Accenture Reports Very Strong Fourth-Quarter and Full-Year Fiscal 2022 Results

-- For the fourth quarter, revenues increase 15% in U.S. dollars and 22.4% in local currency, to $15.4 billion; operating margin expands 10 basis points to 14.7%; EPS increase 18% to $2.60 --

-- For full fiscal year, revenues are $61.6 billion, a record increase of 22% in U.S. dollars and 26% in local currency; operating margin expands 10 basis points to 15.2 --

-- For full fiscal year, EPS are $10.71, a 17% increase from $9.16 for fiscal 2021 and a 22% increase from adjusted fiscal 2021 EPS of $8.80, which excluded $0.36 in gains on an investment --

-- Free cash flow is $3.6 billion for fourth quarter and a record $8.8 billion for full year --

-- New bookings are $18.4 billion for fourth quarter and a record $71.7 billion for full year, a 21% increase in U.S. dollars and 25% increase in local currency over full-year fiscal 2021 new bookings --

-- 15% increase in quarterly dividend to $1.12 per share; Board of Directors approves $3.0 billion of additional share repurchase authority --

-- For fiscal year 2023, Accenture expects revenue growth of 8% to 11% in local currency and diluted EPS of $11.09 to $11.41 --

Accenture (NYSE: ACN) reported financial results for the fourth quarter and full fiscal year ended Aug. 31, 2022.

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Accenture Q4 Earnings Infographic (Graphic: Business Wire)

For the fourth quarter, revenues were $15.4 billion, an increase of 15% in U.S. dollars and 22.4% in local currency compared with the fourth quarter of fiscal 2021. Diluted earnings per share were $2.60, an 18% increase from $2.20 last year. Operating margin for the fourth quarter of fiscal 2022 was 14.7%, an expansion of 10 basis points from the fourth quarter of fiscal 2021. Operating cash flow was $3.8 billion and free cash flow was $3.6 billion. New bookings were $18.4 billion.

For the full fiscal year, revenues were $61.6 billion, a record increase of 22% in U.S. dollars and 26% in local currency compared with fiscal 2021. Diluted earnings per share increased 17% to $10.71 from $9.16 last year, which included gains on an investment of $0.36. Excluding these pre-tax gains, EPS increased 22% from adjusted EPS of $8.80 in fiscal 2021. Operating margin for fiscal 2022 was 15.2%, an expansion of 10 basis points. Operating cash flow for fiscal 2022 was $9.5 billion and free cash flow was a record $8.8 billion. New bookings were a record $71.7 billion.

Julie Sweet, chair and CEO, Accenture, said, “Our exceptional performance in fiscal 2022 is a testament to our ability to create enduring 360° Value for all our stakeholders: clients, people, shareholders, partners and communities. The depth, breadth and relevance of our services uniquely position us to help our clients achieve resilience, agility and growth across every part of the enterprise. Records across all financial metrics - new bookings, revenues, EPS and cash flow, reflect the continued successful execution of our growth strategy. We delivered these results while proudly making progress on our sustainability goals, including advancing inclusion and diversity; exceeding 85% renewable electricity use in our offices and centers globally; and continuing to make a positive impact on the communities where we work and live. I want to thank our 721,000 incredibly talented people, whose dedication and passion make us a trusted partner to our clients as we help them embrace today’s accelerated pace of change.”

Financial Review

Fourth Quarter Fiscal 2022

Revenues for the fourth quarter of fiscal 2022 were $15.4 billion, compared with $13.4 billion for the fourth quarter of fiscal 2021, an increase of 15% in U.S. dollars and 22.4% in local currency and at the upper end of the company's guided range of $15.0 billion to $15.5 billion. The foreign-exchange impact for the quarter was approximately negative 7.5%, compared with the assumption of a negative 8% impact provided in the company’s third-quarter earnings release.

• Consulting revenues were $8.33 billion, an increase of 14% in U.S. dollars and 22% in local currency compared with the fourth quarter of fiscal 2021.

• Outsourcing revenues were $7.09 billion, an increase of 16% in U.S. dollars and 23% in local currency compared with the fourth quarter of fiscal 2021.

Diluted EPS for the fourth quarter were $2.60, an increase of $0.40 or 18% from $2.20 for the fourth quarter last year. The $0.40 increase in EPS reflects:

• a $0.36 increase from higher revenue and operating results;
• a $0.02 increase from lower non-operating expense;
• a $0.02 increase from a lower share count; and
• a $0.01 increase from a lower effective tax rate;

partially offset by

• a $0.01 decrease from higher non-controlling interests.

Gross margin (gross profit as a percentage of revenues) for the fourth quarter was 32.1%, compared with 33.3% for the fourth quarter of fiscal 2021. Selling, general and administrative (SG&A) expenses for the fourth quarter were $2.68 billion, or 17.4% of revenues, compared with $2.51 billion, or 18.7% of revenues, for the fourth quarter of fiscal 2021.

Operating income for the fourth quarter of fiscal 2022 was $2.27 billion, or 14.7% of revenues, compared with $1.96 billion, or 14.6% of revenues, for the fourth quarter of fiscal 2021. Operating margin for the fourth quarter of fiscal 2022 expanded 10 basis points.

The company’s effective tax rate for the fourth quarter was 24.6%, compared with 25.0% for the fourth quarter of fiscal 2021. Net income for the quarter was $1.69 billion, compared with $1.44 billion for the fourth quarter of fiscal 2021. Operating cash flow for the fourth quarter was $3.79 billion, and property and equipment additions were $177 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $3.61 billion. For the same period of fiscal 2021, operating cash flow was $2.44 billion, property and equipment additions were $236 million, and free cash flow was $2.20 billion.

Days services outstanding, or DSOs, were 43 days at Aug. 31, 2022, compared with 38 days at Aug. 31, 2021.

Accenture’s total cash balance at Aug. 31, 2022 was $7.9 billion, compared with $8.2 billion at Aug. 31, 2021.

New Bookings

New bookings for the fourth quarter were $18.4 billion, an increase of 22% in U.S. dollars and 31% in local currency from the fourth quarter last year.

• Consulting new bookings were $8.4 billion, or 46% of total new bookings.

• Outsourcing new bookings were $9.9 billion, or 54% of total new bookings.

Revenues by Geographic Market

Revenues by geographic market for the fourth quarter were as follows:

• North America: $7.52 billion, an increase of 18% in both U.S. dollars and local currency compared with the fourth quarter of fiscal 2021.

• Europe: $4.80 billion, an increase of 12% in U.S. dollars and 26% in local currency compared with the fourth quarter of fiscal 2021.

• Growth Markets: $3.10 billion, an increase of 13% in U.S. dollars and 26% in local currency compared with the fourth quarter of fiscal 2021.

Revenues by Industry Group

Revenues by industry group for the fourth quarter were as follows:

• Communications, Media & Technology: $3.08 billion, an increase of 16% in U.S. dollars and 23% in local currency compared with the fourth quarter of fiscal 2021.

• Financial Services: $2.94 billion, an increase of 13% in U.S. dollars and 22% in local currency compared with the fourth quarter of fiscal 2021.

• Health & Public Service: $2.89 billion, an increase of 15% in U.S. dollars and 19% in local currency compared with the fourth quarter of fiscal 2021.

• Products: $4.48 billion, an increase of 16% in U.S. dollars and 25% in local currency compared with the fourth quarter of fiscal 2021.

• Resources: $2.03 billion, an increase of 13% in U.S. dollars and 21% in local currency compared with the fourth quarter of fiscal 2021.

Full Year Fiscal 2022

Revenues for the full 2022 fiscal year were $61.6 billion, compared with $50.5 billion for fiscal 2021, an increase of 22% in U.S. dollars and 26% in local currency. Revenues for fiscal 2022 reflect a foreign-exchange impact of approximately negative 4% compared with fiscal 2021.

• Consulting revenues were $34.1 billion, an increase of 25% in U.S. dollars and 29% in local currency compared with fiscal 2021.

• Outsourcing revenues were $27.5 billion, an increase of 19% in U.S. dollars and 22% in local currency compared with fiscal 2021.

Diluted EPS for the full 2022 fiscal year were $10.71, an increase of 17% from $9.16 for fiscal 2021. Excluding pre-tax gains on an investment of $271 million, or $0.36 per share in fiscal 2021, diluted EPS increased 22% in fiscal 2022, from adjusted EPS of $8.80 in fiscal 2021. The $1.91 increase in EPS reflects:

• a $2.08 increase from higher revenue and operating results;
• a $0.06 increase from lower other non-operating expense ; and
• a $0.05 increase from a lower share count;

partially offset by

• a $0.15 decrease from the loss on the disposition of the company’s business in Russia;
• a $0.10 decrease from a higher effective tax rate; and
• a $0.03 decrease from higher non-controlling interests.

Gross margin (gross profit as a percentage of revenues) for fiscal 2022 was 32.0%, compared with 32.4% for fiscal 2021. Selling, general and administrative (SG&A) expenses for the full fiscal year were $10.33 billion, or 16.8% of revenues, compared with $8.74 billion, or 17.3% of revenues, for fiscal 2021.

Operating income for the full fiscal year was $9.37 billion, or 15.2% of revenues, compared with $7.62 billion, or 15.1% of revenues, in fiscal 2021.

Accenture’s annual effective tax rate for fiscal 2022 was 24.0%, compared with 22.8% in fiscal 2021. Excluding the investment gains of $271 million and the related tax expense of $41.4 million, the effective tax rate for fiscal 2021 was 23.1%.

Net income for the full fiscal year was $6.99 billion, compared with $5.99 billion in fiscal 2021.

For the full 2022 fiscal year, operating cash flow was $9.54 billion, and property and equipment additions were $718 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $8.82 billion. For fiscal 2021, operating cash flow was $8.98 billion, property and equipment additions were $580 million, and free cash flow was $8.40 billion.

New Bookings

New bookings for the full fiscal year were $71.7 billion, an increase of 21% in U.S. dollars and 25% in local currency from fiscal 2021.

• Consulting new bookings were $37.9 billion, or 53% of total new bookings.

• Outsourcing new bookings were $33.9 billion, or 47% of total new bookings.

Revenues by Geographic Market

Revenues by geographic market for the full fiscal year were as follows:

• North America: $29.12 billion, an increase of 23% in both U.S. dollars and local currency compared with fiscal 2021.

• Europe: $20.26 billion, an increase of 21% in U.S. dollars and 29% in local currency compared with fiscal 2021.

• Growth Markets: $12.21 billion, an increase of 21% in U.S. dollars and 29% in local currency compared with fiscal 2021.

Revenues by Industry Group

Revenues by industry group for the full fiscal year were as follows:

• Communications, Media & Technology: $12.20 billion, an increase of 24% in U.S. dollars and 28% in local currency compared with fiscal 2021.

• Financial Services: $11.81 billion, an increase of 19% in U.S. dollars and 24% in local currency compared with fiscal 2021.

• Health & Public Service: $11.23 billion, an increase of 18% in U.S. dollars and 20% in local currency compared with fiscal 2021.
• Products: $18.28 billion, an increase of 27% in U.S. dollars and 32% in local currency compared with fiscal 2021.

• Resources: $8.08 billion, an increase of 18% in U.S. dollars and 22% in local currency compared with fiscal 2021.

Returning Cash to Shareholders

Accenture continues to return cash to shareholders through cash dividends and share repurchases. In fiscal 2022, the company returned $6.57 billion to shareholders, including $2.46 billion in cash dividends and $4.12 billion in share repurchases.

Dividend

On Aug. 15, 2022, a quarterly cash dividend of $0.97 per share was paid to shareholders of record at the close of business on July 14, 2022. These cash dividend payments totaled $614 million, bringing dividend payments for the full year to $2.46 billion, compared with $2.24 billion in fiscal 2021.

Accenture plc has declared a quarterly cash dividend of $1.12 per share, for shareholders of record at the close of business on Oct. 13, 2022. This dividend, which is payable on Nov. 15, 2022, represents a 15% increase over the company’s previous quarterly dividend.

Share Repurchase Activity

During the fourth quarter of fiscal 2022, Accenture repurchased or redeemed 2.1 million shares, including 2.0 million shares repurchased in the open market, for a total of $605 million. This brought total share repurchases and redemptions for the full fiscal year to 12.2 million shares, including 9.6 million shares repurchased in the open market, for a total of $4.12 billion.

The company’s Board of Directors has approved $3.0 billion in additional share repurchase authority, bringing Accenture’s total outstanding authority to approximately $6.1 billion.

At Aug. 31, 2022, Accenture had approximately 632 million total shares outstanding.

Business Outlook

First Quarter Fiscal 2023

Accenture expects revenues for the first quarter of fiscal 2023 to be in the range of $15.2 billion to $15.75 billion, an increase of 10% to 14% in local currency, reflecting the company’s assumption of an approximately negative 8.5% foreign-exchange impact compared with the first quarter of fiscal 2022.

Fiscal Year 2023

Accenture’s business outlook for the full 2023 fiscal year assumes that the foreign-exchange impact on its results in U.S. dollars will be approximately negative 6% compared with fiscal 2022.

For fiscal 2023, the company expects revenue growth to be in the range of 8% to 11% in local currency.

Accenture expects operating margin for the full fiscal year to be in the range of 15.3% to 15.5%, an expansion of 10 to 30 basis points from fiscal 2022.

The company expects its annual effective tax rate to be in the range of 23% to 25%.

The company expects diluted EPS to be in the range of $11.09 to $11.41, an increase of 4% to 7% over FY22 diluted EPS.

For fiscal 2023, the company expects operating cash flow to be in the range of $8.5 billion to $9.0 billion; property and equipment additions to be $800 million; and free cash flow to be in the range of $7.7 billion to $8.2 billion.

The company expects to return at least $7.1 billion in cash to shareholders through dividends and share repurchases.

360° Value Reporting

Accenture’s goal is to create 360° value for our clients, people, shareholders, partners, and communities. To enhance transparency and provide a comprehensive view for all stakeholders, we have combined our financial and environmental, social and governance (ESG) reporting into a digital-first experience. To access our goals, progress and performance, please visit the Accenture 360° Value Reporting Experience (www.accenture.com/reportingexperience).

Conference Call and Webcast Details

Accenture will host a conference call at 8:00 a.m. EDT today to discuss its fourth-quarter and fiscal year 2022 financial results. To participate, please dial +1 (877) 692-8955 [+1 (234) 720-6979 outside the United States, Puerto Rico and Canada] and enter access code 9024690 approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accenture Web site at www.accenture.com.

A replay of the conference call will be available at www.accenture.com beginning at 11:00 a.m. EDT today, Sept. 22, and continuing through Friday, Dec. 16, 2022. The replay will also be available via telephone by dialing +1 (866) 207-1041 [+1 (402) 970-0847 outside the United States, Puerto Rico and Canada] and entering access code 4002764 from 11:00 a.m. EDT today, Sept. 22, through Friday, Dec. 16, 2022.

About Accenture

Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialized skills across more than 40 industries, we offer Strategy and Consulting, Technology and Operations services and Accenture Song — all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 721,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com.

Non-GAAP Financial Information

This news release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to Accenture’s financial statements as prepared under generally accepted accounting principles (GAAP) are included in this press release. Financial results “in local currency” are calculated by restating current-period activity into U.S. dollars using the comparable prior-year period’s foreign-currency exchange rates. Accenture’s management believes providing investors with this information gives additional insights into Accenture’s results of operations. While Accenture’s management believes that the non-GAAP financial measures herein are useful in evaluating Accenture’s operations, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP. Accenture provides full-year revenue guidance on a local-currency basis and not in U.S. dollars because the impact of foreign exchange rate fluctuations could vary significantly from the company’s stated assumptions.

Forward-Looking Statements

Except for the historical information and discussions contained herein, statements in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. These risks include, without limitation, risks that: Accenture’s results of operations have been, and may in the future be, adversely affected by volatile, negative or uncertain economic and political conditions, including the invasion of Ukraine by Russia, the related sanctions and other measures that have been and continue to be imposed in response to this conflict, as well as the current inflationary environment, and the effects of these conditions on the company’s clients’ businesses and levels of business activity; Accenture faces legal, reputational and financial risks from any failure to protect client and/or company data from security incidents or cyberattacks; Accenture’s business depends on generating and maintaining ongoing, profitable client demand for the company’s services and solutions including through the adaptation and expansion of its services and solutions in response to ongoing changes in technology and offerings, and a significant reduction in such demand or an inability to respond to the evolving technological environment could materially affect the company’s results of operations; if Accenture is unable to match people and skills with client demand around the world and attract and retain professionals with strong leadership skills, the company’s business, the utilization rate of the company’s professionals and the company’s results of operations may be materially adversely affected; the COVID-19 pandemic has impacted Accenture’s business and operations, and the extent to which it will continue to do so and its impact on the company’s future financial results are uncertain; the markets in which Accenture operates are highly competitive, and Accenture might not be able to compete effectively; Accenture’s ability to attract and retain business and employees may depend on its reputation in the marketplace; if Accenture does not successfully manage and develop its relationships with key alliance partners or fails to anticipate and establish new alliances in new technologies, the company’s results of operations could be adversely affected; Accenture’s profitability could materially suffer if the company is unable to obtain favorable pricing for its services and solutions, if the company is unable to remain competitive, if its cost-management strategies are unsuccessful or if it experiences delivery inefficiencies or fail to satisfy certain agreed-upon targets or specific service levels; changes in Accenture’s level of taxes, as well as audits, investigations and tax proceedings, or changes in tax laws or in their interpretation or enforcement, could have a material adverse effect on the company’s effective tax rate, results of operations, cash flows and financial condition; Accenture’s results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates; changes to accounting standards or in the estimates and assumptions Accenture makes in connection with the preparation of its consolidated financial statements could adversely affect its financial results; Accenture might be unable to access additional capital on favorable terms or at all and if the company raises equity capital, it may dilute its shareholders’ ownership interest in the company; as a result of Accenture’s geographically diverse operations and its growth strategy to continue to expand in its key markets around the world, the company is more susceptible to certain risks; if Accenture is unable to manage the organizational challenges associated with its size, the company might be unable to achieve its business objectives; Accenture might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses; Accenture’s business could be materially adversely affected if the company incurs legal liability; Accenture’s global operations expose the company to numerous and sometimes conflicting legal and regulatory requirements; Accenture’s work with government clients exposes the company to additional risks inherent in the government contracting environment; if Accenture is unable to protect or enforce its intellectual property rights or if Accenture’s services or solutions infringe upon the intellectual property rights of others or the company loses its ability to utilize the intellectual property of others, its business could be adversely affected; Accenture’s results of operations and share price could be adversely affected if it is unable to maintain effective internal controls; Accenture may be subject to criticism and negative publicity related to its incorporation in Ireland; as well as the risks, uncertainties and other factors discussed under the “Risk Factors” heading in Accenture plc’s most recent Annual Report on Form 10-K and other documents filed with or furnished to the Securities and Exchange Commission. Statements in this news release speak only as of the date they were made, and Accenture undertakes no duty to update any forward-looking statements made in this news release or to conform such statements to actual results or changes in Accenture’s expectations.

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