01—Abstract
Summary
Summary of the 10-Q filed December 20, 2018. Cited figures are marked; the original filing is the authoritative source.
Accenture plc reported a solid first quarter for fiscal year 2019, with revenues increasing by 7% in U.S. dollars to $10.6 billiona, and 9.5% in local currency, indicating strong global demand for its services.
The company demonstrated robust growth across several key operating segments, including Communications, Media & Technology, Products, and Resources, with notable strength in consulting and outsourcing services. Profitability remained stable, with operating income increasing by 9% and operating margin improving slightly to 15.4%. Diluted earnings per share saw a significant increase to $1.96b, up from $1.79 in the prior year period, driven by higher revenues, improved operating results, and a lower effective tax rate.
Financially, Accenture maintained a healthy liquidity position with cash and cash equivalents of $4.4 billionc. The company continued its commitment to returning capital to shareholders through share repurchases and dividends, utilizing a significant portion of operating cash flow for these activities.
02—Key points
Key Highlights
- Revenue increased 7% year-over-year in U.S. dollars to $10.6 billion, and 9.5% in local currency, demonstrating broad-based global demand.
- Operating income rose 9% to $1.6 billion, with operating margin improving to 15.4% from 15.2% in the prior year.
- Diluted earnings per share (EPS) increased to $1.96 from $1.79, a notable improvement driven by revenue growth, operational efficiency, and a lower tax rate.
- Strong performance was observed across key segments, particularly Communications, Media & Technology (+14% local currency), Products (+10% local currency), and Resources (+21% local currency).
- Consulting revenue grew 8% in USD and 10% in local currency, while outsourcing revenue grew 7% in USD and 9% in local currency, indicating balanced growth across service lines.
- The company returned a significant amount of capital to shareholders, with substantial activity in share repurchases and dividend payments.
- Accenture adopted new accounting standards (ASC 606 and ASC 740) effective September 1, 2018, which impacted presentation but not materially the overall financial results.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, Accenture plc kept $0.12.
- Revenue$10.61B100.0%
- Cost of revenue−$7.31B68.9%
- Gross profit$3.30B31.1%
- Operating costs−$1.67B15.7%
- Operating income$1.63B15.4%
- Interest, other & tax−$354.3M3.3%
- Net income$1.27B12.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed December 20, 2018Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $10.61B$9.88B | +7.3% |
| Cost of Revenue | $7.31B$6.82B | +7.2% |
| Gross Profit | $3.30B$3.06B | +7.6% |
| Operating Expenses | $8.98B$8.39B | +7.0% |
| Operating Income | $1.63B$1.50B | +8.7% |
| Interest Expense | $4.50M$4.71M | −4.3% |
| Net Income | $1.27B$1.12B | +13.4% |
| EPS (Basic) | $2.00$1.82 | +9.9% |
| EPS (Diluted) | $1.96$1.79 | +9.5% |
| Shares Outstanding (Basic) | 638.88M615.84M | +3.7% |
| Shares Outstanding (Diluted) | 652.15M656.67M | −0.7% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue growth in the first quarter of fiscal year 2019, and what drove it?
Accenture's revenue grew by 7% in U.S. dollars to $10.6 billion, and by 9.5% in local currency, compared to the first quarter of fiscal 2018. This growth was driven by strong demand across all areas of its business, particularly in the Resources, Communications, Media & Technology, and Products segments, with robust performance in both consulting and outsourcing services.
How did Accenture's profitability change in this quarter?
Accenture's operating income increased by 9% to $1.6 billion, and the operating margin improved slightly to 15.4% from 15.2% in the prior year's comparable period. This improvement was supported by revenue growth and stable cost management, including a slight decrease in the combined sales and marketing and general and administrative expenses as a percentage of revenue.
What is the company's stance on returning capital to shareholders?
Accenture demonstrated a continued commitment to returning capital to shareholders. During the quarter, the company made significant share repurchases, both through open-market programs and for employee equity plans, and also paid cash dividends. Management indicated an intention to use a significant portion of cash generated from operations for share repurchases throughout the remainder of fiscal 2019.
Were there any significant accounting changes adopted that investors should be aware of?
Yes, Accenture adopted new accounting standards, Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09 (Topic 606) for revenue recognition and ASU No. 2016-16 (Topic 740) for income taxes, effective September 1, 2018. While these changes required retrospective adjustments and impacted the presentation of certain financial data (e.g., no longer reporting net revenues), the company stated that the overall impact on its financial statements was not material.
06—Continue