01—Abstract
Summary
Summary of the 10-Q filed June 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Accenture plc's Q3 FY15 filing for the period ending May 30, 2015, shows resilient top-line growth driven by strong performance in local currency, particularly in Consulting and Outsourcing services across key segments like Communications, Media & Technology and Health & Public Service.
While net revenues saw a slight increase in U.S. dollars, the company experienced significant positive impact from foreign currency fluctuations, with local currency growth outperforming reported figures. The company demonstrated effective cost management, with sales and marketing, and general and administrative expenses decreasing as a percentage of net revenues year-over-year. Despite a one-time $64 milliona pension settlement charge impacting short-term profitability and operating margin, Accenture maintained a solid operational performance.
Diluted earnings per share remained strong, even after accounting for the charge, showcasing the company's ability to manage its P&L effectively. The company also continued its commitment to returning capital to shareholders through robust share repurchase programs and dividend payments, indicating confidence in its financial health and future prospects. Liquidity remains strong, with substantial cash and cash equivalents and ample borrowing facilities, positioning Accenture to navigate economic uncertainties and pursue strategic growth opportunities.
02—Key points
Key Highlights
- Net revenues increased slightly in U.S. dollars but showed robust growth of 10% in local currency for the third quarter and 4% in U.S. dollars (11% in local currency) for the nine months ended May 31, 2015, indicating strong underlying business demand.
- The company reported a $64 million non-cash pension settlement charge in the third quarter of fiscal 2015, which impacted operating income and diluted EPS, but the underlying business performance remained solid.
- Operating margin for the third quarter decreased to 14.6% from 15.2% year-over-year, primarily due to the pension settlement charge. Excluding this charge, operating margin increased by 20 basis points, indicating improved operational efficiency.
- Diluted earnings per share (EPS) were $1.24 for Q3 FY15, down from $1.26 in Q3 FY14, impacted by the pension charge. Excluding the charge, EPS increased, demonstrating earnings resilience.
- The company reported strong bookings, with $8.53 billion for the third quarter and $25.55 billion for the nine months ended May 31, 2015, signaling continued client engagement and future revenue potential.
- Accenture maintained a strong liquidity position with $4.0 billion in cash and cash equivalents and $1.67 billion in available borrowing facilities as of May 31, 2015.
- Shareholder returns were significant, with $1.35 billion in cash dividends paid and substantial share repurchases during the nine months ended May 31, 2015, reflecting a commitment to capital allocation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Accenture plc kept $0.10.
- Revenue$8.28B100.0%
- Cost of revenue−$5.75B69.5%
- Gross profit$2.52B30.5%
- Operating costs−$1.39B16.8%
- Operating income$1.13B13.7%
- Interest, other & tax−$339.8M4.1%
- Net income$793.7M9.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed June 25, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $8.28B$8.24B | +0.4% |
| Cost of Revenue | $5.75B$5.70B | +0.8% |
| Gross Profit | $2.52B$2.54B | −0.5% |
| Operating Expenses | $7.14B$7.06B | +1.1% |
| Operating Income | $1.13B$1.18B | −3.8% |
| Interest Expense | $4.03M$4.29M | −6.1% |
| Net Income | $793.70M$817.34M | −2.9% |
| EPS (Basic) | $1.27$1.29 | −1.6% |
| EPS (Diluted) | $1.24$1.26 | −1.6% |
| Shares Outstanding (Basic) | 625.97M633.13M | −1.1% |
| Shares Outstanding (Diluted) | 677.83M691.04M | −1.9% |
05—Questions
Frequently Asked Questions
How did Accenture's revenue perform in the third quarter of fiscal 2015 compared to the prior year?
Accenture's net revenues saw a slight increase of 1% in U.S. dollars to $7,770 million for the third quarter ended May 31, 2015, compared to $7,736 million in the prior year. However, in local currency, which removes the impact of foreign exchange fluctuations, net revenues grew by a stronger 10%, indicating healthy underlying business growth.
What impact did the pension settlement charge have on Accenture's financial results?
Accenture recorded a $64 million non-cash pension settlement charge in the third quarter of fiscal 2015 related to its U.S. defined benefit pension plan. This charge reduced operating income by $64 million and diluted earnings per share by $0.06 in the quarter. Management provided adjusted figures excluding this charge to offer a clearer view of operational performance.
How is Accenture managing its workforce and costs?
Accenture's headcount increased to over 336,000 by May 31, 2015, reflecting demand for services, particularly through its Global Delivery Network. While attrition was 15% (excluding involuntary terminations), the company proactively manages its workforce to balance skills and resources with client demand. Operating expenses, as a percentage of net revenues, showed positive trends, with sales and marketing, and general and administrative costs decreasing year-over-year for both the quarter and the nine-month period.
What is Accenture's outlook on liquidity and capital return?
Accenture maintained a strong liquidity position with $4.0 billion in cash and cash equivalents and significant available borrowing facilities. The company also demonstrated a strong commitment to returning capital to shareholders, having paid $1.35 billion in cash dividends and engaged in substantial share repurchases during the first nine months of fiscal 2015, with plans to continue utilizing cash flow for share repurchases.
06—Continue