10-QPeriod: Q2 FY2020

Accenture plc Quarterly Report for Q2 Ended Feb 29, 2020

Filed March 19, 2020For Securities:ACN

Summary

Accenture plc (ACN) reported strong financial results for the second quarter and first half of fiscal year 2020, ending February 29, 2020. Revenues grew 7% in U.S. dollars and 8% in local currency year-over-year for both the quarter and the six-month period. This growth was broad-based across operating groups and geographic regions, with notable strength in Health & Public Service and Products. The company demonstrated improved profitability, with gross margin increasing to 30.2% for the quarter and 31.1% for the six months, driven by lower labor and non-payroll costs. Operating margin also saw a slight increase to 13.4% for the quarter and 14.5% for the six months. Diluted earnings per share rose to $1.91 for the quarter and $4.00 for the six months, reflecting the solid operational performance. The company also maintained a strong cash position, though cash and cash equivalents decreased slightly to $5.4 billion from $6.1 billion at the beginning of the fiscal year due to investing and financing activities, including significant share repurchases and dividend payments.

Financial Highlights

53 data points
Beta

Revenue

$11.14B

30.2% Gross Margin

Net Income

$1.23B

11.1% Net Margin

EPS (Diluted)

$1.91

Total Assets

$33.50B

Cash & Equivalents

$5.44B

Free Cash Flow

$1.37B

Financial Statements
Beta
Revenue$11.14B
Cost of Revenue$7.78B
Gross Profit$3.36B
Operating Expenses$9.65B
Operating Income$1.49B
Interest Expense$8.57M
Net Income$1.23B
EPS (Basic)$1.94
EPS (Diluted)$1.91
Shares Outstanding (Basic)637.49M
Shares Outstanding (Diluted)648.83M

Key Highlights

  • 1Revenues increased 7% in U.S. dollars and 8% in local currency for both the second quarter and the first six months of fiscal year 2020 compared to the prior year periods.
  • 2Strong revenue growth was observed across key segments, particularly in Health & Public Service (+15% in local currency for the quarter) and Products (+10% in local currency for the quarter).
  • 3Gross margin improved to 30.2% for the quarter and 31.1% for the six months, driven by better cost management (lower labor and non-payroll costs).
  • 4Diluted earnings per share saw a significant increase, reaching $1.91 for the quarter and $4.00 for the six months.
  • 5The company repurchased $1.7 billion of its Class A ordinary shares and $7,000 of exchangeable shares during the first six months of fiscal year 2020.
  • 6Accenture declared a quarterly cash dividend of $0.80 per share, indicating consistent returns to shareholders.
  • 7The company adopted new lease accounting standards (Topic 842) effective September 1, 2019, resulting in the recognition of significant lease assets and liabilities on the balance sheet.

Frequently Asked Questions

Accenture reported a 7% increase in revenue in U.S. dollars and an 8% increase in local currency for the second quarter of fiscal year 2020, compared to the same period in the prior year.

Accenture's profitability improved. Gross margin increased to 30.2% for the second quarter of fiscal 2020 from 29.2% in the prior year's second quarter. Operating margin also saw a slight increase to 13.4% from 13.3%.

Accenture adopted Topic 842 effective September 1, 2019. This resulted in the recognition of significant 'Lease assets' and 'Lease liabilities' on the balance sheet, amounting to $3.17 billion and $3.39 billion respectively as of February 29, 2020.

Accenture maintained a healthy cash position with $5.4 billion in cash and cash equivalents as of February 29, 2020. During the first six months of fiscal 2020, the company generated $2.3 billion in operating cash flow, but also used significant cash for investing activities ($763 million) and financing activities ($2.2 billion), primarily related to share repurchases and dividend payments.