Accenture plc — FY2021 Form 10-K
Reporting period: Fiscal year ended August 31, 2021. Accenture is a global professional services company providing strategy and consulting, interactive, technology and operations services. It reported across North America, Europe and Growth Markets and employed more than 624,000 people at year-end.
Financial performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $50.53 billion | $44.33 billion |
| Operating income | $7.62 billion | $6.51 billion |
| Operating margin | 15.1% | 14.7% |
| Net income attributable to Accenture plc | $5.91 billion | $5.11 billion |
| Diluted EPS | $9.16 | $7.89 |
| Operating cash flow | $8.98 billion | $8.22 billion |
| Cash and cash equivalents at year-end | $8.17 billion | $8.42 billion |
- Revenue grew 14% in U.S. dollars and 11% in local currency. The weaker U.S. dollar added approximately 3 percentage points to reported growth; lower reimbursable travel costs reduced revenue growth by about 1%.
- Gross margin rose to 32.4% from 31.5%. Lower non-payroll costs, especially travel, more than offset higher labor costs, including a one-time employee bonus.
- The effective tax rate was 22.8%, versus 23.5%. Diluted EPS included a $0.36 contribution from after-tax gains on the Duck Creek Technologies investment; excluding those gains, EPS was $8.80, compared with $7.46 in FY2020.
- Investing cash outflow was $4.31 billion, including $4.17 billion spent on acquisitions and investments. Financing cash outflow was $4.93 billion, including $3.70 billion of share purchases and $2.24 billion of dividends.
- Total debt was $65.6 million at year-end. Accenture had no borrowings under its credit facilities, which provided approximately $4.45 billion of capacity. Operating lease liabilities totaled about $3.44 billion.
Changes and business trends
- Growth accelerated in the second half: revenue increased 22% in U.S. dollars and 18% in local currency versus the comparable prior-year period.
- Outsourcing revenue increased 15% in U.S. dollars (13% local currency); consulting increased 13% (9% local currency). New bookings rose 20% to $59.3 billion.
- North America revenue was $23.70 billion, Europe $16.75 billion and Growth Markets $10.08 billion. Growth Markets operating income declined to $1.48 billion from $1.54 billion as growth was offset by lower contract profitability and higher sales and marketing costs relative to revenue.
- Accenture invested $4.2 billion across 46 strategic acquisitions and $1.1 billion in R&D. Workforce increased to approximately 624,000 from 506,000; FY2021 voluntary attrition was 14%, versus 12% in FY2020.
Outlook, risks and notable items
- Remaining performance obligations were approximately $23 billion at year-end; management expected about 70% to be recognized as revenue in FY2022 and a further 14% in FY2023. These obligations exclude cancellable contract amounts and are not equivalent to total bookings.
- Assuming exchange rates stayed within recent ranges, management estimated FY2022 U.S.-dollar revenue growth would be about 0.5 percentage points below local-currency growth. The filing does not provide a clear overall FY2022 revenue-growth or EPS target in the supplied text.
- Management said expected working-capital and general funding needs should be met from operating cash flow and, if needed, borrowing facilities or capital-market activity. It intended to continue using a significant portion of cash generated for share repurchases. The board declared a subsequent quarterly dividend of $0.97 per share and added $3.0 billion of repurchase authorization.
- In the fourth quarter, Accenture identified irregular activity in one environment involving extraction of proprietary information by a third party; some information was made public. The company reported no material operational impact to date, while warning future cybersecurity incidents could cause significant financial, legal and reputational harm.
- Key risks include changing client demand and economic conditions, intense competition and pricing pressure, attracting and retaining skilled employees, foreign-exchange movements, cybersecurity and data privacy, execution and integration of acquisitions, complex delivery contracts, and tax audits and regulatory requirements.
- Accenture disclosed ongoing litigation, including a putative class action related to a data incident involving Marriott/Starwood. Management said reasonably possible losses beyond accrued amounts, net of insurance, were not expected to materially affect results or financial condition. It also disclosed $1.34 billion of unrecognized tax benefits, primarily involving tax positions including transfer pricing.
Investor verification priorities
- Review the audited statements and notes for the composition and cash conversion of earnings, including the effects of working-capital movements and acquisitions.
- Assess how sustainable margin gains are given labor-cost inflation, compensation adjustments, utilization, attrition and competitive pricing.
- Verify the conversion and cancellability of bookings and remaining performance obligations, and compare reported growth with local-currency growth.
- Monitor acquisition returns, integration progress, goodwill and intangible asset growth, and the effect of continued repurchases and dividends on capital allocation.
- Track developments in the disclosed cybersecurity incident, litigation and tax exposures, as well as changes in foreign exchange and client demand.