Accenture : Q4FY21 Earnings Release

Accenture Reports Very Strong Fourth-Quarter and Full-Year Fiscal 2021 Results

• For the fourth quarter, revenues increase 24% in U.S. dollars and 21% in local currency, to $13.4 billion; EPS increase 11% to $2.20 from $1.99 last year, which included $0.29 in gains on
  an investment; EPS increase 29% from adjusted EPS of $1.70 last year --
• For full fiscal year, revenues are a record $50.5 billion, an increase of 14% in U.S. dollars and 11% in local currency; operating margin expands 40 basis points to 15.1%; EPS increase 16%
  to $9.16 from $7.89 last year, which include $0.36 and $0.43, respectively, in gains on an investment; excluding these gains, adjusted EPS increase 18% to $8.80 in fiscal 2021 from

$7.46 in fiscal 2020 --

-- Free cash flow is $2.2 billion for fourth quarter and $8.4 billion for full year --

• New bookings are $15.0 billion for fourth quarter and a record $59.3 billion for full year, a 20% increase in U.S. dollars over full-year fiscal 2020 new bookings --
• • Company increases quarterly cash dividend 10%, to $0.97 per share; Board of Directors approves $3.0 billion of additional share repurchase authority --
• For fiscal year 2022, Accenture expects revenue growth of 12% to 15% in local currency and GAAP diluted EPS of $9.90 to $10.18, an increase of 13% to 16% from adjusted EPS for fiscal

2021 --

NEW YORK; Sept. 23, 2021 - Accenture (NYSE: ACN) reported financial results for the fourth quarter and full fiscal year ended Aug. 31, 2021.

For the fourth quarter, revenues were $13.4 billion, an increase of 24% in U.S. dollars and 21% in local currency compared with the fourth quarter of fiscal 2020. Diluted earnings per share were $2.20, an 11% increase from $1.99 last year, which included $0.29 in gains on an investment. Diluted EPS increased 29% from adjusted EPS of $1.70 for the fourth quarter last year. Operating margin for the fourth quarter of fiscal 2021 was 14.6%, an expansion of

30 basis points from the fourth quarter of fiscal 2020. Operating cash flow was $2.4 billion and free cash flow was $2.2 billion. New bookings were $15.0 billion.

For the full fiscal year, revenues were $50.5 billion, an increase of 14% in U.S. dollars and 11% in local currency compared with fiscal 2020. Diluted earnings per share increased 16% to $9.16 from $7.89 last year, including gains on an investment of $0.36 and $0.43, respectively.

Excluding these gains, adjusted diluted EPS for fiscal 2021 were $8.80, an 18% increase from $7.46 in fiscal 2020. Operating margin for fiscal 2021 was 15.1%, an expansion of 40 basis points. Operating cash flow for fiscal 2021 was $9.0 billion and free cash flow was $8.4 billion. New bookings were a record $59.3 billion.

Julie Sweet, Accenture's Chair & CEO, said, "We are very proud of our outstanding fiscal 2021 financial performance, reflecting growth significantly above the market and strong momentum heading into fiscal 2022. Our results reflect the dedication and hard work of our 624,000 incredible people, who are laser-focused on creating tangible value for our clients, innovating with our ecosystem, and being the trusted partner of choice on our clients' transformation journeys. We delivered these results while investing in our people and in the capabilities our clients need, now and in the future, and at the same time making progress on our sustainability goals - from progress in inclusion and diversity, to the use of renewable energy now at 50%

across the globe, to supporting our communities during these challenging times. We measure our success by this 360° value creation."

Financial Review

Fourth Quarter Fiscal 2021

Revenues for the fourth quarter of fiscal 2021 were $13.42 billion, compared with $10.84 billion for the fourth quarter of fiscal 2020, an increase of 24% in U.S. dollars and 21% in local currency. Revenues for the quarter reflect a foreign-exchange impact of approximately positive 3%, compared with the positive 4% impact previously assumed. Adjusting for the actual foreign-exchange impact, the company's guided range for quarterly revenues was approximately $13.0 billion to $13.4 billion. Accenture's fourth-quarter fiscal 2021 revenues were slightly above this adjusted range.

• Consulting revenues were $7.31 billion, an increase of 29% in U.S. dollars and 25% in local currency compared with the fourth quarter of fiscal 2020.
• Outsourcing revenues were $6.11 billion, an increase of 19% in U.S. dollars and 16% in local currency compared with the fourth quarter of fiscal 2020.

GAAP diluted EPS for the fourth quarter were $2.20, an increase of $0.21 or 11% from $1.99 for the fourth quarter last year, which included gains on an investment of $219 million, pre-tax, or $0.29 per share. EPS for the quarter increased $0.50, or 29%, from adjusted EPS of $1.70 for the fourth quarter last year. The $0.50 increase in EPS on an adjusted basis reflects:

• a $0.46 increase from higher revenue and operating results;
• a $0.10 increase from a lower effective tax rate; and
• a $0.01 increase from a lower share count;

partially offset by

• a $0.07 decrease from higher non-operating expenses.

Gross margin (gross profit as a percentage of revenues) for the fourth quarter was 33.3%, compared with 31.8% for the fourth quarter of fiscal 2020. Selling, general and administrative (SG&A) expenses for the fourth quarter were $2.51 billion, or 18.7% of revenues, compared with $1.90 billion, or 17.5% of revenues, for the fourth quarter of fiscal 2020.

Operating income for the fourth quarter of fiscal 2021 was $1.96 billion, or 14.6% of revenues, compared with $1.54 billion, or 14.3% of revenues, for the fourth quarter of fiscal 2020. Operating margin for the fourth quarter of fiscal 2021 expanded 30 basis points.

The company's effective tax rate for the fourth quarter was 25.0%, compared with 26.8% for the fourth quarter of fiscal 2020. Excluding the impact of gains on an investment, the effective tax rate was 28.4% for the fourth quarter last year.

Net income for the quarter was $1.44 billion, compared with $1.31 billion for the fourth quarter of fiscal 2020. Excluding the $185 million after-tax impact of gains on an investment, net income was $1.12 billion for the fourth quarter last year.

Operating cash flow for the fourth quarter was $2.44 billion, and property and equipment additions were $236 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $2.20 billion. For the same period of fiscal 2020, operating cash flow was $3.16 billion, property and equipment additions were $189 million, and free cash flow was $2.97 billion.

Days services outstanding, or DSOs, were 38 days at Aug. 31, 2021, compared with 35 days at Aug. 31, 2020.

Accenture's total cash balance at Aug. 31, 2021 was $8.2 billion, compared with $8.4 billion at Aug. 31, 2020.

New Bookings

New bookings for the fourth quarter were $15.0 billion, an increase of 7% in U.S. dollars and 5% in local currency from the fourth quarter last year.

• Consulting new bookings were $8.0 billion, or 53% of total new bookings.
• Outsourcing new bookings were $7.1 billion, or 47% of total new bookings.

Revenues by Geographic Market

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

• North America: $6.39 billion, an increase of 23% in U.S. dollars and 22% in local currency compared with the fourth quarter of fiscal 2020.
• Europe: $4.30 billion, an increase of 26% in U.S. dollars and 18% in local currency compared with the fourth quarter of fiscal 2020.
• Growth Markets: $2.73 billion, an increase of 23% in U.S. dollars and 21% in local currency compared with the fourth quarter of fiscal 2020.

Revenues by Industry Group

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

• Communications, Media & Technology: $2.77 billion, an increase of 26% in U.S. dollars and 23% in local currency compared with the fourth quarter of fiscal 2020.
• Financial Services: $2.61 billion, an increase of 24% in U.S. dollars and 20% in local currency compared with the fourth quarter of fiscal 2020.
• Health & Public Service: $2.50 billion, an increase of 20% in U.S. dollars and 18% in local currency compared with the fourth quarter of fiscal 2020.
• Products: $3.73 billion, an increase of 29% in U.S. dollars and 25% in local currency compared with the fourth quarter of fiscal 2020.

• Resources: $1.80 billion, an increase of 17% in U.S. dollars and 13% in local currency compared with the fourth quarter of fiscal 2020.

Full Year Fiscal 2021

Revenues for the full 2021 fiscal year were $50.5 billion, compared with $44.3 billion for fiscal 2020, an increase of 14% in U.S. dollars and 11% in local currency. Revenues for fiscal 2021 reflect a foreign-exchange impact of approximately positive 3% compared with fiscal 2020.

• Consulting revenues were $27.3 billion, an increase of 13% in U.S. dollars and 9% in local currency compared with fiscal 2020.
• Outsourcing revenues were $23.2 billion, an increase of 15% in U.S. dollars and 13% in local currency compared with fiscal 2020.

GAAP diluted EPS for the full 2021 fiscal year were $9.16, an increase of $1.27 or 16% from $7.89 for fiscal 2020. Excluding pre-tax gains on an investment of $271 million, or $0.36 per share, and $332 million, or $0.43 per share, respectively, adjusted EPS were $8.80 in fiscal 2021 and $7.46 in fiscal 2020, an increase of $1.34, or 18%. The $1.34 increase in EPS on an adjusted basis reflects:

• a $1.30 increase from higher revenue and operating results;
• a $0.09 increase from a lower effective tax rate; and
• a $0.03 increase from a lower share count;

partially offset by

• a $0.07 decrease from higher non-operating expenses; and
• a $0.01 decrease from higher income attributable to noncontrolling interests.

Gross margin (gross profit as a percentage of revenues) for fiscal 2021 was 32.4%, compared with 31.5% for fiscal 2020. Selling, general and administrative (SG&A) expenses for the full fiscal year were $8.74 billion, or 17.3% of revenues, compared with $7.46 billion, or 16.8% of revenues, for fiscal 2020.

Operating income for the full fiscal year was $7.62 billion, or 15.1% of revenues, compared with $6.51 billion, or 14.7% of revenues, in fiscal 2020.

Accenture's annual effective tax rate for fiscal 2021 was 22.8%, compared with 23.5% in fiscal 2020. Excluding the impact of gains on an investment, the effective tax rate was 23.1% in fiscal 2021, compared with 23.9% in fiscal 2020.

Net income for the full fiscal year was $5.99 billion, compared with $5.19 billion in fiscal 2020. Excluding the after-tax impact of gains on an investment of $230 million and $280 million, respectively, net income was $5.76 billion in fiscal 2021, compared with $4.91 billion in fiscal 2020.

For the full 2021 fiscal year, operating cash flow was $8.98 billion, and property and equipment additions were $580 million. Free cash flow, defined as operating cash flow net of property and equipment additions, was $8.40 billion. For fiscal 2020, operating cash flow was $8.22 billion, property and equipment additions were $599 million, and free cash flow was $7.62 billion.

New Bookings

New bookings for the full fiscal year were $59.3 billion, an increase of 20% in U.S. dollars and 17% in local currency from fiscal 2020.

• Consulting new bookings were $30.6 billion, or 52% of total new bookings.
• Outsourcing new bookings were $28.7 billion, or 48% of total new bookings.

Revenues by Geographic Market

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

• North America: $23.70 billion, an increase of 13% in U.S. dollars and 12% in local currency compared with fiscal 2020.
• Europe: $16.75 billion, an increase of 16% in U.S. dollars and 8% in local currency compared with fiscal 2020.
• Growth Markets: $10.08 billion, an increase of 13% in U.S. dollars and 11% in local currency compared with fiscal 2020.

Revenues by Industry Group

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

• Communications, Media & Technology: $10.29 billion, an increase of 16% in U.S. dollars and 14% in local currency compared with fiscal 2020.
• Financial Services: $9.93 billion, an increase of 17% in U.S. dollars and 13% in local currency compared with fiscal 2020.
• Health & Public Service: $9.50 billion, an increase of 18% in U.S. dollars and 16% in local currency compared with fiscal 2020.
• Products: $13.95 billion, an increase of 14% in U.S. dollars and 10% in local currency compared with fiscal 2020.
• Resources: $6.86 billion, an increase of 4% in U.S. dollars and 1% in local currency compared with fiscal 2020.

Returning Cash to Shareholders

Accenture continues to return cash to shareholders through cash dividends and share repurchases. In fiscal 2021, the company returned $5.94 billion to shareholders, including $2.24 billion in cash dividends and $3.70 billion in share repurchases.

Dividend

On Aug. 13, 2021, a quarterly cash dividend of $0.88 per share was paid to shareholders of record at the close of business on July 15, 2021. These cash dividend payments totaled