NEW YORK--(BUSINESS WIRE)--Accenture (NYSE: ACN) reported financial results for the second quarter of fiscal 2020, ended Feb. 29, 2020, with revenues of $11.1 billion, an increase of 7% in U.S. dollars and 8% in local currency over the same period last year.

Diluted earnings per share were $1.91, a 10% increase from the second quarter last year.

Operating income was $1.49 billion, a 7% increase over the same period last year, and operating margin was 13.4%, an expansion of 10 basis points.

New bookings for the quarter were $14.2 billion, with consulting bookings of $7.2 billion and outsourcing bookings of $7.0 billion.

Julie Sweet, Accenture’s chief executive officer, said, “The world is now facing a global health crisis and significant disruption in the global economy. I am incredibly proud of how our leadership team and all our people have rallied to ensure the safety and well-being of each other while continuing to serve our clients at this time of great need. We exited the first half of our fiscal year in a clear position of strength — delivering excellent results, gaining significant market share and continuing to successfully execute our growth strategy. As we move forward, we will focus on helping our clients navigate and succeed in this uncertain period and continue to invest in our business and our people for the long term.”

Financial Review

Revenues for the second quarter of fiscal 2020 were $11.14 billion, compared with $10.45 billion for the second quarter of fiscal 2019, an increase of 7% in U.S. dollars and 8% in local currency, at the top end of the company’s guided range of $10.85 billion to $11.15 billion. The foreign-exchange impact for the quarter was approximately negative 1%, consistent with the assumption provided in the company’s first-quarter earnings release.

• Consulting revenues for the quarter were $6.17 billion, an increase of 7% in U.S. dollars and 8% in local currency compared with the second quarter of fiscal 2019.
• Outsourcing revenues were $4.97 billion, an increase of 6% in U.S. dollars and 8% in local currency compared with the second quarter of fiscal 2019.

Diluted EPS for the quarter were $1.91, compared with $1.73 for the second quarter last year. The $0.18 increase in EPS reflects:

• a $0.14 increase from higher revenue and operating results; and
• a $0.04 increase from higher non-operating income.

Gross margin (gross profit as a percentage of revenues) for the quarter was 30.2%, compared with 29.2% for the second quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $1.87 billion, or 16.8% of revenues, compared with $1.67 billion, or 16.0% of revenues, for the second quarter last year.

Operating income for the quarter increased 7%, to $1.49 billion, or 13.4% of revenues, compared with $1.39 billion, or 13.3% of revenues, for the second quarter of fiscal 2019.

The company’s effective tax rate for the quarter was 17.1%, compared with 17.1% for the second quarter last year.

Net income for the quarter was $1.25 billion, a 10% increase from $1.14 billion for the second quarter last year.

Operating cash flow for the quarter was $1.53 billion and property and equipment additions were $165 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $1.37 billion for the quarter. For the same period last year, operating cash flow was $1.36 billion; property and equipment additions were $140 million; and free cash flow was $1.22 billion.

Days services outstanding, or DSOs, were 39 days at Feb. 29, 2020, compared with 40 days at Aug. 31, 2019 and 40 days at Feb. 28, 2019.

Accenture’s total cash balance at Feb. 29, 2020 was $5.4 billion, compared with $6.1 billion at Aug. 31, 2019.

New Bookings

New bookings for the second quarter were $14.2 billion and reflect a negative 1% foreign-currency impact compared with new bookings in the second quarter last year.

• Consulting new bookings were $7.2 billion, or 50% of total new bookings.
• Outsourcing new bookings were $7.0 billion, or 50% of total new bookings.

Revenues by Operating Group

Revenues by operating group were as follows:

• Communications, Media & Technology: $2.24 billion, compared with $2.15 billion for the second quarter of fiscal 2019, an increase of 4% in U.S. dollars and 5% in local currency.
• Financial Services: $2.09 billion, compared with $2.05 billion for the second quarter of fiscal 2019, an increase of 2% in U.S. dollars and 3% in local currency.
• Health & Public Service: $1.95 billion, compared with $1.71 billion for the second quarter of fiscal 2019, an increase of 14% in U.S. dollars and 15% in local currency.
• Products: $3.16 billion, compared with $2.91 billion for the second quarter of fiscal 2019, an increase of 9% in U.S. dollars and 10% in local currency.
• Resources: $1.70 billion, compared with $1.64 billion for the second quarter of fiscal 2019, an increase of 4% in U.S. dollars and 5% in local currency.

Revenues by Geographic Region

Revenues by geographic region were as follows:

• North America: $5.26 billion, compared with $4.75 billion for the second quarter of fiscal 2019, an increase of 11% in both U.S. dollars and local currency.
• Europe: $3.63 billion, compared with $3.64 billion for the second quarter of fiscal 2019, flat in U.S. dollars and an increase of 2% in local currency.
• Growth Markets: $2.26 billion, compared with $2.06 billion for the second quarter of fiscal 2019, an increase of 9% in U.S. dollars and 11% in local currency.

Returning Cash to Shareholders

Accenture continues to return cash to shareholders through cash dividends and share repurchases.

Dividend

As previously disclosed, the company has moved from a semi-annual to a quarterly schedule for dividend payments in fiscal 2020. On Feb. 14, 2020, a quarterly cash dividend of $0.80 per share was paid to shareholders of record at the close of business on Jan. 16, 2020. These cash dividend payments totaled $511 million, bringing dividend payments for the year to date to $1.02 billion.

Accenture plc has declared another quarterly cash dividend of $0.80 per share for shareholders of record at the close of business on Apr. 16, 2020. This dividend is payable on May 15, 2020.

In fiscal 2019, the company paid semi-annual cash dividends of $1.46 per share, equivalent to quarterly payments of $0.73 per share. The quarterly dividend of $0.80 per share this year represents a 10% increase over the equivalent quarterly rate in fiscal 2019.

Share Repurchase Activity

During the second quarter of fiscal 2020, Accenture repurchased or redeemed 4.7 million shares, including 2.7 million shares repurchased in the open market, for a total of $970 million. This brings Accenture’s total share repurchases and redemptions for the first half of fiscal 2020 to 8.5 million shares, including 6.0 million shares repurchased in the open market, for a total of $1.70 billion.

Accenture’s total remaining share repurchase authority at Feb. 29, 2020 was approximately $2.5 billion.

At Feb. 29, 2020, Accenture had approximately 637 million total shares outstanding.

Business Outlook

The coronavirus (COVID-19) crisis is rapidly evolving and has created a significant amount of uncertainty. Accenture’s third-quarter and full-year 2020 business outlook reflects its assumptions, as of today, regarding the potential effect of the coronavirus pandemic. The extent to which this impacts Accenture’s business, operations, and financial results, including the duration and magnitude of such impact, will depend on numerous factors that the company may not be able to accurately predict, including those discussed in the Risk Factors set forth in Accenture’s Annual Report on Form 10-K and second quarter Form 10-Q filings with the U.S. Securities and Exchange Commission.

Third Quarter Fiscal 2020

Accenture expects revenues for the third quarter of fiscal 2020 to be in the range of $10.75 billion to $11.15 billion, or negative 2% to positive 2% growth in local currency, reflecting the company’s assumption of a negative 1.5% foreign-exchange impact compared with the third quarter of fiscal 2019.

Fiscal Year 2020

Accenture’s business outlook for the full 2020 fiscal year now assumes that the foreign-exchange impact on its results in U.S. dollars will be negative 1.5% compared with fiscal 2019. The company previously had assumed a negative 1% foreign-exchange impact.

For fiscal 2020, the company now expects revenue growth to be in the range of 3% to 6% in local currency, compared with 6% to 8% previously.

Accenture now expects operating margin for the full fiscal year to be in the range of 14.7% to 14.8%, an expansion of 10 to 20 basis points from fiscal 2019. The company previously expected operating margin to expand 10 to 30 basis points.

The company continues to expect its annual effective tax rate to be in the range of 23.5% to 25.5%.

The company now expects diluted EPS to be in the range of $7.48 to $7.70, compared with $7.66 to $7.84 previously.

For fiscal 2020, the company now expects operating cash flow to be in the range of $6.15 billion to $6.65 billion, compared with $6.35 billion to $6.75 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 $5.5 billion to $6.0 billion, compared with $5.7 billion to $6.1 billion previously.

About Accenture

Accenture is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services. We combine unmatched experience and specialized capabilities across more than 40 industries — powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. With 509,000 people serving clients in more than 120 countries, Accenture brings continuous innovation to help clients improve their performance and create lasting value across their enterprises. Visit us at www.accenture.com.