01—Abstract
Summary
Summary of the 10-Q filed December 21, 2016. Cited figures are marked; the original filing is the authoritative source.
Accenture plc (ACN) reported solid performance for the first quarter of fiscal year 2017, ending November 30, 2016.
The company demonstrated revenue growth driven by strong demand across most business areas, with notable expansion in the Products, Financial Services, and Health & Public Service segments. Net revenues increased by 6%a in U.S. dollars and 7% in local currency compared to the prior year's quarter. Profitability also saw improvement, with operating income rising by 9% and operating margin expanding to 15.6% from 15.2%.
This was supported by improved gross margins and a more efficient sales and marketing expense ratio. The company also benefited from a lower effective tax rate of 20.4% compared to 29.3% in the prior year, largely due to the early adoption of new accounting standards related to share-based payments and prior year tax adjustments. Diluted earnings per share increased by $0.30b year-over-year, reflecting these positive financial trends and a reduction in weighted average shares outstanding.
02—Key points
Key Highlights
- Net revenues increased by 6% in USD and 7% in local currency year-over-year, reaching $8.52 billion.
- Operating income grew by 9% to $1.33 billion, with operating margin improving to 15.6% from 15.2%.
- Diluted earnings per share (EPS) increased by $0.30 to $1.58, driven by revenue growth, lower taxes, and reduced share count.
- The company saw strong revenue growth in the Products segment (17% local currency) and continued solid performance in Financial Services and Health & Public Service.
- Effective tax rate decreased significantly to 20.4% from 29.3% due to tax adjustments and adoption of new accounting standards.
- Total headcount increased to approximately 394,000 as of November 30, 2016, up from 373,000 a year prior, indicating continued investment in personnel.
- The company repurchased $587 million in shares during the quarter, reflecting a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2017, Accenture plc kept $0.11.
- Revenue$9.01B100.0%
- Cost of revenue−$6.28B69.7%
- Gross profit$2.73B30.3%
- Operating costs−$1.40B15.5%
- Operating income$1.33B14.8%
- Interest, other & tax−$327.5M3.6%
- Net income$1.00B11.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2017filed December 21, 2016Financial Statements
Q1 FY2017 against Q1 FY2016
| Line item | Q1 FY2017Q1 FY2016 | Change |
|---|---|---|
| Revenue | $9.01B$8.47B | +6.4% |
| Cost of Revenue | $6.28B$5.90B | +6.3% |
| Gross Profit | $2.73B$2.56B | +6.5% |
| Operating Expenses | $7.67B$7.24B | +5.9% |
| Operating Income | $1.33B$1.22B | +9.1% |
| Interest Expense | $3.05M$4.05M | −24.8% |
| Net Income | $1.00B$818.90M | +22.7% |
| EPS (Basic) | $1.62$1.31 | +23.7% |
| EPS (Diluted) | $1.58$1.28 | +23.4% |
| Shares Outstanding (Basic) | 621.57M626.46M | −0.8% |
| Shares Outstanding (Diluted) | 663.75M671.30M | −1.1% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue performance in this quarter?
Accenture reported a 6% increase in net revenues to $8.52 billion for the first quarter of fiscal 2017, compared to the same period in the prior year. Growth was stronger at 7% when measured in local currency, indicating a positive underlying business trend.
How did Accenture's profitability fare?
Profitability improved, with operating income increasing by 9% to $1.33 billion. The operating margin expanded to 15.6% from 15.2% in the prior year, driven by revenue growth and improved cost management.
What is the outlook for Accenture's key service lines or segments?
The report highlights strong performance in the Products segment, which saw 17% local currency revenue growth. Financial Services and Health & Public Service also demonstrated solid growth. The Communications, Media & Technology segment showed modest growth, while Resources experienced a slight decline due to challenging market conditions in certain sub-sectors.
Are there any significant legal or regulatory developments impacting Accenture?
A significant development mentioned is an ongoing investigation by the Swiss Federal Tax Administration into the tax treatment of an intercompany IP transfer in 2010. Accenture disagrees with the assertions and intends to defend its position, noting that any adverse outcome could be material.
06—Continue