NEW YORK--(BUSINESS WIRE)--Accenture (NYSE: ACN) reported financial results for the fourth quarter and full fiscal year ended Aug. 31, 2020.

For the fourth quarter, revenues were $10.8 billion, a decrease of 2% in U.S. dollars and 1% in local currency compared with the fourth quarter of fiscal 2019. 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 $1.99, a 14% increase from fiscal 2019, including $0.29 from gains on an investment. Excluding these gains, diluted EPS were $1.70, a 2% decline from $1.74 for the fourth quarter last year. Operating margin for the fourth quarter of fiscal 2020 was 14.3%, an expansion of 10 basis points from the fourth quarter of fiscal 2019. Operating cash flow was $3.2 billion and free cash flow was $3.0 billion. New bookings were $14.0 billion.

For the full fiscal year, revenues were $44.3 billion, an increase of 3% in U.S. dollars and 4% in local currency compared with fiscal 2019. Revenue growth for the year was reduced approximately 1 percentage point by a decline in revenues from reimbursable travel costs. Diluted earnings per share were $7.89, a 7% increase from fiscal 2019, including $0.43 from gains on an investment. Excluding these gains, diluted EPS for fiscal 2020 were $7.46, a 1% increase from $7.36 in fiscal 2019. This was above the adjusted guided range for diluted EPS of $7.30 to $7.43 after removing $0.27 in gains on an investment realized in the first half of fiscal 2020 and in June 2020 — which were included in the guidance provided in the company’s third-quarter earnings release. Operating margin for fiscal 2020 was 14.7%, an expansion of 10 basis points. Operating cash flow for fiscal 2020 was $8.2 billion and free cash flow was $7.6 billion. New bookings were a record $49.6 billion.

Julie Sweet, Accenture’s chief executive officer, said, “Accenture’s fiscal 2020 results demonstrate the relevance of our growth strategy, the resilience of our business and our people, our disciplined management of the business, and the power of our relationships with the world’s leading companies and ecosystem partners. Our ability to pivot rapidly to meet the needs of our clients and new ways of operating is reflected in our record new bookings of $50 billion for fiscal 2020. We also continued to deliver revenue growth ahead of the market as well as strong profitability and superior cash flow. As we turn the page to fiscal 2021, we are better positioned than ever to continue gaining market share and delivering tangible value for our clients and shared success for all our stakeholders.”

Financial Review

Fourth Quarter Fiscal 2020

Revenues for the fourth quarter of fiscal 2020 were $10.84 billion, compared with $11.06 billion for the fourth quarter of fiscal 2019, a decrease of 2% percent in U.S. dollars and 1% in local currency, including a reduction of approximately 2 percentage points from a decline in revenues from reimbursable travel costs. Revenues were at the midpoint of the company’s guided range of $10.6 billion to $11.0 billion. The foreign-exchange impact for the quarter was approximately negative 1 percent, consistent with the assumption provided in the company’s third-quarter earnings release.

• Consulting revenues were $5.68 billion, a decrease of 8% in both U.S. dollars and local currency compared with the fourth quarter of fiscal 2019, including a reduction of approximately 3 percentage points from a decline in revenues from reimbursable travel costs.
• Outsourcing revenues were $5.15 billion, an increase of 6% in U.S. dollars and 7% percent in local currency compared with the fourth quarter of fiscal 2019.

GAAP diluted EPS for the fourth quarter were $1.99, a 14% increase from $1.74 for the fourth quarter last year. Excluding gains on an investment of $219 million, pre-tax, or $0.29 per share, EPS for the quarter were $1.70, a decrease of $0.04 from the fourth quarter last year. The $0.04 decrease in EPS on an adjusted basis reflects:

• a $0.03 increase from higher non-operating income; and
• a $0.01 increase from a lower share count;

offset by

• a $0.03 decrease from lower revenue and operating results; and
• a $0.05 decrease from a higher effective tax rate.

Gross margin (gross profit as a percentage of revenues) for the fourth quarter was 31.8%, compared with 31.1% for the fourth quarter of fiscal 2019. Selling, general and administrative (SG&A) expenses for the fourth quarter were $1.90 billion, or 17.5% of revenues, compared with $1.86 billion, or 16.9% of revenues, for the fourth quarter of fiscal 2019.

Operating income for the fourth quarter of fiscal 2020 was $1.54 billion, or 14.3% of revenues, compared with $1.57 billion, or 14.2% of revenues, for the fourth quarter of fiscal 2019. Operating margin for the fourth quarter of fiscal 2020 expanded 10 basis points.

The company’s effective tax rate for the fourth quarter was 26.8%. Excluding the impact of gains on an investment, the effective tax rate was 28.4%, compared with 26.6% for the fourth quarter of fiscal 2019.

Net income for the quarter was $1.31 billion. Excluding the $185 million after-tax impact of gains on an investment, net income was $1.12 billion, compared with $1.15 billion for the fourth quarter last year.

Operating cash flow for the fourth quarter was $3.16 billion, and property and equipment additions were $189 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $2.97 billion. For the same period of fiscal 2019, operating cash flow was $2.12 billion, property and equipment additions were $241 million, and free cash flow was $1.87 billion.

Days services outstanding, or DSOs, were 35 days at Aug. 31, 2020, compared with 40 days at Aug. 31, 2019.

Accenture’s total cash balance at Aug. 31, 2020 was $8.4 billion, compared with $6.1 billion at Aug. 31, 2019.

New Bookings

New bookings for the fourth quarter were $14.0 billion, an increase of 8% in U.S. dollars and 9% in local currency from the fourth quarter last year.

• Consulting new bookings were $6.5 billion, or 46% of total new bookings.
• Outsourcing new bookings were $7.5 billion, or 54% of total new bookings.

Revenues by Geographic Market

Revenues by geographic market for the fourth quarter were as follows:

• North America: $5.20 billion, a decrease of 1% in U.S. dollars and flat in local currency compared with the fourth quarter of fiscal 2019.
• Europe: $3.41 billion, a decrease of 5% in both U.S. dollars and local currency compared with the fourth quarter of fiscal 2019.
• Growth Markets: $2.23 billion, a decrease of 1% in U.S. dollars and an increase of 3% in local currency compared with the fourth quarter of fiscal 2019.

Revenues by Industry Group

Revenues by industry group for the fourth quarter were as follows:

• Communications, Media & Technology: $2.20 billion, a decrease of 1% percent in U.S. dollars and flat in local currency compared with the fourth quarter of fiscal 2019.
• Financial Services: $2.10 billion, a decrease of 1% in U.S. dollars and flat in local currency compared with the fourth quarter of fiscal 2019.
• Health & Public Service: $2.09 billion, an increase of 11% in U.S. dollars and 12% in local currency compared with the fourth quarter of fiscal 2019.
• Products: $2.90 billion, a decrease of 6% in both U.S. dollars and local currency compared with the fourth quarter of fiscal 2019.
• Resources: $1.54 billion, a decrease of 11% in U.S. dollars and 10% in local currency compared with the fourth quarter of fiscal 2019.

Full Year Fiscal 2020

Revenues for the full 2020 fiscal year were $44.3 billion, compared with $43.2 billion for fiscal 2019, an increase of 3% in U.S. dollars and 4% in local currency, including a reduction of approximately 1 percentage point from a decline in revenues from reimbursable travel costs. Revenues for fiscal 2020 reflect a foreign-exchange impact of approximately negative 1.5% compared with fiscal 2019.

• Consulting revenues were $24.2 billion, flat in U.S. dollars and an increase of 2% in local currency compared with fiscal 2019, including a reduction of approximately 2 percentage points from a decline in revenues from reimbursable travel costs.
• Outsourcing revenues were $20.1 billion, an increase of 6% in U.S. dollars and 7% in local currency compared with fiscal 2019.

GAAP diluted EPS for the full 2020 fiscal year were $7.89, a 7% increase from fiscal 2019, compared with $7.36 for fiscal 2019. Excluding gains on an investment of $332 million, pre-tax, or $0.43 per share, EPS for the year were $7.46, an increase of $0.10, or 1%, from fiscal 2019. The $0.10 increase in EPS on an adjusted basis reflects:

• a $0.24 increase from higher revenue and operating results; and
• a $0.03 increase from a lower share count;

partially offset by

• a $0.14 decrease from a higher effective tax rate;
• a $0.02 decrease from lower non-operating income; and
• a $0.01 decrease from higher income attributable to noncontrolling interests.

Gross margin (gross profit as a percentage of revenues) for fiscal 2020 was 31.5%, compared with 30.8% for fiscal 2019. Selling, general and administrative (SG&A) expenses for the full fiscal year were $7.46 billion, or 16.8% of revenues, compared with $7.01 billion, or 16.2% of revenues, for fiscal 2019.

Operating income for the full fiscal year was $6.51 billion, or 14.7% of revenues, compared with $6.31 billion, or 14.6% of revenues, in fiscal 2019.

Accenture’s annual effective tax rate for fiscal 2020 was 23.5%. Excluding the impact of gains on an investment, the effective tax rate was 23.9%, compared with 22.5% in fiscal 2019.

Net income for the full fiscal year was $5.19 billion. Excluding the $280 million after-tax impact of gains on an investment, net income was $4.91 billion, compared with $4.85 billion for fiscal 2019.

For the full 2020 fiscal year, operating cash flow was $8.22 billion, and property and equipment additions were $599million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $7.62 billion. For fiscal 2019, operating cash flow was $6.63 billion, property and equipment additions were $599 million, and free cash flow was $6.03 billion.

New Bookings

New bookings for the full fiscal year were $49.6 billion, an increase of 9% in U.S. dollars and 10% in local currency from fiscal 2019.

• Consulting new bookings were $25.8 billion, or 52% of total new bookings.
• Outsourcing new bookings were $23.7 billion, or 48% of total new bookings.

Revenues by Geographic Market

Revenues by geographic market for the full fiscal year were as follows:

• North America: $20.98 billion, an increase of 5% in both U.S. dollars and local currency compared with fiscal 2019.
• Europe: $14.40 billion, a decrease of 2% in U.S. dollars and flat in local currency compared with fiscal 2019.
• Growth Markets: $8.94 billion, an increase of 5% in U.S. dollars and 8% in local currency compared with fiscal 2019.

Revenues by Industry Group

Revenues by industry group for the full fiscal year were as follows:

• Communications, Media & Technology: $8.88 billion, an increase of 1% in U.S. dollars and 3% in local currency compared with fiscal 2019.
• Financial Services: $8.52 billion, flat in U.S. dollars and an increase of 2% in local currency compared with fiscal 2019.
• Health & Public Service: $8.02 billion, an increase of 12% in U.S. dollars and 13% in local currency compared with fiscal 2019.
• Products: $12.27 billion, an increase of 2% in U.S. dollars and 3% percent in local currency compared with fiscal 2019.
• Resources: $6.61 billion, a decrease of 2% in U.S. dollars and flat in local currency compared with fiscal 2019.

Returning Cash to Shareholders

Accenture continues to return cash to shareholders through cash dividends and share repurchases. In fiscal 2020, the company returned $4.95 billion to shareholders, including $2.04 billion in cash dividends and $2.92 billion in share repurchases.

Dividend

On Aug. 14, 2020, a quarterly cash dividend of $0.80 per share was paid to shareholders of record at the close of business on July 16, 2020. These cash dividend payments totaled $509 million, bringing dividend payments for the full year to $2.04 billion, compared with $1.86 billion in fiscal 2019.

Accenture plc has declared a quarterly cash dividend of $0.88 per share, for shareholders of record at the close of business on Oct. 13, 2020. This dividend, which is payable on Nov. 13, 2020, represents a 10% increase over the company’s previous quarterly dividend.

Share Repurchase Activity

During the fourth quarter of fiscal 2020, Accenture repurchased or redeemed 2.6 million shares, including 2.5 million shares repurchased in the open market, for a total of $590 million. This brought total share repurchases and redemptions for the full fiscal year to 14.8 million shares, including 12.0 million shares repurchased in the open market, for a total of $2.92 billion.

The company’s Board of Directors has approved $5.0 billion in additional share repurchase authority, bringing Accenture’s total outstanding authority to approximately $6.3 billion.

At Aug. 31, 2020, Accenture had approximately 635 million total shares outstanding.

Business Outlook

The coronavirus (COVID-19) crisis has created a significant amount of volatility, uncertainty and economic disruption. Accenture’s first-quarter and full-year 2021 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 filings with the U.S. Securities and Exchange Commission.

First Quarter Fiscal 2021

Accenture expects revenues for the first quarter of fiscal 2021 to be in the range of $11.15 billion to $11.55 billion, a decrease of 3% to flat in local currency, including a reduction of approximately 2 percentage points from a decline in revenues from reimbursable travel costs. The company is assuming a positive 1.5% foreign-exchange impact compared with the first quarter of fiscal 2020.

Fiscal Year 2021

Accenture’s business outlook for the full 2021 fiscal year assumes that the foreign-exchange impact on its results in U.S. dollars will be positive 2% compared with fiscal 2020.

For fiscal 2021, the company expects revenue growth to be in the range of 2% to 5% in local currency, including a reduction of approximately 1 percentage point from a decline in revenues from reimbursable travel costs.

Accenture expects operating margin for the full fiscal year to be in the range of 14.8% to 15.0%, an expansion of 10 to 30 basis points from fiscal 2020.

The company expects its annual effective tax rate to be in the range of 23.0% to 25.0%.

The company expects diluted EPS to be in the range of $7.80 to $8.10, an increase of 5% to 9% over adjusted FY20 diluted EPS.

For fiscal 2021, the company expects operating cash flow to be in the range of $6.35 billion to $6.85 billion; property and equipment additions to be $650 million; and free cash flow to be in the range of $5.7 billion to $6.2 billion.

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 506,000 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.