
| Net Income | $831.53M$751.85M | +10.6% |
| EPS (Basic) | $1.32$1.18 | +11.9% |
| EPS (Diluted) | $1.29$1.15 | +12.2% |
| Shares Outstanding (Basic) | 628.44M636.70M | −1.3% |
| Shares Outstanding (Diluted) | 682.33M698.27M | −2.3% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue growth for the first quarter of fiscal year 2015?
Accenture reported a 7% increase in net revenues in U.S. dollars, reaching $7.9 billion, and a 10% increase in local currency compared to the prior year's first quarter. This growth was driven by strong demand across most business segments and geographic regions.
How did profitability fare in this quarter?
While gross margin saw a slight decrease to 32.2% primarily due to higher labor costs, operating income increased by 9% to $1.19 billion, and the operating margin improved slightly to 15.0% from 14.8%. This was supported by effective management of sales and marketing, and general and administrative expenses.
What is the outlook for Accenture's services, particularly Outsourcing and Consulting?
The outsourcing business demonstrated strong momentum, with net revenues up 11% in USD and 14% in local currency, driven by client focus on transformation and cost savings. Consulting services also saw growth, with net revenues up 4% in USD and 7% in local currency, fueled by demand for cost-saving initiatives and digital services.
How is Accenture managing its cash and capital allocation?
Accenture maintained a strong cash position with $4.5 billion in cash and cash equivalents. The company continued its capital return strategy, repurchasing approximately $571 million in Class A ordinary shares during the quarter and indicating an intention to use a significant portion of cash flow for share repurchases in the remainder of fiscal 2015.
06—Continue