10-QPeriod: Q3 FY2019

Accenture plc Quarterly Report for Q3 Ended May 31, 2019

Filed June 27, 2019For Securities:ACN

Summary

Accenture plc reported solid financial performance for the third quarter and nine months ended May 31, 2019. Total revenues grew 4% in U.S. dollars (8% in local currency) for the quarter and 5% in U.S. dollars (9% in local currency) for the nine months, indicating continued strong demand for its services across all segments. The company saw robust growth in its Resources and Products segments, alongside strong performance in North America and Growth Markets. Profitability remained strong, with operating income increasing 5% for the quarter and 7% for the nine months. Diluted earnings per share also saw significant improvement, reaching $1.93 for the quarter and $5.62 for the nine months, reflecting operational efficiency and a favorable tax rate. The company continues to invest in its workforce, with headcount increasing by approximately 33,000 year-over-year, while maintaining a healthy utilization rate. Accenture's strong cash flow generation supports its capital allocation strategy, including substantial share repurchases and dividends.

Financial Highlights

53 data points
Beta

Revenue

$11.10B

31.8% Gross Margin

Net Income

$1.25B

11.3% Net Margin

EPS (Diluted)

$1.93

Total Assets

$28.16B

Cash & Equivalents

$4.77B

Free Cash Flow

$1.98B

Financial Statements
Beta
Revenue$11.10B
Cost of Revenue$7.57B
Gross Profit$3.53B
Operating Expenses$9.38B
Operating Income$1.72B
Interest Expense$5.35M
Net Income$1.25B
EPS (Basic)$1.96
EPS (Diluted)$1.93
Shares Outstanding (Basic)637.83M
Shares Outstanding (Diluted)649.30M

Key Highlights

  • 1Revenue growth of 4% in U.S. dollars (8% in local currency) for Q3 FY19 and 5% in U.S. dollars (9% in local currency) for the nine months ended May 31, 2019, demonstrating sustained demand for services.
  • 2Operating income increased by 5% for Q3 FY19 and 7% for the nine months ended May 31, 2019, reflecting improved operational efficiency and strong revenue performance.
  • 3Diluted Earnings Per Share (EPS) rose to $1.93 for Q3 FY19 and $5.62 for the nine months ended May 31, 2019, showing significant year-over-year improvement.
  • 4Strong growth observed in the Resources (19% in local currency for Q3) and Products (8% in local currency for Q3) operating segments, highlighting diversification benefits.
  • 5Significant headcount increase of approximately 33,000 year-over-year to 482,000 as of May 31, 2019, to meet growing client demand.
  • 6Effective tax rate improved significantly to 25.6% for Q3 FY19 and 21.1% for the nine months FY19, partly due to tax law changes and geographic distribution of earnings.
  • 7Net cash provided by operating activities increased by $593 million to $4.5 billion for the nine months ended May 31, 2019, supporting robust liquidity and investment capacity.

Frequently Asked Questions

For the third quarter ended May 31, 2019, Accenture reported revenues of $11.1 billion, a 4% increase in U.S. dollars and an 8% increase in local currency compared to the prior year quarter. For the nine months ended May 31, 2019, revenues were $32.16 billion, a 5% increase in U.S. dollars and a 9% increase in local currency year-over-year.

Accenture demonstrated strong profitability. Operating income for the third quarter increased 5% to $1.7 billion, and for the nine months it increased 7% to $4.7 billion. Operating margin was 15.5% for the quarter and 14.7% for the nine months, showing slight improvements compared to the prior year periods.

Accenture's headcount grew to approximately 482,000 as of May 31, 2019, an increase of roughly 33,000 from the previous year, to meet rising client demand. The company maintained a utilization rate of 91% in the third quarter, indicating efficient deployment of its workforce.

Accenture adopted Topic 606 effective September 1, 2018. While the adoption had no material impact on operating income, it changed the presentation of revenues. Prior period results were revised for comparability. The standard requires revenue recognition based on the transfer of control of goods or services, and Accenture now presents total revenues instead of net revenues before reimbursements.