Chris Nelson, Big4.com
17 December 2010
After close of market yesterday, Accenture (NYSE: ACN) reported a blow out quarter for Q1-2011 ending Nov. 30, 2010, being a fabulous start to its financial year with net revenues of $6.05 billion, up 12% in U.S. dollars and 14% in local currency over Q1-2010, and beating the company’s guided range of $5.6 billion to $5.8 billion. Q1-2010 revenue was $5.38 billion. Consulting net revenues were $3.57 billion, up 14 % in U.S. dollars and 16 % in local currency over Q1-2010. Outsourcing net revenues were $2.48 billion, up 10 % in U.S. dollars and 11 % in local currency over Q1-2010.
The market was expecting $5.75 billion, so this was a huge beat on the revenue side by $300 million.
Diluted EPS was $0.81, an increase of $0.14, or 20% over Q1-2010. Operating income of $827 million was up 11% over Q1-2010 of $746 million. Q1-2011 operating margin was 13.7 % compared to Q1-2011 of 13.9 % of net revenues. New bookings for the quarter were $6.31 billion, with consulting bookings of $3.72 billion and outsourcing bookings of $2.59 billion.
The market was expecting EPS of 75 cents, so Accenture topped this estimate as well by 6 cents.
Net income for the quarter was $606 million, compared with $525 million for the same period of fiscal 2010, an increase of 15 %. Q1-2011 operating cash flow of $106 million, lower than Q1-2010 operating cash flow of $219 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $31 million compared to $184 million in Q1-2010.
Clearly, the company is firing on all cylinders as companies come back for consulting services. Accenture was moderately affected by the global economic downturn, but as growth returns to all parts of the world, the company’s revenues and margins are taking off skywards.
More so, the company issued a very rosy forecast.
For Q2-2011, Accenture forecasted revenues of $5.6 billion to $5.8 billion. For full Fiscal Year 2011, Accenture raised its outlook for net revenue growth to the range of 8 % to 11 % in local currency from its previous range of 7 % to 10 % in local currency. The company has also raised its outlook for diluted EPS to the range of $3.08 to $3.16 from its previous range of $3.00 to $3.08. Full year operating margin was set in the range of 13.6 % to 13.7 %; and operating cash flow to be $2.7 billion to $2.9 billion; property and equipment additions to be $340 million; and free cash flow to be in the range of $2.4 billion to $2.6 billion. Accenture continues to target new bookings for fiscal 2011 in the range of $25 billion to $28 billion.
William D. Green, Accenture’s chairman & CEO notes this is the highest consulting bookings in more than two years, which clearly demonstrates that Accenture’s global strength and breadth are being deployed completely to gain client penetration, win new projects and further deepen relationships. Note the number of marquee deals that Accenture is posting on its website on an almost daily basis.
Now on the stock side, investors were pleasantly surprised and bid up the stock to historic highs. As on Friday morning before markets open, the ACN stock price is noted at $48.40, up $1.73 from close (increase of 3.71%). This is a historic high for the stock, which has set several historic highs this year alone.
And something else to consider, with 633.92 million shares outstanding, Accenture’s market capitalization now exceeds a landmark of $30 billion.
We have always been long admirers of the Accenture machine and this recent performance demonstrates our faith in the superior management, global presence and focused strategies of this great company.