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12/20 21:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed picture: strong revenue growth and shareholder returns are offset by margin pressure and geopolitical uncertainties. The Q&A highlights management's lack of clarity on revenue risks and growth specifics, adding to uncertainty. While there is optimism around AI and partnerships, the cautious full-year guidance and forex impacts temper expectations. With no market cap data, a neutral rating is appropriate, reflecting balanced positive and negative factors.
Earnings Per Share (EPS) $2.82, reflecting a 2% growth over adjusted EPS of $2.77 from Q2 FY '24.
Revenue $16.7 billion, an 8.5% increase in local currency and a 5% increase in U.S. dollars compared to the previous year.
Operating Margin 13.5%, a decrease of 20 basis points compared to adjusted operating margin last year.
Free Cash Flow $2.7 billion, resulting from cash generated by operating activities of $2.9 billion, net of property and equipment additions of $171 million.
Shareholder Returns $2.4 billion returned to shareholders through repurchases and dividends.
New Bookings $20.9 billion, flat in local currency and a 3% decrease in U.S. dollars compared to the previous year.
Consulting Revenue $8.3 billion, up 6% in local currency and 3% in U.S. dollars.
Managed Services Revenue $8.4 billion, up 11% in local currency and 8% in U.S. dollars.
Gross Margin 29.9%, compared to 30.9% for the second quarter last year.
Days Services Outstanding 48 days, compared to 50 days last quarter and 43 days in the second quarter of last year.
Cash Balance $8.5 billion, compared with $5 billion at the end of August 31.
Dividends Quarterly cash dividend of $1.48 per share, a 15% increase over last year.
New Bookings in Gen AI: Accenture achieved $1.4 billion in new bookings related to Gen AI, with approximately $600 million in revenue.
Acquisitions: Accenture invested over $250 million primarily across six strategic acquisitions to drive growth.
LearnVantage: Accenture's LearnVantage program is being utilized to help clients develop talent and skills for future growth.
Market Share Growth: Accenture continues to take market share on a rolling four-quarter basis against its closest global publicly traded competitors.
Federal Business Update: Federal business represented approximately 8% of global revenue, with ongoing uncertainty due to new procurement actions.
Joint Venture with Telstra: Accenture partnered with Telstra to create a joint venture aimed at accelerating data and AI initiatives.
Revenue Growth: Accenture reported revenue of $16.7 billion, growing 8.5% in local currency.
Training Investment: Approximately 15 million training hours were invested this quarter to enhance employee skills.
Free Cash Flow: Accenture generated free cash flow of $2.7 billion for the quarter.
Focus on Reinvention: Accenture's clients are increasingly focused on reinvention through new technologies, particularly Gen AI.
Investment in Digital Core: Accenture is helping clients build a digital core as a foundation for reinvention.
Acquisition Strategy: Accenture plans to invest $2 billion to $3 billion in acquisitions this fiscal year.
Federal Business Risks: New procurement actions have slowed, negatively impacting sales and revenue. The General Service Administration has instructed federal agencies to review contracts with top consulting firms, including Accenture, which may lead to contract terminations deemed non-mission critical.
Economic and Geopolitical Uncertainty: There is an elevated level of uncertainty in the global economic and geopolitical environment, which may affect business operations and client demand.
Foreign Exchange Impact: The company anticipates a negative impact of approximately 0.5% on revenue due to foreign exchange fluctuations, which could affect financial performance.
Operating Margin Pressure: Operating margin contracted by 20 basis points compared to the previous year, indicating potential pressure on profitability.
Market Competition: Accenture continues to face competitive pressures as it strives to maintain and grow market share against global competitors.
Bookings: Accenture reported bookings of $20.9 billion, including 32 clients with quarterly bookings greater than $100 million.
Investments: Over $250 million was deployed primarily across six strategic acquisitions and approximately 15 million training hours were invested in employee development.
Gen AI Growth: Accenture achieved $1.4 billion in new bookings and approximately $600 million in revenue from Gen AI.
Acquisitions: Accenture plans to strategically deploy $2 billion to $3 billion in acquisitions this fiscal year.
Workforce Development: Increased data and AI workforce to approximately 72,000, aiming for 80,000 by the end of FY 2026.
Q3 Revenue Guidance: Expected revenues for Q3 FY25 are in the range of $16.9 billion to $17.5 billion, reflecting an estimated 3% to 7% growth in local currency.
Full Year Revenue Guidance: For FY25, expected revenue growth is 5% to 7% in local currency over FY24.
Operating Margin Guidance: Expected operating margin for FY25 is 15.6% to 15.7%, a 10 to 20 basis point expansion over FY24.
EPS Guidance: Full year diluted EPS for FY25 is expected to be in the range of $12.55 to $12.79, reflecting 5% to 7% growth over FY24.
Free Cash Flow Guidance: Expected free cash flow for FY25 is in the range of $8.8 billion to $9.5 billion.
Quarterly Cash Dividend: $1.48 per share, totaling $929 million, a 15% increase over last year.
Future Dividend Declaration: Quarterly cash dividend of $1.48 per share to be paid on May 15, 2025, a 15% increase over last year.
Share Repurchase: Repurchased or redeemed 4 million shares for $1.4 billion at an average price of $361.16 per share.
Remaining Share Repurchase Authority: Approximately $5 billion of share repurchase authority remaining.
Total Return to Shareholders: Returned $2.4 billion to shareholders through repurchases and dividends in Q2.
Annual Return Commitment: Expect to return at least $8.3 billion through dividends and share repurchases for the full fiscal year.
The earnings call summary indicates stable financial performance with revenue growth and margin expansion. The shareholder return plan is notably positive, with increased dividends and share repurchases. The Q&A section reveals optimism about AI partnerships and pricing improvements, though there is some uncertainty about the timing of AI revenue impact. Overall, the positive guidance and strategic investments suggest a favorable short-term stock price outlook.
The earnings call highlights strong financial performance with significant growth in key areas like security services and managed services. The guidance for FY '26 remains optimistic, supported by a strong backlog and pipeline. The company's strategic focus on AI and reinvestment of savings into growth areas is viewed positively. Although there are some uncertainties, such as the impact of DOGE and CapEx increase, the overall sentiment from the call is positive, with a focus on expansion and strategic growth initiatives.
Accenture's earnings call reveals strong financial performance with an 8% revenue increase and a 12% EPS growth. The company maintains a resilient model despite minor challenges like attrition. The strategic focus on AI and a solid bookings pipeline bolster optimism. Shareholder returns are robust, with increased dividends and share repurchases. Although some risks exist, such as supply chain challenges and investment risks, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and shareholder-friendly actions.
The earnings call summary presents a mixed picture: strong revenue growth and shareholder returns are offset by margin pressure and geopolitical uncertainties. The Q&A highlights management's lack of clarity on revenue risks and growth specifics, adding to uncertainty. While there is optimism around AI and partnerships, the cautious full-year guidance and forex impacts temper expectations. With no market cap data, a neutral rating is appropriate, reflecting balanced positive and negative factors.
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