Accenture Posts Robust Q2 Fiscal 2023 Results with Record Bookings

• The company’s revenues have increased by 5% in U.S. dollars and 9% in local currency, reaching $15.8 billion.
• The second quarter of this year saw a 13% increase in new bookings, reaching a record high of $22.1 billion in U.S. dollars, and a 17% increase in local currency. The bookings for consulting and managed services were $10.7 billion and $11.4 billion, respectively.
• The GAAP EPS for this quarter is $2.39, which is lower than the $2.54 in the same quarter of fiscal 2022. However, the adjusted EPS has increased by 6%, reaching $2.69.
• The GAAP operating margin for this quarter is 12.3%, compared to 13.7% in the same quarter of fiscal 2022. However, the adjusted operating margin has expanded by 10 basis points, reaching 13.8%.
• The company has declared a quarterly cash dividend of $1.12 per share, which is a 15% increase from the previous year.

Accenture (NYSE: ACN) has updated its business outlook for fiscal 2023 based on its financial results for the second quarter ended February 28, 2023. The company now expects revenue growth of 8% to 10% in local currency, with a negative 4.5% foreign-exchange impact. Additionally, Accenture has revised its GAAP operating margin outlook to 14.1% to 14.3% and its adjusted operating margin outlook to 15.3% to 15.5%.

The company also expects GAAP EPS of $10.84 to $11.06 and adjusted EPS of $11.41 to $11.63. Moreover, Accenture has increased its operating cash flow range to $8.7 billion to $9.2 billion from $8.5 billion to $9.0 billion and its free cash flow range to $8.0 billion to $8.5 billion from $7.7 billion to $8.2 billion. In the second quarter of fiscal 2023, Accenture reported revenues of $15.8 billion, an increase of 5% in U.S. dollars and 9% in local currency compared to the same period last year.

In the second quarter of fiscal 2023, GAAP operating income for the company was $1.94 billion, a decrease from $2.06 billion in the same period last year. The operating margin for this quarter was 12.3%, compared to 13.7% for the second quarter last year. However, the adjusted operating margin was 13.8%, which is an increase of 10 basis points from the second quarter of fiscal 2022.

In terms of earnings per share, GAAP diluted earnings per share were $2.39, which is lower than $2.54 for the second quarter last year. Meanwhile, adjusted EPS were $2.69, an increase of 6% compared to the second quarter of fiscal 2022.

The company also reported a record high of $22.1 billion in new bookings for the quarter, with consulting bookings reaching $10.7 billion and managed services bookings reaching $11.4 billion.

Julie Sweet, the Chair and CEO of Accenture, expressed her satisfaction with the company’s financial results in the second quarter of fiscal 2023. She highlighted the company’s unique ability to combine industry, functional, and technology expertise, along with managed services, which sets them apart from their competitors. She also emphasized the trust that clients have in Accenture to deliver value and enable rapid transformations.

Moreover, the company aims to reduce costs in fiscal year 2024 while continuing to invest in the business and the workforce to capture future growth opportunities.

It’s important to note that adjusted financial measures presented in the release exclude the impact of business optimization costs, while adjusted financial measures for the full year fiscal 2023 outlook exclude an anticipated gain related to Accenture’s investment in Duck Creek Technologies, expected to be recorded in the first half of calendar year 2023.

Financial Review:

A $0.05 decrease from a higher effective tax rate;

A $0.06 decrease from higher business optimization costs;

A $0.02 decrease from a higher share-based compensation expense.

New bookings for the quarter were $22.1 billion, a record for Accenture, with consulting bookings of $10.7 billion and managed services bookings of $11.4 billion. The company generated operating cash flow of $2.2 billion for the quarter and free cash flow of $1.9 billion, reflecting an improvement in working capital management. As of February 28, 2023, Accenture had approximately $10.4 billion in cash and cash equivalents and short-term investments.

To summarize the financial review:

• Revenues for Q2 FY2023 were $15.81 billion, a 5% increase in U.S. dollars and 9% in local currency compared to Q2 FY2022.
• Consulting revenues were $8.28 billion, a decrease of 1% in U.S. dollars and an increase of 4% in local currency compared with Q2 FY2022.
• Managed Services revenues were $7.54 billion, an increase of 12% in U.S. dollars and 16% in local currency compared with Q2 FY2022.
• Accenture recorded $244 million in business optimization costs during Q2 FY2023 and expects to record total costs of approximately $1.5 billion through fiscal 2024.
• GAAP diluted EPS for the quarter were $2.39 compared with $2.54 for Q2 FY2022. Adjusted EPS were $2.69, an increase of 6% from Q2 FY2022.
• Gross margin for the quarter was 30.6%, compared to 30.1% in Q2 FY2022. SG&A expenses for the quarter were $2.65 billion, or 16.7% of revenues, compared with $2.46 billion, or 16.4% of revenues, for Q2 FY2022.
• GAAP operating income for the quarter decreased 6%, to $1.94 billion, or 12.3% of revenues, compared with $2.06 billion, or 13.7% of revenues, for Q2 FY2022. Adjusted operating income for the quarter was $2.19 billion, or 13.8% of revenues, an expansion of 10 basis points from Q2 FY2022.
• The company’s effective tax rate for the quarter was 20.4%, compared with 19.2% for Q2 FY2022.
• GAAP net income for the quarter was $1.55 billion, compared with $1.66 billion for Q2 FY2022. Adjusted net income for the quarter was $1.74 billion.
• Operating cash flow for the quarter was $2.33 billion, and property and equipment additions were $108 million. Free cash flow was $2.22 billion.
• Days services outstanding, or DSOs, were 42 days at February 28, 2023, compared with 43 days at August 31, 2022 and 41 days at February 28, 2022.
• Accenture’s total cash balance at February 28, 2023 was $6.2 billion, compared with $7.9 billion at August 31, 2022.

New Bookings:

• Revenues for the second quarter of fiscal 2023 were $15.81 billion, up 5% in U.S. dollars and 9% in local currency from the same period in fiscal 2022.
• Consulting revenues were $8.28 billion, down 1% in U.S. dollars and up 4% in local currency from the second quarter of fiscal 2022.
• Managed Services revenues were $7.54 billion, up 12% in U.S. dollars and 16% in local currency from the second quarter of fiscal 2022.
• The company recorded $244 million in business optimization costs during the second quarter and expects to record total costs of approximately $1.5 billion through fiscal 2024.
• GAAP diluted EPS for the quarter were $2.39 compared with $2.54 for the second quarter of fiscal 2022. Adjusted EPS were $2.69, up 6% from the second quarter of fiscal 2022.
• New bookings for the second quarter of fiscal 2023 were $22.09 billion, a 13% increase in U.S. dollars and a 17% increase in local currency over the second quarter of fiscal 2022.
• Revenues by geographic market showed growth in all regions, with North America up 5%, Europe up 6%, and Growth Markets up 5%.

Revenues by industry group were reported as follows:

• Communications, Media & Technology generated $2.88 billion in revenue, showing a 4% decrease in U.S. dollars and remained flat in local currency as compared to the second quarter of fiscal 2022.
• Financial Services generated $3.00 billion in revenue, showing a 5% increase in U.S. dollars and 10% increase in local currency as compared to the second quarter of fiscal 2022.
• Health & Public Service generated $3.02 billion in revenue, showing a 13% increase in U.S. dollars and 15% increase in local currency as compared to the second quarter of fiscal 2022.
• Products generated $4.72 billion in revenue, showing a 4% increase in U.S. dollars and 9% increase in local currency as compared to the second quarter of fiscal 2022.
• Resources generated $2.18 billion in revenue, showing an 11% increase in U.S. dollars and 16% increase in local currency as compared to the second quarter of fiscal 2022.
• Accenture is continuously returning cash to its shareholders through cash dividends and share repurchases.

Dividend:

• Accenture plc paid a quarterly cash dividend of $1.12 per share to shareholders of record on January 12, 2023, on February 15, 2023.
• The total cash dividend payments amounted to $708 million.
• Another quarterly cash dividend of $1.12 per share has been declared for shareholders of record on April 13, 2023, which is payable on May 15, 2023.
• The new dividend represents a 15% increase over the quarterly dividend rate of $0.97 per share in fiscal 2022.

Share Purchase Activities:

• In the second quarter of fiscal 2023, Accenture repurchased or redeemed 4.1 million shares for a total of $1.12 billion, including approximately 2.5 million shares repurchased in the open market.
• The company’s total share repurchases and redemptions for the first half of fiscal 2023 were 9.3 million shares for a total of $2.54 billion, including approximately 7.0 million shares repurchased in the open market.
• Accenture’s total remaining share repurchase authority as of February 28, 2023, was about $4.2 billion.
• As of February 28, 2023, the total outstanding shares of Accenture were approximately 632 million.
• For the third quarter of fiscal 2023, Accenture expects revenues to be in the range of $16.1 billion to $16.7 billion, reflecting a 3% to 7% increase in local currency.
• The revenue growth is based on the assumption of an approximately negative 3.5% foreign-exchange impact compared with the third quarter of fiscal 2022.

Fiscal Year 2023:

• Accenture’s projected foreign exchange impact on its results in U.S. dollars for fiscal 2023 is now approximately negative 4.5%, down from the previously expected negative 5% impact.
• The company’s forecast for revenue growth in local currency for fiscal 2023 has been revised to 8-10%, compared to the previously estimated 8-11%.
• Accenture’s projected GAAP operating margin for fiscal 2023 is now 14.1% to 14.3%, compared to the previous estimate of 15.3% to 15.5%. The estimated adjusted operating margin, which excludes an expected $800 million for business optimization costs, is now in the range of 15.3% to 15.5%, showing an expansion of 10 to 30 basis points from fiscal 2022.
• The company’s GAAP annual effective tax rate for fiscal 2023 is expected to be in the range of 22.5% to 24.5%, compared to the earlier expected range of 23% to 25%. The adjusted annual effective tax rate, which excludes the tax impacts of business optimization costs and an anticipated gain on an investment, is expected to be in the range of 23% to 25%.
• Accenture’s estimated GAAP diluted EPS for fiscal 2023 is now in the range of $10.84 to $11.06, compared to the previous range of $11.20 to $11.52. The expected adjusted EPS range is $11.41 to $11.63, showing an increase of 7% to 9% over fiscal 2022 diluted EPS of $10.71. This excludes $0.96 for business optimization costs and $0.39 for an anticipated gain on an investment.
• For fiscal 2023, the company’s operating cash flow is expected to be in the range of $8.7 billion to $9.2 billion, compared to the earlier expected range of $8.5 billion to $9.0 billion. The expected property and equipment additions are $700 million, down from $800 million previously. Free cash flow is now projected to be in the range of $8.0 billion to $8.5 billion, up from the earlier projected range of $7.7 billion and $8.2 billion.
• Accenture still plans to return at least $7.1 billion in cash to shareholders through dividends and share repurchases.

360° Value Reporting:

• Accenture aims to create 360° value for its clients, people, shareholders, partners, and communities. The company’s reporting approach encompasses six critical dimensions and provides a comprehensive view of its financial and environmental, social, and governance (ESG) measures, as well as its goals, progress, and performance for each. The company’s complete 360° Value Report for fiscal 2022 and its online 360° Value Reporting Experience offer customizable reports. To access, visit the Accenture 360° Value Reporting Experience at www.accenture.com/reportingexperience.

Conference Call and Webcast Details:

• Accenture will hold a conference call at 8:00 a.m. EDT today to discuss its financial results for the second quarter of fiscal 2023. To participate, dial +1 (877) 692-8955 [+1 (234) 720-6979 outside the United States, Puerto Rico, and Canada] and enter access code 3264013 about 15 minutes before the scheduled start of the call. The conference call can also be accessed live on the Investor Relations section of the Accenture website

About Accenture

What was the total revenue of Accenture in the second quarter of fiscal 2023 and how does it compare to the same quarter of fiscal 2022? What was the breakdown of revenues by geographic market and industry group?

Accenture’s total revenue in the second quarter of fiscal 2023 was $22.91 billion, which represents a 14% increase in U.S. dollars and a 17% increase in local currency compared to the same quarter of fiscal 2022.

In terms of geographic markets, North America had revenues of $7.40 billion, a 5% increase in both U.S. dollars and local currency compared with the second quarter of fiscal 2022. Europe had revenues of $5.30 billion, a 6% increase in U.S. dollars and 12% increase in local currency compared with the same period of fiscal 2022. The Growth Markets segment had revenues of $3.12 billion, a 5% increase in U.S. dollars and 14% increase in local currency compared with the same period of fiscal 2022.

In terms of industry groups, Communications, Media & Technology had revenues of $2.88 billion, a decrease of 4% in U.S. dollars and flat in local currency compared with the same period of fiscal 2022. Financial Services had revenues of $3.00 billion, an increase of 5% in U.S. dollars and 10% in local currency compared with the second quarter of fiscal 2022. Health & Public Service had revenues of $3.02 billion, an increase of 13% in U.S. dollars and 15% in local currency compared with the same period of fiscal 2022. Products had revenues of $4.72 billion, an increase of 4% in U.S. dollars and 9% in local currency compared with the second quarter of fiscal 2022. Resources had revenues of $2.18 billion, an increase of 11% in U.S. dollars and 16% in local currency compared with the same period of fiscal 2022.