Document/ExhibitDescriptionPagesSize 1: 10-Q Quarterly Report HTML 1.12M
2: EX-10.1 Form of Severance Agreement HTML 23K
3: EX-10.2 Relocation Benefits Agreement Manish Sharma HTML 21K
4: EX-31.1 Section 302 Certification of the Principal HTML 23K
Executive Officer
5: EX-31.2 Section 302 Certification of the Principal HTML 23K
Financial Officer
6: EX-32.1 Section 302 Certification of the Principal HTML 20K
Executive Officer
7: EX-32.2 Section 302 Certification of the Principal HTML 20K
Financial Officer
13: R1 Cover Page HTML 78K
14: R2 Consolidated Balance Sheets HTML 181K
15: R3 Consolidated Balance Sheets (Parenthetical) HTML 37K
16: R4 Consolidated Income Statements HTML 107K
17: R5 Consolidated Statements of Comprehensive Income HTML 59K
18: R6 Consolidated Shareholders' Equity Statement HTML 96K
19: R7 Consolidated Cash Flows Statements HTML 97K
20: R8 Basis of Presentation HTML 50K
21: R9 Revenues HTML 35K
22: R10 Earnings Per Share HTML 43K
23: R11 Accumulated Other Comprehensive Loss HTML 57K
24: R12 Business Combinations HTML 21K
25: R13 Goodwill and Intangible Assets HTML 62K
26: R14 Shareholders' Equity HTML 36K
27: R15 Financial Instruments HTML 48K
28: R16 Income Taxes HTML 24K
29: R17 Commitments and Contingencies HTML 27K
30: R18 Segment Reporting HTML 57K
31: R19 Pay vs Performance Disclosure HTML 31K
32: R20 Insider Trading Arrangements HTML 59K
33: R21 Basis of Presentation (Policies) HTML 46K
34: R22 Basis of Presentation (Tables) HTML 48K
35: R23 Revenues (Tables) HTML 29K
36: R24 Earnings Per Share (Tables) HTML 42K
37: R25 Accumulated Other Comprehensive Loss (Tables) HTML 57K
38: R26 Goodwill and Intangible Assets (Tables) HTML 69K
39: R27 Shareholders' Equity (Tables) HTML 30K
40: R28 Financial Instruments (Tables) HTML 48K
41: R29 Segment Reporting (Tables) HTML 54K
42: R30 Basis of Presentation - Additional Information HTML 34K
(Details)
43: R31 Basis of Presentation - Investments (Details) HTML 26K
44: R32 Basis of Presentation - Depreciation and HTML 33K
Amortization (Details)
45: R33 Basis of Presentation - Business Optimization HTML 28K
(Details)
46: R34 Revenues - Additional Information (Details) HTML 37K
47: R35 Revenues - Schedule of Revenue (Details) HTML 32K
48: R36 Earnings Per Share (Details) HTML 66K
49: R37 Accumulated Other Comprehensive Loss (Details) HTML 75K
50: R38 Business Combinations (Details) HTML 22K
51: R39 Goodwill and Intangible Assets - Goodwill HTML 38K
Rollforward (Details)
52: R40 Goodwill and Intangible Assets - Intangible Table HTML 38K
by Major Class (Details)
53: R41 Goodwill and Intangible Assets - Amortization HTML 39K
(Details)
54: R42 Shareholders' Equity - Dividend Activity (Details) HTML 34K
55: R43 Shareholders' Equity - Additional Information HTML 39K
(Details)
56: R44 Financial Instruments - Additional Information HTML 21K
(Details)
57: R45 Financial Instruments - Notional and Fair Values HTML 44K
of All Derivative Instruments (Details)
58: R46 Financial Instruments - Offsetting Derivative HTML 38K
Assets and Liabilities (Details)
59: R47 Income Taxes (Details) HTML 20K
60: R48 Commitments and Contingencies (Details) HTML 24K
61: R49 Segment Reporting - Additional Information HTML 20K
(Details)
62: R50 Segment Reporting - Reportable Operating Segments HTML 52K
(Details)
65: XML IDEA XML File -- Filing Summary XML 111K
63: XML XBRL Instance -- acn-20231130_htm XML 1.04M
64: EXCEL IDEA Workbook of Financial Report Info XLSX 95K
9: EX-101.CAL XBRL Calculations -- acn-20231130_cal XML 212K
10: EX-101.DEF XBRL Definitions -- acn-20231130_def XML 346K
11: EX-101.LAB XBRL Labels -- acn-20231130_lab XML 1.30M
12: EX-101.PRE XBRL Presentations -- acn-20231130_pre XML 738K
8: EX-101.SCH XBRL Schema -- acn-20231130 XSD 102K
66: JSON XBRL Instance as JSON Data -- MetaLinks 419± 590K
67: ZIP XBRL Zipped Folder -- 0001467373-23-000403-xbrl Zip 274K
(Exact name of registrant as specified in its charter)
iIreland
i98-0627530
(State
or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
i1 Grand Canal Square,
iGrand Canal Harbour,
iDublini2, iIreland
(Address of principal executive offices)
(i353) (i1) i646-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
iClass A ordinary shares, par value $0.0000225
per share
iACN
iNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). iYes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
iLarge
accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging growth company
i☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐ No ☑
The number of shares of the
registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of December 4, 2023 was i666,511,551 (which number includes 39,519,697 issued shares held by the registrant). The number of shares of the registrant’s Class X ordinary shares, par value $0.0000225 per share, outstanding as of December 4,
2023 was i318,441.
Current portion of long-term debt and bank borrowings
$
i104,819
$
i104,810
Accounts
payable
i2,574,700
i2,491,173
Deferred revenues
i4,459,593
i4,907,152
Accrued
payroll and related benefits
i7,260,479
i7,506,030
Income
taxes payable
i755,929
i720,778
Lease
liabilities
i683,628
i690,417
Other
accrued liabilities
i1,441,090
i1,588,678
Total
current liabilities
i17,280,238
i18,009,038
NON-CURRENT
LIABILITIES:
Long-term debt
i42,309
i43,093
Deferred
revenues
i634,981
i653,954
Retirement
obligation
i1,586,945
i1,595,638
Deferred
tax liabilities
i415,386
i395,280
Income
taxes payable
i1,374,062
i1,313,971
Lease
liabilities
i2,249,466
i2,310,714
Other
non-current liabilities
i462,530
i465,024
Total
non-current liabilities
i6,765,679
i6,777,674
COMMITMENTS
AND CONTINGENCIES
i
i
SHAREHOLDERS’ EQUITY:
Ordinary shares, par value
ii1.00/ euros per share, iiii40,000///
shares authorized and issued as of November 30, 2023 and August 31, 2023
i57
i57
Class A
ordinary shares, par value $ii0.0000225/ per share, ii20,000,000,000/
shares authorized, i666,511,551 and i664,616,285 shares issued as of November 30, 2023 and August 31, 2023, respectively
i15
i15
Class
X ordinary shares, par value $ii0.0000225/ per share, ii1,000,000,000/
shares authorized, ii318,441/ and ii325,438/
shares issued and outstanding as of November 30, 2023 and August 31, 2023, respectively
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
9
1. iBasis
of Presentation
i
The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. We use the terms “Accenture,”“we” and “our” in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries.
These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on October 12, 2023.
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from those estimates. The Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion
of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three months ended November 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2024.
i
Allowance for Credit Losses—Client Receivables and Contract
Assets
As of November 30, 2023 and August 31, 2023, the total allowance for credit losses recorded for client receivables and contract assets was $i24,210 and $i26,343,
respectively. The change in the allowance is primarily due to immaterial write-offs and changes in gross client receivables and contract assets.
i
Investments
All available-for-sale securities and liquid investments with an original maturity greater than three months but less than one year are considered to be Short-term investments. Non-current investments consist of equity securities in publicly-traded and privately-held companies and are accounted for using either the equity or fair value measurement alternative method of accounting
(for investments without readily determinable fair values).
Investments
without readily determinable fair values
i174,296
i173,458
Total
non-current investments
$
i198,074
$
i197,443
/
For
investments in which we can exercise significant influence but do not control, we use the equity method of accounting. Equity method investments are initially recorded at cost and our proportionate share of gains and losses of the investee are included as a component of Other income (expense), net.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
10
Depreciation and Amortization
As of November 30, 2023 and August 31,
2023, total accumulated depreciation was $i2,660,216 and $i2,574,685,
respectively. iSee table below for a summary of depreciation on fixed assets, deferred transition amortization, intangible assets amortization and operating lease cost for the three months ended November 30, 2023 and 2022, respectively.
During the second quarter of fiscal 2023, we initiated actions to streamline our operations, transform our non-billable corporate functions and consolidate our office space to reduce costs. We recorded $i1.1 billion in fiscal 2023 related to these actions and expect to record approximately $i450
million in fiscal 2024 for a total of $i1.5 billion, primarily related to employee severance. The actual amount and timing of severance and other personnel costs are dependent in part upon local country consultation processes and regulations and may differ from our current expectations and estimates.
i
Total
business optimization costs by reportable operating segment for the three months ended November 30, 2023 were as follows:
(1)Effective
September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market.
/i
New Accounting Pronouncement
On December
14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU will be effective beginning with our annual fiscal 2026 financial statements and allows for adoption on a prospective basis, with a retrospective option. We are in the process of assessing the impacts and method of adoption. This ASU will impact our income tax disclosures, but not our Consolidated Financial Statements.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
11
2. iRevenues
Disaggregation
of Revenue
See Note 11 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.
Remaining Performance Obligations
We had remaining performance obligations of approximately $ii26/
billion as of November 30, 2023 and August 31, 2023, respectively. Our remaining performance obligations represent the amount of transaction price for which work has not been performed and revenue has not been recognized. The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice. Under Topic 606, only the non-cancelable portion of these contracts is included in our performance obligations. Additionally, our performance obligations only include variable consideration if we assess it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. Based
on the terms of our contracts, a significant portion of what we consider contract bookings is not included in our remaining performance obligations. We expect to recognize approximately i60% of our remaining performance obligations as of November 30, 2023 as revenue in fiscal 2024, an additional i20%
in fiscal 2025, and the balance thereafter.
Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were immaterial for the three months ended November 30, 2023 and 2022, respectively.
Deferred transition revenues were $i634,981
and $i653,954 as of November 30, 2023 and August 31, 2023, respectively, and are included in Non-current deferred revenues. Costs related to these activities are also deferred and are expensed as the services are provided. Deferred transition costs were $i827,608
and $i851,972 as of November 30, 2023 and August 31, 2023, respectively, and are included in Deferred contract costs. Generally, deferred amounts are protected in the event of early termination of the contract and are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted
operating cash flows of the related contract are not sufficient to recover the carrying amount of contract assets.
i
The following table provides information about the balances of our Receivables and Contract assets, net of allowance, and Contract
liabilities (Deferred revenues):
Changes
in the contract asset and liability balances during the three months ended November 30, 2023 were a result of normal business activity and not materially impacted by any other factors.
Revenues recognized during the three months ended November 30, 2023 that were included in Deferred revenues as of August 31, 2023 were $i2.8
billion. Revenues recognized during the three months ended November 30, 2022 that were included in Deferred revenues as of August 31, 2022 were $i2.5 billion.
Net
income attributable to noncontrolling interests in Accenture Canada Holdings Inc. (1)
i2,016
i2,085
Net
income for diluted earnings per share calculation
$
i1,975,460
$
i1,967,035
Basic
weighted average Class A ordinary shares
i627,996,111
i630,137,262
Class A
ordinary shares issuable upon redemption/exchange of noncontrolling interests (1)
i641,659
i668,715
Diluted
effect of employee compensation related to Class A ordinary shares
i8,492,332
i7,847,787
Diluted
effect of share purchase plans related to Class A ordinary shares
i268,259
i113,057
Diluted
weighted average Class A ordinary shares
i637,398,361
i638,766,821
Diluted
earnings per share
$
i3.10
$
i3.08
/
(1)Diluted
earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis. The income effect does not take into account “Net income attributable to noncontrolling interests - other,” since those shares are not redeemable or exchangeable for Accenture plc Class A ordinary shares.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
13
4. iAccumulated
Other Comprehensive Loss
i
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc:
Reclassifications
into net periodic pension and post-retirement expense
i44,294
i126,171
Income
tax benefit (expense)
(i7,865)
(i34,394)
Portion
attributable to noncontrolling interests
(i37)
(i97)
Defined
benefit plans, net of tax
i36,392
i91,680
Ending
balance
(i190,111)
(i257,091)
Cash
flow hedges
Beginning balance
(i5,966)
i10,749
Unrealized
gain (loss)
i23,614
(i59,879)
Reclassification
adjustments into Cost of services
(i10,600)
i2,606
Income
tax benefit (expense)
(i1,701)
i16,051
Portion
attributable to noncontrolling interests
(i11)
i44
Cash
flow hedges, net of tax
i11,302
(i41,178)
Ending
balance (1)
i5,336
(i30,429)
Accumulated
other comprehensive loss
$
(i1,627,215)
$
(i2,055,672)
/
(1)As
of November 30, 2023, $i13,741 of net unrealized gains related to derivatives designated as cash flow hedges is expected to be reclassified into Cost of services in the next twelve months.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
14
5. iBusiness
Combinations
During the three months ended November 30, 2023, we completed individually immaterial acquisitions for total consideration of $i781,525, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.
6. iGoodwill
and Intangible Assets
Goodwill
i
The changes in the carrying amount of goodwill by reportable operating segment are as follows:
(1)Effective
September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.
/
Goodwill includes immaterial adjustments related to prior period acquisitions.
Intangible Assets
i
Our
definite-lived intangible assets by major asset class are as follows:
Total
amortization related to our intangible assets was $i111,631 and $i109,069 for the three months ended November 30, 2023 and 2022, respectively. iEstimated
future amortization related to intangible assets held as of November 30, 2023 is as follows:
The
payment of cash dividends includes the net effect of $i29,279 of additional restricted stock units being issued as a part of our share plans, which resulted in i89,674 restricted share units being issued.
Subsequent
Event
On December 18, 2023, the Board of Directors of Accenture plc declared a quarterly cash dividend of $i1.29 per share on our Class A ordinary shares for shareholders of record at the close of business on January 18, 2024 payable on February 15, 2024.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
16
8. iFinancial
Instruments
Derivatives
In the normal course of business, we use derivative financial instruments to manage foreign currency exchange rate risk. Our derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts.
Cash Flow Hedges
For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in Accumulated other comprehensive loss as a separate component of Shareholders’ Equity and is reclassified into Cost of services in the Consolidated Income Statements during the period in which the hedged transaction is recognized. For information related to derivatives designated as cash flow hedges that
were reclassified into Cost of services during the three months ended November 30, 2023 and 2022, as well as those expected to be reclassified into Cost of services in the next twelve months, see Note 4 (Accumulated Other Comprehensive Loss) to these Consolidated Financial Statements.
Other Derivatives
Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were net losses of $i20,280
and $i29,691 for the three months ended November 30, 2023 and 2022, respectively. Gains and losses on these contracts are recorded in Other income (expense), net in the Consolidated Income Statements and are offset by gains and losses on the related hedged items.
Fair Value
of Derivative Instruments
i
The notional and fair values of all derivative instruments are as follows:
We
utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. In the Consolidated Balance Sheets, we record derivative assets and liabilities at gross fair value. iThe potential effect of netting derivative assets against liabilities under the counterparty master agreements is as follows:
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
17
9. iIncome
Taxes
iWe apply an estimated annual effective tax rate to our year-to-date operating results to determine the interim provision for income tax expense. In addition, we recognize taxes related to unusual or infrequent items or resulting from a change in judgment regarding a position taken in a prior year as discrete items in the interim period in which the event occurs.
Our effective tax rates for the three months ended November 30, 2023 and 2022 were i23.2%
and i23.3%, respectively.
10. iCommitments and Contingencies
Indemnifications
and Guarantees
i
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients with respect to certain matters.
As of November 30, 2023 and August 31, 2023, our aggregate potential liability to our clients for expressly limited guarantees involving the performance of third parties was approximately $i1,929,000
and $i1,793,000, respectively, of which all but approximately $i52,000 and $i51,000,
respectively, may be recovered from the other third parties if we are obligated to make payments to the indemnified parties as a consequence of a performance default by the other third parties. For arrangements with unspecified limitations, we cannot reasonably estimate the aggregate maximum potential liability, as it is inherently difficult to predict the maximum potential amount of such payments, due to the conditional nature and unique facts of each particular arrangement.
As of November 30, 2023 and August 31, 2023, we have issued or provided guarantees in the form of letters of credit and surety bonds of $i1,348,671
and $i1,294,653, respectively, the majority of which support certain contracts that require us to provide them as a guarantee of our performance. These guarantees are typically renewed annually and remain in place until the contractual obligations are satisfied. In general, we would only be liable for these guarantees in the event we defaulted in performing our obligations under each contract, the
probability of which we believe is remote.
To date, we have not been required to make any significant payment under any of the arrangements described above. We have assessed the current status of performance/payment risk related to arrangements with limited guarantees, warranty obligations, unspecified limitations, indemnification provisions, letters of credit and surety bonds, and believe that any potential payments would be immaterial to the Consolidated Financial Statements, as a whole.
Legal Contingencies
As of November 30, 2023, we or our present personnel had been named as a defendant in various litigation matters. We and/or our personnel also from time to time are involved in investigations by various regulatory or legal authorities concerning matters arising in the course of our
business around the world. Based on the present status of these matters, except as otherwise noted below, management believes the range of reasonably possible losses in addition to amounts accrued, net of insurance recoveries, will not have a material effect on our results of operations or financial condition.
On July 24, 2019, Accenture was named in a putative class action lawsuit filed by consumers of Marriott International, Inc. (“Marriott”) in the U.S. District Court for the District of Maryland. The complaint alleges negligence by us, and seeks monetary damages, costs and attorneys’ fees and other related relief, relating to a data security incident involving unauthorized access to the reservations database of Starwood Worldwide Resorts, Inc. (“Starwood”), which was acquired by Marriott on September 23, 2016.
Since 2009, we have provided certain IT infrastructure outsourcing services to Starwood. On May 3, 2022, the court issued an order granting in part the plaintiffs’ motion for class certification, which we appealed. On August 17, 2023, the appeals court vacated the class certification and remanded the case to the district court for consideration of, among other things, the class action waiver signed by Starwood customer plaintiffs. On November 29, 2023, the district court reinstated the classes previously certified by the court in May 2022. We have filed a petition to appeal. We continue to believe the lawsuit is without merit and we will vigorously defend it. At present, we do not believe any losses from this matter will have a material effect on our results of operations or financial condition.
After
Accenture Federal Services (“AFS”) made a voluntary disclosure to the U.S. government, the U.S. Department of Justice (“DOJ”) initiated a civil and criminal investigation concerning whether one or more employees provided inaccurate submissions to
(In
thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
18
an assessor who was evaluating on behalf of the U.S. government an AFS service offering and whether the service offering fully implemented required federal security controls. AFS is responding to an administrative subpoena and cooperating with DOJ’s investigation. This matter could subject us to adverse consequences as described under the heading "Risk Factors" in our
Annual Report on Form 10-K for the year ended August 31, 2023 – “Our work with government clients exposes us to additional risks inherent in the government contracting environment”. We cannot at this time determine when or how this matter will be resolved or estimate the cost or range of costs that are reasonably likely to be incurred in connection with this matter.
11. iSegment Reporting
Effective
September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts below have been reclassified to conform with the current period presentation.
Our reportable segments are our ithree geographic markets, which are North America, EMEA and Growth Markets.
i
Information
regarding reportable segments, industry groups and type of work is as follows:
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended August 31,
2023, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended August 31, 2023.
We use the terms “Accenture,”“we,”“our” and “us” in this report to refer to Accenture plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “fiscal 2024” means the 12-month period that will end on August 31, 2024. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
We use the term “in local currency”
so that certain financial results may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of business performance. 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. This approach is used for all results where the functional currency is not the U.S. dollar.
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our operations, results of operations
and other matters that are based on our current expectations, estimates, assumptions and projections. Words such as “may,”“will,”“should,”“likely,”“anticipates,”“aspires,”“expects,”“intends,”“plans,”“projects,”“believes,”“estimates,”“positioned,”“outlook,”“goal,”“target,” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited
to those identified below.
Business Risks
•Our results of operations have been, and may in the future be, adversely affected by volatile, negative or uncertain economic and political conditions and the effects of these conditions on our clients’ businesses and levels of business activity.
•Our business depends on generating and maintaining client demand for our services and solutions, including through the adaptation and expansion of our 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 our results of operations.
•If we are unable to match people and their
skills with client demand around the world and attract and retain professionals with strong leadership skills, our business, the utilization rate of our professionals and our results of operations may be materially adversely affected.
•We face legal, reputational and financial risks from any failure to protect client and/or Accenture data from security incidents or cyberattacks.
•The markets in which we operate are highly competitive, and we might not be able to compete effectively.
•Our ability to attract and retain business and employees may depend on our reputation in the marketplace.
•If we do not successfully manage and develop our relationships with key ecosystem partners or if we fail to
anticipate and establish new alliances in new technologies, our results of operations could be adversely affected.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Financial Risks
•Our profitability could materially suffer if we are unable to obtain favorable pricing for our services and solutions, if we are unable to remain competitive, if our cost-management strategies are unsuccessful or if we experience delivery inefficiencies or fail to satisfy certain agreed-upon targets or specific service levels.
•Changes in our 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 our effective tax rate, results of operations, cash flows and financial
condition.
•Our 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 we make in connection with the preparation of our consolidated financial statements could adversely affect our financial results.
Operational Risks
•As a result of our geographically diverse operations and strategy to continue to grow in key markets around the world, we are more susceptible to certain risks.
•If we are unable to manage the organizational challenges associated with our size, we might be unable to achieve our business objectives.
•We
might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.
Legal and Regulatory Risks
•Our business could be materially adversely affected if we incur legal liability.
•Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business.
•Our work with government clients exposes us to additional risks inherent in the government contracting environment.
•If we are unable to protect or enforce our intellectual property rights, or if our services or solutions infringe upon the intellectual
property rights of others or we lose our ability to utilize the intellectual property of others, our business could be adversely affected.
•We are incorporated in Ireland and Irish law differs from the laws in effect in the United States and might afford less protection to our shareholders. We may also be subject to criticism and negative publicity related to our incorporation in Ireland.
For a more detailed discussion of these factors, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2023. Our forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to update any forward-looking statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Overview
Accenture is a leading global professional services company, providing a broad range of services and solutions across Strategy & Consulting, Technology, Operations, Industry X and Song. We serve clients in three geographic markets: North America, EMEA (Europe, Middle East and Africa) and Growth Markets (Asia Pacific and Latin America). We combine our strength in technology
and leadership in cloud, data and AI with unmatched industry experience, functional expertise and global delivery capability to help the world’s leading businesses, governments and other organizations build their digital core, optimize their operations, accelerate revenue growth and enhance citizen services—creating tangible value at speed and scale.
Our results of operations are affected by economic conditions, including macroeconomic conditions, the overall inflationary environment and levels of business confidence. There continues to be significant economic and geopolitical uncertainty in many markets around the world, which has impacted and may continue to impact our business. These conditions have slowed the pace and level of client spending for smaller contracts with a shorter duration, especially for our consulting services. From
an industry perspective, we are also experiencing reduced demand particularly in our Communications, Media & Technology industry group.
Key Metrics
Key metrics for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 are included below. We have presented operating margin and diluted earnings per share on a non-GAAP or “adjusted” basis to exclude the impact of $140 million in business optimization costs. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
•Revenues of $16.2 billion, representing 3% growth in U.S. dollars and 1% growth in local currency;
•New
bookings of $18.4 billion, an increase of 14% in U.S. dollars and 12% in local currency;
•Operating margin of 15.8%, compared to 16.5% in the first quarter of fiscal 2023; adjusted operating margin expanded 20 basis points to 16.7%;
•Diluted earnings per share of $3.10, compared to $3.08 in the first quarter of fiscal 2023; adjusted earnings per share increased 6% to $3.27; and
•Cash returned to shareholders of $2.0 billion, including share purchases of $1.2 billion and dividends of $810 million.
(1)Effective
September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
22
Revenues for the first quarter of fiscal 2024 increased 3% in U.S. dollars and 1% in local currency compared to the first quarter of fiscal 2023. During the first quarter of fiscal 2024, revenue growth in local currency was solid in Growth Markets and modest in EMEA, partially offset by a slight decline in North America. We experienced local currency revenue growth that was very strong in Health & Public Service, strong in
Resources, slight in Products and flat in Financial Services, partially offset by a significant decline in Communications, Media & Technology. Revenue growth in local currency was solid in managed services, partially offset by a modest decline in consulting during the first quarter of fiscal 2024. The business environment is competitive, and we have been experiencing lower pricing across the business. We define pricing as contract profitability or margin on the work that we sell.
In our consulting business, revenues for the first quarter of fiscal 2024 were flat in U.S. dollars and decreased 2% in local currency compared to the first quarter of fiscal 2023. The decline in consulting revenue in local currency for the first quarter of fiscal 2024 was driven by modest declines in North America and EMEA, while Growth Markets was flat.
Our consulting revenue continues to be driven by helping our clients accelerate their digital transformation, including moving to the cloud, embedding security across the enterprise and adopting new technologies. In addition, clients continue to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to accelerate growth and improve customer experiences. While we continue to experience demand for these services, we are seeing a slower pace and level of client spending, especially for smaller contracts with a shorter duration.
In our managed services business, revenues for the first quarter of fiscal 2024 increased 6% in U.S. dollars and 5% in local currency compared to the first quarter of fiscal 2023. Managed services revenue in local currency for the first quarter of fiscal 2024 was
driven by very strong growth in Growth Markets and EMEA, while North America was flat. We continue to experience growing demand to assist clients with application modernization and maintenance, cloud enablement and cybersecurity-as-a-service. In addition, clients continue to be focused on transforming their operations through technology, data and AI, and leveraging our digital platforms and talent to drive productivity and operational cost savings.
As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange rate fluctuations. While a significant portion of our revenues are in U.S. dollars, the majority of our revenues are denominated in other currencies, including the Euro, Japanese yen and U.K. pound. There continues to be volatility in foreign currency exchange rates. Unfavorable fluctuations in foreign currency exchange rates have had and could in
the future have a material effect on our financial results. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be higher. If the U.S. dollar strengthens against other currencies, resulting in unfavorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be lower. The U.S. dollar weakened against various currencies during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, resulting in favorable currency translation and U.S. dollar revenue growth that was approximately 1.5% higher than our revenue growth in local currency. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2024, we estimate that our full fiscal 2024 revenue growth in U.S. dollars will be approximately equal to our revenue growth in local currency.
compared to 13% in the first quarter of fiscal 2023
Utilization for the first quarter of fiscal 2024 was 91%, consistent with the first quarter of fiscal 2023. We hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation
costs are the most significant portion of our operating expenses. Our workforce, the majority of which serves our clients, increased to approximately 743,000 as of November 30, 2023, compared to approximately 738,000 as of November 30, 2022. The year-over-year increase in our workforce reflects people added in connection with acquisitions and hiring for specific skills.
For the first quarter of fiscal 2024, annualized attrition, excluding involuntary terminations, was 11%, down from 13% in the first quarter of fiscal 2023. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand.
In addition, we adjust compensation to provide market relevant pay based on the skills
of our people and locations where we operate. We also consider a variety of factors, including the macroeconomic environment, in making our decisions around pay and benefits. We strive to adjust pricing as well as drive cost and delivery efficiencies, such as changing the mix of people and utilizing technology, to reduce the impact of compensation increases on our margin and contract profitability.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to: match people and skills with the types or amounts of services and solutions clients are demanding; recover or offset increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate new employees.
Operating Expenses
The
primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs. Cost of services is primarily driven by the cost of people serving our clients, which consists mainly of compensation, subcontractor and other payroll costs, and non-payroll costs such as facilities, technology and travel. Cost of services includes a variety of activities such as: contract delivery; recruiting and training; software development; and integration of acquisitions. Sales and marketing costs are driven primarily by: compensation costs for business development activities; marketing- and advertising-related activities; and certain acquisition-related costs. General and administrative costs primarily include costs for people that are non-client-facing, information systems, office space and certain acquisition-related costs.
Gross
margin (Revenues less Cost of services as a percentage of Revenues) for the first quarter of fiscal 2024 was 33.6%, compared with 32.9% for the first quarter of fiscal 2023. The increase in gross margin for the first quarter of fiscal 2024 was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel.
Sales and marketing and General and administrative costs as a percentage of revenues were 16.9% for the first quarter of fiscal 2024 compared with 16.5% for the first quarter of fiscal 2023. For the first quarter of fiscal 2024 compared to the same period in fiscal 2023, Sales and marketing costs increased 70 basis points due to higher selling and other business development costs as a percentage of revenues. For the first quarter of fiscal 2024 compared to the same period in fiscal 2023, General and administrative costs decreased 20 basis points
as a percentage of revenues.
During the three months ended November 30, 2023, we recorded $140 million in business optimization costs, primarily for employee severance. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Operating margin (Operating income as a percentage of Revenues) for the first quarter of fiscal 2024 was 15.8%, compared with 16.5% for the first quarter of fiscal 2023. The business optimization costs recorded during the three months ended November 30, 2023 reduced operating margin by 90 basis points. Excluding these costs, operating margin for the three months ended November 30, 2023 increased 20 basis points to 16.7%.
Effective Tax Rate
The effective tax rates for the first quarter of fiscal 2024 and 2023 were 23.2% and 23.3%, respectively. The business optimization costs of $140 million and related reduction in tax expense of $34 million for the three months ended November 30, 2023 had an immaterial impact on our effective tax rate.
Earnings Per Share
Diluted earnings per share were $3.10 for the first quarter of fiscal 2024, compared with $3.08 for the first quarter of fiscal 2023. The $106 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.17 for the first quarter of fiscal 2024. Excluding these impacts, diluted earnings per share were $3.27 for the first quarter of fiscal 2024.
Non-GAAP
Financial Measures
For fiscal 2024, we have presented operating income, operating margin, effective tax rate and diluted earnings per share excluding the business optimization costs, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior periods. While we believe that this non-GAAP financial information is useful in evaluating our 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.
We
provide information regarding our new bookings, which include new contracts, including those acquired through acquisitions, as well as renewals, extensions and changes to existing contracts, because we believe doing so provides useful trend information regarding changes in the volume of our new business over time. New bookings can vary significantly quarter to quarter depending in part on the timing of the signing of a small number of large managed services contracts. The types of services and solutions clients are demanding and the pace and level of their spending may impact the conversion of new bookings to revenues. For example, managed services bookings, which are typically for multi-year contracts,
generally convert to revenue over a longer period of time compared to consulting bookings.
Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. New bookings involve estimates and judgments. There are no third-party standards or requirements governing the calculation of bookings. We do not update our new bookings for material subsequent terminations or reductions related to bookings originally recorded in prior fiscal years. New bookings are recorded using then-existing foreign currency exchange rates and are not subsequently adjusted for foreign currency exchange rate fluctuations.
The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without
notice. Only the non-cancelable portion of these contracts is included in our remaining performance obligations disclosed in Note 2 (Revenues) to our Consolidated Financial Statements under Item 1, “Financial Statements.” Accordingly, a significant portion of what we consider contract bookings is not included in our remaining performance obligations.
(1)Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.
Revenues
The following revenues commentary discusses local currency revenue changes for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023:
Geographic Markets
•North America revenues decreased 1% in local currency, due to
declines in Communications & Media, Software & Platforms and Banking & Capital Markets. These decreases were partially offset by growth in Public Service. The decline in revenues was driven by the United States.
•EMEA revenues increased 2% in local currency, led by growth in Public Service and Banking & Capital Markets. These increases were partially offset by a decline in Communications & Media. Revenue growth was driven by Italy, Austria and France, partially offset by a decline in the United Kingdom.
•Growth Markets revenues increased 5% in local currency, led by growth in Chemicals & Natural Resources, Public Service, and Banking & Capital Markets. Revenue growth was driven by Japan.
Operating Expenses
Operating
expenses for the first quarter of fiscal 2024 increased $505 million, or 4%, compared to the first quarter of fiscal 2023, and increased as a percentage of revenues to 84.2% compared to 83.5% during this period. The increase as a percentage of revenues is primarily due to business optimization costs of $140 million recorded during the first quarter of fiscal 2024.
Cost of services for the first quarter of fiscal 2024 increased $215 million, or 2%, over the first quarter of fiscal 2023, and decreased as a percentage of revenues to 66.4% from 67.1% during this period. Gross margin for the first quarter of fiscal 2024 increased as a percentage of revenues to 33.6% over 32.9% during the first quarter of fiscal 2023. The increase in gross margin was primarily due to lower labor costs, including lower subcontractor costs, partially offset by higher non-payroll costs, primarily for travel compared to the same period in fiscal 2023.
Sales and Marketing
Sales and marketing expense for the first quarter of fiscal 2024 increased $160 million, or 10%, over the first quarter of fiscal 2023, and increased as
a percentage of revenues to 10.5% over 9.8% during this period due to higher selling and other business development costs as a percentage of revenues.
General and Administrative Costs
General and administrative costs for the first quarter of fiscal 2024 decreased $10 million, or 1%, from the first quarter of fiscal 2023, and decreased as a percentage of revenues to 6.4% from 6.6% during this period.
Business Optimization Costs
During the first quarter of fiscal 2024, we recorded business optimization costs of $140 million, primarily for employee severance. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Operating Income and Operating Margin
Operating
income for the first quarter of fiscal 2024 decreased $28 million, or 1%, from the first quarter of fiscal 2023. Operating margin for the first quarter of fiscal 2024 was 15.8%, compared with 16.5% for the first quarter of fiscal 2023. The business optimization costs reduced operating margin by 90 basis points. Excluding these costs, operating margin for the first quarter of fiscal 2024 increased 20 basis points to 16.7%.
Operating income and operating margin for each of the geographic markets are as follows:
(1)Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.
(1)Costs recorded in connection with our business optimization initiatives, primarily for employee severance.
(2)Effective September 1, 2023, we revised the reporting of our geographic markets for the movement of our Middle East and Africa market units from Growth Markets to Europe, and the Europe market is now referred to as our EMEA (Europe, Middle East and Africa) geographic market. Prior period amounts have been reclassified to conform with the current period presentation.
We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2024 was similar to that disclosed for revenue for each geographic market. In addition,
during the first quarter of fiscal 2024 each geographic market’s operating income was unfavorably impacted by business optimization costs. The commentary below provides insight into other factors affecting geographic market performance and operating income, including the impact of foreign currency exchange rates where significant, for the first quarter of fiscal 2024 compared with the first quarter of fiscal 2023:
•North America operating income was relatively flat year-over-year as a decline in consulting revenue and lower contract profitability was offset by lower labor costs.
•EMEA operating income increased primarily due to managed services revenue growth in local currency and the positive impact of foreign currency exchange rates which
resulted in an increase in U.S. dollar revenues.
•Growth Markets operating income decreased as revenue growth was more than offset by lower contract profitability and an increase in selling and other business development costs as a percentage of revenues.
Interest Income
Interest income for the first quarter of fiscal 2024 was $102 million, an increase of $57 million over the first quarter of fiscal 2023. The increase was primarily due to higher cash balances and interest rates.
Income Tax Expense
The effective tax rates for the first quarter of fiscal 2024 and 2023 were 23.2% and 23.3%, respectively. The
business optimization costs of $140 million and related reduction in tax expense of $34 million for the three months ended November 30, 2023 had an immaterial impact on our effective tax rate.
Earnings Per Share
Diluted earnings per share were $3.10 for the first quarter of fiscal 2024, compared with $3.08 for the first quarter of fiscal 2023. The $106 million of business optimization costs, net of related taxes, decreased diluted earnings per share by $0.17. Excluding these impacts, diluted earnings per share were $3.27 for the first quarter of fiscal 2024. For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
The increase in diluted earnings per share was due to
the following factors:
Earnings Per Share
Q1 FY23 As Reported
$
3.08
Higher revenue and operating results
0.14
Higher non-operating income
0.05
Lower share count
0.01
Higher
net income attributable to noncontrolling interests
Cash flows from operating, investing and financing activities, as reflected in our Consolidated
Cash Flows Statements, are summarized in the following table:
Effect of exchange rate changes on cash and cash equivalents
5
(27)
31
Net increase (decrease) in cash and cash equivalents
$
(1,904)
$
(1,990)
$
86
Amounts
in table may not total due to rounding.
Operating activities: The $3 million increase in operating cash flows was primarily due to higher net income, partially offset by changes in operating assets and liabilities.
Investing activities: The $73 million increase in cash used was primarily due to higher spending on business acquisitions. For additional information, see Note 5 (Business Combinations) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Financing activities:The $125 million decrease in cash used was primarily due to a decrease in the net purchases of shares, partially offset by an increase in cash dividends paid. For additional information, see Note 7 (Shareholders’ Equity) to our Consolidated Financial
Statements under Item 1, “Financial Statements.”
We believe that our current and longer-term working capital, investments and other general corporate funding requirements will be satisfied for the next twelve months and thereafter through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.
Substantially all of our cash is held in jurisdictions where there are no regulatory restrictions or material tax effects on the free flow of funds. Domestic cash inflows for our Irish parent, principally dividend distributions from lower-tier subsidiaries, have been sufficient to meet our historic cash requirements, and we expect this to continue into the future.
Local
guaranteed and non-guaranteed lines of credit
248
Total
$
5,122
Amounts in table may not total due to rounding.
(1)This facility, which matures on April 24, 2026, provides unsecured, revolving borrowing capacity for general corporate capital purposes, including the issuance of letters of credit and short-term commercial paper. Borrowings under this facility will accrue interest at the applicable risk-free rate plus a spread. We continue to be in compliance with relevant
covenant terms. The facility is subject to annual commitment fees. As of November 30, 2023, we had $100 million of commercial paper outstanding and backed by this facility, with a weighted-average effective interest rate of 5.4%.
Under the borrowing facilities described above, we had an aggregate of $1,099 million of letters of credit outstanding as of November 30, 2023. We also had $100 million of commercial paper outstanding as of November 30, 2023. The amount of commercial paper and letters of credit outstanding reduces the available borrowing capacity under these facilities.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
Share Purchases and Redemptions
The Board of Directors of Accenture plc has authorized funding for our publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares and for purchases and redemptions of Accenture plc Class A ordinary shares and Accenture Canada Holdings Inc. exchangeable shares held by current and former members of Accenture
Leadership and their permitted transferees.
Our share purchase activity during the three months ended November 30, 2023 is as follows:
Accenture plc Class A Ordinary Shares
Accenture
Canada Holdings Inc. Exchangeable Shares
(in millions of U.S. dollars, except share amounts)
Shares
Amount
Shares
Amount
Open-market share purchases (1)
3,439,438
$
1,075
—
$
—
Other
share purchase programs
—
—
8,997
3
Other purchases (2)
370,495
113
—
—
Total
3,809,933
$
1,188
8,997
$
3
(1)We
conduct a publicly announced open-market share purchase program for Accenture plc Class A ordinary shares. These shares are held as treasury shares by Accenture plc and may be utilized to provide for select employee benefits, such as equity awards to our employees.
(2)During the three months ended November 30, 2023, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under those plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.
We
intend to continue to use a significant portion of cash generated from operations for share repurchases during the remainder of fiscal 2024. The number of shares ultimately repurchased under our open-market share purchase program may vary depending on numerous factors, including, without limitation, share price and other market conditions, our ongoing capital allocation planning, the levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic and/or business conditions, and board and management discretion. Additionally, as these factors may change over the course of the year, the amount of share repurchase activity during any particular period cannot be predicted and may fluctuate from time to time. Share repurchases may be made from time to time through open-market purchases, in respect of purchases and redemptions of Accenture Canada Holdings Inc. exchangeable shares, through the use of Rule 10b5-1 plans and/or by other
means. The repurchase program may be accelerated, suspended, delayed or discontinued at any time, without notice.
Off-Balance Sheet Arrangements
In the normal course of business and in conjunction with some client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients with respect to certain matters.
To date, we have not been required to make any significant payment under any of the arrangements described above. For further discussion of these transactions, see Note 10 (Commitments and Contingencies) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Significant Accounting Policies
See Note 1 (Basis of Presentation) to our Consolidated Financial Statements
under Item 1, “Financial Statements.”
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
30
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the three months ended November 30, 2023, there were no material changes to the information on market risk exposure disclosed in our Annual Report on Form 10-K for the year ended August 31, 2023. For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, 2023, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended August 31,
2023.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the principal executive officer and the principal financial officer of Accenture plc have concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the first quarter of fiscal 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The information set forth under “Legal Contingencies” in Note 10 (Commitments and Contingencies) to our Consolidated Financial Statements under Part I, Item 1, “Financial Statements,” is incorporated
herein by reference.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2023 (the “Annual Report”). There have been no material changes to the risk factors disclosed in our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Accenture plc Class A Ordinary Shares
The
following table provides information relating to our purchases of Accenture plc Class A ordinary shares during the first quarter of fiscal 2024.
Period
Total Number of Shares Purchased
Average Price Paid per
Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3)
(1)Average price paid per share reflects the total cash outlay for the period, divided by the number of shares acquired, including those acquired by purchase or redemption for cash and any acquired by means of employee forfeiture.
(2)Since August 2001, the Board of Directors of Accenture plc has authorized and periodically
confirmed a publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares. During the first quarter of fiscal 2024, we purchased 3,439,438Accenture plc Class A ordinary shares under this program for an aggregate price of $1,075 million. The open-market purchase program does not have an expiration date.
(3)As of November 30, 2023, our aggregate available authorization for share purchases and redemptions was $5,412 million which management has the discretion to use for either our publicly announced open-market share purchase program or the other share purchase programs. Since August 2001 and as of November 30, 2023, the Board of Directors of Accenture plc has authorized an aggregate of $50.1 billion for share purchases
and redemptions by Accenture plc and Accenture Canada Holdings Inc.
(4)During the first quarter of fiscal 2024, Accenture purchased 370,495 Accenture plc Class A ordinary shares in transactions unrelated to publicly announced share plans or programs. These transactions consisted of acquisitions of Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under our various employee equity share plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.
The table below summarizes the terms of trading arrangements iadopted
or iiterminated/ by our executive officers or directors during the first quarter of fiscal 2024. All of the trading arrangements listed below are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
Name
Title
Date
of Adoption or Termination
Duration of Plan (1)
Aggregate number of Class A ordinary shares to be sold pursuant to the trading agreement
(1) Each plan will expire on the earlier of the expiration date or the completion of all transactions under the trading arrangement.
/
(2) The actual number of shares sold will depend on the vesting of certain performance-based equity awards and the number of shares
withheld by Accenture to satisfy its income tax withholding obligations, and may vary from the approximate number provided.
Relocation
Benefits Agreement between Accenture LLP and Manish Sharma (filed herewith)
31.1
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2
Certification
of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished
herewith)
32.2
Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101
The following financial information
from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of November 30, 2023 (Unaudited) and August 31, 2023, (ii) Consolidated Income Statements (Unaudited) for the three months ended November 30, 2023 and November 30, 2022, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended November 30, 2023 and November 30, 2022, (iv) Consolidated Shareholders’ Equity Statement (Unaudited) for the three months ended November 30, 2023 and November
30, 2022, (v) Consolidated Cash Flows Statements (Unaudited) for the three months ended November 30, 2023 and November 30, 2022 and (vi) the Notes to Consolidated Financial Statements (Unaudited)
104
The cover page from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2023, formatted in Inline XBRL (included as Exhibit 101)
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.