Accenture said it repurchased $1.18 billion of its stock in the quarter.
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Accenture shares are trading higher after the technology consulting and outsourcing company posted better-than-expected results for its fiscal second quarter. The solid results and improved outlook are a positive sign for IT spending as the world emerges from the Covid-19 pandemic.
For the quarter, ended Feb. 28, Accenture (ticker: ACN) reported revenue of $12.1 billion, up 8% from a year ago, or 5% in local currency, and ahead of both the company’s guidance range of $11.55 billion to $11.95 billion and the Wall Street analyst consensus at $11.8 billion.
Adjusted profits were $2.03 a share, up 10% from the year-ago quarter and above the Street consensus at $1.90 a share. GAAP profits, which include an investment gain of $151 million, were $2.23 a share.
Consulting revenue was $6.44 billion, up 4%, while outsourcing revenue was $5.65 billion, up 14%. Bookings in the quarter were $16 billion, split evenly between the company’s consulting and outsourcing arms. The company said revenue in the quarter was reduced by about 2% by lower reimbursable travel costs. Revenues were up 7% in North America, 11% in Europe, and 8% in “growth markets.”
Accenture said it repurchased $1.18 billion of its stock in the quarter and has about $5 billion remaining on its currency buyback authorization. It has a market cap of about $175 billion.
“With our outstanding second-quarter financial results, we have returned to overall pre-pandemic growth ahead of expectations while continuing to take market share faster than before the pandemic,” CEO Julie Sweet said in a statement. “We have seen another quarter of strong, broad-based demand for our services across geographic markets and industries, and delivered record new bookings as well as excellent profitability and free cash flow.”
For the fiscal third quarter ending in May, Accenture is projecting revenue of $12.55 billion to $12.95 billion, up 10% to 13% in local currency, including 4.5% benefit from foreign exchange; the Street had been projecting $12.2 billion.
The company now sees revenue for the August 2021 fiscal year to be up 6.5% to 8.5% in local currency, compared with a previous forecast of 4% to 6% growth. That includes a 1% reduction from lower reimbursable travel costs. Accenture now sees operating margin for the year of 15% to 15.1%, up from a previous forecast of 14.8% to 15%, up 30 to 40 basis points from fiscal 2020. (A basis point is 1/100th of a percentage point.)
Accenture raised its full-year earnings guidance range to $8.67 to $8.85 a share, from $8.17 to $8.40; excluding investment gains, the range will be $8.32 to $8.50. The company now sees free cash flow for the year of $7 billion to $7.5 billion, up from a previous forecast of $6 billion to $6.5 billion.
Accenture shares are up 0.6%, at $265.75, in recent trading, after trading as high as $271.51 earlier in the session. The S&P 500 is down 0.6%.
Write to Eric J. Savitz at [email protected]
