Accenture (ACN, Financial) reported its second-quarter results for the fiscal year 2015 on March 26, and the top and bottom line numbers clearly crossed the analysts’ estimates showing the phenomenal growth witnessed in the company’s services sector which caters to insurance, banking and the healthcare sectors. The company also emphasized returning to the shareholders during the quarter.
Accenture’s CEO, Peirre Nanterme, stated during the earnings call, “We are extremely pleased with our very strong financial results for the second quarter and first half of fiscal 2015. Our revenue growth of 12 percent in the second quarter was again broad-based across the different dimensions of our business, and we gained significant market share. We delivered excellent new bookings of $9.4 billion, demonstrating that our services continue to be highly relevant to our clients …”
Let’s quickly get into the facts that were shared in the quarterly earnings call by the management.
Revenue shows a climb
The second quarter revenue jumped 5.1% year-over-year to $7.50 billion, surpassing the consensus estimate of $7.38 billion. Net revenue came in line with the higher range of the management guidance of $7.25-$7.5 billion provided for the second quarter, and such a jump in the topline was attributed by the growth witnessed in the outsourcing and consulting services segments.
Outsourcing revenue came in at $3.65 billion, a 6% jump year over year while the consulting services revenue climbed 4% to $3.84 billion. Among the operating segments, revenue from communications, media and technology rose 8% year over year to $1.52 billion while revenue from healthcare rose 12% to $1.32 billion and from financial services increased 2% to $1.59 billion for the quarter. However, revenue from the resources segment fell 1% year over year to $1.21 billion.
Geographically, Accenture reported growth in topline in North America and growth markets where the revenue increased 13% and 3%, respectively while revenue was down 2% from the year ago quarter in Europe.
Operating expenses down, net income shows increase beating Street expectations
There was decrease in operating expenses for the quarter by about 4.6% to $1.22 million, from that noticed a year ago, chiefly due to lower selling, general and administrative expenses. Operating expenses contracted almost 160 basis points when compared as a percentage to the revenue, to 16.3% from the year-ago quarter.
Operating income stood at $1.02 billion or 13.6% of net revenue, improving from $951.3 million or 13.3% of revenue, reported a year back. Net income stood at $731.8 million which was chiefly backed by lower operating expenses and higher revenue earned, leading to earnings of $1.08 per share that clearly outpaced the Street’s earnings estimates by a penny. In fact, earnings rose almost 4.8% from $1.03 per share, reported a year ago in the same quarter.
Order continuum has been maintained
Though there was presence of headwind like foreign currency fluctuations that negatively impacted the order count for the quarter, Accenture’s new bookings stood at $9.4 billion. Of the total bookings recorded during the quarter, consulting orders comprised 45% of the total value of the new bookings, while outsourcing bookings claimed the remaining 55% of the total order value.
Dividend payout, a cherry for the investors
During the earnings call, the company declared a semiannual dividend that would be paid on May 15 of the year. Investors will be given a dividend of $1.02 per share, and this would represent a dividend yield of 2.17%. This dividend payout if combined with the cash dividend of $1.02 per share paid in November 2014 would bring the total dividend payment to $2.04 per share paid in the fiscal year till the second quarter, and obviously this looks lucrative from its investors’ standpoint.
Besides the dividend declaration, the management has also bought back shares worth $601 million during the quarter. Both the dividend payout and share repurchase activity speak to the cash generation power of the company that is engaged in providing management consulting, technology and outsourcing services to its esteemed global clients. It signifies the interest of Accenture to keep its investors happy at the end of the day.
Last word
Soon after the earnings release, several analysts have commented on the stock. Sources have confirmed that ten investment analysts have rated the stock to be a “hold” while five have issued a “buy” rating on the stock. This means that Accenture has immense growth potential in the days ahead that stays well portrayed through the order count, which testifies the ability of the consulting company to reach to the global masses and offer its services to clients in global industries. Let’s stay tuned for more information which would be shared in the coming quarters, but as on date, Accenture’s Q2 earnings look promising enough to hold or buy the stock at this juncture.
