01—Abstract
Summary
Summary of the 10-Q filed June 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Accenture plc reported revenues of $10.99 billiona for the third quarter of fiscal year 2020, a 1% decrease in U.S. dollars but a 1% increase in local currency compared to the prior year.
This performance was significantly impacted by the COVID-19 pandemic, which led to a shift towards remote work for most employees and reduced demand in certain industries like Travel, Retail, and Energy, while digital transformation and cloud services saw increased demand. Despite revenue pressures, the company maintained a strong operating income of $1.71 billionb and a slightly improved operating margin of 15.6%.
Diluted earnings per share were $1.90c, a modest decrease from $1.93 in the prior year, largely due to increased non-operating expenses and higher net income attributable to non-controlling interests. The company also reported robust operating cash flow and maintained a strong liquidity position with $6.4 billion in cash and cash equivalents, underscoring its financial resilience amidst challenging economic conditions.
02—Key points
Key Highlights
- Q3 FY2020 revenues were $10.99 billion, down 1% in USD but up 1% in local currency, impacted by COVID-19.
- Operating income remained strong at $1.71 billion, with a slightly improved operating margin of 15.6%.
- Diluted Earnings Per Share (EPS) was $1.90, down from $1.93 in the prior year's quarter.
- Significant shift to remote work, with approximately 95% of the workforce enabled to work remotely.
- Demand saw a decline in Travel, Retail, Energy, High Tech, and Industrial sectors, while digital, cloud, and security services experienced increased demand.
- Strong operating cash flow of $5.06 billion for the nine months ended May 31, 2020, up from $4.51 billion in the prior year.
- Company maintained a robust cash position of $6.44 billion as of May 31, 2020, and added a $1 billion syndicated loan facility in June 2020 for liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Accenture plc kept $0.11.
- Revenue$10.99B100.0%
- Cost of revenue−$7.46B67.9%
- Gross profit$3.53B32.1%
- Operating costs−$1.82B16.5%
- Operating income$1.71B15.6%
- Interest, other & tax−$484.5M4.4%
- Net income$1.23B11.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed June 25, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $10.99B$11.10B | −1.0% |
| Cost of Revenue | $7.46B$7.57B | −1.4% |
| Gross Profit | $3.53B$3.53B | 0.0% |
| Operating Expenses | $9.28B$9.38B | −1.1% |
| Operating Income | $1.71B$1.72B | −0.3% |
| Interest Expense | $4.96M$5.35M | −7.2% |
| Net Income | $1.23B$1.25B | −1.7% |
| EPS (Basic) | $1.93$1.96 | −1.5% |
| EPS (Diluted) | $1.90$1.93 | −1.6% |
| Shares Outstanding (Basic) | 636.15M637.83M | −0.3% |
| Shares Outstanding (Diluted) | 645.61M649.30M | −0.6% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Accenture's third quarter 2020 financial performance?
The COVID-19 pandemic had a significant impact, causing a 1% decline in U.S. dollar revenues but a 1% growth in local currency for the third quarter of fiscal year 2020. It led to reduced demand in sectors like Travel, Retail, and Energy, while increasing demand for digital transformation, cloud, and security services. The company also shifted to a remote work model for most of its employees.
What was Accenture's profitability in the third quarter of fiscal year 2020?
Accenture reported a strong operating income of $1.71 billion and an operating margin of 15.6% for the third quarter of fiscal year 2020. Diluted earnings per share were $1.90, a slight decrease from $1.93 in the same period last year, attributed to higher non-operating expenses and other factors.
What is Accenture's liquidity and cash flow situation as of the end of the third quarter of fiscal year 2020?
Accenture maintained a strong liquidity position with $6.44 billion in cash and cash equivalents as of May 31, 2020. For the nine months ended May 31, 2020, cash flow from operations was $5.06 billion, an increase from $4.51 billion in the prior year. The company also bolstered its liquidity by adding a $1 billion syndicated loan facility in June 2020.
How did the company's segment performance vary during the quarter?
For the third quarter, North America revenues grew 2% in local currency, while Europe saw a 2% decrease, and Growth Markets increased by 5%. By type of work, consulting revenues decreased 2% in local currency, while outsourcing revenues grew by 5%.
06—Continue