Accenture Reports Strong Q1 2025 Earnings and Revenue Growth

Accenture plc (ACN) has released its first-quarter fiscal 2025 results, which exceeded expectations.

For the first quarter, Accenture reported earnings of $3.6 per share after excluding non-recurring items, which is a 28.7% increase from the previous year. This figure surpassed the Zacks Consensus Estimate by 6.2%. Additionally, the company achieved total revenues of $17.7 billion, beating the consensus estimate by 3.1% and reflecting a year-over-year growth of 9.1%.

In the past six months, Accenture's stock has appreciated by 14.5%. However, this is notably lower than the 22.3% increase seen in the industry and higher than the 11.6% growth of the S&P 500.

Revenue Overview

Accenture's revenues varied by service type. Managed services accounted for $8.6 billion, representing an 11% increase from the same period last year, surpassing estimates of $8.2 billion. Consulting revenues rose by 7% year over year to reach $9 billion, exceeding projections of $8.9 billion.

Looking at segment performance, revenues from the health and public service segment grew by 13% year over year, reaching $3.8 billion, and exceeded estimates of $3.7 billion. The resources segment reported revenues of $2.4 billion, a 6% year-over-year increase that met expectations. Additionally, product segment revenues hit $5.4 billion, increasing by 12% year-over-year and outpacing estimates of $5.2 billion.

Regarding communications, media, and technology, revenues were reported at $2.9 billion, growing by 7% year-over-year, in line with expectations. Financial services revenues came in at $3.2 billion, a 4% increase from the prior year, surpassing estimates of $3.1 billion.

Geographically, revenues from the Americas totaled $8.7 billion, a 9% increase from the previous year; this exceeded expectations of $8.6 billion. In the EMEA region, revenues rose by 10% year over year to $6.4 billion, exceeding projections of $6 billion. Asia Pacific revenues, however, totaled $2.5 billion, marking a 6% year-over-year increase, which was in line with estimates.

Booking Statistics

Accenture reported total bookings of $18.7 billion for the first quarter, reflecting a 1% increase from last year. Of this total, consulting bookings were $9.2 billion, while managed services bookings reached $9.5 billion.

Operating Results

For the gross margin in the first quarter, Accenture reported a figure of 32.9%, which marks a 70 basis point decline from the previous year. The adjusted operating income was $2.7 billion, an increase of 9% year-over-year. The adjusted operating margin remained stable at 16.7%, the same as the first quarter of fiscal 2024.

Financial Position

Accenture ended the first quarter with cash and cash equivalents totaling $8.3 billion, up from $5 billion at the end of the previous quarter. The company generated $1 billion in cash from operating activities and reported capital expenditure for the quarter at $152.2 million.

Accenture's free cash flow was reported at $870 million, and the company repurchased 2.5 million shares for a total of $898 million, including 2.2 million shares from the open market. In addition, the company disbursed $926 million in dividends during the quarter.

Fiscal Year 2025 Guidance

For fiscal 2025, Accenture has adjusted its revenue growth forecast, now anticipated to be between 4-7% in local currency, compared to the previous guidance of 3-6%. The company expects operating cash flow to range from $9.4 to $10.1 billion, and anticipates free cash flow to be between $8.8 billion and $9.5 billion.

Currently, Accenture holds a Zacks Rank of #4 (Sell).

Peer Earnings Snapshot

Clean Harbors, Inc. (CLH) reported mixed results for its third quarter, with earnings lagging behind estimates but revenues exceeding expectations, indicating varied performance among peers.

Verisk Analytics Inc. (VRSK) reported strong growth in its latest quarter, showcasing overall positive trends in the sector.

Earnings, Stock, Growth