Accenture(ACN) - 2025 Q1 - Quarterly Report

Part I. Financial Information Financial Statements This section presents the unaudited consolidated financial statements for Q1 FY2025, detailing financial position, performance, and cash flows Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands USD) | Account | Nov 30, 2024 | Aug 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $59,868,070 | $55,932,363 | +6.9% | | Cash and cash equivalents | $8,306,055 | $5,004,469 | +66.0% | | Goodwill | $20,868,911 | $21,120,179 | -1.2% | | Total Liabilities | $29,765,647 | $26,764,115 | +11.2% | | Long-term debt | $5,039,460 | $78,628 | +6309.5% | | Total Shareholders' Equity | $30,102,423 | $29,168,248 | +3.2% | - The significant increase in cash and long-term debt is primarily due to the issuance of $5 billion in senior unsecured notes during the quarter[6][31] Consolidated Income Statements Consolidated Income Statement (in thousands USD, except per share data) | Metric | Q1 FY2025 (ended Nov 30, 2024) | Q1 FY2024 (ended Nov 30, 2023) | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $17,689,545 | $16,224,303 | +9.0% | | Operating Income | $2,948,477 | $2,564,887 | +14.9% | | Net Income Attributable to Accenture plc | $2,278,894 | $1,973,444 | +15.5% | | Diluted EPS | $3.59 | $3.10 | +15.8% | Consolidated Cash Flows Statements Consolidated Cash Flows (in thousands USD) | Cash Flow Activity | Three Months Ended Nov 30, 2024 | Three Months Ended Nov 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,022,486 | $498,551 | | Net cash used in investing activities | ($385,524) | ($855,430) | | Net cash provided by (used in) financing activities | $2,751,748 | ($1,551,913) | | Net increase (decrease) in cash | $3,301,586 | ($1,904,191) | - Financing activities were the primary driver of the cash increase, mainly due to proceeds from debt issuance of $5.06 billion, which was partially offset by share purchases ($898 million) and dividend payments ($926 million)[11] Notes to Consolidated Financial Statements Detailed notes disclose key accounting policies, including revenue recognition, new debt issuance of $5 billion, and updated segment reporting - Remaining performance obligations were approximately $29 billion as of November 30, 2024, with the company expecting to recognize about 58% of this amount as revenue in fiscal 2025[19] - During the quarter, the company completed several individually immaterial acquisitions for a total consideration of $184.9 million[25] - On October 4, 2024, Accenture Capital Inc. issued $5 billion in aggregate principal amount of senior unsecured notes with maturities ranging from 2027 to 2034[31] - The effective tax rate for Q1 FY25 was 21.6%, down from 23.2% in Q1 FY24, primarily due to higher benefits from adjustments to prior year tax liabilities[34] Management's Discussion and Analysis (MD&A) Management discusses Q1 FY25 financial results, highlighting 9% revenue growth to $17.7 billion, 1% new bookings growth, and improved operating margin and EPS Overview and Key Metrics Q1 FY2025 Key Metrics vs. Q1 FY2024 | Metric | Q1 FY2025 | YoY Change (USD) | YoY Change (Local Currency) | | :--- | :--- | :--- | :--- | | Revenues | $17.7 billion | +9% | +8% | | New Bookings | $18.7 billion | +1% | +1% | | Operating Margin | 16.7% | +90 bps | - | | Diluted EPS | $3.59 | +16% | - | - The company returned $1.8 billion to shareholders through $926 million in dividends and $898 million in share repurchases[47] Results of Operations Revenues grew 8% in local currency, driven by Americas and Managed Services, with gross margin declining and operating margin improving Q1 FY2025 Revenue Growth vs. Q1 FY2024 (Local Currency) | Category | Revenue Growth (Local Currency) | | :--- | :--- | | By Geography | | | Americas | 11% | | EMEA | 6% | | Asia Pacific | 4% | | By Type of Work | | | Consulting | 6% | | Managed Services | 11% | - New bookings for the quarter were $18.7 billion, a 1% increase in both USD and local currency, with Consulting bookings growing 6% while Managed Services bookings declined 4% in local currency[52] - The company is experiencing a slower pace and level of client spending, particularly for smaller consulting contracts with shorter durations, although clients continue to prioritize large-scale transformations[46][49] - The workforce increased to approximately 799,000 people from 743,000 a year ago, and annualized voluntary attrition was 12%, up from 11% in the prior year[49] Liquidity and Capital Resources Cash and cash equivalents increased to $8.3 billion, driven by financing activities, primarily a $5 billion debt issuance, and cash from operations Share Purchase Activity (Q1 FY2025) | Category | Shares Purchased | Amount (millions) | | :--- | :--- | :--- | | Open-market purchases | 2,174,686 | $771 | | Other purchases (employee plans) | 353,046 | $126 | | Total | 2,527,732 | $897 | - As of November 30, 2024, the company had approximately $5.9 billion remaining in its authorized share purchase program[71] Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's market risk exposure, including foreign currency, interest rate, and equity investment risks, since the prior fiscal year - There were no material changes to the information on market risk exposure during the three months ended November 30, 2024[66] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective at the reasonable assurance level[66] - There were no changes in internal control over financial reporting during the first quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, internal controls[67] Part II. Other Information Legal Proceedings The company is involved in various litigation and regulatory matters, including an appeal in a data security lawsuit and a DOJ investigation into federal security controls compliance - Accenture is appealing a class certification in a lawsuit related to a data security incident at Starwood, a former client, and believes the lawsuit is without merit[36] - Accenture Federal Services (AFS) is under a civil and criminal investigation by the U.S. Department of Justice (DOJ) concerning potential inaccurate submissions related to federal security controls, with the potential cost or outcome currently inestimable[36] Risk Factors No material changes occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended August 31, 2024 - There have been no material changes to the risk factors disclosed in the company's Annual Report for the year ended August 31, 2024[69] Use of Proceeds and Share Repurchases During Q1 FY25, Accenture repurchased 2.53 million shares for $897 million, with $5.9 billion remaining in the authorized share purchase program Q1 FY2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid | Approx. Value Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | | Sep 2024 | 723,155 | $343.18 | $6,458 | | Oct 2024 | 981,930 | $363.53 | $6,175 | | Nov 2024 | 822,647 | $355.28 | $5,922 | | Total | 2,527,732 | $355.02 | - |