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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended
February 28, 2023
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
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For the transition period from to
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Commission File Number: 001-34448
Accenture plc
(Exact name of registrant as specified in its charter)
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Ireland |
98-0627530 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
1 Grand Canal Square,
Grand Canal Harbour,
Dublin 2, Ireland
(Address of principal executive offices)
(353) (1) 646-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Class A ordinary shares, par value $0.0000225 per
share |
ACN |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☑ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☑
The number of shares of the registrant’s Class A ordinary
shares, par value $0.0000225 per share, outstanding as of
March 9, 2023 was 662,595,677 (which number includes
31,063,379 issued shares held by the registrant). The number of
shares of the registrant’s Class X ordinary shares, par value
$0.0000225 per share, outstanding as of March 9, 2023 was
338,638.
Table of Contents
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Page |
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Part I. |
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Item 1. |
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Item 2. |
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Item 3. |
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Item 4. |
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Part II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share
amounts)
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ACCENTURE
FORM 10-Q
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3
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Part I — Financial Information
Item 1. Financial
Statements
Consolidated Balance Sheets
February 28, 2023 and August 31, 2022
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February 28, 2023 |
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August 31, 2022 |
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ASSETS |
(Unaudited) |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ |
6,238,787 |
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$ |
7,889,833 |
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Short-term investments |
4,189 |
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3,973 |
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Receivables and contract assets |
12,499,168 |
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11,776,775 |
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Other current assets |
2,318,814 |
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1,940,290 |
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Total current assets |
21,060,958 |
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21,610,871 |
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NON-CURRENT ASSETS: |
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Contract assets |
75,423 |
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46,844 |
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Investments |
325,251 |
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317,972 |
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Property and equipment, net |
1,560,691 |
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1,659,140 |
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Lease assets |
2,906,181 |
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3,018,535 |
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Goodwill |
14,190,658 |
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13,133,293 |
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Deferred contract costs |
850,522 |
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807,940 |
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Deferred tax assets |
4,050,145 |
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4,001,200 |
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Other non-current assets |
2,707,460 |
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2,667,595 |
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Total non-current assets |
26,666,331 |
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25,652,519 |
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TOTAL ASSETS |
$ |
47,727,289 |
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$ |
47,263,390 |
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LIABILITIES
AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Current portion of long-term debt and bank borrowings |
$ |
10,815 |
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$ |
9,175 |
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Accounts payable |
2,470,896 |
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2,559,485 |
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Deferred revenues |
5,112,570 |
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4,478,048 |
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Accrued payroll and related benefits |
5,974,677 |
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7,611,794 |
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Income taxes payable |
535,001 |
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646,471 |
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Lease liabilities |
700,570 |
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707,598 |
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Other accrued liabilities |
1,544,993 |
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1,510,925 |
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Total current liabilities |
16,349,522 |
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17,523,496 |
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NON-CURRENT LIABILITIES: |
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Long-term debt |
45,155 |
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45,893 |
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Deferred revenues |
726,092 |
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712,715 |
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Retirement obligation |
1,641,782 |
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1,692,152 |
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Deferred tax liabilities |
364,510 |
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318,584 |
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Income taxes payable |
1,250,019 |
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1,198,139 |
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Lease liabilities |
2,451,961 |
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2,563,090 |
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Other non-current liabilities |
440,970 |
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462,233 |
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Total non-current liabilities |
6,920,489 |
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6,992,806 |
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COMMITMENTS AND CONTINGENCIES |
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SHAREHOLDERS’ EQUITY: |
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Ordinary shares, par value 1.00 euros per share, 40,000 shares
authorized and issued as of February 28, 2023 and
August 31, 2022
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57 |
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Class A ordinary shares, par value $0.0000225 per share,
20,000,000,000 shares authorized, 662,405,556 and 664,561,282
shares issued as of February 28, 2023 and August 31,
2022, respectively
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15 |
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Class X ordinary shares, par value $0.0000225 per share,
1,000,000,000 shares authorized, 338,638 and 500,837 shares issued
and outstanding as of February 28, 2023 and August 31,
2022, respectively
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Restricted share units |
1,636,155 |
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2,091,382 |
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Additional paid-in capital |
12,163,671 |
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10,679,180 |
|
|
Treasury shares, at cost: Ordinary, 40,000 shares as of
February 28, 2023 and August 31, 2022; Class A ordinary,
31,141,439 and 33,393,703 shares as of February 28, 2023 and
August 31, 2022, respectively
|
(5,593,010) |
|
|
(6,678,037) |
|
|
Retained earnings |
17,500,001 |
|
|
18,203,842 |
|
|
Accumulated other comprehensive loss |
(1,944,270) |
|
|
(2,190,342) |
|
|
Total Accenture plc shareholders’ equity |
23,762,619 |
|
|
22,106,097 |
|
|
Noncontrolling interests |
694,659 |
|
|
640,991 |
|
|
Total shareholders’ equity |
24,457,278 |
|
|
22,747,088 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
47,727,289 |
|
|
$ |
47,263,390 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share
amounts)
|
|
|
ACCENTURE
FORM 10-Q
|
|
4
|
|
|
|
|
|
Consolidated Income Statements
For the Three and Six Months Ended February 28, 2023 and
2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
REVENUES: |
|
|
|
|
|
|
|
|
Revenues |
$ |
15,814,158 |
|
|
$ |
15,046,693 |
|
|
$ |
31,561,960 |
|
|
$ |
30,011,846 |
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Cost of services |
10,979,392 |
|
|
10,522,734 |
|
|
21,541,052 |
|
|
20,571,098 |
|
|
Sales and marketing |
1,563,567 |
|
|
1,414,814 |
|
|
3,113,586 |
|
|
2,869,239 |
|
|
General and administrative costs |
1,082,228 |
|
|
1,047,565 |
|
|
2,125,251 |
|
|
2,075,635 |
|
|
Business optimization costs |
244,390 |
|
|
— |
|
|
244,390 |
|
|
— |
|
|
Total operating expenses |
13,869,577 |
|
|
12,985,113 |
|
|
27,024,279 |
|
|
25,515,972 |
|
|
OPERATING INCOME |
1,944,581 |
|
|
2,061,580 |
|
|
4,537,681 |
|
|
4,495,874 |
|
|
Interest income |
50,259 |
|
|
7,269 |
|
|
94,964 |
|
|
13,319 |
|
|
Interest expense |
(11,634) |
|
|
(11,216) |
|
|
(18,914) |
|
|
(22,399) |
|
|
Other income (expense), net |
(36,300) |
|
|
(7,183) |
|
|
(65,207) |
|
|
(30,212) |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
1,946,906 |
|
|
2,050,450 |
|
|
4,548,524 |
|
|
4,456,582 |
|
|
Income tax expense |
396,223 |
|
|
392,921 |
|
|
1,001,541 |
|
|
979,323 |
|
|
NET INCOME |
1,550,683 |
|
|
1,657,529 |
|
|
3,546,983 |
|
|
3,477,259 |
|
|
Net income attributable to noncontrolling interests in Accenture
Canada Holdings Inc. |
(1,604) |
|
|
(1,742) |
|
|
(3,689) |
|
|
(3,676) |
|
|
Net income attributable to noncontrolling interests –
other |
(25,431) |
|
|
(20,845) |
|
|
(54,696) |
|
|
(47,617) |
|
|
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC |
$ |
1,523,648 |
|
|
$ |
1,634,942 |
|
|
$ |
3,488,598 |
|
|
$ |
3,425,966 |
|
|
Weighted average Class A ordinary shares: |
|
|
|
|
|
|
|
|
Basic |
630,845,147 |
|
|
633,956,712 |
|
|
630,485,134 |
|
|
633,108,627 |
|
|
Diluted |
637,735,390 |
|
|
644,127,093 |
|
|
638,350,779 |
|
|
644,622,602 |
|
|
Earnings per Class A ordinary share: |
|
|
|
|
|
|
|
|
Basic |
$ |
2.42 |
|
|
$ |
2.58 |
|
|
$ |
5.53 |
|
|
$ |
5.41 |
|
|
Diluted |
$ |
2.39 |
|
|
$ |
2.54 |
|
|
$ |
5.47 |
|
|
$ |
5.32 |
|
|
Cash dividends per share |
$ |
1.12 |
|
|
$ |
0.97 |
|
|
$ |
2.24 |
|
|
$ |
1.94 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars)
|
|
|
ACCENTURE
FORM 10-Q
|
|
5
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended February 28, 2023 and
2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
NET INCOME |
$ |
1,550,683 |
|
|
$ |
1,657,529 |
|
|
$ |
3,546,983 |
|
|
$ |
3,477,259 |
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
|
|
|
|
|
|
Foreign currency translation |
112,625 |
|
|
9,410 |
|
|
196,793 |
|
|
(211,353) |
|
|
Defined benefit plans |
6,539 |
|
|
9,534 |
|
|
98,219 |
|
|
(3,427) |
|
|
Cash flow hedges |
(7,762) |
|
|
12,807 |
|
|
(48,940) |
|
|
(41,208) |
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ACCENTURE
PLC |
111,402 |
|
|
31,751 |
|
|
246,072 |
|
|
(255,988) |
|
|
Other comprehensive income (loss) attributable to noncontrolling
interests |
2,469 |
|
|
96 |
|
|
5,338 |
|
|
(5,576) |
|
|
COMPREHENSIVE INCOME |
$ |
1,664,554 |
|
|
$ |
1,689,376 |
|
|
$ |
3,798,393 |
|
|
$ |
3,215,695 |
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC |
$ |
1,635,050 |
|
|
$ |
1,666,693 |
|
|
$ |
3,734,670 |
|
|
$ |
3,169,978 |
|
|
Comprehensive income attributable to noncontrolling
interests |
29,504 |
|
|
22,683 |
|
|
63,723 |
|
|
45,717 |
|
|
COMPREHENSIVE INCOME |
$ |
1,664,554 |
|
|
$ |
1,689,376 |
|
|
$ |
3,798,393 |
|
|
$ |
3,215,695 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
|
|
|
ACCENTURE
FORM 10-Q
|
|
6
|
|
|
|
|
|
Consolidated Shareholders’ Equity Statement
For the Three Months Ended February 28, 2023
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Shares |
|
Class A
Ordinary
Shares |
|
Class X
Ordinary
Shares |
|
Restricted
Share
Units |
|
Additional
Paid-in
Capital |
|
Treasury Shares |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Total
Accenture plc
Shareholders’
Equity |
|
Noncontrolling
Interests |
|
Total
Shareholders’
Equity |
|
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
|
|
$ |
|
No.
Shares |
|
|
|
|
|
|
Balance as of November 30, 2022 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
658,255 |
|
|
$ |
— |
|
|
499 |
|
|
$ |
2,167,437 |
|
|
$ |
11,051,309 |
|
|
$ |
(5,169,967) |
|
|
(28,850) |
|
|
$ |
16,981,432 |
|
|
$ |
(2,055,672) |
|
|
$ |
22,974,611 |
|
|
$ |
691,339 |
|
|
$ |
23,665,950 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,523,648 |
|
|
|
|
1,523,648 |
|
|
27,035 |
|
|
1,550,683 |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,402 |
|
|
111,402 |
|
|
2,469 |
|
|
113,871 |
|
|
Purchases of Class A shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,014 |
|
|
(1,117,535) |
|
|
(4,085) |
|
|
|
|
|
|
(1,116,521) |
|
|
(1,014) |
|
|
(1,117,535) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
631,871 |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
631,870 |
|
|
|
|
631,870 |
|
|
Purchases/redemptions of Accenture Canada Holdings Inc.
exchangeable shares and Class X shares |
|
|
|
|
|
|
|
|
|
|
(160) |
|
|
|
|
(676) |
|
|
|
|
|
|
|
|
|
|
(676) |
|
|
|
|
(676) |
|
|
Issuances of Class A shares for employee share
programs |
|
|
|
|
|
|
4,151 |
|
|
|
|
|
|
(1,193,792) |
|
|
1,108,186 |
|
|
694,492 |
|
|
1,754 |
|
|
(267,284) |
|
|
|
|
341,602 |
|
|
312 |
|
|
341,914 |
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
30,639 |
|
|
|
|
|
|
|
|
(737,795) |
|
|
|
|
(707,156) |
|
|
(866) |
|
|
(708,022) |
|
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,839 |
|
|
|
|
|
|
|
|
|
|
3,839 |
|
|
(24,616) |
|
|
(20,777) |
|
|
Balance as of February 28, 2023 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
662,406 |
|
|
$ |
— |
|
|
339 |
|
|
$ |
1,636,155 |
|
|
$ |
12,163,671 |
|
|
$ |
(5,593,010) |
|
|
(31,181) |
|
|
$ |
17,500,001 |
|
|
$ |
(1,944,270) |
|
|
$ |
23,762,619 |
|
|
$ |
694,659 |
|
|
$ |
24,457,278 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
|
|
|
ACCENTURE
FORM 10-Q
|
|
7
|
|
|
|
|
|
Consolidated Shareholders’ Equity Statement —
(continued)
For the Three Months Ended February 28, 2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Shares |
|
Class A
Ordinary
Shares |
|
Class X
Ordinary
Shares |
|
Restricted
Share
Units |
|
Additional
Paid-in
Capital |
|
Treasury Shares |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Total
Accenture plc
Shareholders’
Equity |
|
Noncontrolling
Interests |
|
Total
Shareholders’
Equity |
|
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
|
|
$ |
|
No.
Shares |
|
|
|
|
|
|
Balance as of November 30, 2021 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
658,333 |
|
|
$ |
— |
|
|
508 |
|
|
$ |
1,931,366 |
|
|
$ |
9,097,934 |
|
|
$ |
(4,079,625) |
|
|
(26,287) |
|
|
$ |
15,110,688 |
|
|
$ |
(1,707,236) |
|
|
$ |
20,353,199 |
|
|
$ |
585,459 |
|
|
$ |
20,938,658 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,634,942 |
|
|
|
|
1,634,942 |
|
|
22,587 |
|
|
1,657,529 |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,751 |
|
|
31,751 |
|
|
96 |
|
|
31,847 |
|
|
Purchases of Class A shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,639 |
|
|
(1,691,604) |
|
|
(4,582) |
|
|
|
|
|
|
(1,689,965) |
|
|
(1,639) |
|
|
(1,691,604) |
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
546,607 |
|
|
|
|
|
|
|
|
|
|
|
|
546,607 |
|
|
|
|
546,607 |
|
|
Purchases/redemptions of Accenture Canada Holdings Inc.
exchangeable shares and Class X shares |
|
|
|
|
|
|
|
|
|
|
(4) |
|
|
|
|
(1,750) |
|
|
|
|
|
|
|
|
|
|
(1,750) |
|
|
|
|
(1,750) |
|
|
Issuances of Class A shares for employee share programs |
|
|
|
|
|
|
4,084 |
|
|
|
|
|
|
(1,067,053) |
|
|
959,264 |
|
|
473,880 |
|
|
1,834 |
|
|
(73,629) |
|
|
|
|
292,462 |
|
|
285 |
|
|
292,747 |
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
27,676 |
|
|
|
|
|
|
|
|
(643,602) |
|
|
|
|
(615,926) |
|
|
(657) |
|
|
(616,583) |
|
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,703 |
|
|
|
|
|
|
|
|
|
|
8,703 |
|
|
(9,175) |
|
|
(472) |
|
|
Balance as of February 28, 2022 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
662,417 |
|
|
$ |
— |
|
|
504 |
|
|
$ |
1,438,596 |
|
|
$ |
10,065,790 |
|
|
$ |
(5,297,349) |
|
|
(29,035) |
|
|
$ |
16,028,399 |
|
|
$ |
(1,675,485) |
|
|
$ |
20,560,023 |
|
|
$ |
596,956 |
|
|
$ |
21,156,979 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
|
|
|
ACCENTURE
FORM 10-Q
|
|
8
|
|
|
|
|
|
Consolidated Shareholders’ Equity Statement —
(continued)
For the Six Months Ended February 28, 2023
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Shares |
|
Class A
Ordinary
Shares |
|
Class X
Ordinary
Shares |
|
Restricted
Share
Units |
|
Additional
Paid-in
Capital |
|
Treasury Shares |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Total
Accenture plc
Shareholders’
Equity |
|
Noncontrolling
Interests |
|
Total
Shareholders’
Equity |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
|
|
$ |
|
No.
Shares |
|
|
|
|
|
|
Balance as of August 31, 2022 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
664,561 |
|
|
$ |
— |
|
|
501 |
|
|
$ |
2,091,382 |
|
|
$ |
10,679,180 |
|
|
$ |
(6,678,037) |
|
|
(33,434) |
|
|
$ |
18,203,842 |
|
|
$ |
(2,190,342) |
|
|
$ |
22,106,097 |
|
|
$ |
640,991 |
|
|
$ |
22,747,088 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,488,598 |
|
|
|
|
3,488,598 |
|
|
58,385 |
|
|
3,546,983 |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,072 |
|
|
246,072 |
|
|
5,338 |
|
|
251,410 |
|
|
Purchases of Class A shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,318 |
|
|
(2,534,683) |
|
|
(9,295) |
|
|
|
|
|
|
(2,532,365) |
|
|
(2,318) |
|
|
(2,534,683) |
|
|
Cancellation of treasury shares |
|
|
|
|
|
|
(8,828) |
|
|
|
|
|
|
|
|
(175,701) |
|
|
2,595,281 |
|
|
8,828 |
|
|
(2,419,580) |
|
|
|
|
— |
|
|
|
|
— |
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
1,001,365 |
|
|
55,974 |
|
|
|
|
|
|
|
|
|
|
1,057,339 |
|
|
|
|
1,057,339 |
|
|
Purchases/redemptions of Accenture Canada Holdings Inc.
exchangeable shares and Class X shares |
|
|
|
|
|
|
|
|
|
|
(162) |
|
|
|
|
(2,230) |
|
|
|
|
|
|
|
|
|
|
(2,230) |
|
|
|
|
(2,230) |
|
|
Issuances of Class A shares for employee share
programs |
|
|
|
|
|
|
6,673 |
|
|
|
|
|
|
(1,512,994) |
|
|
1,599,816 |
|
|
1,024,429 |
|
|
2,720 |
|
|
(304,363) |
|
|
|
|
806,888 |
|
|
733 |
|
|
807,621 |
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
56,402 |
|
|
|
|
|
|
|
|
(1,468,496) |
|
|
|
|
(1,412,094) |
|
|
(1,495) |
|
|
(1,413,589) |
|
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,314 |
|
|
|
|
|
|
|
|
|
|
4,314 |
|
|
(6,975) |
|
|
(2,661) |
|
|
Balance as of February 28, 2023 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
662,406 |
|
|
$ |
— |
|
|
339 |
|
|
$ |
1,636,155 |
|
|
$ |
12,163,671 |
|
|
$ |
(5,593,010) |
|
|
(31,181) |
|
|
$ |
17,500,001 |
|
|
$ |
(1,944,270) |
|
|
$ |
23,762,619 |
|
|
$ |
694,659 |
|
|
$ |
24,457,278 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
|
|
|
ACCENTURE
FORM 10-Q
|
|
9
|
|
|
|
|
|
Consolidated Shareholders’ Equity Statement —
(continued)
For the Six Months Ended February 28, 2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Shares |
|
Class A
Ordinary
Shares |
|
Class X
Ordinary
Shares |
|
Restricted
Share
Units |
|
Additional
Paid-in
Capital |
|
Treasury Shares |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Total
Accenture plc
Shareholders’
Equity |
|
Noncontrolling
Interests |
|
Total
Shareholders’
Equity |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
$ |
|
No.
Shares |
|
|
|
$ |
|
No.
Shares |
|
|
|
|
|
|
Balance as of August 31, 2021 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
656,591 |
|
|
$ |
— |
|
|
513 |
|
|
$ |
1,750,784 |
|
|
$ |
8,617,838 |
|
|
$ |
(3,408,491) |
|
|
(24,545) |
|
|
$ |
13,988,748 |
|
|
$ |
(1,419,497) |
|
|
$ |
19,529,454 |
|
|
$ |
567,660 |
|
|
$ |
20,097,114 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,425,966 |
|
|
|
|
3,425,966 |
|
|
51,293 |
|
|
3,477,259 |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(255,988) |
|
|
(255,988) |
|
|
(5,576) |
|
|
(261,564) |
|
|
Purchases of Class A shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,463 |
|
|
(2,534,446) |
|
|
(7,017) |
|
|
|
|
|
|
(2,531,983) |
|
|
(2,463) |
|
|
(2,534,446) |
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
864,159 |
|
|
48,139 |
|
|
|
|
|
|
|
|
|
|
912,298 |
|
|
|
|
912,298 |
|
|
Purchases/redemptions of Accenture Canada Holdings Inc.
exchangeable shares and Class X shares |
|
|
|
|
|
|
|
|
|
|
(9) |
|
|
|
|
(4,274) |
|
|
|
|
|
|
|
|
|
|
(4,274) |
|
|
|
|
(4,274) |
|
|
Issuances of Class A shares for employee share
programs |
|
|
|
|
|
|
5,826 |
|
|
|
|
|
|
(1,230,304) |
|
|
1,389,803 |
|
|
645,588 |
|
|
2,527 |
|
|
(103,889) |
|
|
|
|
701,198 |
|
|
679 |
|
|
701,877 |
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
53,957 |
|
|
|
|
|
|
|
|
(1,282,426) |
|
|
|
|
(1,228,469) |
|
|
(1,322) |
|
|
(1,229,791) |
|
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,821 |
|
|
|
|
|
|
|
|
|
|
11,821 |
|
|
(13,315) |
|
|
(1,494) |
|
|
Balance as of February 28, 2022 |
$ |
57 |
|
|
40 |
|
|
$ |
15 |
|
|
662,417 |
|
|
$ |
— |
|
|
504 |
|
|
$ |
1,438,596 |
|
|
$ |
10,065,790 |
|
|
$ |
(5,297,349) |
|
|
(29,035) |
|
|
$ |
16,028,399 |
|
|
$ |
(1,675,485) |
|
|
$ |
20,560,023 |
|
|
$ |
596,956 |
|
|
$ |
21,156,979 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
(In thousands of U.S. dollars)
|
|
|
ACCENTURE
FORM 10-Q
|
|
10
|
|
|
|
|
|
Consolidated Cash Flows Statements
For the Six Months Ended February 28, 2023 and 2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2023 |
|
February 28, 2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net income |
$ |
3,546,983 |
|
|
$ |
3,477,259 |
|
|
Adjustments to reconcile Net income to Net cash provided by (used
in) operating activities — |
|
|
|
|
Depreciation, amortization and other |
1,038,705 |
|
|
1,029,125 |
|
|
Share-based compensation expense |
1,057,339 |
|
|
912,298 |
|
|
|
|
|
|
|
|
|
|
Deferred tax expense (benefit) |
(92,295) |
|
|
(15,670) |
|
|
Other, net |
57,334 |
|
|
(110,458) |
|
|
Change in assets and liabilities, net of acquisitions — |
|
|
|
|
Receivables and contract assets, current and
non-current |
(358,519) |
|
|
(1,800,345) |
|
|
Other current and non-current assets |
(535,273) |
|
|
(610,693) |
|
|
Accounts payable |
(151,738) |
|
|
(45,475) |
|
|
Deferred revenues, current and non-current |
419,313 |
|
|
570,558 |
|
|
Accrued payroll and related benefits |
(1,713,468) |
|
|
(541,474) |
|
|
Income taxes payable, current and non-current |
(110,828) |
|
|
255,397 |
|
|
Other current and non-current liabilities |
(332,044) |
|
|
(434,158) |
|
|
Net cash provided by (used in) operating activities |
2,825,509 |
|
|
2,686,364 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
(206,378) |
|
|
(346,331) |
|
|
Purchases of businesses and investments, net of cash
acquired |
(1,076,987) |
|
|
(1,848,774) |
|
|
Proceeds from the sale of businesses and investments, net of cash
transferred |
17,875 |
|
|
3,561 |
|
|
|
|
|
|
Other investing, net |
5,119 |
|
|
6,461 |
|
|
Net cash provided by (used in) investing activities |
(1,260,371) |
|
|
(2,185,083) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds from issuance of shares |
807,621 |
|
|
701,877 |
|
|
Purchases of shares |
(2,536,913) |
|
|
(2,538,720) |
|
|
Proceeds from (repayments of) long-term debt, net |
(408) |
|
|
(8,877) |
|
|
Cash dividends paid |
(1,413,589) |
|
|
(1,229,791) |
|
|
Other financing, net |
(48,912) |
|
|
(30,664) |
|
|
Net cash provided by (used in) financing activities |
(3,192,201) |
|
|
(3,106,175) |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
(23,983) |
|
|
(97,164) |
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(1,651,046) |
|
|
(2,702,058) |
|
|
CASH AND CASH EQUIVALENTS,
beginning of period
|
7,889,833 |
|
|
8,168,174 |
|
|
CASH AND CASH EQUIVALENTS,
end of period
|
$ |
6,238,787 |
|
|
$ |
5,466,116 |
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
Income taxes paid, net |
$ |
1,318,515 |
|
|
$ |
874,413 |
|
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
11
|
|
|
|
|
|
1. Basis of Presentation
The accompanying unaudited interim Consolidated Financial
Statements of Accenture plc and its controlled subsidiary companies
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”) for quarterly reports on
Form 10-Q and do not include all of the information and note
disclosures required by U.S. generally accepted accounting
principles (“U.S. GAAP”) for complete financial statements. We use
the terms “Accenture,” “we” and “our” in the Notes to Consolidated
Financial Statements to refer to Accenture plc and its
subsidiaries. These Consolidated Financial Statements should
therefore be read in conjunction with the Consolidated Financial
Statements and Notes thereto for the fiscal year ended
August 31, 2022 included in our Annual Report on Form 10-K
filed with the SEC on October 12, 2022.
The accompanying unaudited interim Consolidated Financial
Statements have been prepared in accordance with U.S. GAAP, which
requires management to make estimates and assumptions that affect
amounts reported in the Consolidated Financial Statements and
accompanying disclosures. Although these estimates are based on
management’s best knowledge of current events and actions that we
may undertake in the future, actual results may differ from those
estimates. The Consolidated Financial Statements reflect all
adjustments of a normal, recurring nature that are, in the opinion
of management, necessary for a fair presentation of results for
these interim periods. The results of operations for the three and
six months ended February 28, 2023 are not necessarily indicative
of the results that may be expected for the fiscal year ending
August 31, 2023.
Allowance for Credit Losses—Client Receivables and Contract
Assets
As of February 28, 2023 and August 31, 2022, the total
allowance for credit losses recorded for client receivables and
contract assets was $25,737 and $25,786, respectively. The change
in the allowance is primarily due to immaterial write-offs and
changes in gross client receivables and contract
assets.
Investments
All available-for-sale securities and liquid investments with an
original maturity greater than three months but less than one year
are considered to be Short-term investments. Non-current
investments consist of equity securities in publicly-traded and
privately-held companies and are accounted for using either the
equity or fair value measurement alternative method of accounting
(for investments without readily determinable fair
values).
Our non-current investments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2023 |
|
August 31, 2022 |
|
Equity method investments |
$ |
168,812 |
|
|
$ |
164,164 |
|
|
Investments without readily determinable fair values |
156,439 |
|
|
153,808 |
|
|
Total non-current investments |
$ |
325,251 |
|
|
$ |
317,972 |
|
For investments in which we can exercise significant influence but
do not control, we use the equity method of accounting. Equity
method investments are initially recorded at cost and our
proportionate share of gains and losses of the investee are
included as a component of Other income (expense), net. Our equity
method investments consist primarily of an investment in Duck Creek
Technologies. As of February 28, 2023, the carrying amount of
our investment was $143,700, and the estimated fair value of our
approximately 16% ownership was $400,355. We account for the
investment under the equity method because we have the ability to
influence operations through the combination of our voting power
and through other factors, such as representation on the board and
our business relationship.
On January 9, 2023, Duck Creek Technologies announced an agreement
to be acquired by Vista Equity Partners for $19.00 per share. The
transaction is expected to close in the first half of calendar year
2023, subject to the satisfaction of customary closing
conditions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
12
|
|
|
|
|
|
Depreciation and Amortization
As of February 28, 2023 and August 31, 2022, total
accumulated depreciation was $2,694,138 and $2,490,187,
respectively. See table below for summary of depreciation on fixed
assets, deferred transition amortization, intangible assets
amortization and operating lease cost for the three and six months
ended February 28, 2023 and 2022, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
Depreciation |
$ |
137,742 |
|
|
$ |
149,872 |
|
|
$ |
281,791 |
|
|
$ |
288,665 |
|
|
Amortization - Deferred transition |
85,160 |
|
|
68,331 |
|
|
155,600 |
|
|
135,537 |
|
|
Amortization - Intangible assets |
120,212 |
|
|
115,831 |
|
|
229,281 |
|
|
218,373 |
|
|
Operating lease cost |
184,226 |
|
|
192,869 |
|
|
364,728 |
|
|
383,111 |
|
|
Other |
5,136 |
|
|
1,357 |
|
|
7,305 |
|
|
3,439 |
|
|
Total depreciation, amortization and other |
$ |
532,476 |
|
|
$ |
528,260 |
|
|
$ |
1,038,705 |
|
|
$ |
1,029,125 |
|
Business Optimization
During the second quarter of fiscal 2023, we initiated actions to
streamline our operations, transform our non-billable corporate
functions and consolidate our office space to reduce costs. We
expect to record total business optimization costs of approximately
$1.5 billion related to these actions, with approximately $800
million in fiscal 2023 and $700 million in fiscal 2024. This
consists of approximately $1.2 billion of employee severance and
other personnel costs, of which we expect to incur $500 million in
fiscal 2023 and the remaining $700 million in fiscal 2024. The
actual amount and timing of costs are dependent in part upon local
country consultation processes and regulations and may differ from
our current expectations and estimates. Additionally, we expect to
incur $300 million of costs related to the consolidation of office
space, the majority of which is expected to be recorded in fiscal
2023.
We recorded $244,390 of business optimization costs during the
second quarter of fiscal 2023, primarily for employee
severance.
Total business optimization costs for the three and six months
ended February 28, 2023 were $176,980 for North America, $40,377
for Europe and $27,033 for Growth Markets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
13
|
|
|
|
|
|
2. Revenues
Disaggregation of Revenue
See Note 11 (Segment Reporting) to these Consolidated Financial
Statements for our disaggregated revenues.
Remaining Performance Obligations
We had remaining performance obligations of approximately $27
billion and $24 billion as of February 28, 2023 and
August 31, 2022, respectively. Our remaining performance
obligations represent the amount of transaction price for which
work has not been performed and revenue has not been recognized.
The majority of our contracts are terminable by the client on short
notice with little or no termination penalties, and some without
notice. Under Topic 606, only the non-cancelable portion of these
contracts is included in our performance obligations. Additionally,
our performance obligations only include variable consideration if
we assess it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty is resolved.
Based on the terms of our contracts, a significant portion of what
we consider contract bookings is not included in our remaining
performance obligations. We expect to recognize approximately 52%
of our remaining performance obligations as of February 28,
2023 as revenue in fiscal 2023, an additional 24% in fiscal 2024,
and the balance thereafter.
Contract Estimates
Adjustments in contract estimates related to performance
obligations satisfied or partially satisfied in prior periods were
immaterial for the three and six months ended February 28, 2023 and
2022.
Contract Balances
Deferred transition revenues were $726,092 and $712,715
as of February 28, 2023 and August 31, 2022,
respectively, and are included in Non-current deferred revenues.
Costs related to these activities are also deferred and are
expensed as the services are provided. Deferred transition costs
were $850,522 and $807,940 as of February 28, 2023 and
August 31, 2022, respectively, and are included in Deferred
contract costs. Generally, deferred amounts are protected in the
event of early termination of the contract and are monitored
regularly for impairment. Impairment losses are recorded when
projected remaining undiscounted operating cash flows of the
related contract are not sufficient to recover the carrying amount
of contract assets.
The following table provides information about the balances of our
Receivables and Contract assets, net of allowance, and Contract
liabilities (Deferred revenues):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of February 28, 2023 |
|
As of August 31, 2022 |
|
Receivables |
$ |
10,997,530 |
|
|
$ |
10,484,211 |
|
|
Contract assets (current) |
1,501,638 |
|
|
1,292,564 |
|
|
Receivables and contract assets, net of allowance
(current) |
12,499,168 |
|
|
11,776,775 |
|
|
Contract assets (non-current) |
75,423 |
|
|
46,844 |
|
|
Deferred revenues (current) |
5,112,570 |
|
|
4,478,048 |
|
|
Deferred revenues (non-current) |
726,092 |
|
|
712,715 |
|
Changes in the contract asset and liability balances during the six
months ended February 28, 2023 were a result of normal business
activity and not materially impacted by any other
factors.
Revenues recognized during the three and six months ended February
28, 2023 that were included in Deferred revenues as of November 30,
2022 and August 31, 2022 were $2.5 billion and $3.3 billion,
respectively. Revenues recognized during the three and six months
ended February 28, 2022 that were included in Deferred revenues as
of November 30, 2021 and August 31, 2021 were $2.3 billion and
$3.2 billion, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
14
|
|
|
|
|
|
3. Earnings Per Share
Basic and diluted earnings per share are calculated as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
Basic earnings per share |
|
|
|
|
|
|
|
|
Net income attributable to Accenture plc |
$ |
1,523,648 |
|
|
$ |
1,634,942 |
|
|
$ |
3,488,598 |
|
|
$ |
3,425,966 |
|
|
Basic weighted average Class A ordinary shares |
630,845,147 |
|
|
633,956,712 |
|
|
630,485,134 |
|
|
633,108,627 |
|
|
Basic earnings per share |
$ |
2.42 |
|
|
$ |
2.58 |
|
|
$ |
5.53 |
|
|
$ |
5.41 |
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
Net income attributable to Accenture plc |
$ |
1,523,648 |
|
|
$ |
1,634,942 |
|
|
$ |
3,488,598 |
|
|
$ |
3,425,966 |
|
|
Net income attributable to noncontrolling interests in Accenture
Canada Holdings Inc. (1) |
1,604 |
|
|
1,742 |
|
|
3,689 |
|
|
3,676 |
|
|
Net income for diluted earnings per share calculation |
$ |
1,525,252 |
|
|
$ |
1,636,684 |
|
|
$ |
3,492,287 |
|
|
$ |
3,429,642 |
|
|
Basic weighted average Class A ordinary shares |
630,845,147 |
|
|
633,956,712 |
|
|
630,485,134 |
|
|
633,108,627 |
|
|
Class A ordinary shares issuable upon redemption/exchange of
noncontrolling interests (1) |
664,218 |
|
|
675,417 |
|
|
666,479 |
|
|
679,187 |
|
|
Diluted effect of employee compensation related to Class A
ordinary shares |
5,865,118 |
|
|
9,013,734 |
|
|
6,861,930 |
|
|
10,377,945 |
|
|
Diluted effect of share purchase plans related to Class A
ordinary shares |
360,907 |
|
|
481,230 |
|
|
337,236 |
|
|
456,843 |
|
|
Diluted weighted average Class A ordinary shares |
637,735,390 |
|
|
644,127,093 |
|
|
638,350,779 |
|
|
644,622,602 |
|
|
Diluted earnings per share |
$ |
2.39 |
|
|
$ |
2.54 |
|
|
$ |
5.47 |
|
|
$ |
5.32 |
|
(1)Diluted
earnings per share assumes the exchange of all Accenture Canada
Holdings Inc. exchangeable shares for Accenture plc Class A
ordinary shares on a one-for-one basis. The income effect does not
take into account “Net income attributable to noncontrolling
interests - other,” since those shares are not redeemable or
exchangeable for Accenture plc Class A ordinary
shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
15
|
|
|
|
|
|
4. Accumulated Other Comprehensive Loss
The following table summarizes the changes in the accumulated
balances for each component of accumulated other comprehensive loss
attributable to Accenture plc:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
Foreign currency translation |
|
|
|
|
|
|
|
|
Beginning balance |
$ |
(1,768,152) |
|
|
$ |
(1,195,827) |
|
|
$ |
(1,852,320) |
|
|
$ |
(975,064) |
|
|
Foreign
currency translation |
117,726 |
|
|
7,845 |
|
|
204,710 |
|
|
(219,248) |
|
|
Income
tax benefit (expense) |
(2,631) |
|
|
1,637 |
|
|
(2,631) |
|
|
2,367 |
|
|
Portion
attributable to noncontrolling interests |
(2,470) |
|
|
(72) |
|
|
(5,286) |
|
|
5,528 |
|
|
Foreign
currency translation, net of tax |
112,625 |
|
|
9,410 |
|
|
196,793 |
|
|
(211,353) |
|
|
Ending balance |
(1,655,527) |
|
|
(1,186,417) |
|
|
(1,655,527) |
|
|
(1,186,417) |
|
|
|
|
|
|
|
|
|
|
Defined benefit plans |
|
|
|
|
|
|
|
|
Beginning balance |
(257,091) |
|
|
(572,919) |
|
|
(348,771) |
|
|
(559,958) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassifications
into net periodic pension and
post-retirement
expense |
8,719 |
|
|
12,850 |
|
|
134,890 |
|
|
(4,698) |
|
|
Income
tax benefit (expense) |
(2,174) |
|
|
(3,306) |
|
|
(36,568) |
|
|
1,267 |
|
|
Portion
attributable to noncontrolling interests |
(6) |
|
|
(10) |
|
|
(103) |
|
|
4 |
|
|
Defined
benefit plans, net of tax |
6,539 |
|
|
9,534 |
|
|
98,219 |
|
|
(3,427) |
|
|
Ending balance |
(250,552) |
|
|
(563,385) |
|
|
(250,552) |
|
|
(563,385) |
|
|
|
|
|
|
|
|
|
|
Cash flow hedges |
|
|
|
|
|
|
|
|
Beginning balance |
(30,429) |
|
|
61,510 |
|
|
10,749 |
|
|
115,525 |
|
|
Unrealized
gain (loss) |
(32,837) |
|
|
39,162 |
|
|
(92,716) |
|
|
6,054 |
|
|
Reclassification
adjustments into Cost of services |
18,000 |
|
|
(22,959) |
|
|
20,606 |
|
|
(50,693) |
|
|
Income
tax benefit (expense) |
7,068 |
|
|
(3,382) |
|
|
23,119 |
|
|
3,387 |
|
|
Portion
attributable to noncontrolling interests |
7 |
|
|
(14) |
|
|
51 |
|
|
44 |
|
|
Cash
flow hedges, net of tax |
(7,762) |
|
|
12,807 |
|
|
(48,940) |
|
|
(41,208) |
|
|
Ending balance (1) |
(38,191) |
|
|
74,317 |
|
|
(38,191) |
|
|
74,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
$ |
(1,944,270) |
|
|
$ |
(1,675,485) |
|
|
$ |
(1,944,270) |
|
|
$ |
(1,675,485) |
|
(1)As
of February 28, 2023, $19,684 of net unrealized losses related
to derivatives designated as cash flow hedges is expected to be
reclassified into Cost of services in the next twelve
months.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
16
|
|
|
|
|
|
5. Business Combinations
During the six months ended February 28, 2023, we completed
individually immaterial acquisitions for total consideration of
$1,069,298, net of cash acquired. The pro forma effects of these
acquisitions on our operations were not material.
6. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by reportable
operating segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
2022 |
|
Additions/
Adjustments |
|
Foreign
Currency
Translation |
|
February 28,
2023 |
|
North America |
$ |
7,744,582 |
|
|
$ |
255,553 |
|
|
$ |
(15,138) |
|
|
$ |
7,984,997 |
|
|
Europe |
4,134,091 |
|
|
274,694 |
|
|
197,005 |
|
|
4,605,790 |
|
|
Growth Markets |
1,254,620 |
|
|
357,274 |
|
|
(12,023) |
|
|
1,599,871 |
|
|
Total |
$ |
13,133,293 |
|
|
$ |
887,521 |
|
|
$ |
169,844 |
|
|
$ |
14,190,658 |
|
Goodwill includes immaterial adjustments related to prior period
acquisitions.
Intangible Assets
Our definite-lived intangible assets by major asset class are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2022 |
|
February 28, 2023 |
|
Intangible Asset Class |
|
Gross Carrying Amount |
|
Accumulated Amortization |
|
Net Carrying Amount |
|
Gross Carrying Amount |
|
Accumulated Amortization |
|
Net Carrying Amount |
|
Customer-related |
|
$ |
2,498,001 |
|
|
$ |
(842,056) |
|
|
$ |
1,655,945 |
|
|
$ |
2,690,751 |
|
|
$ |
(943,805) |
|
|
$ |
1,746,946 |
|
|
Technology |
|
283,251 |
|
|
(96,782) |
|
|
186,469 |
|
|
286,434 |
|
|
(114,239) |
|
|
172,195 |
|
|
Patents |
|
126,950 |
|
|
(70,745) |
|
|
56,205 |
|
|
127,244 |
|
|
(72,061) |
|
|
55,183 |
|
|
Other |
|
62,875 |
|
|
(30,686) |
|
|
32,189 |
|
|
68,680 |
|
|
(37,060) |
|
|
31,620 |
|
|
Total |
|
$ |
2,971,077 |
|
|
$ |
(1,040,269) |
|
|
$ |
1,930,808 |
|
|
$ |
3,173,109 |
|
|
$ |
(1,167,165) |
|
|
$ |
2,005,944 |
|
Total amortization related to our intangible assets was $120,212
and $229,281 for the three and six months ended February 28, 2023,
respectively. Total amortization related to our intangible assets
was $115,831 and $218,373 for the three and six months ended
February 28, 2022, respectively. Estimated future amortization
related to intangible assets held as of February 28, 2023 is
as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year |
|
Estimated Amortization |
|
Remainder of 2023 |
|
$ |
222,576 |
|
|
2024 |
|
386,493 |
|
|
2025 |
|
350,365 |
|
|
2026 |
|
301,701 |
|
|
2027 |
|
238,727 |
|
|
Thereafter |
|
506,082 |
|
|
Total |
|
$ |
2,005,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
17
|
|
|
|
|
|
7. Shareholders’ Equity
Cancellation of Treasury Shares
During the six months ended February 28, 2023, we cancelled
8,828,496 Accenture plc Class A ordinary shares that were held as
treasury shares and had an aggregate cost of $2,595,281. The effect
of the cancellation of these treasury shares was recognized in
Class A ordinary shares and Additional paid-in capital with the
residual recorded in Retained earnings. There was no effect on
total shareholders’ equity as a result of this
cancellation.
Dividends
Our dividend activity during the six months ended February 28, 2023
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Per
Share |
|
Accenture plc Class A
Ordinary Shares |
|
Accenture Canada Holdings
Inc. Exchangeable Shares |
|
Total Cash
Outlay |
|
Dividend Payment Date |
|
|
Record Date |
|
Cash Outlay |
|
Record Date |
|
Cash Outlay |
|
|
November 15, 2022 |
|
$ |
1.12 |
|
|
October 13, 2022 |
|
$ |
704,938 |
|
|
October 11, 2022 |
|
$ |
629 |
|
|
$ |
705,567 |
|
|
February 15, 2023 |
|
1.12 |
|
|
January 12, 2023 |
|
707,156 |
|
|
January 10, 2023 |
|
866 |
|
|
708,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Dividends |
|
|
|
|
|
$ |
1,412,094 |
|
|
|
|
$ |
1,495 |
|
|
$ |
1,413,589 |
|
The payment of cash dividends includes the net effect of $56,402 of
additional restricted stock units being issued as a part of our
share plans, which resulted in 195,372 restricted share units being
issued.
Subsequent Event
On March 22, 2023, the Board of Directors of Accenture
plc declared a quarterly cash dividend of $1.12 per share
on our Class A ordinary shares for shareholders of record at the
close of business on April 13, 2023 payable
on May 15, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
18
|
|
|
|
|
|
8. Financial Instruments
Derivatives
In the normal course of business, we use derivative financial
instruments to manage foreign currency exchange rate risk. Our
derivative financial instruments consist of deliverable and
non-deliverable foreign currency forward contracts.
Cash Flow Hedges
For a cash flow hedge, the effective portion of the change in
estimated fair value of a hedging instrument is recorded in
Accumulated other comprehensive loss as a separate component of
Shareholders’ Equity and is reclassified into Cost of services in
the Consolidated Income Statements during the period in which the
hedged transaction is recognized. For information related to
derivatives designated as cash flow hedges that were reclassified
into Cost of services during the three and six months ended
February 28, 2023 and 2022, as well as those expected to be
reclassified into Cost of services in the next 12 months, see Note
4 (Accumulated Other Comprehensive Loss) to these Consolidated
Financial Statements.
Other Derivatives
Realized gains or losses and changes in the estimated fair value of
foreign currency forward contracts that have not been designated as
hedges were net gains of $7,431 and net losses of $22,260 for the
three and six months ended February 28, 2023, respectively, and net
losses of $13,048 and $36,527 for the three and six months ended
February 28, 2022, respectively. Gains and losses on these
contracts are recorded in Other income (expense), net in the
Consolidated Income Statements and are offset by gains and losses
on the related hedged items.
Fair Value of Derivative Instruments
The notional and fair values of all derivative instruments are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2023 |
|
August 31, 2022 |
|
Assets |
|
|
|
|
Cash Flow Hedges |
|
|
|
|
Other current assets |
$ |
51,224 |
|
|
$ |
89,867 |
|
|
Other non-current assets |
36,255 |
|
|
69,209 |
|
|
Other Derivatives |
|
|
|
|
Other current assets |
8,002 |
|
|
8,657 |
|
|
Total assets |
$ |
95,481 |
|
|
$ |
167,733 |
|
|
Liabilities |
|
|
|
|
Cash Flow Hedges |
|
|
|
|
Other accrued liabilities |
$ |
70,908 |
|
|
$ |
61,156 |
|
|
Other non-current liabilities |
31,003 |
|
|
42,537 |
|
|
Other Derivatives |
|
|
|
|
Other accrued liabilities |
42,979 |
|
|
83,792 |
|
|
Total liabilities |
$ |
144,890 |
|
|
$ |
187,485 |
|
|
Total fair value |
$ |
(49,409) |
|
|
$ |
(19,752) |
|
|
Total notional value |
$ |
11,874,339 |
|
|
$ |
11,095,604 |
|
We utilize standard counterparty master agreements containing
provisions for the netting of certain foreign currency transaction
obligations and for the set-off of certain obligations in the event
of an insolvency of one of the parties to the transaction. In the
Consolidated Balance Sheets, we record derivative assets and
liabilities at gross fair value. The potential effect of netting
derivative assets against liabilities under the counterparty master
agreements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2023 |
|
August 31, 2022 |
|
Net derivative assets |
$ |
38,490 |
|
|
$ |
140,073 |
|
|
Net derivative liabilities |
87,899 |
|
|
159,825 |
|
|
Total fair value |
$ |
(49,409) |
|
|
$ |
(19,752) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
19
|
|
|
|
|
|
9. Income Taxes
We apply an estimated annual effective tax rate to our year-to-date
operating results to determine the interim provision for income tax
expense. In addition, we recognize taxes related to unusual or
infrequent items or resulting from a change in judgment regarding a
position taken in a prior year as discrete items in the interim
period in which the event occurs.
Our effective tax rates for the three months ended February 28,
2023 and 2022 were 20.4% and 19.2%, respectively. The higher
effective tax rate for the three months ended February 28, 2023 was
primarily due to lower tax benefits from share-based payments,
partially offset by lower tax expense from changes in the
geographic distribution of earnings. Our effective tax rate for
both the six months ended February 28, 2023 and 2022 was 22.0%. The
business optimization costs of $244,390 and related reduction in
tax expense of $51,515 did not significantly impact our effective
tax rates for the second quarter of fiscal 2023 or six months ended
February 28, 2023.
10. Commitments and Contingencies
Indemnifications and Guarantees
In the normal course of business and in conjunction with certain
client engagements, we have entered into contractual arrangements
through which we may be obligated to indemnify clients with respect
to certain matters.
As of February 28, 2023 and August 31, 2022, our
aggregate potential liability to our clients for expressly limited
guarantees involving the performance of third parties was
approximately $1,638,000 and $1,349,000, respectively, of which all
but approximately $50,000 and $49,000, respectively, may be
recovered from the other third parties if we are obligated to make
payments to the indemnified parties as a consequence of a
performance default by the other third parties. For arrangements
with unspecified limitations, we cannot reasonably estimate the
aggregate maximum potential liability, as it is inherently
difficult to predict the maximum potential amount of such payments,
due to the conditional nature and unique facts of each particular
arrangement.
As of February 28, 2023 and August 31, 2022, we have
issued or provided guarantees in the form of letters of credit and
surety bonds of $1,143,983 and $1,116,298, respectively, the
majority of which support certain contracts that require us to
provide them as a guarantee of our performance. These guarantees
are typically renewed annually and remain in place until the
contractual obligations are satisfied. In general, we would only be
liable for these guarantees in the event we defaulted in performing
our obligations under each contract, the probability of which we
believe is remote.
To date, we have not been required to make any significant payment
under any of the arrangements described above. We have assessed the
current status of performance/payment risk related to arrangements
with limited guarantees, warranty obligations, unspecified
limitations, indemnification provisions, letters of credit and
surety bonds, and believe that any potential payments would be
immaterial to the Consolidated Financial Statements, as a
whole.
Legal Contingencies
As of February 28, 2023, we or our present personnel had been
named as a defendant in various litigation matters. We and/or our
personnel also from time to time are involved in investigations by
various regulatory or legal authorities concerning matters arising
in the course of our business around the world. Based on the
present status of these matters, management believes the range of
reasonably possible losses in addition to amounts accrued, net of
insurance recoveries, will not have a material effect on our
results of operations or financial condition.
On July 24, 2019, Accenture was named in a putative class action
lawsuit filed by consumers of Marriott International, Inc.
(“Marriott”) in the U.S. District Court for the District of
Maryland. The complaint alleges negligence by us, and seeks
monetary damages, costs and attorneys’ fees and other related
relief, relating to a data security incident involving unauthorized
access to the reservations database of Starwood Worldwide Resorts,
Inc. (“Starwood”), which was acquired by Marriott on September 23,
2016. Since 2009, we have provided certain IT infrastructure
outsourcing services to Starwood. On October 27, 2020, the court
issued an order largely denying Accenture’s motion to dismiss the
claims against us. On May 3, 2022, the court issued an order
granting in part the plaintiffs’ motion for class certification,
which we are appealing. We continue to believe the lawsuit is
without merit and we will vigorously defend it. At present, we do
not believe any losses from this matter will have a material effect
on our results of operations or financial condition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts
or as otherwise disclosed)
|
|
|
ACCENTURE
FORM 10-Q
|
|
20
|
|
|
|
|
|
11. Segment Reporting
Our reportable segments are our three geographic markets, which are
North America, Europe and Growth Markets. Information regarding
reportable segments, industry groups and type of work is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
Geographic Markets |
|
|
|
|
|
|
|
|
North America |
$ |
7,397,874 |
|
|
$ |
7,077,036 |
|
|
$ |
15,020,694 |
|
|
$ |
13,984,251 |
|
|
Europe |
5,300,169 |
|
|
5,009,885 |
|
|
10,372,219 |
|
|
10,109,953 |
|
|
Growth Markets |
3,116,115 |
|
|
2,959,772 |
|
|
6,169,047 |
|
|
5,917,642 |
|
|
Total Revenues |
$ |
15,814,158 |
|
|
$ |
15,046,693 |
|
|
$ |
31,561,960 |
|
|
$ |
30,011,846 |
|
|
Industry Groups (1) |
|
|
|
|
|
|
|
|
Communications, Media & Technology |
$ |
2,884,802 |
|
|
$ |
2,998,970 |
|
|
$ |
5,865,005 |
|
|
$ |
5,896,265 |
|
|
Financial Services |
3,002,867 |
|
|
2,872,158 |
|
|
5,966,263 |
|
|
5,789,878 |
|
|
Health & Public Service |
3,023,595 |
|
|
2,686,853 |
|
|
6,023,614 |
|
|
5,416,887 |
|
|
Products |
4,718,572 |
|
|
4,522,967 |
|
|
9,384,360 |
|
|
8,990,864 |
|
|
Resources |
2,184,322 |
|
|
1,965,745 |
|
|
4,322,718 |
|
|
3,917,952 |
|
|
Total Revenues |
$ |
15,814,158 |
|
|
$ |
15,046,693 |
|
|
$ |
31,561,960 |
|
|
$ |
30,011,846 |
|
|
TYPE OF WORK |
|
|
|
|
|
|
|
|
Consulting |
$ |
8,278,763 |
|
|
$ |
8,322,202 |
|
|
$ |
16,723,130 |
|
|
$ |
16,714,611 |
|
|
Managed Services (2) |
7,535,395 |
|
|
6,724,491 |
|
|
14,838,830 |
|
|
13,297,235 |
|
|
Total Revenues |
$ |
15,814,158 |
|
|
$ |
15,046,693 |
|
|
$ |
31,561,960 |
|
|
$ |
30,011,846 |
|
(1)Effective
June 1, 2022, we revised the reporting of our industry groups for
the movement of Aerospace & Defense from Communications, Media
& Technology to Products. Prior period amounts have been
reclassified to conform with the current period
presentation.
(2)Previously
referred to as our outsourcing business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
February 28, 2023 |
|
February 28, 2022 |
|
February 28, 2023 |
|
February 28, 2022 |
|
Geographic Markets |
|
|
|
|
|
|
|
|
North America |
$ |
823,858 |
|
|
$ |
1,090,910 |
|
|
$ |
2,133,741 |
|
|
$ |
2,335,327 |
|
|
Europe |
573,633 |
|
|
531,629 |
|
|
1,263,633 |
|
|
1,276,485 |
|
|
Growth Markets |
547,090 |
|
|
439,041 |
|
|
1,140,307 |
|
|
884,062 |
|
|
Total Operating Income |
$ |
1,944,581 |
|
|
$ |
2,061,580 |
|
|
$ |
4,537,681 |
|
|
$ |
4,495,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
21
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis should be read in conjunction
with our Consolidated Financial Statements and related Notes
included elsewhere in this Quarterly Report on Form 10-Q and in our
Annual Report on Form 10-K for the year ended August 31, 2022,
and with the information under the heading “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
our Annual Report on Form 10-K for the year ended August 31,
2022.
We use the terms “Accenture,” “we,” “our” and “us” in this report
to refer to Accenture plc and its subsidiaries. All references to
years, unless otherwise noted, refer to our fiscal year, which ends
on August 31. For example, a reference to “fiscal 2023” means
the 12-month period that will end on August 31, 2023. All
references to quarters, unless otherwise noted, refer to the
quarters of our fiscal year.
We use the term “in local currency” so that certain financial
results may be viewed without the impact of foreign currency
exchange rate fluctuations, thereby facilitating period-to-period
comparisons of business performance. Financial results “in local
currency” are calculated by restating current period activity into
U.S. dollars using the comparable prior year period’s foreign
currency exchange rates. This approach is used for all results
where the functional currency is not the U.S. dollar.
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934 (the “Exchange Act”) relating to our operations, results of
operations and other matters that are based on our current
expectations, estimates, assumptions and projections. Words such as
“may,” “will,” “should,” “likely,” “anticipates,” “aspires,”
“expects,” “intends,” “plans,” “projects,” “believes,” “estimates,”
“positioned,” “outlook,” “goal,” “target,” and similar expressions
are used to identify these forward-looking statements. These
statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict.
Forward-looking statements are based upon assumptions as to future
events that may not prove to be accurate. Actual outcomes and
results may differ materially from what is expressed or forecast in
these forward-looking statements. Risks, uncertainties and other
factors that might cause such differences, some of which could be
material, include but are not limited
to those identified below.
Business Risks
•Our
results of operations have been, and may in the future be,
adversely affected by volatile, negative or uncertain economic and
political conditions and the effects of these conditions on our
clients’ businesses and levels of business activity.
•Our
business depends on generating and maintaining client demand for
our services and solutions, including through the adaptation and
expansion of our services and solutions in response to ongoing
changes in technology and offerings, and a significant reduction in
such demand or an inability to respond to the evolving
technological environment could materially affect our results of
operations.
•If
we are unable to match people and their skills with client demand
around the world and attract and retain professionals with strong
leadership skills, our business, the utilization rate of our
professionals and our results of operations may be materially
adversely affected.
•We
face legal, reputational and financial risks from any failure to
protect client and/or Accenture data from security incidents or
cyberattacks.
•The
markets in which we operate are highly competitive, and we might
not be able to compete effectively.
•Our
ability to attract and retain business and employees may depend on
our reputation in the marketplace.
•Our
environmental, social and governance (ESG) commitments and
disclosures may expose us to reputational risks and legal
liability.
•If
we do not successfully manage and develop our relationships with
key ecosystem partners or if we fail to anticipate and establish
new alliances in new technologies, our results of operations could
be adversely affected.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
22
|
Financial Risks
•Our
profitability could materially suffer if we are unable to obtain
favorable pricing for our services and solutions, if we are unable
to remain competitive, if our cost-management strategies are
unsuccessful or if we experience delivery inefficiencies or fail to
satisfy certain agreed-upon targets or specific service
levels.
•Changes
in our level of taxes, as well as audits, investigations and tax
proceedings, or changes in tax laws or in their interpretation or
enforcement, could have a material adverse effect on our effective
tax rate, results of operations, cash flows and financial
condition.
•Our
results of operations could be materially adversely affected by
fluctuations in foreign currency exchange rates.
•Changes
to accounting standards or in the estimates and assumptions we make
in connection with the preparation of our consolidated financial
statements could adversely affect our financial
results.
Operational Risks
•As
a result of our geographically diverse operations and strategy to
continue to grow in key markets around the world, we are more
susceptible to certain risks.
•If
we are unable to manage the organizational challenges associated
with our size, we might be unable to achieve our business
objectives.
•We
might not be successful at acquiring, investing in or integrating
businesses, entering into joint ventures or divesting
businesses.
Legal and Regulatory Risks
•Our
business could be materially adversely affected if we incur legal
liability.
•Our
global operations expose us to numerous and sometimes conflicting
legal and regulatory requirements, and violation of these
regulations could harm our business.
•Our
work with government clients exposes us to additional risks
inherent in the government contracting environment.
•If
we are unable to protect or enforce our intellectual property
rights, or if our services or solutions infringe upon the
intellectual property rights of others or we lose our ability to
utilize the intellectual property of others, our business could be
adversely affected.
•We
are incorporated in Ireland and Irish law differs from the laws in
effect in the United States and might afford less protection to our
shareholders. We may also be subject to criticism and negative
publicity related to our incorporation in Ireland.
For a more detailed discussion of these factors, see the
information under the heading “Risk Factors” in our Annual Report
on Form 10-K for the year ended August 31, 2022. In addition,
the timing and amount of costs related to our business optimization
actions and the nature and extent of benefits realized from such
actions are subject to uncertainties and other factors, including
local country consultation processes and regulations, and may
differ from our current expectations and estimates. Our
forward-looking statements speak only as of the date of this report
or as of the date they are made, and we undertake no obligation to
update any forward-looking statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
23
|
Overview
Accenture is a leading global professional services company,
providing a broad range of services and solutions across Strategy
& Consulting, Technology, Operations, Industry X and Song. We
serve clients in three geographic markets: North America, Europe
and Growth Markets (Asia Pacific, Latin America, Africa and the
Middle East). We combine our strength in technology with industry
experience, functional expertise and global delivery capability to
help the world’s leading businesses, governments and other
organizations build their digital core, optimize their operations,
accelerate revenue growth and enhance citizen services—creating
tangible value at speed and scale.
Our results of operations are affected by economic conditions,
including macroeconomic conditions, the overall inflationary
environment and levels of business confidence. There continues to
be significant economic and geopolitical uncertainty in many
markets around the world, which has impacted and may continue to
impact our business, particularly with regard to wage inflation and
volatility in foreign currency exchange rates. In some cases, these
conditions have slowed the pace and level of client
spending.
Key Metrics
We saw strong demand across our business in the second quarter of
fiscal 2023. Key metrics for the second quarter of fiscal 2023
compared to the second quarter of fiscal 2022 are included below.
We have presented operating margin and diluted earnings per share
on a non-GAAP or “adjusted” basis to exclude the impact of $244
million in business optimization costs recorded during the second
quarter of fiscal 2023. For additional information, see Note 1
(Basis of Presentation) to our Consolidated Financial Statements
under Item 1, “Financial Statements.”
•Revenues
of $15.8 billion,
representing
5%
growth in U.S. dollars and
9% growth in
local currency;
•New
bookings of $22.1 billion,
an increase of 13% in U.S. dollars and 17% in local
currency;
•Operating
margin of 12.3%,
compared to 13.7% in the second quarter of fiscal 2022; adjusted
operating margin expanded 10 basis points to 13.8%;
•Diluted
earnings per share of $2.39,
compared to $2.54 in the second quarter of fiscal 2022; adjusted
earnings per share increased 6% to $2.69; and
•Cash
returned to shareholders of $1.8 billion,
including share purchases of $1.1 billion and dividends of $708
million.
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Percent
Increase
(Decrease)
U.S.
Dollars |
|
Percent
Increase
(Decrease)
Local
Currency |
|
(in billions of U.S. Dollars) |
February 28, 2023 |
February 28, 2022 |
|
|
|
|
|
|
|
|
|
|
|
Geographic Markets |
North America |
$ |
7.4 |
|
$ |
7.1 |
|
|
5 |
% |
|
5 |
% |
|
Europe |
5.3 |
|
5.0 |
|
|
6 |
|
|
12 |
|
|
Growth Markets |
3.1 |
|
3.0 |
|
|
5 |
|
|
14 |
|
|
Total Revenues |
$ |
15.8 |
|
$ |
15.0 |
|
|
5 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industry Groups (1) |
Communications, Media & Technology |
$ |
2.9 |
|
$ |
3.0 |
|
|
(4) |
% |
|
— |
% |
|
Financial Services |
3.0 |
|
2.9 |
|
|
5 |
|
|
10 |
|
|
Health & Public Service |
3.0 |
|
2.7 |
|
|
13 |
|
|
15 |
|
|
Products |
4.7 |
|
4.5 |
|
|
4 |
|
|
9 |
|
|
Resources |
2.2 |
|
2.0 |
|
|
11 |
|
|
16 |
|
|
Total Revenues |
$ |
15.8 |
|
$ |
15.0 |
|
|
5 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Work |
Consulting |
$ |
8.3 |
|
$ |
8.3 |
|
|
(1) |
% |
|
4 |
% |
|
Managed Services (2) |
7.5 |
|
6.7 |
|
|
12 |
|
|
16 |
|
|
Total Revenues |
$ |
15.8 |
|
$ |
15.0 |
|
|
5 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
Amounts in table may not total due to rounding.
(1)Effective
June 1, 2022, we revised the reporting of our industry groups for
the movement of Aerospace & Defense from Communications, Media
& Technology to Products. Prior period amounts have been
reclassified to conform with the current period
presentation.
(2)Previously
referred to as our outsourcing business.
|
|
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|
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|
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|
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|
|
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|
|
ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
24
|
Revenues for the second quarter of fiscal 2023 increased 5% in U.S.
dollars and 9% in local currency compared to the second quarter of
fiscal 2022. Revenues for the six months ended February 28, 2023
increased 5% in U.S. dollars and 12% in local currency compared to
the six months ended February 28, 2022. During the second quarter
of fiscal 2023, revenue growth in local currency was very strong in
Growth Markets and Europe and solid in North America. We
experienced local currency revenue growth that was very strong in
Resources, Health & Public Service and Financial Services,
strong in Products and flat in Communications, Media &
Technology. Revenue growth in local currency was very strong in
managed services and solid in consulting during the second quarter
of fiscal 2023. In the second quarter of fiscal 2023, pricing,
which we define as the contract profitability or margin on the work
that we sell, was relatively stable.
In our consulting business, revenues for the second quarter of
fiscal 2023 decreased 1% in U.S. dollars and increased 4% in local
currency compared to the second quarter of fiscal 2022. Consulting
revenues for the six months ended February 28, 2023 were flat in
U.S. dollars and increased 7% in local currency compared to the six
months ended February 28, 2022. Consulting revenue growth in local
currency for the second quarter of fiscal 2023 was very strong in
Growth Markets, solid in Europe and flat in North America. Our
consulting revenue continues to be driven by helping our clients
accelerate their digital transformation, including moving to the
cloud, embedding security across the enterprise and adopting new
technologies. In addition, clients continue to be focused on
initiatives designed to deliver cost savings and operational
efficiency, as well as projects to accelerate growth and improve
customer experiences.
In our managed services business, revenues for the second quarter
of fiscal 2023 increased 12% in U.S. dollars and 16% in local
currency compared to the second quarter of fiscal 2022. Managed
services revenues for the six months ended February 28, 2023
increased 12% in U.S. dollars and 18% in local currency compared to
the six months ended February 28, 2022. Managed services revenue in
local currency for the second quarter of fiscal 2023 was driven by
very strong growth in Europe, Growth Markets and North America. We
continue to experience growing demand to assist clients with
application modernization and maintenance, cloud enablement and
managed security services. In addition, clients continue to be
focused on transforming their operations through data and
analytics, automation and artificial intelligence to drive
productivity and operational cost savings.
As we are a global company, our revenues are denominated in
multiple currencies and may be significantly affected by currency
exchange rate fluctuations. While a significant portion of our
revenues are in U.S. dollars, the majority of our revenues are
denominated in other currencies, including the Euro, Japanese yen
and U.K. pound. There continues to be volatility in foreign
currency exchange rates. Unfavorable fluctuations in foreign
currency exchange rates have had and could in the future have a
material effect on our financial results. If the U.S. dollar
weakens against other currencies, resulting in favorable currency
translation, our revenues, revenue growth and results of operations
in U.S. dollars may be higher. If the U.S. dollar strengthens
against other currencies, resulting in unfavorable currency
translation, our revenues, revenue growth and results of operations
in U.S. dollars may be lower. The U.S. dollar strengthened against
various currencies during the three and six months ended February
28, 2023 compared to the three and six months ended February 28,
2022, resulting in unfavorable currency translation and U.S. dollar
revenue growth that was approximately 4% and 7% lower,
respectively, than our revenue growth in local currency. Assuming
that exchange rates stay within recent ranges for the remainder of
fiscal 2023, we estimate that our full fiscal 2023 revenue growth
in U.S. dollars will be approximately 4.5% lower than our revenue
growth in local currency.
People Metrics
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Utilization
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Workforce
|
|
Annualized Voluntary Attrition
|
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91%
|
|
738,000+
|
|
12%
|
|
compared to 92% in the second quarter of fiscal 2022
|
|
compared to approximately 699,000 as of February 28,
2022
|
|
compared to 18% in the second quarter of fiscal 2022
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|
Utilization for the second quarter of fiscal 2023 was 91%, compared
to 92% in the second quarter of fiscal 2022. We hire to meet
current and projected future demand. We proactively plan and manage
the size and composition of our workforce and take actions as
needed to address changes in the anticipated demand for our
services and solutions, given that compensation costs are the most
significant portion of our operating expenses. Our workforce, the
majority of which serves our clients, increased to approximately
738,000 as of February 28, 2023, compared to approximately
699,000 as of February 28, 2022. The year-over-year increase
in our workforce reflects demand for our services and solutions, as
well as people added in connection with acquisitions.
While we continue to hire, especially to support our strategic
growth priorities, during the second quarter of fiscal 2023, we
initiated actions to streamline our operations and transform our
non-billable corporate functions to reduce costs. Over the next 18
months, these actions are expected to result in the departure of
approximately 19,000 people (or 2.5% of our current workforce), and
we expect over half of these departures will consist of people in
our non-billable corporate functions.
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ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
25
|
For the second quarter of fiscal 2023, attrition, excluding
involuntary terminations, was 12%, down from 18% in the second
quarter of fiscal 2022. We evaluate voluntary attrition, adjust
levels of new hiring and use involuntary terminations as a means to
keep our supply of skills and resources in balance with changes in
client demand.
In addition, we adjust compensation in order to attract and retain
appropriate numbers of qualified employees. For the majority of our
people, compensation increases become effective December
1st
of each fiscal year. Given the overall inflationary environment,
compensation has been and continues to increase faster than in
prior years. We strive to adjust pricing as well as drive cost and
delivery efficiencies, such as changing the mix of people and
utilizing technology, to reduce the impact of compensation
increases on our margin and contract profitability.
Our ability to grow our revenues and maintain or increase our
margin could be adversely affected if we are unable to: match
people and skills with the types or amounts of services and
solutions clients are demanding; recover or offset increases in
compensation; deploy our employees globally on a timely basis;
manage attrition; and/or effectively assimilate new
employees.
Operating Expenses
The primary categories of operating expenses include Cost of
services, Sales and marketing and General and administrative costs.
Cost of services is primarily driven by the cost of people serving
our clients, which consists mainly of compensation, subcontractor
and other payroll costs, and non-payroll costs on managed services
contracts. Cost of services includes a variety of activities such
as: contract delivery; recruiting and training; software
development; and integration of acquisitions. Sales and marketing
costs are driven primarily by: compensation costs for business
development activities; marketing- and advertising-related
activities; and certain acquisition-related costs. General and
administrative costs primarily include costs for people that are
non-client-facing, information systems, office space and certain
acquisition-related costs.
Gross margin (Revenues less Cost of services as a percentage of
Revenues) for the second quarter of fiscal 2023 was 30.6%, compared
with 30.1% for the second quarter of fiscal 2022. Gross margin for
the six months ended February 28, 2023 was 31.7% compared with
31.5% for the six months ended February 28, 2022. The increase in
gross margin for the second quarter of fiscal 2023 was primarily
due to lower labor costs, including lower subcontractor costs,
partially offset by higher non-payroll costs, primarily for travel.
The increase in gross margin for the six months ended February 28,
2023 was primarily due to lower labor costs, including lower
subcontractor costs.
Sales and marketing and General and administrative costs as a
percentage of revenues were 16.7% for the second quarter of fiscal
2023 and 16.6% for the six months ended February 28, 2023, compared
with 16.4% for the second quarter of fiscal 2022 and 16.5% for the
six months ended February 28, 2022. For the second quarter of
fiscal 2023 and six months ended February 28, 2023, compared to the
same period in fiscal 2022, Sales and marketing costs increased 50
and 30 basis points, respectively. The increase in Sales and
marketing for the second quarter of fiscal 2023 and six months
ended February 28, 2023 was due to higher selling and other
business development costs as a percentage of revenues. For the
second quarter of fiscal 2023 and six months ended February 28,
2023, compared to the same period in fiscal 2022, General and
administrative costs decreased 20 basis points as a percentage of
revenues.
During the three and six months ended February 28, 2023, we
recorded $244 million in business optimization costs, primarily for
employee severance. As part of these business optimization
initiatives, we expect to record total costs of approximately $1.5
billion, with approximately $800 million in fiscal 2023 and $700
million in fiscal 2024. The $1.5 billion is expected to consist of
$1.2 billion of employee severance and other personnel costs and
$300 million related to the consolidation of office space. The
actual amount and timing of costs are dependent in part upon local
country consultation processes and regulations and may differ from
our current expectations and estimates. For additional information,
see Note 1 (Basis of Presentation) to our Consolidated Financial
Statements under Item 1, “Financial Statements.”
Operating margin (Operating income as a percentage of Revenues) for
the second quarter of fiscal 2023 was 12.3%, compared with 13.7%
for the second quarter of fiscal 2022. Operating margin for the six
months ended February 28, 2023 was 14.4%, compared with 15.0% for
the six months ended February 28, 2022. The business optimization
costs recorded in the second quarter of fiscal 2023 decreased
operating margin by 150 and 80 basis points for the second quarter
of fiscal 2023 and six months ended February 28, 2023,
respectively. Excluding these costs, operating margin for the
second quarter of fiscal 2023 and six months ended February 28,
2023 increased 10 and 20 basis points to 13.8% and 15.2%,
respectively.
Effective Tax Rate
The effective tax rates for the second quarter of fiscal 2023 and
2022 were 20.4% and 19.2%, respectively. The effective tax rate for
both the six months ended February 28, 2023 and 2022 was 22.0%. The
business optimization costs of $244 million and related reduction
in tax expense of $52 million did not significantly impact our
effective tax rates for the second quarter of fiscal 2023 or six
months ended February 28, 2023.
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ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
26
|
Earnings Per Share
Diluted earnings per share were $2.39 for the second quarter of
fiscal 2023, compared with $2.54 for the second quarter of fiscal
2022. Diluted earnings per share were $5.47 for the six months
ended February 28, 2023, compared with $5.32 for the six months
ended February 28, 2022. The $193 million of business optimization
costs, net of related taxes, decreased diluted earnings per share
by $0.30 for the second quarter of fiscal 2023 and six months ended
February 28, 2023. Excluding these impacts, diluted earnings per
share were $2.69 and $5.77 for the second quarter of fiscal 2023
and six months ended February 28, 2023, respectively.
Non-GAAP Financial Measures
We have presented operating income, operating margin, effective tax
rates and diluted earnings per share for fiscal 2023, excluding the
impact of the business optimization costs, as we believe doing so
facilitates understanding as to the impact of these items and our
performance in comparison to the prior period. While we believe
that this non-GAAP financial information is useful in evaluating
our operations, this information should be considered as
supplemental in nature and not as a substitute for the related
financial information prepared in accordance with
GAAP.
New Bookings
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|
Three Months Ended |
|
Percent
Increase
(Decrease)
U.S.
Dollars |
|
Percent
Increase
(Decrease)
Local
Currency |
|
(in billions of U.S. dollars) |
February 28, 2023 |
February 28, 2022 |
|
|
|
Consulting |
$ |
10.7 |
|
$ |
10.9 |
|
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(2) |
% |
|
2 |
% |
|
Managed Services (1) |
11.4 |
|
8.7 |
|
|
32 |
|
|
37 |
|
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Total New Bookings |
$ |
22.1 |
|
$ |
19.6 |
|
|
13 |
% |
|
17 |
% |
(1)Previously
referred to as our outsourcing business.
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|
|
Six Months Ended |
|
Percent
Increase
(Decrease)
U.S.
Dollars |
|
Percent
Increase
(Decrease)
Local
Currency |
|
(in billions of U.S. dollars) |
February 28, 2023 |
February 28, 2022 |
|
|
|
Consulting |
$ |
18.8 |
|
$ |
20.3 |
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|
(8) |
% |
|
(2) |
% |
|
Managed Services (1) |
19.5 |
|
16.1 |
|
|
22 |
|
|
29 |
|
|
Total New Bookings |
$ |
38.3 |
|
$ |
36.4 |
|
|
5 |
% |
|
12 |
% |
(1)Previously
referred to as our outsourcing business.
We provide information regarding our new bookings, which include
new contracts, including those acquired through acquisitions, as
well as renewals, extensions and changes to existing contracts,
because we believe doing so provides useful trend information
regarding changes in the volume of our new business over time. New
bookings can vary significantly quarter to quarter depending in
part on the timing of the signing of a small number of large
managed services contracts. The types of services and solutions
clients are demanding and the pace and level of their spending may
impact the conversion of new bookings to revenues. For example,
managed services bookings, which are typically for multi-year
contracts, generally convert to revenue over a longer period of
time compared to consulting bookings.
Information regarding our new bookings is not comparable to, nor
should it be substituted for, an analysis of our revenues over
time. New bookings involve estimates and judgments. There are no
third-party standards or requirements governing the calculation of
bookings. We do not update our new bookings for material subsequent
terminations or reductions related to bookings originally recorded
in prior fiscal years. New bookings are recorded using
then-existing foreign currency exchange rates and are not
subsequently adjusted for foreign currency exchange rate
fluctuations.
The majority of our contracts are terminable by the client on short
notice with little or no termination penalties, and some without
notice. Only the non-cancelable portion of these contracts is
included in our remaining performance obligations disclosed in Note
2 (Revenues) to our Consolidated Financial Statements under Item 1,
“Financial Statements.” Accordingly, a significant portion of what
we consider contract bookings is not included in our remaining
performance obligations.
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|
|
ACCENTURE
FORM 10-Q
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
27
|
Results of Operations for the Three Months Ended February 28, 2023
Compared to the Three Months Ended February 28, 2022
Revenues by geographic market, industry group and type of work are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Percent
Increase
(Decrease)
U.S.
Dollars |
|
Percent
Increase
(Decrease)
Local
Currency |
|
Percent of Revenues
for the Three Months Ended |
|
(in millions of U.S. dollars) |
February 28, 2023 |
|
February 28, 2022 |
|
|
|
February 28, 2023 |
|
February 28, 2022 |
|
Geographic Markets |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
$ |
7,398 |
|
|
$ |
7,077 |
|
|
5 |
% |
|
5 |
% |
|
47 |
% |
|
47 |
% |
|
Europe |
5,300 |
|
|
5,010 |
|
|
6 |
|
|
12 |
|
|
34 |
|
|
33 |
|
|
Growth Markets |
3,116 |
|
|
2,960 |
|
|
5 |
|
|
14 |
|
|
20 |
|
|
20 |
|
|
Total |
$ |
15,814 |
|
|
$ |
15,047 |
|
|
5 |
% |
|
9 |
% |
|
100 |