Taking a closer look at the results, ACN reported EPS of $1.33, topping analysts' expectations by $0.03. This was a far better performance relative to expectations than last quarter, when ACN missed the EPS number by $0.09. Revenue came in at $8.32 billion, up a modest 4.7% -- which is roughly inline with its current growth rates -- essentially inline with the $8.34 billion estimate.
Breaking the topline down by segment, consulting (53% of revenue) was up 3%, while outsourcing (47%) was a little stronger, up 7%. In terms of new bookings for Q2, consulting ramped higher as compared to outsourcing with both coming in at $4.6 billion.
In terms of geography, North America continues to be its largest market at 48% of revenue. Revenue in this market was up 4%. By far, its fastest growing region is in the emerging markets (Asia, China), which is calls its "Growth Markets." Revenue was up 12% here and is steadily becoming a bigger piece of the overall pie at 18%.
One notable blemish in the Q2 results is that its cash flow from operations and its free cash flow both took a turn lower. Operating cash flow of $155 million was down 57% from the year ago period and free cash flow of $50 million was lower by 77%. This, combined with the FY18 EPS guidance likely explains the softness in the stock today.
ACN's Q3 revenue outlook was about as "middle of the road" as can be. Specifically, its Q3 revenue guidance of $8.65-$8.90 billion is right inline with the $8.81 billion Capital IQ Consensus. Where the disappointment may be is in its FY18 EPS guidance. While it did raise the low end of its EPS guidance to $5.70-$5.87 from its original outlook of $5.64-$5.87, the midpoint of this guidance ($5.79) is still below the $5.87 Capital IQ Consensus. That seems to be nit-picking a bit, but, as noted above, the stock had been rallying higher into the print. So, with many investors sitting on some gains, it could be that they are using this guidance as a reason to lock in gains.