Accenture plc ACN reported better-than-expected second-quarter fiscal 2023 results, wherein both earnings & revenues increased year over year.
Adjusted earnings (excluding 30 cents from non-recurring items) of $2.69 per share surpassed the Zacks Consensus Estimate by 8% and improved 5.9% from the year-ago fiscal quarter’s reading. The bottom line benefited from higher revenues, streamlined operations and optimization of office space to reduce costs.
Revenues of $15.81 billion also beat the Zacks Consensus Estimate by 2% and increased 5.1% from the year-ago fiscal quarter’s tally on a reported basis and 9% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
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Revenues in Detail
Based on the type of work, Consulting revenues of $8.28 billion decreased 1% from the year-ago quarter’s reading on a reported basis and 4% in terms of local currency. Managed Services revenues of $7.54 billion increased 12% from the year-ago quarter’s number on a reported basis and 16% in terms of local currency.
Segment-wise, Communications, Media & Technology revenues of $2.88 billion decreased 4% on a reported basis and matched the year-ago quarter in terms of local currency. Financial Services revenues of $3 billion increased 5% from the year-ago fiscal quarter’s reading on a reported basis and 10% on a local currency basis.
Health & Public Service revenues of $3.02 billion increased 13% from the year-ago fiscal quarter’s reading on a reported basis and 15% in terms of local currency. Products revenues of $4.72 billion grew 4% from the year-ago fiscal quarter’s number in U.S. dollars and 15% in terms of local currency. Resources revenues of $2.18 billion increased 11% from the year-ago fiscal quarter’s level on a reported basis and 16% in local currency.
Geographically, revenues of $7.4 billion from North America increased 5% on a reported basis and 11% in terms of local currency from the year-ago fiscal quarter’s figure. Revenues of $5.3 billion from Europe increased 6% on a reported basis but increased 12% in terms of local currency. Revenues of $3.12 billion from Growth Markets increased 5% year over year on a reported basis and 14% in terms of local currency.
Booking Trends
Accenture reported new bookings worth $22.1 billion in the fiscal second quarter, up 13% from the year-ago fiscal quarter’s reading on a reported basis and up 17% in terms of local currency. Consulting bookings totaled $10.7 billion and Managed Services bookings summed at $11.4 billion.
Operating Results
The gross margin (gross profit as a percentage of net revenues) for second-quarter fiscal 2023 came in at 30.6%, 50 basis points more than the figure reported in the year-ago fiscal period. Operating income came at $2.19 billion. The operating margin of 13.8% rose from 13.7% in the year-ago fiscal quarter.
Balance Sheet & Cash Flow
Accenture exited second-quarter fiscal 2022 with cash and cash equivalents of $6.2 billion compared with $7.9 billion at the end of the prior fiscal quarter. Cash provided by operating activities was $2.33 billion for the reported fiscal quarter. Free cash flow came in at $1.82 billion.
Share Repurchases
During second-quarter fiscal 2023, Accenture repurchased 4.1 million shares for $1.12 billion.
Guidance
For second-quarter fiscal 2023, Accenture expects revenues in the range of $16.1-$16.7 billion. The midpoint of the guided range ($16.4 billion) matches the Zacks Consensus Estimate of $16.4 billion.
For fiscal 2023, revenues are expected to register 8-10% growth in local currency, narrowing down from 8-11% expected earlier.
Accenture now expects fiscal 2023 EPS in the range of $10.84-$11.06 (prior guidance: $11.2-$11.52). The Zacks Consensus Estimate of earnings is pegged at $11.34 billion.
Accenture still expects its operating margin for the full fiscal year in the range of 14.1-14.3%, reduced from the previous expectation of 15.3-15.5%.
Operating cash flow is still anticipated in the range of $8.7-$9.2 billion up from the previous range of $8.5-$9 billion. Free cash flow is expected between $8 billion and $8.5 billion. ACN expects to return $7.1 billion of cash to its shareholders through dividend payments and share repurchases.
Currently, Accenture carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Recent Performances of Other Business Services Companies
The following stocks from the Business Service sector reported better-than-expected fourth-quarter results.
Gartner, Inc. IT,holding a Zacks Rank #2 (Buy), reported better-than-expected fourth-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Adjusted earnings (excluding 49 cents from non-recurring items) per share of $3.70 beat the Zacks Consensus Estimate by 44% and increased 23.8% year over year. IT’s revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.6% and improved 15.2% year over year on a reported basis and 20% on a foreign-currency-neutral basis.
Aptiv PLC (APTV), carrying a Zacks Rank of 3, reported better-than-expected fourth-quarter 2022 results. Adjusted earnings (excluding 41 cents from non-recurring items) of $1.27 per share beat the Zacks Consensus Estimate by 6.7% and increased more than 100% on a year-over-year basis. APTV’s revenues surpassed the Zacks Consensus Estimate by 6% and increased 12.2% year over year.
Equifax EFX, currently holding a Zacks Rank of 3, reported stellar fourth-quarter 2022 results. The company’s earnings and revenues surpassed the Zacks Consensus Estimate. EFX’s adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 2.7% but decreased 17.4% on a year-over-year basis. Revenues of $1.2 billion beat the Zacks Consensus Estimate by 1.5% but decreased 4.4% year over year.
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