Acn Strategy

Image source: Accenture.

Accenture (NYSE:ACN) reported third-quarter results on June 23. The business consulting and services company delivered solid increases in sales and profits, and raised its guidance for the year ahead.

Accenture results: The raw numbers

 

Q3 2016

Q3 2015

Growth (YOY)

Net Revenue

$8.4 billion

$7.8 billion

9%

Net Income

$897 million

$794 million

13%

Earnings Per Share

$1.41

$1.24

14%

Data source: Accenture Q3 2016 earnings press release [opens in PDF].

What happened with Accenture this quarter?

Net revenue rose 9% year over year -- 10% in local currency -- to $8.4 billion, with consulting net revenue jumping 12%, to $4.62 billion, and outsourcing net revenue rising 4%, to $3.81 billion. New bookings were also strong, at $9.1 billion, including consulting bookings of $4.9 billion, and outsourcing bookings of $4.2 billion.

Operating income increased 9%, to $1.31 billion -- after adjusting for pension settlement-related charges in Q3 2015 -- and improved to 15.5% of net revenues compared to 15.4% in the year-ago quarter. All told, adjusted earnings per share, which saw the benefit of Accenture's share buybacks offset by a higher effective tax rate, grew 8% year over year, to $1.41.

Additionally, operating cash flow was $1.59 billion, up 13% from the third quarter of 2015. Free cash flow was $1.5 billion, representing an increase of 15% from the prior-year period.

What did management have to say?

Chairman and CEO Pierre Nanterme said in a press release:

We are very pleased with our third-quarter financial results and the continued strong momentum in our business. We delivered 10 percent revenue growth in local currency, and our new bookings of $9.1 billion demonstrate that we are providing highly relevant services to our clients. We expanded operating margin, generated strong free cash flow and returned $1.2 billion in cash to our shareholders.

Looking forward

Accenture expects fourth-quarter net revenue to be between $8.25 billion and $8.50 billion, which would represent year-over-year growth of 6% to 9% in local currency.

The company also boosted its full-year forecast, including:

  • Net revenue growth of 9.5% to 10.5% in local currency compared with previous expectations of 8% to 10%
  • Adjusted EPS of $5.29 to $5.33, up from $5.21 to $5.32

Accenture reiterated its projections for operating cash flow of $4.1 billion to $4.4 billion, and free cash flow of $3.6 billion to $3.9 billion.

"Our excellent results reflect the investments we have made to differentiate Accenture in the marketplace as well as our successful rotation to digital, cloud and security services, which now account for approximately 40 percent of our total revenues," added Nanterme. "Looking ahead, we are confident in our ability to continue gaining market share, driving profitable growth and delivering value for our clients and shareholders."

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Accenture. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.