QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedNovember 30, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-34448
Accenture plc
(Exact name of registrant as specified in its charter)
Ireland
98-0627530
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1 Grand Canal Square,
Grand Canal Harbour,
Dublin2, Ireland
(Address of principal executive offices)
(353) (1) 646-2000
(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
Class A ordinary shares, par value $0.0000225 per share
ACN
New 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. Yes ☑ 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). Yes ☑ 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.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
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 ☐ No ☑
The number of shares of the registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of December 7, 2021 was 658,332,779 (which number includes 26,332,043 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 7, 2021 was 508,155.
(In thousands of U.S. dollars, except share and per share amounts)
ACCENTURE FORM 10-Q
3
Part I — Financial Information
Item 1. FinancialStatements
Consolidated Balance Sheets
November 30, 2021 and August 31, 2021
November 30, 2021
August 31, 2021
ASSETS
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents
$
5,637,117
$
8,168,174
Short-term investments
6,968
4,294
Receivables and contract assets
11,120,401
9,728,212
Other current assets
1,857,166
1,765,831
Total current assets
18,621,652
19,666,511
NON-CURRENT ASSETS:
Contract assets
41,612
38,334
Investments
325,714
329,526
Property and equipment, net
1,654,065
1,639,105
Lease assets
3,157,065
3,182,519
Goodwill
12,395,904
11,125,861
Deferred contract costs
751,939
731,445
Deferred tax assets
4,036,565
4,007,130
Other non-current assets
2,690,227
2,455,412
Total non-current assets
25,053,091
23,509,332
TOTAL ASSETS
$
43,674,743
$
43,175,843
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings
$
9,089
$
12,080
Accounts payable
2,210,163
2,274,057
Deferred revenues
4,006,078
4,229,177
Accrued payroll and related benefits
6,445,109
6,747,853
Income taxes payable
547,883
423,400
Lease liabilities
738,285
744,164
Accrued consumption taxes
612,154
609,553
Other accrued liabilities
663,246
668,583
Total current liabilities
15,232,007
15,708,867
NON-CURRENT LIABILITIES:
Long-term debt
55,884
53,473
Deferred revenues
701,629
700,080
Retirement obligation
2,045,443
2,016,021
Deferred tax liabilities
320,163
243,636
Income taxes payable
1,144,011
1,105,896
Lease liabilities
2,674,020
2,696,917
Other non-current liabilities
562,928
553,839
Total non-current liabilities
7,504,078
7,369,862
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of November 30, 2021 and August 31, 2021
57
57
Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 658,332,779 and 656,590,625 shares issued as of November 30, 2021 and August 31, 2021, respectively
15
15
Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 508,155 and 512,655 shares issued and outstanding as of November 30, 2021 and August 31, 2021, respectively
—
—
Restricted share units
1,931,366
1,750,784
Additional paid-in capital
9,097,934
8,617,838
Treasury shares, at cost: Ordinary, 40,000 shares as of November 30, 2021 and August 31, 2021; Class A ordinary, 26,247,335 and 24,504,666 shares as of November 30, 2021 and August 31, 2021, respectively
(4,079,625)
(3,408,491)
Retained earnings
15,110,688
13,988,748
Accumulated other comprehensive loss
(1,707,236)
(1,419,497)
Total Accenture plc shareholders’ equity
20,353,199
19,529,454
Noncontrolling interests
585,459
567,660
Total shareholders’ equity
20,938,658
20,097,114
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
43,674,743
$
43,175,843
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
9
1. Basis of Presentation
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, 2021 included in our Annual Report on Form 10-K filed with the SEC on October 15, 2021.
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, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2022.
Allowance for Credit Losses - Client Receivables and Contract Assets
As of November 30, 2021 and August 31, 2021, the total allowance for credit losses recorded for client receivables and contract assets was $32,521 and $32,206, respectively. The change in the allowance is primarily due to immaterial write-offs and changes in gross client receivables and contract assets.
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).
Our non-current investments are as follows:
November 30, 2021
August 31, 2021
Equity method investments
$
177,119
$
184,157
Investments without readily determinable fair values
148,595
145,369
Total non-current investments
$
325,714
$
329,526
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. Our equity method investments consist primarily of an investment in Duck Creek Technologies. As of November 30, 2021, the carrying amount of our investment was $156,574, and the estimated fair value of our approximately 16% ownership was $524,113. We account for the investment under the equity method because we have the ability to influence operations through the combination of our voting power and through other factors, such as representation on the board and our business relationship.
(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, 2021 and August 31, 2021, total accumulated depreciation was $2,466,716 and $2,412,449, respectively. See table below for summary of depreciation on fixed assets, deferred transition amortization, intangible assets amortization and operating lease cost for the three months ended November 30, 2021 and 2020, respectively.
Three Months Ended
November 30, 2021
November 30, 2020 (1)
Depreciation
$
138,793
$
133,918
Amortization - Deferred transition
67,206
81,356
Amortization - Intangible assets
102,542
67,207
Operating lease cost
190,242
184,372
Other
2,082
1,347
Total depreciation, amortization and other
$
500,865
$
468,200
(1)Prior period amounts have been reclassified to conform with the current period presentation.
On September 1, 2021, we early adopted FASB ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. The adoption did not have a material impact on 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. Revenues
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 $23 billion as of November 30, 2021 and August 31, 2021. 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 65% of our remaining performance obligations as of November 30, 2021 as revenue in fiscal 2022, an additional 19% in fiscal 2023, and the balance thereafter.
Contract Estimates
Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were immaterial for the three months ended November 30, 2021 and 2020, respectively.
Contract Balances
Deferred transition revenues were $701,629 and $700,080 as of November 30, 2021 and August 31, 2021, 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 $751,939 and $731,445 as of November 30, 2021 and August 31, 2021, 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.
The following table provides information about the balances of our Receivables and Contract assets, net of allowance, and Contract liabilities (Deferred revenues):
As of November 30, 2021
As of August 31, 2021
Receivables
$
10,032,721
$
8,796,992
Contract assets (current)
1,087,680
931,220
Receivables and contract assets, net of allowance (current)
11,120,401
9,728,212
Contract assets (non-current)
41,612
38,334
Deferred revenues (current)
4,006,078
4,229,177
Deferred revenues (non-current)
701,629
700,080
Changes in the contract asset and liability balances during the three months ended November 30, 2021, were a result of normal business activity and not materially impacted by any other factors.
Revenues recognized during the three months ended November 30, 2021 that were included in Deferred revenues as of August 31, 2021 were $2.5 billion. Revenues recognized during the three months ended November 30, 2020 that were included in Deferred revenues as of August 31, 2020 were $2.0 billion.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
12
3. Earnings Per Share
Basic and diluted earnings per share are calculated as follows:
Three Months Ended
November 30, 2021
November 30, 2020
Basic earnings per share
Net income attributable to Accenture plc
$
1,791,024
$
1,500,276
Basic weighted average Class A ordinary shares
632,280,932
634,271,482
Basic earnings per share
$
2.83
$
2.37
Diluted earnings per share
Net income attributable to Accenture plc
$
1,791,024
$
1,500,276
Net income attributable to noncontrolling interests in Accenture Canada Holdings Inc. (1)
1,934
1,700
Net income for diluted earnings per share calculation
$
1,792,958
$
1,501,976
Basic weighted average Class A ordinary shares
632,280,932
634,271,482
Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1)
682,916
718,767
Diluted effect of employee compensation related to Class A ordinary shares
11,727,163
11,633,343
Diluted effect of share purchase plans related to Class A ordinary shares
231,650
256,143
Diluted weighted average Class A ordinary shares
644,922,661
646,879,735
Diluted earnings per share
$
2.78
$
2.32
(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. Accumulated Other Comprehensive Loss
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc:
Three Months Ended
November 30, 2021
November 30, 2020
Foreign currency translation
Beginning balance
$
(975,064)
$
(1,010,279)
Foreign currency translation
(227,093)
67,443
Income tax benefit (expense)
730
1,313
Portion attributable to noncontrolling interests
5,600
(1,444)
Foreign currency translation, net of tax
(220,763)
67,312
Ending balance
(1,195,827)
(942,967)
Defined benefit plans
Beginning balance
(559,958)
(615,223)
Reclassifications into net periodic pension and post-retirement expense
(17,548)
13,595
Income tax benefit (expense)
4,573
(2,702)
Portion attributable to noncontrolling interests
14
(12)
Defined benefit plans, net of tax
(12,961)
10,881
Ending balance
(572,919)
(604,342)
Cash flow hedges
Beginning balance
115,525
63,714
Unrealized gain (loss)
(33,108)
25,364
Reclassification adjustments into Cost of services
(27,734)
(20,895)
Income tax benefit (expense)
6,769
(71)
Portion attributable to noncontrolling interests
58
(5)
Cash flow hedges, net of tax
(54,015)
4,393
Ending balance (1)
61,510
68,107
Investments
Beginning balance
—
(49)
Unrealized gain (loss)
—
49
Investments, net of tax
—
49
Ending balance
—
—
Accumulated other comprehensive loss
$
(1,707,236)
$
(1,479,202)
(1)As of November 30, 2021, $68,742 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. Business Combinations
During the three months ended November 30, 2021, we completed individually immaterial acquisitions for total consideration of $1,751,636, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.
6. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by reportable operating segment are as follows:
August 31, 2021
Additions/ Adjustments
Foreign Currency Translation
November 30, 2021
North America
$
6,618,198
$
352,336
$
(2,148)
$
6,968,386
Europe
3,329,746
938,313
(147,409)
4,120,650
Growth Markets
1,177,917
153,567
(24,616)
1,306,868
Total
$
11,125,861
$
1,444,216
$
(174,173)
$
12,395,904
Goodwill includes immaterial adjustments related to prior period acquisitions.
Intangible Assets
Our definite-lived intangible assets by major asset class are as follows:
August 31, 2021
November 30, 2021
Intangible Asset Class
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Customer-related
$
2,068,156
$
(654,460)
$
1,413,696
$
2,312,672
$
(671,490)
$
1,641,182
Technology
250,481
(54,391)
196,090
265,686
(64,069)
201,617
Patents
126,202
(66,650)
59,552
125,629
(65,825)
59,804
Other
70,407
(28,807)
41,600
75,851
(33,006)
42,845
Total
$
2,515,246
$
(804,308)
$
1,710,938
$
2,779,838
$
(834,390)
$
1,945,448
Total amortization related to our intangible assets was $102,542 and $67,207 for the three months ended November 30, 2021 and 2020, respectively. Estimated future amortization related to intangible assets held as of November 30, 2021 is as follows:
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
15
7. Shareholders’ Equity
Dividends
Our dividend activity during the three months ended November 30, 2021 is as follows:
Dividend Per Share
Accenture plc Class A Ordinary Shares
Accenture Canada Holdings Inc. Exchangeable Shares
Total Cash Outlay
Dividend Payment Date
Record Date
Cash Outlay
Record Date
Cash Outlay
November 15, 2021
$
0.97
October 14, 2021
$
612,543
October 12, 2021
$
665
$
613,208
The payment of cash dividends includes the net effect of $26,281 of additional restricted stock units being issued as a part of our share plans, which resulted in 66,486 restricted share units being issued.
Subsequent Event
On December 15, 2021, the Board of Directors of Accenture plc declared a quarterly cash dividend of $0.97 per share on our Class A ordinary shares for shareholders of record at the close of business on January 13, 2022 payable on February 15, 2022.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
16
8. Financial 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, 2021 and 2020, as well as those expected to be reclassified into Cost of services in the next 12 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 $23,479 and net gains of $28,324 for the three months ended November 30, 2021 and 2020, 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
The notional and fair values of all derivative instruments are as follows:
November 30, 2021
August 31, 2021
Assets
Cash Flow Hedges
Other current assets
$
76,213
$
109,416
Other non-current assets
44,558
70,250
Other Derivatives
Other current assets
20,587
32,322
Total assets
$
141,358
$
211,988
Liabilities
Cash Flow Hedges
Other accrued liabilities
$
7,471
$
5,867
Other non-current liabilities
10,160
8,585
Other Derivatives
Other accrued liabilities
18,763
3,614
Total liabilities
$
36,394
$
18,066
Total fair value
$
104,964
$
193,922
Total notional value
$
9,618,821
$
10,045,903
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. The 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. Income Taxes
We 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, 2021 and 2020 were 24.4% and 23.4%, respectively. Absent the $119,700 gain on our investment in Duck Creek Technologies and related $22,906 in tax expense, our effective tax rate for the three months ended November 30, 2020 would have been 23.7%. The effective tax rate for the three months ended November 30, 2021 was higher primarily due to tax expense from adjustments to prior year tax liabilities, partially offset by changes in the geographic distribution of earnings and higher tax benefits from share-based payments.
10. Commitments and Contingencies
Indemnifications and Guarantees
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, 2021 and August 31, 2021, our aggregate potential liability to our clients for expressly limited guarantees involving the performance of third parties was approximately $867,000 and $885,000, respectively, of which all but approximately $76,000 and $78,000, 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.
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 and/or indemnification provisions and believe that any potential payments would be immaterial to the Consolidated Financial Statements, as a whole.
Legal Contingencies
As of November 30, 2021, 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, 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 October 27, 2020, the court issued an order largely denying Accenture’s motion to dismiss the claims against us. 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.
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
ACCENTURE FORM 10-Q
18
11. Segment Reporting
Our reportable segments are our three geographic markets, which are North America, Europe and Growth Markets. 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, 2021, 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, 2021.
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 2022” means the 12-month period that will end on August 31, 2022. 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,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” 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:
Business Risks
•The COVID-19 pandemic has impacted our business and operations, and the extent to which it will continue to do so and its impact on our future financial results are uncertain.
•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 ongoing, profitable 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 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 alliance 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.
•We might be unable to access additional capital on favorable terms or at all. If we raise equity capital, it may dilute our shareholders’ ownership interest in us.
Operational Risks
•As a result of our geographically diverse operations and our growth strategy to continue to expand in our 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.
•Our results of operations and share price could be adversely affected if we are unable to maintain effective internal controls.
•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, 2021. 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 plc is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations. We serve clients in three geographic markets: North America, Europe and Growth Markets (Asia Pacific, Latin America, Africa and the Middle East). We help our clients build their digital core, transform their operations, and accelerate revenue growth—creating tangible value across their enterprises at speed and scale.
We saw very strong demand across our business in the first quarter of fiscal 2022 as our clients continue their digital transformations. Highlights from the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 included:
•Revenues of $15.0 billion, representing 27% growth in both U.S. dollars and local currency;
•New bookings of $16.8 billion, an increase of 30% in both U.S. dollars and local currency;
•Operating margin of 16.3%, a 20 basis point expansion; and
•Cash returned to shareholders of $1.5 billion, including share purchases of $845 million and dividends of $613 million.
Revenues for the first quarter of fiscal 2022 increased 27% in both U.S. dollars and local currency compared to the first quarter of fiscal 2021. During the first quarter of fiscal 2022, revenue growth in local currency was very strong across all geographic markets, industry groups and types of work. The business environment remained competitive. In many areas, our pricing, which we define as the contract profitability or margin on the work that we sell, improved.
In our consulting business, revenues for the first quarter of fiscal 2022 increased 33% in U.S. dollars and 32% in local currency compared to the first quarter of fiscal 2021. Consulting revenue in local currency for the first quarter of fiscal 2022 was driven by very strong growth in Growth Markets, Europe and North America. 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.
In our outsourcing business, revenues for the first quarter of fiscal 2022 increased 21% in both U.S. dollars and local currency compared to the first quarter of fiscal 2021. Outsourcing revenue in local currency for the first quarter of fiscal 2022 was driven by very strong growth in North America, Growth Markets and Europe. We continue to experience growing demand to assist clients with application modernization and maintenance, cloud enablement and managed security services. In addition, clients continue to be focused on transforming their operations through data and analytics, automation and artificial intelligence 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. The majority of our revenues are denominated in currencies other than the U.S. dollar, 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 2022 compared to the first quarter of fiscal 2021, resulting in minimal currency translation impact. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2022, we estimate that our full fiscal 2022 revenue growth in U.S. dollars will be approximately 3% lower than our revenue growth in local currency.
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 client-service personnel, which consists mainly of compensation, subcontractor and other personnel costs, and non-payroll costs on outsourcing contracts. 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 non-client-facing personnel, information systems, office space and certain acquisition-related costs.
Utilization for the first quarter of fiscal 2022 was 92%, down from 93% in the first quarter of fiscal 2021. 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 674,000 as of November 30, 2021, compared to approximately 514,000 as of November 30, 2020. The year-over-year increase in our workforce reflects an overall increase in demand for our services and solutions, as well as people added in connection with acquisitions. Annualized attrition, excluding involuntary terminations, for the first quarter of fiscal 2022 was 17%, compared to 9% in the first quarter of fiscal 2021. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
22
terminations as a means to match people and skills with client demand. In addition, we adjust compensation in order to attract and retain appropriate numbers of qualified employees. For the majority of our personnel, compensation increases become effective December 1st of each fiscal year. We strive to adjust pricing and/or the mix of people to reduce the impact of compensation increases on our margin. During fiscal 2021, we adjusted compensation in line with the increasing market relevant pay around the world. In addition, due to strong demand for our services in the first quarter, we are hiring significantly more people at a time when compensation is increasing, as compared to prior years. We are increasing our pricing and changing the mix of people to reduce the impact of these compensation increases on our margin; however, the impact of the pricing improvements is lagging the impact of these compensation increases. 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 increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate and utilize new employees.
Gross margin (Revenues less Cost of services as a percentage of Revenues) for the first quarter of fiscal 2022 was 32.9%, compared with 33.1% for the first quarter of fiscal 2021. The decrease in gross margin for the first quarter of fiscal 2022 was due to higher labor, including increased usage of subcontractors, and higher acquisition-related costs, partially offset by a decrease in non-payroll costs compared to the same period in fiscal 2021.
Sales and marketing and General and administrative costs as a percentage of revenues was 16.6% for the first quarter of fiscal 2022, compared with 17.1% for the first quarter of fiscal 2021. For the first quarter of fiscal 2022, compared to the same period in fiscal 2021, Sales and marketing costs decreased 70 basis points due to lower business development costs as a percentage of revenues and General and administrative costs increased 30 basis points due to higher non-payroll costs as a percentage of revenues.
Operating margin (Operating income as a percentage of revenues) for the first quarter of fiscal 2022 was 16.3%, compared with 16.1% for the first quarter of fiscal 2021.
During the first quarter of fiscal 2021, we recorded gains of $120 million and tax expense of $23 million related to our investment in Duck Creek Technologies. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
The effective tax rates for the first quarter of fiscal 2022 and 2021 were 24.4% and 23.4%, respectively. Absent the investment gains and related tax expense, our effective tax rate for the first quarter of fiscal 2021 would have been 23.7%.
Diluted earnings per share were $2.78 for the first quarter of fiscal 2022, compared with $2.32 for the first quarter of fiscal 2021. The $97 million investment gains, net of taxes, increased diluted earnings per share by $0.15 during the first quarter of fiscal 2021. Excluding the impact of these gains, diluted earnings per share would have been $2.17 for the first quarter of fiscal 2021.
We have presented our effective tax rate and diluted earnings per share for the first quarter of fiscal 2021, excluding the impact of the investment gains, as we believe doing so facilitates understanding as to the impact of these items and our performance in comparison to the prior period.
New Bookings
New bookings for the first quarter of fiscal 2022 were $16.8 billion, with consulting bookings of $9.4 billion and outsourcing bookings of $7.4 billion. New bookings for the first quarter of fiscal 2021 were $12.9 billion, with consulting bookings of $6.6 billion and outsourcing bookings of $6.3 billion.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Results of Operations for the Three Months Ended November 30, 2021 Compared to the Three Months Ended November 30, 2020
Revenues by geographic market, industry group and type of work are as follows:
Three Months Ended
Percent Increase (Decrease) U.S. Dollars
Percent Increase (Decrease) Local Currency
Percent of Revenues for the Three Months Ended
(in millions of U.S. dollars)
November 30, 2021
November 30, 2020
November 30, 2021
November 30, 2020
GEOGRAPHIC MARKETS
North America
$
6,907
$
5,481
26
%
26
%
46
%
47
%
Europe
5,100
3,967
29
28
34
34
Growth Markets
2,958
2,314
28
30
20
20
Total
$
14,965
$
11,762
27
%
27
%
100
%
100
%
INDUSTRY GROUPS
Communications, Media & Technology
$
3,084
$
2,334
32
%
32
%
21
%
20
%
Financial Services
2,918
2,346
24
24
19
20
Health & Public Service
2,730
2,212
23
23
18
19
Products
4,282
3,206
34
34
29
27
Resources
1,952
1,664
17
17
13
14
Total
$
14,965
$
11,762
27
%
27
%
100
%
100
%
TYPE OF WORK
Consulting
$
8,392
$
6,333
33
%
32
%
56
%
54
%
Outsourcing
6,573
5,430
21
21
44
46
Total
$
14,965
$
11,762
27
%
27
%
100
%
100
%
Amounts in table may not total due to rounding.
Revenues
The following revenues commentary discusses local currency revenue changes for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021:
Geographic Markets
•North America revenues increased 26% in local currency, led by growth in Public Service, Software & Platforms and Consumer Goods, Retail & Travel Services. Revenue growth was driven by the United States.
•Europe revenues increased 28% in local currency, led by growth in Consumer Goods, Retail & Travel Services, Industrial and Banking & Capital Markets. Revenue growth was driven by Germany, the United Kingdom, France and Italy.
•Growth Markets revenues increased 30% in local currency, led by growth in Consumer Goods, Retail & Travel Services, Banking & Capital Markets and Public Service. Revenue growth was driven by Japan and Australia.
Operating Expenses
Operating expenses for the first quarter of fiscal 2022 increased $2,659 million, or 27%, over the first quarter of fiscal 2021, and decreased as a percentage of revenues to 83.7% from 83.9% during this period.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Cost of Services
Cost of services for the first quarter of fiscal 2022 increased $2,184 million, or 28%, over the first quarter of fiscal 2021, and increased as a percentage of revenues to 67.1% from 66.9% during this period. Gross margin for the first quarter of fiscal 2022 decreased to 32.9% from 33.1% during the first quarter of fiscal 2021. The decrease in gross margin was due to higher labor, including increased usage of subcontractors, and higher acquisition-related costs, partially offset by a decrease in non-payroll costs as a percentage of revenues compared to the same period in fiscal 2021.
Sales and Marketing
Sales and marketing expense for the first quarter of fiscal 2022 increased $227 million, or 19%, over the first quarter of fiscal 2021, and decreased as a percentage of revenues to 9.7% from 10.4% during this period. The decrease was primarily due to lower business development costs as a percentage of revenues compared to the same period in fiscal 2021.
General and Administrative Costs
General and administrative costs for the first quarter of fiscal 2022 increased $248 million, or 32%, over the first quarter of fiscal 2021, and increased as a percentage of revenues to 6.9% from 6.6% during this period. The increase was primarily due to higher non-payroll costs as a percentage of revenues compared to the same period in fiscal 2021.
Operating Income and Operating Margin
Operating income for the first quarter of fiscal 2022 increased $544 million, or 29%, over the first quarter of fiscal 2021. Operating margin for the first quarter of fiscal 2022 was 16.3%, compared with 16.1% for the first quarter of fiscal 2021.
Operating income and operating margin for each of the geographic markets are as follows:
Three Months Ended
November 30, 2021
November 30, 2020
(in millions of U.S. dollars)
Operating Income
Operating Margin
Operating Income
Operating Margin
Increase (Decrease)
North America
$
1,244
18
%
$
889
16
%
$
356
Europe
745
15
629
16
115
Growth Markets
445
15
372
16
73
Total
$
2,434
16.3
%
$
1,891
16.1
%
$
544
Amounts in table may not total due to rounding.
We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2022 was similar to that disclosed for revenue for each geographic market. The commentary below provides insight into other factors affecting geographic market performance and operating income for the first quarter of fiscal 2022 compared with the first quarter of fiscal 2021:
•North America operating income increased primarily due to revenue growth.
•Europe operating income increased primarily due to revenue growth, partially offset by lower contract profitability and higher acquisition-related costs.
•Growth Markets operating income increased primarily due to revenue growth, partially offset by lower contract profitability.
Other Income (Expense), net
Other income (expense), net primarily consists of foreign currency gains and losses, non-operating components of pension expense, as well as gains and losses associated with our investments. During the first quarter of fiscal 2022, other income (expense), net decreased $117 million from the first quarter of fiscal 2021, primarily due to lower gains on investments. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Income Tax Expense
The effective tax rates for the first quarter of fiscal 2022 and 2021 were 24.4% and 23.4%, respectively. Absent the $120 million investment gains and related $23 million in tax expense, our effective tax rate for the first quarter of fiscal 2021 would have been 23.7%. The higher effective tax rate for the first quarter of fiscal 2022 was primarily due to tax expense from adjustments to prior year tax liabilities, partially offset by changes in the geographic distribution of earnings and higher tax benefits from share-based payments.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Our provision for income taxes is based on many factors and subject to volatility year to year. We expect the fiscal 2022 annual effective tax rate to be in the range of 23.0% to 25.0%. The effective tax rate for interim periods can vary because of the timing of when certain events occur during the year.
Earnings Per Share
Diluted earnings per share were $2.78 for the first quarter of fiscal 2022, compared with $2.32 for the first quarter of fiscal 2021. The $97 million investment gains, net of taxes, increased diluted earnings per share by $0.15 in the first quarter of fiscal 2021. Excluding the impact of these gains, diluted earnings per share would have been $2.17 for first quarter of fiscal 2021. 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 is due to the following factors:
Earnings Per Share
Q1 FY21 As Reported
$
2.32
Higher revenue and operating results
0.64
Lower share count
0.01
Net Income attributable to noncontrolling interests
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
Liquidity and Capital Resources
As of November 30, 2021, Cash and cash equivalents was $5.6 billion, compared with $8.2 billion as of August 31, 2021.
Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are summarized in the following table:
Three Months Ended
(in millions of U.S. dollars)
November 30, 2021
November 30, 2020
Change
Net cash provided by (used in):
Operating activities
$
531
$
1,603
$
(1,072)
Investing activities
(1,913)
(446)
(1,466)
Financing activities
(1,069)
(999)
(70)
Effect of exchange rate changes on cash and cash equivalents
(80)
22
(102)
Net increase (decrease) in cash and cash equivalents
$
(2,531)
$
179
$
(2,710)
Amounts in table may not total due to rounding.
Operating activities: The $1,072 million decrease in operating cash flows was due to a larger increase inreceivables from clients and contract assets as well as higher spending on certain compensation payments, partially offset by higher net income.
Investing activities: The $1,466 million increase in cash used was primarily due to higher spending on business acquisitions, lower proceeds from the sale of businesses and investments, and higher spending on purchases of property and equipment. For additional information, see Note 5 (Business Combinations) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Financing activities:The $70 million increase in cash used was primarily due to an increase in the net purchases of shares as well as an increase in cash dividends paid, partially offset by an increase in net proceeds from share issuances. 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.
Borrowing Facilities
As of November 30, 2021, we had the following borrowing facilities, including the issuance of letters of credit, to support general working capital purposes:
Local guaranteed and non-guaranteed lines of credit
252
—
Total
$
4,527
$
—
Amounts in table may not total due to rounding.
Under the borrowing facilities described above, we had an aggregate of $718 million of letters of credit outstanding as of November 30, 2021. We have a short-term commercial paper financing program backed by our $3 billion syndicated credit facility. As of November 30, 2021, we had no commercial paper outstanding.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
27
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, 2021 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)
1,934,294
$
669
—
$
—
Other share purchase programs
—
—
7,000
3
Other purchases (2)
500,609
174
—
—
Total
2,434,903
$
843
7,000
$
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, 2021, 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 2022. 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
28
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the three months ended November 30, 2021, 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, 2021. For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, 2021, 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, 2021.
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 2022 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, 2021 (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 2022.
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)
(in millions of U.S. dollars)
September 1, 2021 — September 30, 2021
679,771
$
336.84
657,264
$
6,065
October 1, 2021 — October 31, 2021
1,062,256
340.42
685,173
5,832
November 1, 2021 — November 30, 2021
692,876
364.06
591,857
5,614
Total (4)
2,434,903
$
346.15
1,934,294
(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 2022, we purchased 1,934,294 Accenture plc Class A ordinary shares under this program for an aggregate price of $669 million. The open-market purchase program does not have an expiration date.
(3)As of November 30, 2021, our aggregate available authorization for share purchases and redemptions was $5,614 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, 2021, the Board of Directors of Accenture plc has authorized an aggregate of $43.1 billion for share purchases and redemptions by Accenture plc and Accenture Canada Holdings Inc.
(4)During the first quarter of fiscal 2022, Accenture purchased 500,609 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.
Accenture LLP Leadership Separation Benefits Plan (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, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of November 30, 2021 (Unaudited) and August 31, 2021, (ii) Consolidated Income Statements (Unaudited) for the three months ended November 30, 2021 and November 30, 2020, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended November 30, 2021 and November 30, 2020, (iv) Consolidated Shareholders’ Equity Statement (Unaudited) for the three months ended November 30, 2021 and November 30, 2020, (v) Consolidated Cash Flows Statements (Unaudited) for the three months ended November 30, 2021 and November 31, 2020 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, 2021, formatted in Inline XBRL (included as Exhibit 101)
(*)
Indicates management contract or compensatory plan or arrangement.
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.
Date: December 16, 2021
ACCENTURE PLC
By:
/s/ KC McClure
Name:
KC McClure
Title:
Chief Financial Officer
(Principal Financial Officer and Authorized Signatory)
