01—Abstract
Summary
Summary of the 10-Q filed March 19, 2020. Cited figures are marked; the original filing is the authoritative source.
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%a 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 $1.91b 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.
02—Key points
Key Highlights
- Revenues 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.
- Strong 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).
- Gross 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).
- Diluted earnings per share saw a significant increase, reaching $1.91 for the quarter and $4.00 for the six months.
- The 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.
- Accenture declared a quarterly cash dividend of $0.80 per share, indicating consistent returns to shareholders.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2020, Accenture plc kept $0.11.
- Revenue$11.14B100.0%
- Cost of revenue−$7.78B69.8%
- Gross profit$3.36B30.2%
- Operating costs−$1.87B16.8%
- Operating income$1.49B13.4%
- Interest, other & tax−$254.2M2.3%
- Net income$1.23B11.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2020filed March 19, 2020Financial Statements
Q2 FY2020 against Q2 FY2019
| Line item | Q2 FY2020Q2 FY2019 | Change |
|---|---|---|
| Revenue | $11.14B$10.45B | +6.6% |
| Cost of Revenue | $7.78B$7.40B | +5.2% |
| Gross Profit | $3.36B$3.05B | +10.0% |
| Operating Expenses | $9.65B$9.07B | +6.5% |
| Operating Income | $1.49B$1.39B | +7.4% |
| Interest Expense | $8.57M$5.62M | +52.5% |
| Net Income | $1.23B$1.12B | +9.8% |
| EPS (Basic) | $1.94$1.76 | +10.2% |
| EPS (Diluted) | $1.91$1.73 | +10.4% |
| Shares Outstanding (Basic) | 637.49M638.64M | −0.2% |
| Shares Outstanding (Diluted) | 648.83M649.17M | −0.1% |
05—Questions
Frequently Asked Questions
What was Accenture's revenue growth for the second quarter of fiscal year 2020?
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.
How did Accenture's profitability change compared to the previous 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%.
What is the impact of the new lease accounting standard (Topic 842) on Accenture's balance sheet?
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.
How is Accenture managing its cash and capital resources?
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.
06—Continue