Accenture investors cheered Thursday after the management consultant said it would eliminate 19,000 jobs as part of cost-cutting measures and reported fiscal second-quarter profit and sales that rose above expectations amid record new bookings.
The company expects its “business optimization” plan to cost $1.5 billion through fiscal 2024, with about $1.2 billion going toward severance payments and $300 million toward consolidating office space.
“These actions are expected to impact roughly 2.5%, or 19,000, of our current workforce, of which over half are non-billable corporate functions and include over 800 of our more than 10,000 leaders across our markets and services,” said Chief Financial Officer KC McClure in a post-earnings conference call with analysts, according to a transcript provided by AlphaSense. “Nearly half of the 19,000 people will depart by the end of fiscal 2023.” Accenture’s fiscal year ends in August.
Accenture CFO KC McClure
Accenture PLC
Accenture’s
ACN,
stock jumped 6.2% in morning trading, enough to pace the Technology Select Sector SPDR exchange-traded fund’s
XLK,
gainers.
In addition to the job-cutting news, the company reported net income for the quarter to Feb. 28 that fell to $1.53 billion, or $2.39 a share, from $1.64 billion, or $2.54 a share, in the same period a year ago. Excluding nonrecurring items, the company said adjusted earnings per share rose 6% to $2.69, to beat the FactSet consensus of $2.49.
Revenue grew 5.1% to $15.81 billion, above the FactSet consensus of $15.59 billion, as bookings jumped 13% to a record $22.09 billion.
Managed-services revenue rose 12% to $7.54 billion to offset a 1% decline in consulting revenue to $8.28 billion. Technology, services and operations revenue grew in the double-digits percentage range, CFO McClure said, while consulting declined by mid-single digits.
The company said it spent $1.12 billion during the quarter to repurchase 4.1 million shares, leaving $4.2 billion remaining in its stock-buyback program.
For fiscal 2023, the company trimmed its revenue-growth outlook to 8%-10% from 8%-11% and its net EPS guidance to $10.84-$11.05 from $11.20-$11.52, as operating margin is expected to contract to 14.1%-14.3%.
On an adjusted basis, the company expects fiscal 2023 EPS of $11.41 to $11.63. The FactSet consensus is for $11.47.
The stock has lost 5.1% year to date through Wednesday, while the S&P 500
SPX,
has gained 2.5%.
