Accenture reported strong financial results for the third quarter of fiscal 2008, ended May 31, with net revenues of $6.10 billion, a year-overyear increase of 20 percent in U.S. dollars and 12 percent in local currency and the highest quarterly net revenues in the company’s history. Consulting and outsourcing revenues were both quarterly records, growing by double digits in U.S. dollars and local currency.
Earnings per share were $0.74, the highest for any quarter in the company’s history and an increase of 36 percent over the third quarter of fiscal 2007, driven largely by strong growth in revenue and operating income. In addition, the company has again raised its outlook for earnings per share for the full fiscal year 2008, to a range of $2.63 to $2.65 from its previously guided range of $2.55 to $2.60.
New bookings were $6.77 billion, with record quarterly consulting bookings of $3.98 billion.
The company grew operating income by 27 percent and expanded its operating margin by 70 basis points over the third quarter last year.
William D. Green, Accenture’s chairman & CEO, said, “Our excellent results in the third quarter include our highest-ever quarterly revenues and earnings per share. In addition, our disciplined approach to managing our diverse and global business enabled us to expand our operating margin, and the solid bookings we achieved demonstrate continued strong global demand for our services, even in markets experiencing difficult economic conditions.
“We continue to benefit from our long-term relationships with our clients, who seek our help in entering new markets, lowering the cost of doing business and managing increased levels of risk as they work to achieve and maintain high performance. To ensure that we continue to meet and anticipate our clients’ needs, we are investing in technological innovation and expanding our skills and capabilities through both organic growth and tactical acquisitions. We see strong momentum in our business as we look to the rest of the fiscal year, and we remain focused on delivering value for our clients, and in turn, our shareholders.”
Financial Review
Revenues before reimbursements (“net revenues”) for the third quarter of fiscal 2008 were $6.10 billion, compared with $5.08 billion for the third quarter of fiscal 2007, an increase of 20 percent in U.S. dollars and 12 percent in local currency.
Consulting net revenues were $3.70 billion, an increase of 20 percent in U.S. dollars and 12 percent in local currency over the third quarter last year.
Outsourcing net revenues were $2.40 billion, also an increase of 20 percent in U.S. dollars and 12 percent in local currency over the same period last year.
Diluted EPS for the third quarter were $0.74, compared with $0.54 in the third quarter last year, an increase of 36 percent, driven largely by strong growth in revenue and operating income and, to a lesser extent, by favorable foreign-exchange rates, a lower share count and a lower tax rate compared with the third quarter last year.
Operating income increased 27 percent, to $862 million, or 14.1 percent of net revenues, compared with $682 million, or 13.4 percent of net revenues, in the third quarter last year. Gross margin (gross profit as a percentage of net revenues) was 31.5 percent, compared with 31.7 percent in the third quarter of fiscal 2007.
Selling, general and administrative expenses were $1.06 billion, or 17.3 percent of net revenues, compared with $921 million, or 18.1 percent of net revenues, in the third quarter last year. The reduction as a percentage of net revenues was primarily due to strong revenue growth and the company’s management of general and administrative costs to a growth rate lower than that of its net revenues.
The company’s effective tax rate for the third quarter of fiscal 2008 was 30.8 percent, compared with 33.3 percent in the third quarter last year. The reduction in the effective tax rate compared with the third quarter last year was due primarily to changes in the geographic distribution of income.
Income before minority interest for the third quarter was $608 million, compared with $473 million for the same period of fiscal 2007, an increase of 28 percent.
For the three months ended May 31, 2008, operating cash flow was $1,080 million; property and equipment additions were $66 million; and free cash flow, defined as operating cash flow net of property and equipment additions, was $1,014 million.
Accenture’s total cash balance at May 31, 2008 was $3.33 billion, compared with $3.31 billion at Aug. 31, 2007. Cash combined with $39 million of fixed-income securities classified as investments on the company’s balance sheet was $3.37 billion at May 31, 2008, compared with $3.61 billion at Aug. 31, 2007. Total debt at May 31, 2008 was $7 million.
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