Accenture FY 1Q15 Earnings Call Notes

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. Full transcripts can be found at Seeking Alpha

10% Revenue growth

“We delivered new bookings of $7.7 billion in line with our expectations. We grew revenues 10% in local currency gaining significant market share. We delivered outstanding earnings per share of $1.29 a 12% increase“

Our energy clients are just watching right now not panicking

“As we speak and we comment almost as of today, we’ve not yet seen any form of significant impact in our business with what’s happening. I believe that these big organizations in energy, oil and gas are just watching the situation. It has been very volatile this last few weeks and I guess our clients in these companies are waiting a bit to understand whether there is going to be some form of stabilization and when you have some form of stabilization you can stop executing your strategy. But as we speak we’re not seeing any different pattern with our clients and I would characterize my dialog as being in a watching mode not panicking.

Very pleased with the US market

“I am pleased with what’s happening. I am extremely pleased with the sustainability of our performance in the United States. It is very important it is the largest market of Accenture and it is I would say the global market where things are happening in our industry.

This is where things are happening

“This is where things happening from a digital standpoint, from an innovation standpoint as well from a disruption standpoint from an energy standpoint we can comment all of this and it’s for us all goodness that we are doing so well in the U.S.

Accenture FY 4Q14 Earnings Call Notes

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. Full transcripts can be found at Seeking Alpha

Marketplace is focused on digitization and rationalization

“In this fast changing environment we see the market becoming more and more polarized around two major things; Digitization to create competitive advantage and drive new sources of value, and rationalization to create productivity and efficiency gains.”

FX could shave 2% off of revenue growth

” For the full fiscal year ’15 based upon how the rates have been trending over the last few weeks we currently assume the impact of FX on our results in U.S. dollars will be negative 2% compared to fiscal ‘14. For the full fiscal ’15 we expect our net revenue to be in the range of 4% to 7% growth in local currency.”

Seeing traction in digital specifically in B2C industries

“Digital is pervasive across the patch. So it’s clearly a set of technologies and I’m talking about of course the digital consumer, the digital enterprise, the digital operations all related to analytics, of course cloud enabling technologies, usually known as SMAC in the past or [mobile] and each cloud is absolutely pervasive across the board. So we’re starting to see good traction of course with more the B2C kind of industries if you will, I’m thinking about retail, I’m thinking about consumer good, financial services, telecom, good appetite for that but certainly we see the second wave of digital impacting now more the B2C businesses, I could have mentioned Healthcare.”

B2B also strong with interest in internet of things

“nd then you move in to more the manufacturing kind of organization with what we know we call it the famous IOT, the Internet of things and we are taking step as well to move from the B2C to do B2B2C and from the B2B and from the digital consumer to the Internet of things. So the early adopters we are very pleased with them. They are the usual suspects but now we see good traction in all the parts of the business.”

Digital plant and digital operations

“e’re starting to put digital in what we are calling digital plant and digital operations and things we’re doing with some of our partners and we’ve recently created joint ventures as you might have seen with General Electric around aircraft maintenance as well as intelligent pipeline, which is the new launch we made with General Electric. And on the other side of the spectrum with Siemens around the SmartGrid.”

You really have to look at operating margin to understand our business

“ou also referenced gross margin and there is a lot of things that go into gross margin beyond just the contract delivery cost. You have for example things like training and recruiting and we typically bring a lot of people on broad in the fourth quarter and this year that was especially true as our revenue is growing, as an example…That’s why we repeatedly say that to understand our business you really have to focus on operating margin.”

Examples of Business Process Outsourcing function

“Of course from an F&A we communicated around this big win with this oil and gas company in Europe, a giant as well, we are doing all the HR, Administration of one of the largest consumer good company in the world and I can mention this and extremely recently in electronic equipment we’ve been selected to be clearly their backbone in running their Finance and Accounting, their HR, their IT and part of their sourcing operation to support them in one of their largest scale transformation program today in the industry.

So it is pretty hot and again I am coming back at the heart of our — at what I call repositioning or what I think our business is if you will from what we were and we are still famous for the more classic ERP and technology business.”

We dont’ anticipate unusual wage increases in 2015

“here are also a lot of markets around the world where there is deflation and deflationary trends for compensation and so — what we always do is we’re market relevant. And so if you’re trying to understand is there anything unusual that we anticipate in ’15 with respect to wage increases, the answer to that is no.”

Accenture 2Q14 Earnings Call Notes

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.”

Accenture 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

3% local currency revenue growth

“We generated revenues of $7.1 billion, a 3% increase in local currency and above the midpoint of our guided range.”

Energy business a bright spot but rest of natural resources cyclically bad

” The energy business continues to be the real bright spot globally with double-digit growth. But cyclical challenges in natural resources continue to negatively impact the overall growth rate of our Resources business. Having said that, we do still expect to have positive growth for the year.”

Starting to see pickup in some important European economies

“We’re starting to see good pickup in growth in important countries such as Switzerland, the U.K., Italy, Germany and France. And in Asia-Pacific, we grew revenues 4% in local currency, driven by continued strong growth in Japan.”

Global economic environment remains challenging especially EM

“I want to comment on the global economic environment which, frankly, continues to be challenging especially in the emerging markets.”

Guiding to 3-6% revenue growth. 7-10% EPS growth.

“we now expect net revenue for the full fiscal 2014 to be in the range of 3% to 6% growth in local currency.”

“For earnings per share, we now expect full year diluted EPS for fiscal 2014 to be in the range of $4.50 to $4.62 or 7% to 10% growth”

Volume of work strong, but pricing is a headwind

“We do see a situation in consulting in particular where from a volume standpoint we’re actually seeing very strong growth, and in fact, I would say that our volume growth is where we expected, if not better. The pricing environment is impacting that such that we’re getting the net result in our revenue growth in consulting in particular.”

There is demand in the marketplace, but focused on cost control

“the level of client discussions that are taking place and clients’ willingness to contract work is actually quite strong.

Having said that, if there is a common theme and we’ve talked about this for several quarters now, clients are by and large focused on cost optimization. I think that is a trend that we see almost in every industry and every market around the world.

And so clients are moving forward, driving the business forward, looking at investments that they need to make, but they’re doing it with an eye towards being very cost conscious in the contracting investments they’re making in their business.”

Accenture is investing in growth though

“you’ll see that our headcount growth over the last couple of quarters has been meaningful and so we have more heads, more payroll, base pay comp. We also have slightly lower utilization on the margin as we’ve been building bench in certain areas in anticipation of revenue ramping”

Accenture digital growing double digits

“We are more end-to-end than anyone else in digital marketing. Our Mobility organization is just on fire. And, as you know, there is great demand for analytics. And, of course, through the creation of Accenture Digital, we have the unique ability now to create synergies among these three capabilities and be even more end-to-end. So we’re extremely pleased with Digital.”

Brazil turning the corner?

“I’m pleased to report that indeed in Q2 we feel that we are turning the corner with Brazil coming back flattened, hopefully positive for the reminder of the year.”

Accenture 4Q13 Earnings Call Notes

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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“For the full year…We delivered new bookings of $33.3 billion…We generated revenues of $28.6 billion, a 4% increase in local currency…After adjusting to exclude tax and reorganization benefits in the second and third quarters, earnings per share for the year were $4.21, a 10% increase…operating margin of 14.2%, a 30 basis point expansion”

“All 3 components of our consulting bookings, management consulting, technology consulting and systems integration, were all at the low end of our book-to-bill range and very similar to our Q3 bookings level. And at the same time, we did see consulting bookings convert to revenue slightly faster than we expected.”

“we had bookings over $100 million at 11 clients, giving us a record 44 clients with bookings at this level”

“From a geographic standpoint, needless to say, we are living in an interesting world. A year ago, the big questions were around Europe and the sovereign debt issue. It now seems that Europe is stabilizing and even showing some early signs of improvement. And today, the question is around the emerging markets, where we’re seeing more volatility.”

“For the past 4 to 5 quarters, it’s clear that our addressable market has been in a cycle of lower growth, and this has certainly impacted our growth. As we look forward, we think it’s likely that our overall market conditions won’t change much in the near term. ”

“Overall, my assessment on the situation is Europe is stable with hopefully, early sign of improvement. But you know the overall economic condition, probably all Europe been moving from a slight recession to a slight growth, but more or less — being more or less the same plus”

“When you look at Japan, indeed, we mentioned last quarter that we were challenged with the EHT activity in Japan. And again, it’s more or less the same. We’re working hard in Japan. probably Japan is not totally out of the woods. We are still challenged, especially in the vertical you’re mentioning.”

“BPO is doing very well, and we are doing very well in BPO. So I’m pleased to have the opportunity to acknowledge our people and our leader driving the BPO business. I mean, why — I mean, first, there is a natural demand on BPO for the reason [ph] of cost management, productivity and efficiency and of course, business process outsourcing is a good response.”

“But what’s different with the BPO at Accenture? We invested a lot in BPO, first, and invested to create innovative services with a lot of analytics inside, what we’re calling BPO Generation 4 or 5. But forget about the generation. Just to mention that we are investing in bringing more capabilities and more innovation out of our BPO. So there is a strong demand. We have differentiated solutions and services.”

“what we’re in right now is no different than cycles that we’ve been in — many other cycles, where when you hit a period of low growth in our addressable market, even though we take share, the math is such that even taking share, our growth is going to be lower.”

“if you look in the prior ’08, the global economic growth has been in the range of 5%-ish. If you look at these last couple of years, the global economic growth has been in the range of 2%-ish. And at the end of the day, the addressable market is somewhat correlated to the global economic growth. I mean, that’s a kind of natural correlation at some point in time. So the reality is that today, we’re in a world growing at 2%. And as mentioned by David, the addressable market, the way we define, has been growing in that range. So we are executing against our commitment, which is anyway to grow more than the market and then deliver value to our clients and shareholders. But the world has changed.”

“ERPs are important, and they are important for all the industry. It’s the backbone of a lot of things our clients are doing in IT to build system and then in driving maintenance and so forth. But again, we are a very highly diversified company. We are doing ERP, and we are doing a lot of other things in our portfolio of business.”

“frankly, the one with the highest volatility and probably caught us by surprise to be honest will be Brazil. We had a very strong growth over many years. Brazil was, as you all know, a place where many of our clients have been investing for quite a long time. And what happened in Brazil probably caught our clients and ourselves a little bit by surprise with what’s happened now.”

“frankly, I’m very pleased with one country which is very important for Accenture but going to be extremely important for the future is China. I mean, China is going to be the second largest economy in the world. We all know how strong is China. And frankly, double-digit growth in China these last quarters, not to mention these last couple of years, I’m extremely pleased with what’s happening.”

“clearly in the mature markets today, you have a bias towards cost productivity, still efficiency for all sorts of reason we know, low economic growth. So a company to be more competitive, you need to be extremely mindful regarding your costs. And so you have this consequence around outsourcing and BPO being more in demand at consulting in that cycle. If you move to the emerging markets, they’re still in an environment where you need to build capabilities. And it’s not a surprise that we see some ERP work or build work or consulting work, for instance, in countries such as China, where you will see probably more consulting than outsourcing in countries such as China. So it’s probably fair indeed, David, to call that in emerging markets, it’s going to be more skewed towards consulting versus outsourcing and in mature markets, it’s going to be the other way around.”

Accenture 3Q13 Earnings Call Notes

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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“In Management Consulting, the macro environment continues to be challenging and volatile. Our clients held back on spending more than we expected, particularly in Europe and Brazil, and the environment is more competitive.”

“we do see growth in demand for transformational projects in operations, CRM and risk management”

“Technology consulting bookings reflected demand for infrastructure consulting projects that span data centers, networks and workplaces, as well as IT strategy projects.”

“System integration bookings, on the one hand, reflected rising demand for industry-specific Software solutions, where emerging technologies such as Mobility, Analytics and cloud are part of the mix. On the other hand, the bookings also reflected lower demand and a more competitive environment for ERP systems work.”

“The decrease in ERP work was most pronounced in some European countries, as clients are slowing down their investments in add-on work to existing solutions and generally starting fewer large programs right now.”

“Turning to outsourcing. New bookings were well above our expectations. Technology outsourcing bookings were strong, as our clients continue to seek solutions for driving operational efficiencies and flexible cost-effective sourcing.”

“Marketing is one of the key functions that digital is having a huge impact on. Chief Marketing Officers are increasingly looking for integrated solutions that bring together strategy, technology and analytics, add scale to get more value out of their investments.”

“the overall environment has not been progressing probably the way we all expected, including our clients, when you look at our Q3. The situation in Europe is not even slightly better. It’s probably slightly worse. Even if we do not have a Greece event, if you will, the environment is moving from an economic standpoint to recession. And so the mood with our clients over there is still to be thoughtful and to be very mindful about the way they invest. And when clients are thoughtful and mindful, they tend to wait a little bit more and to think further on when and how much they’re going to invest. It’s particularly true when it’s about smaller projects, as we mentioned, but indeed, this is what I would characterize as the softness, particularly true in Europe and in Europe, in South Europe, to be even more specific. And it’s definitely true that — to be honest, not something we anticipated at that level in Brazil, situation has changed recently.”

“Consulting, it’s all about launching projects, programs…So it’s slightly different from the mindset on outsourcing, which most of the time is more driven through cost optimization. Consulting is more about building for the future, if you will, for clients. And building for the future is requiring confidence, confidence in the economic outlook, confidence in the business… The level of confidence is not at the level we expected. And there is an eroding economic conditions in some parts of the world.”

“I mentioned the Digital Marketing as a fast-growing area is where we have been deploying our capital into acquisitions.”

“I love the U.S. I love that market, and I love the U.S. for Accenture…the overall economic environment in the U.S. is better than in the rest of the world.”

“U.S. companies are more than any other companies in the world early adopters of new technologies”

Accenture F2Q13 Earnings Call Notes

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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$ACN F2Q13 Conference Call Notes

“In management consulting, bookings were strong in the United States as well as in Asia Pacific and also in parts of Europe. We continue to see client demand for transformational projects in operations, customer relationship management and talent and organization, as well as a pickup in demand for risk management.

Our bookings in technology consulting moderated this quarter, and they primarily reflected projects to drive cost reduction in the data center network and desktop infrastructures of our clients. We see lots of opportunity ahead and have strengthened our leadership focus on the technology transformation agendas at our clients.

System integration bookings reflected strong continued demand to modernize and upgrade installed ERP systems, as well as an increasing demand for industry-specific systems across the major platforms. Emerging technologies are often part of the mix, as we are doing more and more to help our clients integrate Software as a Service, cloud platforms, mobile applications and digital solutions.”

“BPO bookings in Q2 reflected continued demand for our cross-industry offerings, especially finance and accounting, and for our industry-specific solutions in communications and banking.”

“Asia Pacific grew less this quarter, and we expect this trend to continue. Q2 included a decline in Japan, which was primarily in CMT [communications, media and technology], where certain clients in the high tech industry there in particular have significant challenges in their businesses right now.”

“We ended the quarter with a global headcount of about 261,000 people, and we now have approximately 170,000 people in our Global Delivery Network. In Q2, our utilization was 88%, consistent with Q1.”

“Our latest technology vision report identifies the trends that are having a big impact across different industries and explores how companies can use technology to improve business results. One of these trends is a convergence of social media, mobile computing, analytics and the cloud, which is transforming the way businesses operate. And this is driving demand for our services.”

“I have made the decision to turn over the CFO reins to my successor in a few months, effective July 1, and to retire from Accenture at the end of the fiscal year to pursue some new things.”