10-QPeriod: Q1 FY2019

Accenture plc Quarterly Report for Q1 Ended Nov 30, 2018

Filed December 20, 2018For Securities:ACN

Summary

Accenture plc reported a solid first quarter for fiscal year 2019, with revenues increasing by 7% in U.S. dollars to $10.6 billion, 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 $1.96, 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 billion. 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.

Financial Highlights

53 data points
Beta

Revenue

$10.61B

31.1% Gross Margin

Net Income

$1.27B

12.0% Net Margin

EPS (Diluted)

$1.96

Total Assets

$26.71B

Cash & Equivalents

$4.36B

Free Cash Flow

$949.82M

Financial Statements
Beta
Revenue$10.61B
Cost of Revenue$7.31B
Gross Profit$3.30B
Operating Expenses$8.98B
Operating Income$1.63B
Interest Expense$4.50M
Net Income$1.27B
EPS (Basic)$2.00
EPS (Diluted)$1.96
Shares Outstanding (Basic)638.88M
Shares Outstanding (Diluted)652.15M

Key Highlights

  • 1Revenue increased 7% year-over-year in U.S. dollars to $10.6 billion, and 9.5% in local currency, demonstrating broad-based global demand.
  • 2Operating income rose 9% to $1.6 billion, with operating margin improving to 15.4% from 15.2% in the prior year.
  • 3Diluted 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.
  • 4Strong performance was observed across key segments, particularly Communications, Media & Technology (+14% local currency), Products (+10% local currency), and Resources (+21% local currency).
  • 5Consulting 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.
  • 6The company returned a significant amount of capital to shareholders, with substantial activity in share repurchases and dividend payments.
  • 7Accenture adopted new accounting standards (ASC 606 and ASC 740) effective September 1, 2018, which impacted presentation but not materially the overall financial results.

Frequently Asked Questions

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.

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.

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.

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.