— Revenues are $13.3 billion, an increase of 21% in U.S. dollars and 16% in local currency —
— EPS are $2.40, a 26% increase —
— Operating income increases 24% to $2.1 billion, with operating margin of 16.0%, an expansion of 40 basis points —
— New bookings are $15.4 billion, a 39% increase in U.S. dollars from the third quarter last year, with consulting bookings of $8.0 billion and outsourcing bookings of $7.4 billion —
— Company declares quarterly cash dividend of $0.88 per share, up 10% from a year ago —
— Accenture raises its business outlook for fiscal 2021; now expects full-year revenue growth of 10% to 11% in local currency; operating margin of 15.1%; GAAP EPS of $9.07 to $9.16; adjusted EPS of $8.71 to $8.80; and free cash flow of $8.0 billion to $8.5 billion —
Accenture reported financial results for the third quarter of fiscal 2021, ended May 31, 2021, with revenues of $13.3 billion, an increase of 21% in U.S. dollars and 16% in local currency over the same period last year.
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“Net income attributable to noncontrolling interests — other”
Diluted earnings per share were $2.40, a 26% increase from $1.90 for the third quarter last year.
Operating income was $2.1 billion, a 24% increase over the same period last year, and operating margin was 16.0%, an expansion of 40 basis points.
New bookings for the quarter were $15.4 billion, a 39% increase from the third quarter last year, with consulting bookings of $8.0 billion and outsourcing bookings of $7.4 billion.
Julie Sweet, Accenture’s chief executive officer, said, “Our outstanding financial results reflect our continued momentum driven by the demand for digital transformation, the depth and breadth of our client relationships with the world’s leading companies, our talented people and the strength of our business across geographic markets, industries and services.
“We are particularly pleased with our ability to continue to invest significantly in our business and our people. This includes acquisitions of 39 innovative companies that we have announced for the fiscal year to date, bringing us scale and new or expanded capabilities. To continue to provide vibrant career paths, we have promoted a record 117,000 people, including almost 1,200 managing directors so far this fiscal year in recognition of their leadership, excellence and commitment to creating value for our clients, people, shareholders, partners and communities.”
Financial Review
Revenues for the third quarter of fiscal 2021 were $13.26 billion, compared with $10.99 billion for the third quarter of fiscal 2020, an increase of 21% in U.S. dollars and 16% in local currency. Revenues were approximately $300 million above the top end of the company’s guided range of $12.55 billion to $12.95 billion. The foreign-exchange impact for the quarter was approximately positive 5%, in line with the assumption provided in the company’s second-quarter earnings release.
- Consulting revenues for the quarter were $7.26 billion, an increase of 21% in U.S. dollars and 16% in local currency compared with the third quarter of fiscal 2020.
- Outsourcing revenues were $6.00 billion, an increase of 20% in U.S. dollars and 16% in local currency compared with the third quarter of fiscal 2020.
Diluted EPS for the quarter were $2.40, a 26% increase from $1.90 for the third quarter last year. The $0.50 increase in EPS reflects:
- a $0.47 increase from higher revenue and operating results;
- a $0.01 increase from lower non-operating expense;
- a $0.01 increase from a lower effective tax rate; and
- a $0.01 increase from lower income attributable to noncontrolling interests.
Gross margin (gross profit as a percentage of revenues) for the quarter was 33.2%, compared with 32.1% for the third quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $2.29 billion, or 17.2% of revenues, compared with $1.82 billion, or 16.5% of revenues, for the third quarter last year.
Operating income for the quarter increased 24%, to $2.12 billion, or 16.0% of revenues, compared with $1.71 billion, or 15.6% of revenues, for the third quarter of fiscal 2020.
The company’s effective tax rate for the quarter was 25.0%, compared with 25.5% for the third quarter last year.
Net income for the quarter was $1.57 billion, a 25% increase from $1.25 billion for the third quarter last year.
Operating cash flow for the quarter was $2.40 billion, and property and equipment additions were $158 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $2.24 billion. For the same period last year, operating cash flow was $2.74 billion; property and equipment additions were $150 million; and free cash flow was $2.59 billion.
Days services outstanding, or DSOs, were 36 days at May 31, 2021, compared with 35 days at Aug. 31, 2020 and 41 days at May 31, 2020.
Accenture’s total cash balance at May 31, 2021 was $10.0 billion, compared with $8.4 billion at Aug. 31, 2020.
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New Bookings
New bookings for the third quarter were $15.4 billion, a 39% increase from the third quarter last year.
- Consulting bookings were $8.0 billion, a 30% increase from the third quarter last year.
- Outsourcing bookings were $7.4 billion, a 52% increase from the third quarter last year.
Revenues by Geographic Market
Revenues by geographic market were as follows:
- North America: $6.20 billion, an increase of 18% in both U.S. dollars and local currency compared with the third quarter of fiscal 2020.
- Europe: $4.45 billion, an increase of 25% in U.S. dollars and 14% in local currency compared with the third quarter of fiscal 2020.
- Growth Markets: $2.61 billion, an increase of 20% in U.S. dollars and 15% in local currency compared with the third quarter of fiscal 2020.
Revenues by Industry Group
Revenues by industry group were as follows:
- Communications, Media & Technology: $2.70 billion, an increase of 23% in U.S. dollars and 19% in local currency compared with the third quarter of fiscal 2020.
- Financial Services: $2.60 billion, an increase of 21% in U.S. dollars and 16% in local currency compared with the third quarter of fiscal 2020.
- Health & Public Service: $2.52 billion, an increase of 25% in U.S. dollars and 21% in local currency compared with the third quarter of fiscal 2020.
- Products: $3.67 billion, an increase of 22% in U.S. dollars and 17% in local currency compared with the third quarter of fiscal 2020.
- Resources: $1.77 billion, an increase of 8% in U.S. dollars and 3% in local currency compared with the third quarter of fiscal 2020.
Returning Cash to Shareholders
Accenture continues to return cash to shareholders through cash dividends and share repurchases.
Dividend
On May 14, 2021, a quarterly cash dividend of $0.88 per share was paid to shareholders of record at the close of business on April 15, 2021. These cash dividend payments totaled $559 million, bringing dividend payments for the year to date to $1.68 billion.
Accenture plc has declared another quarterly cash dividend of $0.88 per share for shareholders of record at the close of business on July 15, 2021. This dividend, which is payable on Aug. 13, represents a 10% increase over the quarterly dividend rate of $0.80 per share in fiscal 2020.
Share Repurchase Activity
During the third quarter of fiscal 2021, Accenture repurchased or redeemed 3.0 million shares for a total of $835 million, including approximately 2.8 million shares repurchased in the open market. This brings Accenture’s total share repurchases and redemptions for the first three quarters of fiscal 2021 to 11.0 million shares for a total of $2.79 billion, including approximately 8.4 million shares repurchased in the open market.
Accenture’s total remaining share repurchase authority at May 31, 2021 was approximately $4.2 billion.
At May 31, 2021, Accenture had approximately 635 million total shares outstanding.
Business Outlook
Fourth Quarter Fiscal 2021
Accenture expects revenues for the fourth quarter of fiscal 2021 to be in the range of $13.1 billion to $13.5 billion, 17% to 21% growth in local currency, reflecting the company’s assumption of a positive 4% foreign-exchange impact compared with the fourth quarter of fiscal 2020.
Fiscal Year 2021
Accenture’s business outlook for the full 2021 fiscal year now assumes that the foreign-exchange impact on its results in U.S. dollars will be positive 3.5% compared with fiscal 2020. The company previously had assumed a positive 3% foreign-exchange impact.
For fiscal 2021, the company now expects revenue growth to be in the range of 10% to 11% in local currency, compared with 6.5% to 8.5% previously. Fiscal 2021 revenues include a reduction of approximately 1 percentage point from a decline in revenues from reimbursable travel costs.
Accenture now expects operating margin for the full fiscal year to be 15.1%, an expansion of 40 basis points from fiscal 2020. The company previously expected operating margin to expand 30 to 40 basis points.
The company now expects its annual effective tax rate to be in the range of 23.0% to 24.0%, compared with 23.0% to 25.0% previously.
The company now expects GAAP diluted EPS to be in the range of $9.07 to $9.16, compared with $8.67 to $8.85 previously. Excluding gains on an investment of $0.36 in fiscal 2021 and $0.43 in fiscal 2020, the company now expects adjusted fiscal 2021 EPS to be in the range of $8.71 to $8.80, an increase of 17% to 18% over adjusted fiscal 2020 EPS of $7.46. The company previously expected adjusted fiscal 2021 EPS to be in the range of $8.32 to $8.50.
For fiscal 2021, the company now expects operating cash flow to be in the range of $8.65 billion to $9.15 billion, compared with $7.65 billion to $8.15 billion previously; continues to expect property and equipment additions to be $650 million; and now expects free cash flow to be in the range of $8.0 billion to $8.5 billion, compared with $7.0 billion to $7.5 billion previously.
The company continues to expect to return at least $5.8 billion in cash to shareholders through dividends and share repurchases.
Conference Call and Webcast Details
Accenture will host a conference call at 8:00 a.m. EDT today to discuss its third-quarter financial results. To participate, please dial +1 (877) 692-8955 [+1 (234) 720-6979 outside the United States, Puerto Rico and Canada] and enter access code 4728020 approximately 15 minutes before the scheduled start of the call.
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