Accenture 2Q14 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Very pleased with results

“We are very pleased with our financial results for the first quarter. We generated strong revenue growth and earnings per share, grew operating income, returned substantial cash to our shareholders and delivered another quarter of very strong year bookings.”

Solid growth

“New bookings were $8.8 billion, bringing us to $27.6 billion for the first three quarters of the year. We generated revenues of $7.7 billion, a 7% increase and above our guiding range. We delivered earnings per share of $1.26, up 11% from adjusted EPS in the third quarter last year.”

Customers focused on four areas

“our clients are focused on four main themes, the digital customer, efficiency in cost optimization, industry specific solutions and advancing the technology agenda, including new technologies, extending ERP and network optimization.”

Bank client revenue grew 5%

“Financial services grew 5% consistent with last quarter. We’re particularly pleased with the significant growth in banking and capital markets in EMEA and Asia Pacific.”

Resources segment improved

“we saw moderate improvement in resources with 2% growth. Energy continues to generate strong growth globally, but we did see some moderation from previous quarters, particularly in North America.”

Tax rate just 25%

“Our effective tax rate for the quarter was 25% compared with an adjusted tax rate of 24.8% for the third quarter last year.”

Examples of projects in Energy, Finance, Technology

“We are helping Baker Hughes a leading oil field services company transform its finance and accounting operations across 90 countries, delivering more than $50 million in annual cost saving so far.”

“For large European banks, we are providing application development and management services to support the bank’s repositioning to a new digital platform. This is a major strategic IT transformation designed to increase productivity by up to 20%.”

“And we are working with the leading global software company leveraging our analytics and technology capabilities in finance and accounting to deliver cost savings of more than $150 million over the next seven years.”

Acquired a company specializing in industry specific applications

“i4C specializes in tailored industry and function specific applications to speed up the delivery of new insights and business outcome. ”

Lots of opportunity but ongoing macro uncertainty

“we have an environment that has an abundance of opportunities, but it also is one that has ongoing — I am talking about the macro environment has ongoing challenges and uncertainty.’

Managing the business for 10-30bps of margin expansion. Forecasting the low end of that for this year

“we feel like if we’re moving the margins up year-over-year in that 10 to 30 basis points range, that’s very consistent with what our objectives have been and we think that’s a reasonable place for us to land and we’re balancing many things within that including investments in our business, which include the impact of acquisitions just to name that as one.”

We have an ebb and flow to our business in terms of margins

“we have ebb and flow or operating margin across our operating groups as their portfolio mix just evolves right. And so a swing of a point or two in either direction shouldn’t be over read at that level because sometimes it’s just the ebb and flow of the portfolio and then the time of kind of balance the overall expenses associated with that.”

Payroll efficiency is a key profitability driver

” job number one for us in driving our profitability objective going forward is to get payroll efficiency right.”

Pleased with the rebound in Europe

“We’re definitely very pleased to see the rebound we had in EMEA, which is something we’ve been watching very carefully this last quarter…what I am particularly pleased with is when you look at the countries contributing to EMEA growth both from a consulting and outsourcing standpoint, we have quite largest markets in the country and countries in Europe and think about France, Italy, Germany the U.K.”

“And it is very encouraging to see that with the slow recovery of Europe that seems to show some sustained ability on this slow recovery in Europe is creating more confidence with investors and this is what’s explaining the pickup of our business in Europe”

Brazil rebounding too

“as you know and we signaled that in the prior quarters, we were watching carefully what was happening in Brazil. We had excellent performance for many years and we had a kind of pause almost a year ago literally.

So again it’s very encouraging to see that through all the efforts made by our Brazilian leadership, Brazil is back with high single digit growth this quarter”

Japan strong with momentum

“Japan is sustaining a very strong double-digit growth and it’s not the story of a quarter. It’s been true this last quarter.”

South Africa, dependent on resources is most challenging

“South Africa as you know which is a country, which is very dependent on natural resources and very consistent what David mentioned previously natural resources, very cyclical challenging industry.

South Africa very dependent on natural resources and it’s a country where we are most challenged. ”

14% employee attrition is normal

“that 14% is well within our tolerant zone and there is ebb and flow and so just frankly there really isn’t a story behind that. It’s just kind of the normal flow of how attrition goes.”