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Accenture reports strong Q2 Results

Date: 28-03-2008
Source: Accenture

Accenture (NYSE: ACN) reported strong financial results for the second quarter of fiscal 2008, ended Feb. 29, with net revenues of $5.61 billion, a year-over-year increase of 18 percent in U.S. dollars and 11 percent in local currency.

Consulting and outsourcing revenues both grew by double digits in U.S. dollars and in local currency, with outsourcing revenues the highest for any quarter.

Earnings per share were $0.64, an increase of 36 percent over the second quarter of fiscal 2007, driven by higher operating income and a lower tax rate in the quarter. In addition, the company has raised its outlook for earnings per share for the full fiscal year 2008 to a range of $2.55 to $2.60 from the previous range of $2.36 to $2.41 provided during the first-quarter earnings announcement.

New bookings were $6.44 billion, with record quarterly consulting bookings of $3.79 billion. The company also grew operating income by 14 percent over the second quarter last year.

William D. Green, Accenture´s chairman & CEO, said, "Our strong performance in the second quarter reflects the momentum we have seen in the marketplace and the essential nature of our services, as clients rely on the value we deliver in helping them achieve high performance in a challenging economic environment. With strong bookings, including our highest consulting bookings ever, we are seeing solid demand for our services.

"We continue to invest with confidence in our capabilities across all dimensions of our business to ensure that we are meeting and anticipating our clients´ evolving needs. We are focused on maintaining firm operating discipline and are well positioned to achieve profitable growth through our emphasis on specialization, differentiation and superior execution."

Financial Review
Revenues before reimbursements ("net revenues") for the second quarter of fiscal 2008 were $5.61 billion, compared with $4.75 billion for the second quarter of fiscal 2007, an increase of 18% in U.S. dollars and 11% in local currency.

• Consulting net revenues were $3.35 billion, an increase of 18% in U.S. dollars and 11% in local currency over the second quarter last year.

• Outsourcing net revenues were $2.26 billion, an increase of 18% in U.S. dollars and 11% in local currency over the same period last year.

• Diluted EPS for the second quarter were $0.64, compared with $0.47 in the second quarter last year, an increase of 36 percent.

• Operating income increased 14 percent, to $638 million, or 11.4 percent of net revenues, compared with $559 million, or 11.8 percent of net revenues, in the second quarter last year.

• Gross margin (gross profit as a percentage of net revenues) for the second quarter of fiscal 2008 was 29.5 percent, compared with 29.6 percent in the second quarter of fiscal 2007.

Selling, general and administrative expenses in the second quarter of fiscal 2008 were $1,009 million, or 18.0 percent of net revenues, compared with $839 million, or 17.7 percent of net revenues, in the second quarter last year.

The company´s effective tax rate for the second quarter of fiscal 2008 was 17.8 percent, compared with 29.4 percent in the second quarter last year, driven primarily by benefits related to final determinations in Q2 of fiscal 2008. Income before minority interest for the second quarter was $534 million, compared with $413 million for the same period of fiscal 2007, an increase of 29%.

For the three months ended Feb. 29, 2008, operating cash flow was $724 million; property and equipment additions were $79 million; and free cash flow, defined as operating cash flow net of property and equipment additions, was $645 million.

Accenture´s total cash balance at Feb. 29, 2008 was $2.58 billion, compared with $3.31 billion at Aug. 31, 2007. Cash combined with $129 million of fixed-income securities classified as investments on the company´s balance sheet was $2.71 billion at Feb. 29, 2008, compared with $3.61 billion at Aug. 31, 2007. Total debt at Feb. 29, 2008 was $9 million.

New Bookings
New bookings for the second quarter of fiscal 2008 were $6.44 billion.

• Consulting bookings were $3.79 billion, or 59 percent of new bookings.

• Outsourcing accounted for $2.65 billion, or 41 percent of new bookings.

Net Revenues by Operating Group
Net revenues for Accenture´s five operating groups were as follows:

• Communications & High Tech: $1,339 million, compared with $1,086 million for the second quarter of fiscal 2007, an increase of 23 percent in U.S. dollars and 15 percent in local currency.
• Financial Services: $1,209 million, compared with $1,051 million for the same period last year, an increase of 15% in U.S. dollars and 7% in local currency.
• Products: $1,439 million, compared with $1,165 million for the year-ago period, an increase of 24% in U.S. dollars and 17% in local currency.
• Public Service: $675 million, compared with $655 million for the year-ago period, an increase of 3% in U.S. dollars and a fall of 1% in local currency.
• Resources: $944 million, compared with $787 million for the same period last year, an increase of 20% in U.S. dollars and 12% in local currency.

Net Revenues by Geographic Region
Net revenues by geographic region were as follows:

• Americas: $2,317 million, compared with $2,043 million for the second quarter of fiscal 2007, an increase of 13% in U.S. dollars and 10% in local currency.
• Europe, Middle East and Africa (EMEA): $2,791 million, compared with $2,334 million for the second quarter of fiscal 2007, an increase of 20 percent in U.S. dollars and 9 percent in local currency.
• Asia Pacific: $503 million, compared with $373 million for the year-ago period, an increase of 35 percent in U.S. dollars and 23 percent in local currency.

Share Repurchase Activity
During the second quarter of fiscal 2008, Accenture repurchased or redeemed 16.3 million shares for a total of $549 million, including $120 million for 3.6 million shares repurchased in the open market. At Feb. 29, 2008, Accenture had $3.6 billion of share repurchase authority remaining.

Business Outlook 

Fiscal Year 2008
For the full fiscal year 2008, Accenture continues to expect net revenue growth in the range of 9 percent to 12 percent in local currency. The company has increased its outlook for diluted EPS for the full fiscal year by $0.19, to a range of $2.55 to $2.60. The company now expects operating cash flow in the range of $2.42 billion to $2.62 billion; property and equipment additions to be $420 million; and free cash flow in the range of $2.0 billion to $2.2 billion. The company now expects its annual effective tax rate to be in the range of 28 percent to 30 percent. Accenture continues to target new bookings for fiscal 2008 in the range of $24 to $26 billion.

Third Quarter Fiscal 2008
Accenture expects net revenues for the third quarter of fiscal 2008 to be in the range of $5.85 billion to $6.05 billion.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world´s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With 178,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007.