01—Abstract
Summary
Summary of the 10-Q filed March 22, 2018. Cited figures are marked; the original filing is the authoritative source.
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 milliona for the quarter.
Despite this one-time charge, which reduced diluted EPS by $0.21b, 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.
02—Key points
Key Highlights
- Net 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.
- Strong performance across all operating groups, with Communications, Media & Technology, Products, and Resources showing particularly robust local currency revenue growth.
- Geographic growth was led by Europe and Growth Markets, with North America also showing consistent growth.
- Diluted 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.
- Cash and cash equivalents stood at $3.6 billion as of February 28, 2018, reflecting strong operating cash flow generation.
- The company continued its share repurchase program, with approximately $2.1 billion authorized for future purchases as of February 28, 2018.
- Headcount increased significantly year-over-year, reaching approximately 442,000 employees as of February 28, 2018, to support growing client demand.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2018, Accenture plc kept $0.09.
- Revenue$9.91B100.0%
- Cost of revenue−$7.05B71.1%
- Gross profit$2.86B28.9%
- Operating costs−$1.56B15.8%
- Operating income$1.30B13.1%
- Interest, other & tax−$432.3M4.4%
- Net income$863.7M8.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2018filed March 22, 2018Financial Statements
Q2 FY2018 against Q2 FY2017
| Line item | Q2 FY2018Q2 FY2017 | Change |
|---|---|---|
| Revenue | $9.91B$8.76B | +13.1% |
| Cost of Revenue | $7.05B$6.26B | +12.7% |
| Gross Profit | $2.86B$2.50B | +14.2% |
| Operating Expenses | $8.61B$7.62B | +13.0% |
| Operating Income | $1.30B$1.14B | +13.8% |
| Interest Expense | $3.84M$3.98M | −3.4% |
| Net Income | $863.70M$838.75M | +3.0% |
| EPS (Basic) | $1.40$1.35 | +3.7% |
| EPS (Diluted) | $1.37$1.33 | +3.0% |
| Shares Outstanding (Basic) | 617.85M622.00M | −0.7% |
| Shares Outstanding (Diluted) | 656.12M661.08M | −0.8% |
05—Questions
Frequently Asked Questions
How did the U.S. Tax Cuts and Jobs Act impact Accenture's financial results?
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.
What drove the revenue growth in the reported period?
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.
How is Accenture managing its workforce and costs in response to market demand?
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.
What is Accenture's outlook on cash flow and liquidity?
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.
06—Continue