Accenture plc — FY2023 Form 10-K
Reporting period: Fiscal year ended August 31, 2023. The filing also reports fourth-quarter results. Accenture provides global professional services across Strategy & Consulting, Technology, Operations, Industry X and Song, serving clients in more than 120 countries.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $64.1 billion; up 4% in U.S. dollars and 8% in local currency | $61.6 billion |
| Operating income | $8.81 billion; operating margin 13.7% | $9.37 billion; margin 15.2% |
| Adjusted operating margin | 15.4%, excluding business optimization costs | 15.2% |
| Net income attributable to Accenture plc | $6.87 billion | $6.88 billion |
| Diluted EPS | $10.77 reported; $11.67 excluding optimization costs and the investment gain | $10.71 |
| Operating cash flow | $9.52 billion | $9.54 billion |
| Cash and cash equivalents | $9.05 billion at year-end | $7.89 billion |
Gross margin increased to 32.3% from 32.0%. The $1.06 billion business optimization charge, primarily severance and office consolidation, reduced operating margin by approximately 170 basis points and diluted EPS by $1.28 after tax. A $253 million Duck Creek Technologies investment gain added $0.38 to diluted EPS after tax.
FY2023 bookings were $72.2 billion, up 1% in U.S. dollars and 5% in local currency. Managed services revenue rose 11% in U.S. dollars (14% local currency), while consulting revenue declined 1% in U.S. dollars (up 3% local currency). Remaining performance obligations were approximately $26 billion; Accenture expects to recognize about 67% in FY2024, subject to contract terms.
FY2023 Q4: Revenue was $15.99 billion versus $15.42 billion a year earlier; operating income was $1.91 billion versus $2.27 billion; net income attributable to Accenture plc was $1.37 billion versus $1.67 billion; diluted EPS was $2.15 versus $2.60.
Liquidity, debt and capital returns
Operating cash flow was nearly unchanged year over year. Investing activities used $2.62 billion, while financing activities used $5.65 billion. Total outstanding debt was $147.9 million, compared with cash of $9.05 billion. Accenture reported $5.02 billion of borrowing facilities; $100 million of commercial paper and $1.08 billion of letters of credit were outstanding. Management said cash flows and available borrowing facilities should meet working-capital and general funding needs for the next 12 months and thereafter.
Accenture returned $7.2 billion to shareholders in FY2023, including $4.3 billion of share purchases and $2.8 billion of dividends. The annual dividend per share was $4.48. The board later approved an additional $4.0 billion of repurchase authority and declared a quarterly dividend of $1.29 per share. Contractual commitments for cloud hosting, software subscriptions, IT services and other ordinary-course obligations totaled $3.68 billion.
Material changes and management commentary
- Macroeconomic and geopolitical uncertainty slowed client spending, particularly on smaller, shorter-duration consulting engagements. Accenture also reported reduced demand in Communications, Media & Technology, where revenue fell 6% in U.S. dollars.
- Growth was stronger in managed services and in the Health & Public Service and Resources industry groups. Revenue increased in all three geographic markets in local currency, with Europe and Growth Markets each up 11% and 12%, respectively.
- The U.S. dollar’s strength reduced reported FY2023 revenue growth by approximately four percentage points versus local-currency growth. Accenture estimated FY2024 U.S.-dollar revenue growth would be approximately equal to local-currency growth if exchange rates stayed within recent ranges; the filing excerpt does not provide a specific overall FY2024 revenue-growth target.
- Accenture initiated measures to streamline operations, transform non-billable corporate functions and consolidate office space. It expects total costs of approximately $1.5 billion, including about $450 million in FY2024, primarily for severance; timing and amounts may vary with local consultation processes.
- During FY2023, Accenture invested $2.5 billion across 25 acquisitions, $1.3 billion in R&D and $1.1 billion in learning and development. It also said it intends to double its Data & AI practice to 80,000 people over the next three years.
Risks, contingencies and unusual items
- Key risks include uncertain client demand, pricing and contract profitability, foreign-exchange movements, competition, talent and utilization management, and the ability to adapt to technology changes, including generative AI. AI also presents legal, ethical, privacy, security and reputational risks.
- Most consulting contracts are short term and many contracts can be terminated, delayed or reduced on short notice. Bookings are not equivalent to guaranteed future revenue; a significant portion is excluded from reported remaining performance obligations because it is cancellable.
- Accenture disclosed a U.S. Department of Justice civil and criminal investigation following a voluntary disclosure by Accenture Federal Services concerning submissions to a government security assessor. The company could not estimate the timing, outcome or reasonably likely costs.
- A putative class action related to the Starwood/Marriott reservation-database incident remains pending. The appeals court vacated class certification in August 2023 and remanded the case; Accenture says it will defend the lawsuit.
- Unrecognized tax benefits were $1.74 billion at year-end, with transfer pricing and intercompany transactions a significant area of uncertainty. The company also faces ongoing tax audits and proceedings.
- Management reported effective disclosure controls and internal control over financial reporting; KPMG issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Whether consulting demand stabilizes and whether managed services growth and bookings convert into revenue at expected margins.
- How much of the reported margin and EPS pressure is attributable to the optimization program, and whether expected savings offset its costs.
- FY2024 growth and profitability assumptions, including currency effects, pricing, compensation costs and client spending trends.
- The outcome and potential financial or contracting consequences of the DOJ investigation and other legal matters.
- Potential resolution of tax audits and transfer-pricing matters, and the realizability of deferred tax assets and tax credit carryforwards.
- Actual cash deployment for acquisitions, dividends and repurchases, alongside the company’s commitments and available liquidity.