Accenture Plc. (ACN) reported second quarter 2010 EPS of 60 cents, missing the Zacks Consensus Estimate of 61 cents.
Revenue
Accenture reported second quarter 2010 total revenue of $5.54 billion, down 2.1% from $5.66 billion reported in the year-ago quarter. The company witnessed a revenue decline in most of its operating groups, with Communication & High Tech revenue declining 7.0% from the year-ago quarter.
Financial Services revenue was up 11.0% year-over-year in US dollars, but declined 4.0% in local currency. Health & Public services revenue was down 3.0%, with product revenue increasing 1.0% in US dollars, but declining 5.0% in local currency compared to the year-ago quarter. Resources revenue was down 3.0% from the year-ago quarter.
Geographically, Americas reported a 4.0% decline in revenue compared to the year ago quarter, Europe Middle East Africa (EMEA) reported a 1.0% decline in revenue and the Asia Pacific region reported a 6.0% increase in revenue compared to the year-ago quarter.
Bookings
The company recorded consulting bookings of $3.39 billion. Outsourcing bookings were $3.13 billion. On the whole, new bookings for the second quarter were $6.52 billion and reflect a positive 6 percent foreign-currency impact when compared to new bookings in the second quarter last year.
Operating Results
Operating revenue for the first quarter declined to $651.0 million (12.6% of revenue) down from $677.0 million (12.9% of revenue) reported in the year-ago quarter. Operating margin include a 30 basis points benefit from the reduction of reorganization liabilities in that quarter. Excluding it, operating margin is 12.6%.
Second quarter gross margin was 32.7%, compared to 30.8% for the second quarter last year. This yearly increase can be attributed to the implementation of the new sales effectiveness model implemented by the company in the first quarter. Selling, general and administrative (SG&A) expenses for the quarter increased 8.6% to $1.04 billion, from $958.0 million reported in the year ago quarter. The SG&A increase took place as a result of the implementation of a sales effectiveness model.
The company reported net income of $461.8 million (or 60 cents per share), down from $498.8 million (or 66 cents per share) in the year-ago quarter. Accenture recorded an effective tax rate of 27.8%, compared with 28.1% in the year-ago quarter.
Balance Sheet & Cash Flow
Operating cash flow for the quarter was $660.0 million and net of property and equipment additions of $44.0 million. For the same period last year operating cash flow was $631.0 million. Day services outstanding (DSO) were 30 days, down from 32 days in the last quarter. Total cash balance for the company as on Feb 28, 2010, was $4.1 billion versus $4.0 billion in the previous quarter.
Guidance
For the third quarter of fiscal 2010, the company expects net revenues to be in the range of $5.5 billion to $5.7 billion. This figure was arrived at after taking into consideration a positive 5% foreign-exchange impact, compared to the year-ago quarter.
For full fiscal year 2010, management expects net revenue growth in the range of negative 3.0% to positive 1.0%. The company has lowered its outlook for diluted EPS for the full fiscal year by 6 cents and now expects diluted EPS in the range of $2.61 to $2.69. This apart, the company targets new bookings for fiscal 2010 in the range of $23 billion to $26 billion.
Read the full analyst report on “ACN”
Zacks Investment Research
