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Accenture's Quarterly Results Surpass All Expectations

GuruFocus.com
·4 min read

- By Margaret Moran

Before the markets opened on Dec. 17, Accenture PLC (NYSE:ACN) released the earnings report for its first quarter of fiscal 2021, which ended on Nov. 30.

The American-Irish multinational professional services and consulting company posted GAAP earnings per share of $2.32, representing an 11% increase from $2.09 in the first quarter of last year. Revenue came in at $11.76 billion, growing 4% year over year. Analysts had been predicting earnings of $2.05 per share and revenue of $11.36 billion, while Accenture itself had been anticipating revenue of around $11.66 billion.


Shares of Accenture gained 0.16% to around $247.45 in midday trading following the news:

Accenture's Quarterly Results Surpass All Expectations
Accenture's Quarterly Results Surpass All Expectations

Overview of the quarter

New bookings for the quarter were $12.9 billion, while consulting bookings totaled $6.63 billion and outsourcing bookings were $6.3 billion. Favorable currency exchange rates accounted for a 1.5% tailwind. Operating income came in at $1.89 billion, a 7% increase over the same period last year, and the operating margin expanded 50 basis points to 16.1%.

By region, North America had the highest growth at 4%, while the Europe segment grew 5% in U.S. dollars but decreased 1% in local currency and the Growth Markets segment grew 1% in U.S. dollars and 3% in local currency.

The industry that Accenture experienced the biggest revenue jump in was health and public service, up 12% compared to last year. Financial services increased 7% while communications, media and technology grew 5%. The revenue from the resources industry declined 4%, while the products industry revenue dropped 3%.

Accenture has declared another quarterly cash dividend of 88 cents per share payable on Feb. 12, 2020 to shareholders of record at the close of business on Jan. 14. Over the quarter, Accenture repurchased or redeemed 3.3 million of its own shares for a total cost of $769 million.

In terms of cash flow, Accenture brought in operating cash flow of $1.60 billion compared to last year's $787 million, while free cash flow was $1.51 billion compared to $692 million in the prior-year quarter.

As of the quarter's end, the cash balance was $8.6 billion, an increase of $200 million from a year ago. Long-term debt was up slightly to $59 million compared to $54 billion in the fourth quarter of fiscal 2020, which ended on Aug. 30 for the company.

Julie Sweet, Accenture's CEO, had the following to say in summary of the quarter:


"New bookings, profitability and free cash flow were all very strong, and we again returned substantial cash to shareholders while continuing to invest in our business and our people.

We also created Accenture Cloud First to help clients accelerate their move to the cloud and took exciting actions to launch our new purpose and brand as well as new sustainability and diversity goals - living our commitments as a responsible business and trusted partner."



Looking forward

Throughout its history, Accenture is a company that has relied on acquisitions and expansion in order to keep its profits increasing. This strategy has gained it a lot of moving parts to deal with. The company's strategy for future growth revolves around gradually shifting away from slow-growth areas and replacing them with services in fast-growing end markets like digital, cloud and security.

Accenture has now raised its business outlook for full fiscal 2021. The company expects revenue growth for the full year to be between 4% to 6% in local currency, while GAAP earnings per share is expected to fall in the range of $8.17 to $8.40. Accenture also estimates that free cash flow will be around $6.0 billion to $6.5 billion.

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.

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This article first appeared on GuruFocus.