Accenture (ACN) has reported first quarter 2010 EPS of 67 cents, exceeding the Zacks Consensus Estimate of 65 cents.
Revenue
Accenture reported first quarter 2010 total revenue of $5.75 billion, down 11.0% from $6.47 billion reported in the year ago quarter. Revenue declined across all its operating groups, with Communication & High Tech revenue declining 15.0% from the year ago quarter. Financial Services revenue declined 11.0% year-over-year, Health & Public Services revenue remained flat, Product revenue declined 13.0% from the year ago quarter, while Resources revenue was down11.0% from the year ago quarter.
Geographically, the Americas reported 13.0% decline in revenue compared to the year ago quarter, Europe Middle East Africa (EMEA) reported 11.0% decline in revenue and Asia-Pacific region reported 6.0% decline in revenue from the year ago quarter.
Operating Results
Operating revenue for the first quarter declined to $746.4 million (13.9% of 2009 revenue) down from $814.8 million (13.5% of 2008 revenue) reported in the year ago quarter. Sales and marketing expense increased 10.4% on a year over year basis, while general and administrative cost declined 18.7% from the year ago quarter.
The company reported $518.8 million (or $0.67 per share), down from $587.9 million (or 74 cents per share) in the year ago quarter. The company witnessed an effective tax rate of 30.5% compared with 26.6% in the year ago quarter.
Balance Sheet & Cash Flow
Free cash flow for the quarter was $184.0 million, resulting from cash of $219.0 million, generated by operating activities, net of property and equipment additions of $35.0 million. For the same period last year, free cash flow was $396.0 million. The reduction in free cash flow was driven primarily by an increase in day services outstanding (DSO) since August 31, 2009. DSO were 32 days, up four days from last quarter’s historically lower level of 28 days. Th total cash balances on Nov 30 was $4.0 billion versus $4.5 billion at the end of August.
Bookings
Accenture recorded consulting bookings of $3.51 billion. Outsourcing bookings were $2.02 billion. The company recorded the highest level of consulting bookings in the last four quarters. In management consulting, the company witnessed increased client interest in projects, focused on risk management, strategic sourcing, and global expansion activities.
Guidance
For full fiscal year 2010, management expects net revenue growth in the range of negative 3.0% to positive 1.0%. The company has increased its outlook for EPS for full fiscal year by 3 cents, reflecting the updated foreign currency assumption, and expects diluted EPS to be in the range of $2.67 to $2.75. The company also expects operating margin for full fiscal year at 13.4%.
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