Accenture plc (ACN) on Q2 2023 Results - Earnings Call Transcript

Operator: And ladies and gentlemen, thank you for standing by and welcome to the Accenture’s Second Quarter Fiscal 2023 Earnings Call. As a reminder, today’s conference is being recorded. I would now like to turn the conference over to Katie O’Conor, Managing Director and Head of Investor Relations. Please go ahead. Katie O’Conor: Thank you, operator and thanks everyone for joining us today on our second quarter fiscal 2023 earnings announcement. As the operator just mentioned, I am Katie O’Conor, Managing Director, Head of Investor Relations. On today’s call, you will hear from Julie Sweet, our Chair and Chief Executive Officer; and KC McClure, our Chief Financial Officer. We hope you have had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today’s call. Julie will begin with an overview of our results. KC will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the second quarter. Julie will then provide a brief update on our market positioning before KC provides our business outlook for the third quarter and full fiscal year 2023. We will then take your questions before Julie provides a wrap-up at the end of the call. Some of the matters we will discuss on this call, including our business outlook, are forward-looking and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors set forth in today’s news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures, where appropriate, to GAAP in our news release or in the Investor Relations section of our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie. Julie Sweet: Thank you, Katie and thank you to everyone joining today and thank you to our 738,000 people around the globe for your incredible work and commitment to our clients, which has resulted in our delivering another strong quarter of financial results and the broader 360-degree value we continue to create for all our stakeholders. Let me share a few highlights and value we created in our continued disciplined execution. I am very pleased with our record bookings for Q2 at $22.1 billion, our highest ever including 35 clients with quarterly bookings greater than $100 million, our second highest quarter on record for such bookings, representing the continued trust that our clients have in us. We delivered revenues of $15.8 billion, representing 9% growth in local currency, bringing us to $31.6 billion of revenue at 12% growth through H1 and we continued gaining market share, growing approximately 2x the market. We continued our inorganic investments with six acquisitions in strategic areas, including cloud with the acquisition of SKS in Europe, which will expand our specialized technology, consulting and regulatory capabilities, enabling us to better serve our financial services clients; security with the acquisition of Morphus in Brazil, a cyber defense risk management, cyber threat intelligence service provider; and supply chain with the acquisition of Inspirage in the U.S., which will enhance our technology capabilities to accelerate innovation for clients through emerging technologies such as touchless supply chain and digital twins. We also continued our investment in our people with 10.3 million training hours, a 12% increase year-over-year. We are optimizing our business to lower costs in fiscal year 2024 and beyond, while continuing to invest in our business and our people to capture the significant growth opportunities ahead. KC will be giving you more detail on these actions. Finally, we believe our focus on creating 360-degree value differentiates us in our market. We earned the number one position in our industry for the 10th year in a row and number 32 overall on Fortune’s list of the World’s Most Admired Companies. We ranked number one in our industry and number four overall on the JUST Capital list of America’s Most JUST Companies. And we have been recognized by Ethisphere as one of the world’s most ethical companies for the 16th year in a row. I am very pleased that our results demonstrate once again that our strategy to be the execution partner of choice for transformation, lead in the five forces and have a diverse business across markets, industries and services continues to allow us to lead and take market share. And in a world in which all strategies lead to technology, we have distinguished ourselves and our impact in the market. Over to you, KC. KC McClure: Thank you, Julie and thanks to all of you for taking the time to join us on today’s call. We were pleased with our overall results in the second quarter, setting a new bookings record at $22.1 billion, $2.5 billion higher than our previous record set in Q2 of last year, with consulting bookings close to matching our previous record. We delivered revenue growth for the quarter at the top end of our guided range as we continue to deliver on our shareholder value propositions. Before I summarize results for the quarter, let me spend a moment on the business optimization actions we are taking to reduce costs for fiscal ‘24 and beyond, which includes streamlining operations, transforming our non-billable corporate functions and consolidating office space. We estimate cost of $1.5 billion through fiscal year 2024, of which we expect to incur approximately $800 million in FY ‘23 and $700 million in FY ‘24, comprised of approximately $1.2 billion in severance and $300 million for the consolidation of 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. Nearly half of the 19,000 people will depart by the end of fiscal year ‘23. Now, let me summarize a few of the highlights for the quarter. Revenues grew 9% local currency, driven by broad-based growth across all markets with more than half of our 13 industries growing double-digits. We also continue to extend our leadership position with growth estimated to be about 2x the market, which refers to our basket of publicly traded companies. In Q2, we recorded $244 million in cost associated with the business optimization actions, which impacted operating margin by 150 basis points and EPS by $0.30. The following comparisons exclude these impacts and reflect adjusted results. We delivered adjusted EPS in the quarter of $2.69, reflecting 6% growth over EPS last year. Adjusted operating margin of 13.8% increased 10 basis points, with 20 basis points expansion year-to-date and includes continued significant investments in our people and our business. Finally, we delivered free cash flow of $2.2 billion and returned $1.8 billion to shareholders through repurchases and dividends. Year-to-date, we have invested $1.1 billion in acquisitions, primarily attributed to 15 transactions. With those high level comments, let me turn to some of the details, starting with new bookings. New bookings were a record at $22.1 billion for the quarter, representing growth of 17% in local currency with an overall book-to-bill of 1.4. Consulting bookings were $10.7 billion with a book-to-bill of 1.3. Managed service bookings were also a record at $11.4 billion with a book-to-bill of 1.5. We were very pleased with the strength of our new bookings, which were broad-based, delivering a very strong book-to-bill across all of our geographic markets and across our services with a book-to-bill of 1.5 in operations, 1.4 in technology and 1.3 in strategy and consulting. Turning now to revenues. Revenues for the quarter were $15.8 billion, a 5% increase in U.S. dollars and 9% in local currency and we are at the top end of our range, adjusting for a foreign exchange headwind of approximately 4% compared to the 5% provided last quarter. Consulting revenues for the quarter were $8.3 billion, a decline of 1% in U.S. dollars and an increase of 4% in local currency. Managed services revenue were $7.5 billion, up 12% in U.S. dollars and 16% in local currency. Taking a closer look at our service dimensions, technology services and operations grew double-digits and strategy and consulting declined mid single-digits. Turning to our geographic markets. In North America, revenue growth was 5% in local currency, driven by growth in public service, health and utilities. These increases were partially offset by a decline in communications and media and high tech. Revenue growth was driven by the United States. In Europe, revenues grew 12% in local currency, led by growth in industrial, banking and capital markets and public service. Revenue growth was driven by Germany, Italy and France. In Growth Markets, we delivered 14% revenue growth in local currency, driven by growth in banking and capital markets, chemical and natural resources and public service. Revenue growth was led by Japan. Moving down the income statement. Gross margin for the quarter was 30.6% compared with 30.1% for the same period last year. Sales and marketing expense for the quarter was 9.9% compared to 9.4% for the second quarter last year. General and administrative expense was 6.8% compared to 7% for the same quarter last year. Adjusted operating income was $2.2 billion in the second quarter, reflecting an adjusted 13.8% operating margin, an increase of 10 basis points from operating margin in the second quarter of last year. Our effective tax rate for the quarter was 20.4% compared with an effective tax rate of 19.2% for the second quarter last year. Adjusted diluted earnings per share were $2.69 compared with diluted EPS of $2.54 in the second quarter last year. Days service outstanding were 42 days compared to 48 days last quarter and 41 days in the second quarter of last year. Free cash flow for the quarter was $2.2 billion compared to approximately $400 million last quarter, resulting from cash generated by operating activities of $2.3 billion, net of property and equipment additions of $108 million. Our cash balance of – at February 28 was $6.2 billion compared with $7.9 billion at August 31. With regards to our ongoing objective to return cash to shareholders, in the second quarter, we repurchased or redeemed 4.1 million shares for $1.1 billion at an average price of $273.55 per share. As of February 28, we had approximately $4.2 billion of share repurchase authority remaining. Also in February, we paid a quarterly cash dividend of $1.12 per share for a total of $708 million. This represents a 15% increase over last year. And our Board of Directors declared a quarterly cash dividend of $1.12 per share to be paid on May 15, a 15% increase over last year. Finally, turning to the 360-degree value we are creating for all our stakeholders, we are partnering with Save the Children to connect with new audiences and invigorate donors through fundraising and creative campaign excellence. So at the halfway point of fiscal ‘23, we are pleased with our results. Now, let me turn it back to Julie. Julie Sweet: Thank you, KC. I will start with the overall demand environment, which is more of the same. We believe that the ongoing volatility and uncertainty in the macro environment is making it even clearer to clients that they need to change more, not less. And that two of the five key forces of change that we have identified for the next decade, the need for total enterprise reinvention and the ability to access, create and unlock the potential of talent are critical to succeed in the near, medium and long-term. We see two common themes. First, all strategies continue to lead to technology, particularly cloud, data, AI and security. This is reflected in the latest market estimates, which are down slightly, but are still hovering around 5%. And second, companies remain focused on executing compressed transformations to achieve lower cost, stronger growth, more agility and greater resilience faster. We remain laser focused on pivoting to our clients’ changing needs and being relevant across the enterprise from the frontline to core operations to corporate functions. Our ability to advise, shape and deliver value-led transformations, leveraging the breadth of our services from strategy and consulting to our strategic managed services across all industries and geographic markets is what differentiates Accenture. Now, I will give you more color on the quarter and in particular, how total enterprise reinvention and talent are critical to our clients. For example, we are helping Shionogi & Co. Limited, a Japanese pharmaceutical company with a compressed transformation to improve its business process efficiency and create a more agile organization. We will enter into a joint venture with the company that will provide managed services capability to oversee back office functions such as human resources, finance and accounting, public relations, facility management, procurement and marketing. The joint venture will also be charged with the management of the pharmacovigilance function from safety management operations to post-marketing operations to regulatory compliance. As part of this transformation, we will upscale over 400 employees, enabling them to play a greater role in the growth and development of the wider business, hence demonstrating the value of all our services from strategy and consulting, our deep industry knowledge to technology and operations coming together to enable the clients transformation. I would like to take a moment to recognize Egawa-san, our Head of the Japan market unit and our extraordinary people in Japan for how they are consistently creating value for our clients with double-digit revenue growth for each of the past 5 years. As clients focus on building their digital core with a modern cloud-based infrastructure, our cloud business continues to grow very strong double-digits. For example, we are working with the state of Missouri to replace its legacy applications and infrastructure with a modern ERP in the cloud, introducing new capabilities in finance, supply chain management, human capital management, payroll and budgeting. As the current ERP system no longer fully meets the business needs of the state, they are looking for a modern system that is efficient, scalable and flexible, all delivered by a best-in-class implementation partner. This compressed transformation, one of the earliest and most complex ERP implementations for any state will help reduce operating expenses, provide opportunities for upskilling and improve customer experience and services. We are partnering with minority and women-owned businesses on this transformation and we will bring in apprentices, the program’s lifecycle part of our shared commitment with the state of Missouri to foster diversity and inclusion. With our cloud-first strategy, our approach has been to help clients migrate to the cloud and then partner with them on their journey to grow and innovate in the cloud. Our cloud growth is driven by both migration and clients who are moving forward on this journey, such as Enel, one of our largest utilities clients who has taken their mass migration to cloud a few years ago to the next level, changing their operating model, tools and talent and largely automating IT operations. We are now helping them accelerate the modernization of their application landscape, reduce greenhouse gas emissions by up to 80%, support a significant acquisition and divestment agenda and pivot to platform-based business model for integrated retail delivery beyond meter services, grid and renewable energy. Using cloud as their operating systems is helping this market leader manage increasing levels of complexity by bringing together data, AI and applications to optimize their operations and accelerate growth. A strong and secure digital core also is essential to total enterprise reinvention. We are seeing continued very strong demand for our security services, which experienced another quarter of very strong double-digit growth. We are working with Empresas CMPC SA, a Chilean pulp and paper company and a cybersecurity transformation of their plant operations. We will implement a security program across its 48 industrial sites focused on threat detection, management and response as well as governance and workforce training. Through our global and local Industry X capabilities, we will help strengthen the company’s cybersecurity expenses through continuous monitoring of its physical locations and equipment. We continue to lead in managed services, which experienced strong growth again this quarter at 16%. Managed services are strategic for our clients, because they enable clients to move faster, leveraging our digital platform expertise and talent as well as delivering cost efficiencies. And our clients are turning to Accenture because of the depth and breadth of our industry, functional and technology expertise that we bring together into the transformation journey. Our approach to managed services is to both run and transform and run and modernize. We deliver cost savings as table stakes. For example, we are partnering with the UK’s Department for Work and Pensions, which is responsible for welfare pensions and child maintenance policy to modernize its legacy systems, eliminating backlogs and delivering a better experience for citizens and employees. We developed a cloud-based intelligent optimization platform that combines robotic process automation, AI, analytics and machine learning to provide bots as a service to create the equivalent of a virtual workforce available 24/7. With routine tests now automated, the organization has already saved 2.4 million human hours, which can be reallocated to more complex higher value tasks. Let me pause to thank our global H&PS colleagues for their amazing contributions as evidenced by 14 consecutive quarters of double-digit growth. As our clients continue to prioritize cost optimization as well as growth in Vigilance, Song is more relevant than ever. In Song, which grew strong double-digits this quarter, clients are focused on more capital efficient growth that creates efficiency, drive short-term growth and optimizes existing assets with clear outcomes and shorter time horizons to keep up with the pace of change with customers and technology. We have moved quickly to help clients seize new opportunities in contact centers, not only for enhanced customer service, but also customer acquisition and growth. We are working with a global biopharmaceutical leader in North America to reinvent digital marketing at scale. Driven by data and using technologies integrated with SynOps, the company will be able to create, produce and deliver consistent world class content that informs and educates healthcare providers and patient communities around the world, helping to deliver innovative health services. We are working with the Prada Group, the Italian luxury fashion player, to offer its customers an entirely new customization experience through an online 3D configurator. Accenture Song created a digital twin of Prada’s iconic show called America’s Cup, which allows shoppers to fully customize it from material to color to trim across the overlay, lining, sole and other parts. With more than 50 million possible configurations, more than any web platform could handle, this innovative approach allows customers to see high resolution 3D models of their custom builds with the same quality and fidelity as a physical shoe. Song solution to online product customization is fully scalable to the cloud. It gives Prada the flexibility to apply the same strategy to other products, ensuring the outstanding experience that their shoppers expect. As I continue to move across the enterprise, industries and markets, I want to also highlight Industry X, which grew very strong double digits again this quarter, and which we believe is the next digital frontier where our digital engineering capabilities are advancing sustainability services. For example, we are working with Recharge Industries, a battery research and production company in Australia, to help design and engineer one of the world’s largest lithium-ion battery facilities. Once built, the facility will generate up to 30-gigawatt hours of storage capacity per year. Finally, moving to the metaverse and the ongoing tech revolution. We’ve talked about the importance of artificial intelligence in building the digital core for our clients. While generative AI has recently burst into the popular imagination, at Accenture, we’ve been working with the technology from its earliest stages and are already applying it at clients. For example, we’re working with a multinational bank to transform how it manages high volumes of post-trade processing e-mails every day. We are leveraging a generative AI solution as it is built to understand the context of e-mails with high accuracy. It automatically routes large numbers of e-mails, daily to relevant teams and draft responses with recommended actions and related information. Our work will help reduce manual effort and risk, boost worker efficiency and improve interactions with customers. And finally, on that note, we will release our Tech Vision 2023 on March 30. The 4th and 5th key forces of change we have identified for the next decade at a metaverse and ongoing tech revolution. And this year’s tech vision is particularly relevant and actionable as our clients face a rapidly changing landscape in which generative AI, metaverse cloud, science, tech and other technologies are driving more opportunities for change and reinvention. This year’s vision will explore how these technologies and more are blending the physical world and the virtual world into a shared reality, creating a huge opportunity for our clients and for Accenture. Now turning to our business outlook. For the third quarter of fiscal ‘23, we expect revenues to be in the range of $16.1 billion to $16.7 billion. This assumes the impact of FX will be about negative 3.5% compared to the third quarter of fiscal ‘22 and reflects an estimated 3% to 7% growth in local currency. For the full fiscal year ‘23, based upon how the rates have been trending over the last few weeks, we now expect the impact of FX on our results in U.S. dollars will be approximately negative 4.5% compared to fiscal ‘22. For the full fiscal ‘23, we now expect our revenue to be in the range of 8% to 10% growth in local currency over fiscal ‘22, which assumes an inorganic contribution of 2%. We expect business optimization actions to impact fiscal ‘23 GAAP operating margin by 120 basis points and EPS by $0.96. We expect our anticipated gain on our investment in Duck Creek Technologies to impact EPS by $0.39. Our guidance for full year fiscal ‘23 excludes these impacts. For adjusted operating margin, we expect fiscal year ‘23 to be 15.3% to 15.5%, a 10 to 30 basis point expansion over fiscal ‘22 results. We expect our adjusted annual effective tax rate to be in the range of 23% to 25%. This compares to an effective tax rate of 24% in fiscal ‘22. We expect our full year adjusted earnings per share for fiscal ‘23 to be in the range of $11.41 to $11.63, or 7% to 9% growth over fiscal ‘22 results. For the full fiscal ‘23, we now expect operating cash flow to be in the range of $8.7 billion to $9.2 billion, property and equipment additions to be approximately $700 million and free cash flow to be in the range of $8 billion to $8.5 billion, $300 million higher than our previous guidance. Our free cash flow guidance continues to reflect a very strong free cash flow to net income ratio of 1.1. Finally, we continue to expect to return at least $7.1 billion through dividends and share repurchases as we remain committed to returning a substantial portion of cash to our shareholders. With that, let’s open it up so we can take your questions. Katie? Katie O’Conor: Thanks, KC. Operator, would you please provide instructions for those on the call? Operator: Our first question comes from the line of Tien-Tsin Huang with JPMorgan. Please go ahead. Tien-Tsin Huang: Hi, thanks so much. I had to ask, given the great bookings here, your confidence in being able to replenish those bookings as we look to the third quarter and ahead? I’m sure a lot of people are thinking what’s going on in the month of February and March as well. I know your guidance some reacceleration in the fourth quarter, but just curious about your ability to replenish on the bookings side? Thanks. KC McClure: Yes. Thanks, Tien-Tsin. So we do feel good about our pipeline even after our record bookings this quarter. And our sales outlook for the next quarter, Q3 is solid. We expect to have slightly lighter bookings than what we’ve had compared to the record quarter that we just had. Julie Sweet: And maybe just to add a little color. Look, as you can see in our bookings, there is just continued strong demand for the larger transformational deals, right? And the need to, in particular, build the digital core. And I’m personally working right now with clients across insurance, healthcare, consumer goods, banking and telecom, all of whom are very focused on how do we upgrade our – get rid of our technical debt, how do we build more resilience. They are trying to build digital products, but they have got really old systems. And so we remain in the early innings of building the kind of digital core that really need to transform every part of the enterprise. And so we continue to feel good, not just about our pipeline, but about the demand we’re seeing really rooted in our view that all companies are going to have to do total enterprise reinvention across the enterprise that it’s really a continuous cycle starting with a digital – a strong digital core. And there is a lot of work to do on building those cores out. Tien-Tsin Huang: Good. Glad to hear. Very encouraging. So given that, given both your comments and the optimization, I’m just trying to think about is it more playing offense versus defense? So I’m just trying to think about – I know a lot of your clients are going through similar optimization efforts as well. How does this one fit given that? And should we still think about this within the 10 to 30 basis points of typical margin expansion that we think about sort of philosophically? Or could this be incremental? KC McClure: Yes. So just let me answer the last part first, is you should view this as creating the room in our P&L to ensure that we can continue to deliver on that enduring shareholder value model, including the 10 to 30 basis points, which for a short period of time will be on an adjusted basis. So – and as you think about it, it is – I like that, is it offense or defense. It is offensive. I mean if you look at where we are today, right, we’ve got record bookings, a strong quarter of – strong view of the year, 8% to 10%, 91% chargeability. We’re going after structural cost, right, to ensure that we’re in a better position. As you know, we’ve been dealing with the difficult challenges of compounding wage inflation. And we’ve been doing that with pricing, but we’ve also been doing that with cost efficiencies and digitizing. And we have identified an opportunity to go after more structural costs to kind of create that resilience and that room in the P&L as we look forward. So very much in our view, getting ahead of and dealing with these structural issues that have been created over the last couple of years. Tien-Tsin Huang: Awesome. That’s great. Great results then. Thank you. Julie Sweet: Thank you. Operator: And our next question comes from the line of James Faucette with Morgan Stanley. Please go ahead. James Faucette: Great. Thank you very much. Wanted to follow-up on a couple of those items. First, can you talk a little bit about what you’re seeing around the actual conversion and decision cycles? Obviously, the bookings themselves speak well to being able to do conversions, but are we seeing any changes in the sales cycle times or the types of projects that customers may want to engage in? Julie Sweet: Well, let me just start with the type of projects. I mean what we’ve been seeing over the last several quarters is just a laser focus on cost, right? So most programs, clients want to see a shorter return on investments, right, more focused on cost. They love cost and growth, but it has to be, in most cases, a shorter return on the investment. At the same time, it’s important that not all industries are in the same place, right? So if you’ve got industries like, say, in the high-tech area, and some spots on retail, for example, cost optimization is very dominant, right? If you have – you’ve got some of the other less affected industries, say, insurance, energy, it’s – everyone wants to be more resilient and lower cost. But they are really trying to deal with their technical debt, they are thinking about growth, how do you reimagine the customer experience. And so I would say a common theme is that in this kind of an environment, everyone does want to be optimizing costs, but where they are focusing is different by industry is what I would say first. And then just to your first part of your question about are you seeing changes in decision making and I’d let KC talk to you about the yields in our pipeline because you all saw, in general, seeing a trend toward these larger deals. So there is – and we talked about this in the last couple of quarters, we’re seeing less of the smaller deals in SMC and to some extent, SI, particularly in North America, where we’re seeing more caution. North America had record sales this quarter. But in areas tending towards the bigger transformational deals, not the smaller SNC and to some extent, SI deals. And those – that transformational pipeline, which is our strategy, right, like if you think about it, what have we been trying to drive for the last few years? We want to be at the center of our clients’ business, we want to be able to be relevant, really help them transform and then be well positioned to continue to be that partner. And I would just say, Enel in my script, is a great example of that. I mean they are hugely innovative utility. They were very early in cloud. We help them get to the cloud. And now they are modernizing and once again being super innovative. That’s exactly the way we want to work with our clients, be it their core and then be there for their next big transformation. Maybe, KC, if you want to just comment on the yields real quick. KC McClure: Yes, sure. No problem. So when we – let me focus really on consulting bookings because it is important to understand the impact of F&C and our consulting bookings and also how to what we’re doing in our larger transformation deals because they do convert to revenue at a slower pace. So as I mentioned in my script, I was very pleased with our SNC bookings and our overall consulting bookings, which were very close to the record that we had last year. And SNC participates, and is a critical part of winning the larger deals, which we have 35 clients over $100 million. And so what you’ll see is in SNC, you may see a conversion that’s a little bit slower than we typically have because we still do have some pressure in our smaller deals, particularly in North America. And so maybe I’ll just – how does that all work in terms of yield then? What that means for next quarter? As we look at SNC, I mentioned that we had a modest decline, a decline in mid-single digits this quarter. We think we will be in the same zone overall in Q3, and we’re going to look to reconnect with SNC growth in Q4. It may take us a little bit more time than that. But I just want to make that connection to your question as it relates to our very strong consulting bookings in SNC. They were definitely part of that discussion and clearly part of that the reason why we are able to get the 35 clients in a $100 million, but you will see that come into our P&L at a little bit slower conversion. James Faucette: Thank you. That’s really helpful. And then just quickly, on D&A, it seems like we’ve seen a little bit of a deceleration there. How are you thinking about D&A going forward? And what was inorganic contribution in the quarter and how should we think about that for the year? Thanks. KC McClure: So I’ll just maybe reiterate the contribution for the year. So we now see inorganic contribution to be about 2%. And acquisitions can be lumpy. And we – as you know, we can’t always really control the timing, but there is no change to our strategy. In any given year, you’ll hear us kind of go up or down a bit on the percentage of contribution. No change. James Faucette: Great. Thank you. Operator: And our next question comes from the line of Bryan Keane with Deutsche Bank. Please go ahead. Bryan Keane: Hi, guys. Good morning. Wanted to just ask about… Julie Sweet: Good morning. Bryan Keane: Good morning. I just wanted to ask about the communications, media and technology group that did come in at flat local currency and is kind of a standout versus the others. Can you just talk a little bit about what’s happening there and what the outlook might be? Julie Sweet: Yes. That’s primarily happening in North America where we’ve got comms and media and high-tech are more challenged, cutting back spending for sort of obvious reasons. And then our software and platforms business, which has been really a strong business for us for the last few years has – it’s still slightly positive, but has come down a lot, and I think for kind of obvious reasons that we’re all reading in the press. And so we do think this will last for a bit of time as you look at sort of some of the ways they are approaching spending in that. And – but it will eventually come back, and these are great companies. And we’re helping them in many places, but their spending is just lower right now. So that’s – I think long-term, we’re very positive. These are all great companies. And this why it’s so great that we’re diverse, right, that we serve so many and not just diversity in industries but in markets because you’re seeing a different picture, for example, in comms and media in Europe, where it was growing double digits last quarter in growth markets where it was positive. So the diversity of our business really plays to our strength and why we’re continuing to deliver strong financial results. Bryan Keane: Got it. Got it. And I was just trying to reconcile in my head the strong bookings, but the actions also taken to lower costs in fiscal year ‘24. What does that signal, I guess, for the demand environment in fiscal year ‘24? Should we expect slightly lower growth rates than typical as a result of the actions taken? Julie Sweet: No. I mean the actions, I can just kind of reground you on like what we’ve been saying, right, which is we’ve been achieving hypergrowth and there is been wage inflation like none of us have ever experienced and it’s compounding. And we’ve been addressing that through a combination of improved pricing, cost efficiencies, and so this is really us taking a step back and being able to more structurally address the impact of compounding wage inflation. So it’s a real positive for how we’re moving forward. And think of it as really being – creating more room in the P&L so that when you think about our enduring shareholder value proposition is we still expect next year to grow faster than the market. We expect to invest at scale in our business, to deliver 10 to 30 basis point margin expansion on an adjusted basis, to have a disciplined capital allocation, including a meaningful return to our shareholders. So that is a commitment – this is an offensive mood to say, yes, today, we’ve got great demand, we’ve got great utilization, and we can take out more structural costs to put us in a better position as we move forward. Bryan Keane: Okay. Great. That’s really helpful. Congrats. Julie Sweet: Thanks. Operator: And our next question comes from the line of Lisa Ellis with MoffettNathanson. Please go ahead. Lisa Ellis: Terrific. Thanks for taking my question. Maybe just a kind of follow-up on the sort of connecting the dots questions. I noticed that your headcount growth slowed a bit this quarter, up 6% year-on-year and was flat sequentially. Can you kind of connect the dots that side, what you are seeing and sort of what you’re thinking about on the hiring side with the fact that you have record bookings in the quarter and then typically, those two things kind of move a little bit more in tandem? Thank you. KC McClure: Yes, sure. Thanks, Lisa. So maybe I’ll just first start with just looking back over the last two previous quarters. We added 28,000 people in the previous quarters. So let’s first start there. And you’re right, Lisa, when you take a look at what we were able to accomplish this quarter, first of all, we had record bookings. We drove 9% – 9.3% revenue growth, and we had 91% utilization of our people, right? So we have the skills and all the people we needed to deliver to the demand in the market. And if I look – answering your question, looking forward, we sequentially did not add headcount from Q1 to Q2. We see that being about the same in Q2 to Q3. And then looking forward, based on the outlook that we have now, we do see that we would add additional heads in the fourth quarter. Lisa Ellis: Okay. Great. And then my follow-up is related to AI. Maybe this one is, Julie, for you. Just can you talk a bit about how you apply AI in your own operations? I know every time this topic kind of stirs up, there is this question of whether it’s a positive or a negative for the operations of IT services firms. Can you just talk about how you sort of applied internally and how you think about that over the long-term? Thank you. Julie Sweet: Sure. In fact, I was just at a client this week where we are helping them really transform their whole IT department. And one of the things they want from us is our myWizard platform, which is a great way of explaining how over the last several years, we have built a platform that integrates the best-in-class technology. So, we didn’t write our own code, right. We use the best technologies. And the way it uses AI, for example, is that when a ticket comes in to address something, an IT issue, AI looks at it, identifies whether or not it’s been a problem solved before, in some cases, can solve the problem, in other cases, routes it to the right people. And then it learns from every ticket. So, in the past, when we have talked about – with you about why is it – how do you think about revenue and people, we said, look, we have already been breaking that for years now because we are using so much technology and AI in how we are delivering all of our technology jobs. The same thing is true, for example, with testing, which is incredibly automated, using different technology, including AI. We are continuing to use AI in the way we run our business, for example, in how we look at our accounts payable and receivables and finding ways where we can optimate to have better efficiencies there. We are using it today in the way we are delivering our consulting services as well and definitely very much so in how we look at sales and being able to predict based on lots of factors. Should we be running after the sale or not, or can we show the data that these – this is not the right kind of sale, we are not the right fit. So, we have increasingly been using AI, both in how we deliver services as well as in how we run ourselves. Of course, our SynOps platform for operations is also AI-enabled. It’s one of the reasons why clients turn to us because it’s helping them digitize faster. They are not having to build these things. So, long-term, we see these technology changes, things like generative AI is playing to our strengths because to use these technologies, it requires deep understanding of the industry, the use cases, the process changes. When people talk about the new kinds of generative AI, which we are super excited about, being like a co-pilot to human beings, the entire process has to be changed in order to make that work. You have got to up-skill the people and you have to be able to do all of that in a very responsible way. So, we are already working with. There has been a lot of demand to understand this. And in understanding it, understanding actually how hard it is to be able to implement at scale in an enterprise versus, I am assuming you are – we are all having fun playing with it, but how you build that into an enterprise is very different and a great opportunity, and we are partnering with all the major players to help them take the technology go from technology to implementation to impact. Lisa Ellis: Thank you. Julie Sweet: Thanks Lisa. Operator: And our next question comes from the line of David Togut with Evercore ISI. Please go ahead. David Togut: Thank you. Good morning. Could you delve into demand trends in the financial services vertical in a little greater depth, especially given the evolving banking crisis we have seen in the last month or so, particularly with some of the regional banks struggling? And maybe as part of that, if you could just remind us of your profile within bank-related IT services, smaller banks versus regionals and money centers. Julie Sweet: Sure. As a client base, we skew towards the larger banks across all of the markets. So, we don’t comment on individual clients, but we don’t have any big exposure to kind of the smaller regional banks and in general. So, as you sort of think about the stepping brake, obviously, the developments on the banks for the – are still early in the last couple of weeks. So, as I talk about demand trends for our clients, which are generally the bigger banks, a couple of things really stand out. So, first of all, there is a lot of focus on their technical debt, because the banks, a lot of them are still in the mainframe. Our mainframe practice really across industry has growing like gangbusters right now as clients across the industry are really having to take on some of that harder technical debt, which they need to do because the more and more they digitize their services, which is a continuing trend in financial services, if the systems behind it aren’t agile, then it can take a lot of time to introduce new services. You have got to – oftentimes, we will have multiple systems. You will have to test things. You can’t go as fast. And so the banks are kind of reaching their limits in terms of what they can do without touching their core. So, we expect the sort of addressing the core to be a really important driver. We are seeing, in asset management, more and more views – more and more companies in asset management, really digitizing. They had been kind of slower behind the banks. And then insurance, we are working with leading insurers across the world who not only are kind of trying to catch up because banking was ahead of insurance, but finding sort of new and exciting opportunities on how to use data, in particular, to grow their business, how to transform their experience and claims. So, financial services which covers banking, capital markets and insurance, we continue to see as a vibrant area. Where things are slowing down a bit in the U.S. where we have been a big player is in integration. We will see that might pick up again. Let’s just see how all of this shakes out. But that has slowed down for a bit. Hopefully, that gives you some color. David Togut: It does. Thanks so much. Operator: Our next question comes from the line of Jason Kupferberg with Bank of America. Please go ahead. Jason Kupferberg: Good morning. Thanks guys. I just wanted to ask about Q3 bookings. If you can discuss consulting versus managed services, just expectations there? I mean I think the year-over-year comparison for consulting at least gets a bit easier. KC McClure: Yes. Thanks Jason. I am not going to comment specifically on kind of individual breakout of the bookings. But maybe I will just reiterate what I mentioned to Tien-Tsin. So, we had record bookings this quarter. We do see that next quarter. We will have lighter bookings than what we had this quarter in terms of the record bookings. Overall, what you can see, Jason, you know us well, is that the mix right now is much more favored halfway through the year to managed services, all the reasons that Julie talked about. We were really pleased with consulting this quarter that did – we thought it was going to be strong, and it came in even stronger. And so that, we are very encouraged by that, and we do have a strong pipeline, and we continue to see solid bookings for Q3. Jason Kupferberg: Okay. Understood. And then just on the cost side, what’s the estimated savings from the cost takeout program? And I know the charges will aggregate to $1.5 billion, but I just wanted to understand kind of what the fully annualized run rate of savings is? And are you essentially reinvesting the savings? I mean I know at least for this year, we are not changing the underlying margin guidance. So, just wanted to get a picture of how much of this is being reinvested, or are you essentially just offsetting some other headwinds around wage inflation, etcetera? KC McClure: Thanks for the question. Let me just first start with FY ‘23. So, the actions that we are taking are not about FY ‘23. They are about FY ‘24 and beyond. So, in terms of what we will do with those savings, it really is going to depend, Jason, on how the market develops, the growth opportunities that we have next year. And as Julie said, the key part of what we are really focused on is just going to give us more room to continue to execute our enduring shareholder value proposition, what she mentioned. And I know you know that. Jason Kupferberg: Yes. Alright. So, just… Julie Sweet: Keep your model – to be clear, keep your model 10 basis point to 30 basis point adjusted margin expansion. We are going to invest in our business and we are going to grow faster than the market. Jason Kupferberg: We love the consistency. Thank you. Julie Sweet: Thanks. Operator: And our next question comes from the line of Darrin Peller with Wolfe Research. Please go ahead. Darrin Peller: Hey. Thanks guys. I mean when you put the pieces together with the bookings we are seeing and the actual changes in the efficiency, it really does sound like we are finally seeing more of a divergence in linearity between headcount growth and bookings capabilities and revenue contribution. So, I mean I know you mentioned AI, obviously, is a big theme. But is there other factors that we can point to that are structurally part of the model now, or is it a function of the mix type of bookings or anything else? KC McClure: Yes. Maybe I will just talk a little bit about what you are seeing in terms of headcount, Darrin, and what we are recording in revenue in terms of how we are generating our revenue. And Julie, if you want to add in, you certainly can. But in terms of what you are seeing is we have been very focused on hiring, balancing our supply, demand to what we need to both sell and drive the revenue to meet our client demand and continue to take market share. And part of what you are seeing throughout the year is we have been continuing – you have heard us talk about us really focusing on continued strong pricing. Again, reminder, that when we talk about pricing, it’s the margin on the work that we sold. And that has been improving over the last five quarters. It’s not stable, which we are really happy with. And so some of that is part – there is a part of that that’s helping to drive our revenue production as well. Julie Sweet: And I would just say, a lot of its mix, right. If you have longer transformational deals like the numbers of people that you need to drive are different. So, I wouldn’t say there is some big, wait a minute, we have got some new inflection point where you have disconnected more. As I talked about earlier, we have been disconnecting to some degree, for a while now, but there is no big change in that perspective. Just as we have executed our strategy. And I think it’s so important to understand that it has been a deliberate strategy to say we want to do transformational deals. We want to take our SNC people who have deep industry and functional knowledge, put them together with our technology people to do either big implementations, right, that are changing the digital core or transformations that are coupled with managed services and just how that works out. And so while we love when the economy is booming and SNC and the small deals are also booming, the strategy is to be at the core so that we continue – we help them with one big project, we understand their company and met it more. We take them on the next big project, and we are really getting that kind of stickiness in our relationships. And so we will kind of deal with the sort of softness in the smaller deals. But over time, this is exactly what we want to do. And in fact, if you think about this year, consulting – last quarter, we thought consulting this year would be mid-single digits to high-single digits. We now see it as mid-single digits for the year, and we are fine with that, right, because that’s about kind of lower SNC and SI smaller deals. North America in December, we thought it was going to be mid-single to high-single digits. We now see that as the mid-single digits for the year. Again, it’s because sort of the caution that’s impacting the smaller deals, record sales, great large transformational deals, and that’s just going to how it deals with. And that’s why, as KC said before, SNC, we are going to see a very similar performance next quarter probably, and it may take a little bit longer to reconnect with growth. But remember, we don’t look at that as separate. We see SNC as a competitive differentiator for these larger transformational deals, which is our strategy. Darrin Peller: That actually makes a lot of sense. One follow-up on that and related is the cyclicality of business is it’s not surprising, you would see some of the smaller deals get impacted first by pause or concern among enterprise spending. When we think about the larger transformational side, the pipeline is longer. The sales cycle is longer there. So, having that strong still is probably not – if you do – given how well you guys execute, it’s not shocking, I guess. But on the same side, the magnitude of strength was better than I think we expected. And so looking ahead, what in your experience, cyclically, when do you see that sort of slow down if the economy does take a step down? Julie Sweet: Look, it’s never say never I guess the economy slowing down and what we do it, but I really stay focused. We try to stay focused on our strategy being relevant across cycles, so – and basically growing stronger than the market. And so the market is still faster than market, it’s still kind of hovering around 5%. And so that’s what we kind of watch more than the economy because technology is so core to every strategy that when the economy goes down, what are you seeing, well, people are saying, we got to optimize. We have got a lower cost. We have got to do managed services. So, we watch more – the economy can kind of do an uplift, right. But what we are trying to always do is grow faster than the market. So, that’s the big indicator for us. And you see it’s a very strong market. And it makes sense. I mean I will just tell you like the amount of the just technical debt across these industries and how much work to do, we are still very much in early innings of what needs to be done to take advantage of cool things like generative AI. You got to have data. Darrin Peller: Yes. Awesome. Alright. Thanks Julie. Thanks KC. KC McClure: Thank you. Operator, we have time for one more question and then Julie will wrap up the call. Operator: Thank you. And that last question comes from the line of Bryan Bergin with TD Cowen. Please go ahead. Bryan Bergin: Hi guys. Good morning. Thank you. I wanted to ask on consolidation activity. And whether – how much of this has helped to really offset some of the areas that have pulled back in the shorter cycle work? And I guess has that picked up meaningfully? And if you were to step back and look at those 35 deals over $100 billion, can you give us a sense of the mix of those that might include an aspect of vendor consolidation? Julie Sweet: Vendor consolidation is certainly a part of what’s going on in the market, but there are some industries that did that a long time ago in some clients. So, I am not – I don’t have the numbers off hand of what we have in our 35 clients. But I am not seeing that as sort of the big driver of our growth. Right now, we are often telling clients who like basically need to get revenue faster, but more – it’s interesting, the vendor consolidation for many of our clients is less about cost and more that a lot of the industries, like say, consumer goods, telecom where they have lots of different countries. It’s very hard to move to a platform business and sort of build things consistently if you have a ton of different vendors, right, because you want the stuff done in the same way. And so the – it’s interesting the vendor consolidation play for many is more about how do we actually implement a strategy of kind of moving to global platforms being able to have a single approach to data, super hard to do if you have got 50 vendors to 100 vendors. So, I would just say it’s tied to exactly the kind of strategies that we are advising clients on, but no big theme for us. Bryan Bergin: Okay. And then just a quick follow-up, with the record bookings in managed services, any near-term margin impacts we should consider as you ramp up and invest in those? Any considerations on adjusted operating margin cadence as you go through the second half? KC McClure: Yes. No, there is nothing unusual. Bryan Bergin: Alright. Thank you. Julie Sweet: Thank you. So, in closing, I want to thank all of our shareholders for your continued trust and support in all our people for what you are doing for our clients and for each other every day. Thanks everyone for joining. Operator: And ladies and gentlemen, today’s conference will be available for replay after 10:00 a.m. Eastern today through June 22nd. You may access the AT&T replay system at any time by dialing 1-866-207-1041 and entering the access code 4319130. International participants may dial 402-970-0847 and those numbers again are 1-866-207-1041 and 402-970-0847 and entering the access code 4319130. That does conclude your conference for today. Thank you for your participation and for using AT&T conferencing service. You may now disconnect.
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Accenture Shares Jump 4% After Beating Q4 Estimates and Issuing Positive Outlook

Accenture (NYSE:ACN) shares surged over 4% in pre-market on Thursday following the company's release of better-than-expected fourth-quarter results and an optimistic outlook for fiscal 2025.

The consulting and outsourcing giant reported adjusted earnings per share of $2.79 for the quarter, slightly exceeding analyst expectations of $2.78. Revenue grew 3% year-over-year to $16.4 billion, surpassing the Street estimate of $16.35 billion.

Accenture's new bookings for the quarter totaled $20.1 billion, marking a 21% year-over-year increase, with $1 billion coming from generative AI projects. For fiscal 2024, the company achieved a record $81.2 billion in new bookings, reflecting a 13% annual increase.

Julie Sweet, Accenture’s chair and CEO, highlighted the company’s resilience and ability to adapt, emphasizing the success of their scalable and evolving business model.

Looking ahead, Accenture forecasts revenue growth of 3% to 6% in local currency for fiscal 2025 and anticipates full-year earnings per share between $12.55 and $12.91, representing 5% to 8% growth from 2024.

In addition, the company announced a 15% hike in its quarterly dividend to $1.48 per share and approved an extra $4 billion for its share repurchase program.

Accenture (NYSE:ACN) Quarterly Earnings Report Preview

  • Earnings Per Share (EPS) estimate for Accenture is set at $2.77, indicating a year-over-year increase of 2.2%.
  • Projected revenue for the quarter is approximately $16.38 billion, marking a 2.2% rise from the same quarter last year.
  • Accenture has a history of exceeding the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 2.9%.

Accenture (NYSE:ACN) is gearing up to release its quarterly earnings report on Thursday, September 26, 2024, before the market opens. This announcement is highly anticipated by investors and analysts alike, as it provides a snapshot of the company's financial health and operational performance. Accenture, a global professional services company, offers a broad range of services and solutions in strategy, consulting, digital, technology, and operations. It operates in a competitive landscape, going head-to-head with other consulting giants such as Deloitte, PwC, and McKinsey & Company. The earnings per share (EPS) estimate set by Wall Street analysts for this quarter is $2.77, with projected revenue of approximately $16.38 billion.

The EPS estimate of $2.77 represents a year-over-year increase of 2.2%, indicating a positive growth trajectory for Accenture. This growth is further underscored by the expected revenue of $16.33 billion for the quarter, marking a 2.2% rise from the same quarter in the previous year. Such financial metrics are crucial for investors as they reflect the company's ability to grow its earnings and expand its operations amidst the competitive and ever-evolving global market.

Over the past 30 days, the consensus EPS estimate has been revised upwards by 0.6%, a testament to the analysts' growing confidence in Accenture's performance. This positive reassessment is likely influenced by the company's strategic initiatives and its ability to adapt to market demands, including the application of Generative AI (GenAI) for large-scale transformations. These technological advancements not only enhance Accenture's service offerings but also position it as a leader in innovation within the consulting industry.

Accenture's history of exceeding the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 2.9%, further bolsters expectations for a strong performance in the upcoming earnings report. Such a track record of earnings surprises plays a significant role in shaping investor expectations and can lead to positive stock price movements if the trend continues.

Given the company's solid financial indicators and the optimistic projections by analysts, there is a high probability that Accenture will beat earnings expectations for the fourth quarter. This potential outcome is supported by Accenture's strategic use of technology, its consistent growth in bookings, and its ability to deliver innovative solutions to its clients. As the earnings report date approaches, investors and market watchers will be keenly observing how Accenture's financial performance aligns with these expectations.

UBS Upgrades Accenture to Buy with $400 Target, Citing AI Growth Potential

UBS analysts upgraded Accenture (NYSE:ACN) to Buy from Neutral, setting a new price target of $400 on the stock.

The analysts highlighted the potential for multiple expansion as the market begins to anticipate accelerated revenue growth driven by AI opportunities. While there are concerns about the pace of IT spending, the analysts believe Accenture's shift towards cloud services, digital transformation, cybersecurity, and now Generative AI will support higher and more sustainable growth.

The analysts’ evaluation of Accenture's top 10 alliance partners indicates a positive trend for revenue acceleration over the next year. They noted that the current stock price does not fully reflect the potential of Generative AI, with Accenture already securing approximately $2 billion in GenAI bookings by Q3/24, compared to $300 million in the fiscal year ending August 2023.

Additionally, the analysts expect GenAI adoption to accelerate as clients recognize the value from initial experimentation, potentially scaling even faster than Accenture's cloud business, which grew from $1 billion in revenue in 2012 to $32 billion, representing about 50% of total revenue in 2023.

Accenture Quarterly Earnings Preview

  • Wall Street anticipates an EPS of 3.14 and revenue estimates of $16.57 billion for Accenture's upcoming earnings report.
  • Despite a forecasted slight year-over-year decline, the Managed Services segment is expected to see a 4.6% revenue increase.
  • Accenture's valuation metrics, including a P/E ratio of approximately 25.54 and a P/S ratio of about 2.78, highlight its financial health and market position.

Accenture (NYSE:ACN) is gearing up for its quarterly earnings report on Thursday, June 20, 2024, before the market opens. With Wall Street setting its sights on an earnings per share (EPS) of 3.14 and revenue estimates hovering around $16.57 billion, the spotlight is on Accenture's financial performance. As a leading global professional services company, Accenture offers a broad range of services and solutions in strategy, consulting, digital, technology, and operations. It operates in a competitive landscape, going head-to-head with other consulting giants and technology service providers. The upcoming earnings report is crucial as it provides insights into the company's operational efficiency and market position.

Despite Accenture's impressive track record of surpassing earnings expectations in the past four quarters, with an average beat of 4.9%, the current forecast suggests a tempered outlook. Analysts predict a slight year-over-year decline in both revenues and earnings for the third quarter of fiscal 2024. The anticipated revenue is pegged at $16.5 billion, a marginal decrease from the previous year, attributed to reduced spending in key sectors such as software and platforms, communications, media, and banking. This scenario underscores the challenges Accenture faces amidst shifting market dynamics and client spending behaviors.

However, not all is bleak for Accenture. The Managed Services segment is expected to shine, with revenues projected to hit $8.2 billion, marking a 4.6% increase from the previous year. This growth is partly fueled by the effective deployment of Accenture's SynOps platform, highlighting the company's ability to innovate and adapt to changing market needs. Such performance in the Managed Services segment could offset the downturns in other areas, underscoring the importance of diversification in Accenture's business model.

The financial community closely watches earnings revisions, as they can significantly impact a stock's short-term movements. In Accenture's case, analysts have revised their consensus EPS estimate downward by 0.6% over the last 30 days. This adjustment reflects a cautious stance on the company's financial outlook for the quarter ended May 2024. Historical trends suggest that the direction of earnings estimate revisions can influence stock performance leading up to the earnings announcement, making it a critical factor for investors to monitor.

Accenture's valuation metrics, such as the price-to-earnings (P/E) ratio of approximately 25.54 and the price-to-sales (P/S) ratio of about 2.78, offer insights into how investors view the company's earnings potential and overall value. These ratios, along with the enterprise value to sales (EV/Sales) and the enterprise value to operating cash flow (EV/OCF), provide a comprehensive picture of Accenture's financial health and market position. With a low debt-to-equity (D/E) ratio and a solid current ratio, Accenture demonstrates financial stability and resilience, key attributes that investors consider when assessing the company's long-term growth prospects.

Accenture Drops 6% on Guidance Cut

Accenture (NYSE:ACN) experienced a 6% drop in its stock price intra-day today after the company adjusted its revenue growth expectations for the fiscal year 2024 downward. In its Q2, Accenture reported an earnings per share of $2.77, which was higher than the anticipated $2.66 by analysts. However, its revenue of $15.8 billion was just shy of the $15.84 billion forecast.

For the upcoming Q3, Accenture projects its revenues to range between $16.25 billion and $16.85 billion.

For the fiscal year 2024, Accenture has revised its expected revenue growth to between 1% and 3% in local currency, down from the earlier projection of 2% to 5%.

Accenture Plunges 5% After Q4 Earnings Report

Accenture (NYSE:ACN) shares dropped more than 5% intra-day today after the company released its Q4 results and provided guidance for its full fiscal year.

The company reported an EPS of $2.71, surpassing the Street estimate of $2.66. However, the revenue for the quarter came in slightly below expectations at $15.99 billion, compared to the Street estimate of $16.07 billion.

Looking forward, Accenture offered guidance for 2024, projecting an EPS range of $11.97 to $12.32. This is slightly lower than the Street forecast of $12.46. Additionally, for fiscal year 2024, Accenture anticipates revenue growth in the range of 2% to 5%.

For the first quarter of fiscal 2024, the company expects revenues to fall within the range of $15.85 billion to $16.45 billion.

Accenture Reports Better Than Expected Q3 Earnings

Accenture (NYSE:ACN) reported its Q3 earnings results yesterday, with EPS of $3.19 coming in better than the Street estimate of $3.01. Revenue was $16.6 billion, beating the Street estimate of $16.49 billion.

Management noted continued pressure on revenue and bookings from smaller deals, especially in Strategy & Consulting, systems integration work and Communications, Media & Technology. New bookings increased 2% year-over-year on a reported basis, and increased 4% in local currency to $22.1B in Q3 for a book-to-bill ratio of 1x.

For Q4/23, the company expects revenue to be in the range of $15.75-$16.35 billion, compared to the Street estimate of $16.35 billion. For the full year, the company sees EPS in the range of $11.52-$11.63, compared to the Street estimate of $11.60.