10-QPeriod: Q3 FY2016

Accenture plc Quarterly Report for Q3 Ended May 31, 2016

Filed June 23, 2016For Securities:ACN

Summary

Accenture plc (ACN) reported solid financial results for the third quarter and nine months ended May 31, 2016, demonstrating continued revenue growth and profitability. Net revenues increased by 9% in USD (10% in local currency) for the quarter and 5% in USD (11% in local currency) year-to-date, driven by strong demand across its consulting and outsourcing services, particularly in the Financial Services, Health & Public Service, and Products segments. The company also successfully completed the divestiture of its Navitaire business, recognizing a significant gain. Profitability remained robust, with operating margins showing improvement, even when adjusted for a prior year pension settlement charge. Accenture continues to invest in its workforce and global delivery capabilities, with headcount increasing to support demand. The company maintained a strong liquidity position and returned significant capital to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value.

Financial Highlights

53 data points
Beta

Revenue

$8.97B

30.0% Gross Margin

Net Income

$897.25M

10.0% Net Margin

EPS (Diluted)

$1.41

Total Assets

$19.19B

Cash & Equivalents

$3.50B

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$8.97B
Cost of Revenue$6.28B
Gross Profit$2.69B
Operating Expenses$7.66B
Operating Income$1.31B
Interest Expense$3.71M
Net Income$897.25M
EPS (Basic)$1.44
EPS (Diluted)$1.41
Shares Outstanding (Basic)623.73M
Shares Outstanding (Diluted)666.40M

Key Highlights

  • 1Net revenues for the third quarter increased 9% in USD (10% in local currency) to $8.43 billion, and 5% in USD (11% in local currency) for the nine-month period to $24.39 billion.
  • 2Operating income for the third quarter rose 15% to $1.31 billion, with an operating margin of 15.5%. For the nine-month period, operating income increased 8% to $3.62 billion, with an operating margin of 14.8%.
  • 3The company recognized a significant pre-tax gain of $553.6 million from the sale of its Navitaire business in the second quarter of fiscal 2016.
  • 4Accenture continued to grow its workforce, with headcount reaching approximately 375,000 as of May 31, 2016, up from approximately 336,000 in the prior year.
  • 5Diluted earnings per share were $1.41 for the third quarter and $4.77 for the nine-month period, reflecting strong operational performance and the impact of the Navitaire divestiture gain.
  • 6The company returned substantial capital to shareholders, with $1.44 billion in cash dividends paid and $1.92 billion in share repurchases during the nine months ended May 31, 2016.
  • 7Cash and cash equivalents stood at $3.5 billion as of May 31, 2016, providing ample liquidity for ongoing operations and strategic initiatives.

Frequently Asked Questions

Accenture reported net revenues of $8.43 billion for the third quarter ended May 31, 2016, an increase of 9% in U.S. dollars and 10% in local currency compared to the same period in the prior year. This growth was driven by strong demand across its service lines and operating groups.

Yes, Accenture completed the sale of its Navitaire business in January 2016, recognizing a significant pre-tax gain of $553.6 million. In October 2015, the company acquired Cloud Sherpas for approximately $409 million to enhance its cloud capabilities.

Accenture focused on operational efficiency. While cost of services increased due to higher labor costs and acquisition activity, sales and marketing and general and administrative costs as a percentage of net revenues decreased or remained stable. Operating margin for the third quarter was 15.5%, demonstrating strong profitability.

Accenture maintained a strong liquidity position with $3.5 billion in cash and cash equivalents as of May 31, 2016. The company continued to return capital to shareholders through dividends ($1.44 billion YTD) and share repurchases ($1.92 billion YTD), indicating confidence in its ongoing cash generation and future prospects.