01—Abstract
Summary
Summary of the 10-Q filed March 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Accenture plc reported stable revenues of $15.8 billiona for the second quarter of fiscal year 2024, flat year-over-year in both U.S. dollars and local currency.
Despite macroeconomic uncertainties and a competitive environment impacting client spending, particularly in consulting services, the company saw growth in managed services and strong performance in specific industries like Health & Public Service and Resources. Diluted earnings per share increased by 10% to $2.63b, reflecting improved operating margins and effective management of business optimization costs.
The company also continued its commitment to returning capital to shareholders, with $2.1 billionc in cash returned during the quarter through share repurchases and dividends. Accenture's strong balance sheet and operational efficiency position it to navigate current market conditions while investing in future growth areas like cloud, data, and AI.
02—Key points
Key Highlights
- Revenues remained flat at $15.8 billion for the second quarter of fiscal 2024 compared to the prior year period, indicating resilience in a challenging economic climate.
- Diluted Earnings Per Share (EPS) saw a significant increase of 10% to $2.63, demonstrating effective cost management and operational efficiency.
- Operating margin improved to 13.0% from 12.3% year-over-year, driven by better cost of services management, despite increased sales and marketing expenses.
- New bookings totaled $21.6 billion, a slight decrease of 2% in both U.S. dollars and local currency, reflecting cautious client spending, particularly in consulting.
- Managed services revenue grew by 3% in local currency, indicating continued demand for outsourced and ongoing client support services.
- The company returned $2.1 billion in cash to shareholders through share purchases ($1.3 billion) and dividends ($813 million), underscoring a commitment to capital return.
- Goodwill increased significantly by approximately $2.4 billion to $17.9 billion, reflecting strategic acquisitions aimed at expanding service capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Accenture plc kept $0.11.
- Revenue$15.80B100.0%
- Cost of revenue−$10.92B69.1%
- Gross profit$4.88B30.9%
- Operating costs−$2.83B17.9%
- Operating income$2.05B13.0%
- Interest, other & tax−$371.6M2.4%
- Net income$1.67B10.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed March 21, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $15.80B$15.81B | −0.1% |
| Cost of Revenue | $10.92B$10.98B | −0.5% |
| Gross Profit | $4.88B$4.83B | +0.9% |
| Operating Expenses | $13.75B$13.87B | −0.8% |
| Operating Income | $2.05B$1.94B | +5.2% |
| Interest Expense | $10.30M$11.63M | −11.4% |
| Net Income | $1.67B$1.52B | +9.9% |
| EPS (Basic) | $2.66$2.42 | +9.9% |
| EPS (Diluted) | $2.63$2.39 | +10.0% |
| Shares Outstanding (Basic) | 629.02M630.85M | −0.3% |
| Shares Outstanding (Diluted) | 636.80M637.74M | −0.1% |
05—Questions
Frequently Asked Questions
How did Accenture's revenue perform in the second quarter of fiscal year 2024?
Accenture's revenues for the second quarter of fiscal year 2024 were $15.8 billion, which was flat year-over-year in both U.S. dollars and local currency. This indicates stable performance amidst economic uncertainties, with growth in managed services and specific industries partially offsetting a decline in consulting revenue and certain sectors like Communications, Media & Technology and Financial Services.
What was the profitability trend, and how did earnings per share fare?
Profitability improved, with operating margin increasing to 13.0% from 12.3% in the prior year. Diluted earnings per share (EPS) saw a substantial increase of 10% to $2.63. This improvement was driven by effective management of operating expenses, particularly cost of services, and a lower effective tax rate, partly due to tax benefits from share-based payments.
How is the company managing its expenses, especially business optimization costs?
Accenture incurred $115 million in business optimization costs during the second quarter of fiscal 2024, primarily for employee severance, down from $244 million in the prior year. These costs, while impacting reported results, are managed strategically. When adjusted for these costs, the adjusted operating margin was 13.7%, and adjusted diluted EPS was $2.77, showing continued operational strength.
What is the outlook for bookings and future revenue recognition?
New bookings for the quarter were $21.6 billion, a slight 2% decrease, reflecting cautious client spending, particularly in consulting. However, the company has significant remaining performance obligations totaling approximately $27 billion as of February 29, 2024. Accenture expects to recognize about 51% of these obligations as revenue in fiscal 2024, indicating a solid revenue base for the remainder of the year.
06—Continue