Accenture (NYSE: ACN) reported financial results for the first quarter of fiscal 2023, ended November 30, 2022, with revenues of $15.7 billion, an increase of 5% in U.S. dollars and 15% in local currency over the same period last year.
Diluted earnings per share were $3.08, an 11% increase from $2.78 for the first quarter last year.
Operating income was $2.59 billion, a 7% increase over the same period last year, and operating margin was 16.5%, an expansion of 20 basis points. Operating cash flow was $495 million and free cash flow was $397 million.
New bookings for the quarter were $16.2 billion, with bookings of $8.1 billion for both consulting and managed services (previously referred to as outsourcing).
Julie Sweet, chair and CEO, Accenture, said, “Our strong first quarter results reflect our laser focus on creating value for our clients, as well as the significant investments in our business and capabilities we make year in and year out to meet the evolving needs of our clients. Today, all strategies lead to technology, and Accenture’s depth and breadth, leading ecosystem relationships and continuous innovation are enabling clients to digitize faster, build greater resiliency and optimize costs. Thanks to our extraordinary people, we continue to deliver 360° value for all our stakeholders, and are pleased to share our goals, progress and performance in our newly enhanced 360° Value Reporting Experience.”
Financial Review
Revenues for the first quarter of fiscal 2023 were $15.75 billion, compared with $14.97 billion for the first quarter of fiscal 2022, an increase of 5% in U.S. dollars and 15% in local currency.
Revenues for the quarter reflect a foreign-exchange impact of approximately negative 9.5% compared with the negative 8.5% impact previously assumed. Adjusting for the actual foreign-exchange impact, the company’s guided range for quarterly revenues was approximately $15.05 billion to $15.60 billion. Accenture’s first-quarter fiscal 2023 revenues were approximately $150 million above this adjusted range.
- Consulting revenues for the quarter were $8.44 billion, an increase of 1% in U.S. dollars and 10% in local currency compared with the first quarter of fiscal 2022.
- Managed Services revenues were $7.30 billion, an increase of 11% in U.S. dollars and 20% local currency compared with the first quarter of fiscal 2022.
Diluted EPS for the quarter were $3.08, an 11% increase from $2.78 for the first quarter last year. The $0.30 increase in EPS reflects:
- a $0.19 increase from higher revenue and operating results; and
- a $0.04 increase from non-operating income; and
- a $0.04 increase from a lower effective tax rate; and
- a $0.03 increase from a lower share count.
Gross margin (gross profit as a percentage of revenues) for the quarter was 32.9%, flat compared to 32.9% in the first quarter last year. Selling, general and administrative (SG&A) expenses for the quarter were $2.59 billion, or 16.5% of revenues, compared with $2.48 billion, or 16.6% of revenues, for the first quarter last year.
Operating income for the quarter increased 7%, to $2.59 billion, or 16.5% of revenues, compared with $2.43 billion, or 16.3% of revenues, for the first quarter of fiscal 2022.
The company’s effective tax rate for the quarter was 23.3%, compared with 24.4% for the first quarter last year.
Net income for the quarter was $2.00 billion, compared with $1.82 billion for the first quarter last year.
Operating cash flow for the quarter was $495 million, and property and equipment additions were $99 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $397 million. For the same period last year, operating cash flow was $531 million; property and equipment additions were $182 million; and free cash flow was $349 million.
Days services outstanding, or DSOs, were 48 days at Nov. 30, 2022, compared with 43 days at Aug. 31, 2022 and 42 days at Nov. 30, 2021.
Accenture’s total cash balance at Nov. 30, 2022 was $5.9 billion, compared with $7.9 billion at Aug. 31, 2022