Accenture (ACN) Beats on Q3 Earnings & Revenues, Ups 2021 View
Accenture plc ACN reported solid third-quarter fiscal 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings of $2.40 per share beat the consensus estimate by 7.6% and improved 26.3% year over year. The bottom line benefited from higher revenues and operating numbers, lower non-operating expenses, lower effective tax rate, and lower income attributable to non-controlling interests.
Revenues of $13.26 billion beat the consensus mark by 3.6% and increased 21% year over year on a reported basis and 16% in terms of local currency. Revenues exceeded the guided range of $12.55-$12.95 billion.
Over the past six months, shares of Accenture have gained 11%, compared with 13.3% growth of the industry it belongs to and 14.9% increase of the Zacks S&P 500 composite.
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Revenues in Detail
Based on the type of work, Consulting revenues of $7.26 billion increased 21% year over year on a reported basis and 16% in terms of local currency. Outsourcing revenues of $6 billion increased 20% year over year on a reported basis and 16% in terms of local currency.
Segment-wise, Communications, Media & Technology revenues of $2.70 billion improved 23% year over year on a reported basis and 19% in terms of local currency. Financial Services revenues of $2.60 billion increased 21% year over year on a reported basis and 16% in terms of local currency. Health & Public Service revenues of $2.52 billion increased 25% year over year on a reported basis and 21% in terms of local currency. Products revenues of $3.67 billion grew 22% year over year in U.S. dollars and 17% in terms of local currency. Resources revenues of $1.77 billion increased 8% year over year on a reported basis and 3% in terms of local currency.
Geographically, revenues of $6.20 billion from North America increased 18% year over year on a reported basis as well as in terms of local currency. Revenues of $4.45 billion from Europe increased 25% on a reported basis and 14% in terms of local currency. Revenues of $2.61 billion from Growth Markets increased 20% year over year on a reported basis and 15% in terms of local currency.
Booking Trends
Accenture reported new bookings worth $15.4 billion, up 39% year over year. Consulting bookings totaled $8 billion and Outsourcing bookings totaled $7.4 billion.
Operating Results
Gross margin (gross profit as a percentage of net revenues) for the third quarter of fiscal 2021 increased 110 basis points (bps) to 33.2%. Operating income was $2.12 billion, up 24% year over year. Operating margin in the reported quarter expanded 40 bps to 16%.
Accenture PLC Price, Consensus and EPS Surprise
Accenture PLC price-consensus-eps-surprise-chart | Accenture PLC Quote
Balance Sheet & Cash Flow
Accenture exited third-quarter fiscal 2021 with total cash and cash equivalents balance of $10 billion compared with $9.17 billion at the end of the prior quarter. Long-term debt was $61.6 million compared with $59.3 million at the end of the prior quarter.
Cash provided by operating activities crossed $2.40 billion in the reported quarter.
Dividend Payout
On May 14, 2021, the company paid out a quarterly cash dividend of 88 cents per share to shareholders of record at the close of business on Apr 15, 2021. These cash dividend payouts totaled $559 million.
The company has declared another quarterly cash dividend of 88 cents per share, to be paid out on Aug 13, 2021 for shareholders of record at the close of business on Jul 15, 2021.
Share Repurchases
During third-quarter fiscal 2021, Accenture repurchased three million shares for $835 million. The company had approximately 635 million total shares outstanding as of May 31, 2021.
Guidance
For fourth-quarter fiscal 2021, Accenture expects revenues of $13.1-$13.5 billion. The expectation is inclusive of a positive foreign-exchange impact of 4%. The Zacks Consensus Estimate of $12.57 billion lies below the guidance.
Accenture has raised its guidance for fiscal year 2021. Revenues are now expected to register 10-11% growth in terms of local currency compared with the prior growth rate of 6.5-8.5%.
The company expects adjusted EPS in the range of $8.71-$8.80 compared with the prior-guided range of $8.32-$8.50. The current Zacks Consensus Estimate of $8.49 lies below the updated guidance.
The company now expects positive foreign-exchange impact of 3.5% on its results in U.S. dollars compared with the prior foreign-exchange assumption of 3%.
Operating cash flow is now anticipated in the range of $8.65-$9.15 billion compared with the prior guidance of $7.65-$8.15 billion. Free cash flow is now expected between $8.0 billion and $8.5 billion compared with the prior guidance of $7.0 billion to $7.5 billion.
Operating margin for the fiscal year is expected to be 15.1%.
Currently, Accenture carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Equifax’s EFX first-quarter 2021 adjusted earnings of $1.97 per share beat the Zacks Consensus Estimate by 29.6% and improved on a year-over-year basis. Revenues of $1.21 billion outpaced the consensus estimate by 7.9% and improved 26.6% year over year on a reported basis as well as on a local-currency basis.
Robert Half’s RHI first-quarter 2021 earnings of 98 cents per share beat the consensus mark by 22.5% and were up 24.1% year over year. Revenues of $1.4 billion surpassed the consensus mark by 3.3% but declined 7.2% year over year on a reported basis and 7.6% on an adjusted basis.
Omnicom’s OMC first-quarter 2021 adjusted earnings of $1.33 per share beat the consensus mark by 16.7% and increased 11.8% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 3.6% and marginally increased year over year.
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