NEW YORK--(BUSINESS WIRE)--Accenture (NYSE: ACN) reported financial results for the third quarter of fiscal 2020, ended May 31, 2020, with revenues of $11.0 billion, a decrease of 1% in U.S. dollars and an increase of 1.3% in local currency over the same period last year. Revenue growth for the quarter was reduced approximately 2 percentage points by a decline in revenues from reimbursable travel costs.

Diluted earnings per share were $1.90, compared with $1.93 for the third quarter last year.

Operating income was $1.71 billion, compared with $1.72 billion for the same period last year, and operating margin was 15.6%, an expansion of 10 basis points.

New bookings for the quarter were $11.0 billion, with consulting bookings of $6.2 billion and outsourcing bookings of $4.8 billion.

Julie Sweet, Accenture’s chief executive officer, said, “In times of crisis, our laser focus on creating value for our clients, our ability to deliver mission-critical services for the world’s leading companies, and our unwavering commitment to our people and to living our core values inside and outside Accenture make a difference. I am proud of how we helped ensure the business continuity of our clients, while prioritizing the health and well-being of our people, and continued to deliver on our commitments to our shareholders. We delivered third-quarter financial results that aligned with our expectations, including revenue growth in the top end of our guided range as well as strong profitability and free cash flow, while continuing to invest in our business and our people.”

Financial Review

Revenues for the third quarter of fiscal 2020 were $11.0 billion, compared with $11.1 billion for the third quarter of fiscal 2019, a decrease of 1% in U.S. dollars and a 1.3% increase in local currency. Revenues for the quarter reflect a foreign-exchange impact of approximately negative 2.5%, compared with the negative 1.5% impact we had previously assumed. Adjusting for the actual foreign-exchange impact, the company’s guided range for quarterly revenues was approximately $10.65 billion to $11.05 billion. Accenture’s third quarter fiscal 2020 revenues were in the top end of this adjusted range.

• Consulting revenues for the quarter were $6.0 billion, a decrease of 4% in U.S. dollars and 2% in local currency compared with the third quarter of fiscal 2019, including a reduction of approximately 3 percentage points from a decline in revenues from reimbursable travel costs.

• Outsourcing revenues were $5.0 billion, an increase of 3% in U.S. dollars and 5% in local currency compared with the third quarter of fiscal 2019.

Diluted EPS for the quarter were $1.90 compared with $1.93 for the third quarter last year. The $0.03 decrease in EPS reflects:

• a $0.01 increase from a lower share count;

offset by

• a $0.01 decrease from lower revenue and operating results;
• a $0.02 decrease from higher non-operating expense; and
• a $0.01 decrease from higher income attributable to noncontrolling interests.

Gross margin (gross profit as a percentage of revenues) for the quarter was 32.1%, compared with 31.8% for the third quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $1.82 billion, or 16.5% of revenues, compared with $1.81 billion, or 16.3% of revenues, for the third quarter last year.

Operating income for the quarter was $1.71 billion, or 15.6% of revenues, compared with $1.72 billion, or 15.5% of revenues, for the third quarter of fiscal 2019.

The company’s effective tax rate for the quarter was 25.5%, compared with 25.6% for the third quarter last year.

Net income for the quarter was $1.25 billion, compared with $1.27 billion for the third quarter last year.

Operating cash flow for the quarter was $2.74 billion and property and equipment additions were $150 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $2.59 billion for the quarter. For the same period last year, operating cash flow was $2.12 billion; property and equipment additions were $140 million; and free cash flow was $1.98 billion.

Days services outstanding, or DSOs, were 41 days at May 31, 2020, compared with 40 days at Aug. 31, 2019 and 39 days at May 31, 2019.

Accenture’s total cash balance at May 31, 2020 was $6.4 billion, compared with $5.4 billion at Feb. 29, 2020 and $6.1 billion at Aug. 31, 2019.

New Bookings

New bookings for the third quarter were $11.0 billion, an increase of 4% in U.S. dollars and 6% in local currency from the third quarter last year.

• Consulting new bookings were $6.2 billion, or 56% of total new bookings.

• Outsourcing new bookings were $4.8 billion, or 44% of total new bookings.

Revenues by Geographic Market

Revenues by geographic market were as follows:

• North America: $5.24 billion, compared with $5.15 billion for the third quarter of fiscal 2019, an increase of 2% in both U.S. dollars and local currency.

• Europe: $3.57 billion, compared with $3.77 billion for the third quarter of fiscal 2019, a decrease of 5% in U.S. dollars and 2% in local currency.

• Growth Markets: $2.18 billion, compared with $2.18 billion for the third quarter of fiscal 2019, flat in U.S. dollars and an increase of 5% in local currency.

Revenues by Industry Group

Revenues by industry group were as follows:

• Communications, Media & Technology: $2.20 billion, compared with $2.25 billion for the third quarter of fiscal 2019, a decrease of 2% in U.S. dollars and flat in local currency.

• Financial Services: $2.14 billion, compared with $2.20 billion for the third quarter of fiscal 2019, a decrease of 3% in U.S. dollars and flat in local currency.

• Health & Public Service: $2.02 billion, compared with $1.82 billion for the third quarter of fiscal 2019, an increase of 11% in U.S. dollars and 12% in local currency.

• Products: $3.00 billion, compared with $3.08 billion for the third quarter of fiscal 2019, a decrease of 3% in U.S. dollars and 1% in local currency.

• Resources: $1.64 billion, compared with $1.75 billion for the third quarter of fiscal 2019, a decrease of 6% in U.S. dollars and 3% 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 May 15, 2020, a quarterly cash dividend of $0.80 per share was paid to shareholders of record at the close of business on Apr. 16, 2020. These cash dividend payments totaled $509 million, bringing dividend payments for the year to date to $1.53 billion.

Accenture plc has declared another quarterly cash dividend of $0.80 per share for shareholders of record at the close of business on July 16, 2020. This dividend is payable on Aug. 14, 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 third quarter of fiscal 2020, Accenture repurchased or redeemed 3.7 million shares, including 3.5 million shares repurchased in the open market, for a total of $627 million. This brings Accenture’s total share repurchases and redemptions for the first three quarters of fiscal 2020 to 12.2 million shares, including 9.5 million shares repurchased in the open market, for a total of $2.33 billion.

Accenture’s total remaining share repurchase authority at May 31, 2020 was approximately $1.9 billion.

At May 31, 2020, Accenture had approximately 637 million total shares outstanding.

Business Outlook

The coronavirus (COVID-19) crisis has created a significant amount of volatility, uncertainty and economic disruption. Accenture’s fourth-quarter and full-year 2020 business outlook reflects its assumptions, as of today, regarding the continued effect of the coronavirus pandemic. The extent to which this continues to impact Accenture’s business, operations, and financial results, including the duration and magnitude of such impact, will depend on numerous evolving factors that are difficult to accurately predict, including those discussed in the Risk Factors set forth in Accenture’s Annual Report on Form 10-K and third-quarter Form 10-Q filings with the U.S. Securities and Exchange Commission.

Fourth Quarter Fiscal 2020

Accenture expects revenues for the fourth quarter of fiscal 2020 to be in the range of $10.6 billion to $11.0 billion, or negative 3% to positive 1% growth in local currency, reflecting the company’s assumption of a negative 1% foreign-exchange impact compared with the fourth quarter of fiscal 2019.

Fiscal Year 2020

Accenture’s business outlook for the full 2020 fiscal year continues to assume that the foreign-exchange impact on its results in U.S. dollars will be negative 1.5% compared with fiscal 2019.

For fiscal 2020, the company now expects revenue growth to be in the range of 3.5% to 4.5% in local currency, compared with 3% to 6% previously.

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

The company now expects its annual effective tax rate to be in the range of 23.5% to 24.5%, compared with 23.5% to 25.5% previously.

The company now expects diluted EPS to be in the range of $7.57 to $7.70, compared with $7.48 to $7.70 previously.

For fiscal 2020, the company now expects operating cash flow to be in the range of $6.45 billion to $6.95 billion, compared with $6.15 billion to $6.65 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 $5.8 billion to $6.3 billion, compared with $5.5 billion to $6.0 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 513,000 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.