10-QPeriod: Q2 FY2018

Accenture plc Quarterly Report for Q2 Ended Feb 28, 2018

Filed March 22, 2018For Securities:ACN

Summary

Accenture plc reported solid financial performance for the second quarter and first half of fiscal year 2018, demonstrating robust revenue growth across its segments and geographic regions. Net revenues increased by 15% year-over-year in the second quarter and 14% for the first half, driven by strong demand for consulting and outsourcing services, particularly in digital, cloud, and security-related areas. The company's operational efficiency remained strong, with consistent utilization rates and strategic headcount growth to meet client demand. A key development impacting profitability was the U.S. Tax Cuts and Jobs Act, enacted in December 2017, which resulted in a provisional tax expense of $137 million for the quarter. Despite this one-time charge, which reduced diluted EPS by $0.21, the underlying operational performance was strong, with diluted EPS showing a significant increase when excluding this impact. The company also continued its capital allocation strategy, returning cash to shareholders through dividends and share repurchases, reinforcing its commitment to shareholder value.

Financial Highlights

53 data points
Beta

Revenue

$9.91B

28.9% Gross Margin

Net Income

$863.70M

8.7% Net Margin

EPS (Diluted)

$1.37

Total Assets

$23.13B

Cash & Equivalents

$3.60B

Free Cash Flow

$791.16M

Financial Statements
Beta
Revenue$9.91B
Cost of Revenue$7.05B
Gross Profit$2.86B
Operating Expenses$8.61B
Operating Income$1.30B
Interest Expense$3.84M
Net Income$863.70M
EPS (Basic)$1.40
EPS (Diluted)$1.37
Shares Outstanding (Basic)617.85M
Shares Outstanding (Diluted)656.12M

Key Highlights

  • 1Net revenues grew 15% in USD and 10% in local currency for Q2 FY18 year-over-year, and 14% in USD and 10% in local currency for the first half of FY18.
  • 2Strong performance across all operating groups, with Communications, Media & Technology, Products, and Resources showing particularly robust local currency revenue growth.
  • 3Geographic growth was led by Europe and Growth Markets, with North America also showing consistent growth.
  • 4Diluted Earnings Per Share (EPS) was $1.37 for Q2 FY18 and $3.16 for the first half, an increase from the prior year periods, though impacted by a $137 million charge related to the U.S. Tax Cuts and Jobs Act.
  • 5Cash and cash equivalents stood at $3.6 billion as of February 28, 2018, reflecting strong operating cash flow generation.
  • 6The company continued its share repurchase program, with approximately $2.1 billion authorized for future purchases as of February 28, 2018.
  • 7Headcount increased significantly year-over-year, reaching approximately 442,000 employees as of February 28, 2018, to support growing client demand.

Frequently Asked Questions

The U.S. Tax Cuts and Jobs Act, enacted in December 2017, resulted in a provisional tax expense of $137 million for Accenture in the second quarter of fiscal year 2018. This charge reduced diluted earnings per share by $0.21 for the quarter and the first half of the fiscal year. The company is still analyzing the full impact and may adjust these provisional amounts.

Revenue growth was driven by strong client demand for both consulting and outsourcing services across all major industries and geographic regions. Key growth areas included digital, cloud, and security-related services. Specifically, the Communications, Media & Technology, Products, and Resources segments showed particularly strong performance.

Accenture strategically manages its workforce to balance client demand with available skills and resources. Headcount increased by approximately 41,000 employees year-over-year to 442,000 as of February 28, 2018. While attrition increased slightly, the company focuses on managing compensation costs and pricing to maintain gross margins, which were 29.7% for consulting and 30.9% for outsourcing in the first half of FY18.

Accenture generated strong operating cash flow, with $1.93 billion in net cash provided by operating activities for the six months ended February 28, 2018. Cash and cash equivalents stood at $3.6 billion. The company expects its current and longer-term working capital needs to be met through its operating cash flows and believes it has sufficient liquidity for the next twelve months and beyond.