Accenture Earnings Preview: What We’re Watching

by Trefis Team
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Accenture (NYSE:ACN) is set to report its Q1 FY 2013 results on December 19. It had a strong FY 2012, driven by 0utsourcing and technology. Its full year FY 2012 revenues came in at $27.9 billion, a 9% increase in U.S. dollars y-o-y, with an EPS of $3.84 and a free cash flow of $3.9 billion for the full year.  The company also increased its semi-annual cash dividend by 20%, to $0.81 per share. For FY 2013, Accenture guided a net revenue growth of 5% to 8% in local currency and an EPS increase of 10-12 percent y-o-y to $4.22 to $4.30. [1]

The company expects revenue this quarter to be driven lower by a slight decline in revenue in the communications, media and technology division, but expects growth across the majority of its businesses. For Q1 2013, the company expects revenues to be in the range of $7.1 billion to $7.35 billion. [2]

See our full analysis on Accenture

Accenture Poised For Growth In 2013

After the surge in new bookings in the second half of 2012, the company reported record new bookings of $9.2 billion for Q4, bringing the entire year’s bookings to $32.2 billion which is the highest ever for the company. The outsourcing business outperformed with outsourcing net revenues for the quarter coming in at $3.1 billion, growing 10% in U.S dollars and 18% in local currency compared to the previous year. The consulting business showed much slower growth with revenues of $3.74 billion which was a 4% decrease in U.S dollars and a 2% increase in local currency.

On a full year basis, Accenture’s Americas business grew 11% y-o-y to $12.5 billion, the Europe, Middle East and Africa business grew by 4% y-o-y to $11.3 billion and the Asia Pacific business grew by nearly 20% y-o-y to $4 billion. Net revenues for the full 2012 fiscal year were $27.9 billion, compared with $25.5 billion last year. This is an increase of 9% in U.S. dollars. The consulting business grew 6% annually in local currency, with net revenues of $15.6 billion and the outsourcing business grew 19% annually with revenues of $12.3 billion.

Accenture’s New Business Lines Key Growth Drivers

Accenture acquired three new companies in the last quarter: NewsPage, a Singapore-based mobility software provider, and Octagon Research Solutions, a provider of clinical and regulatory information management solutions for the pharmaceutical industry and digital production services company avVenta Worldwide.

avVenta provides digital production and management services for marketing campaigns, including mobile, social and websites. The acquired product portfolio will be integrated with Accenture Interactive.

NewsPage is a provider of integrated distributor management software and mobility software for the consumer goods industry, mainly targeting emerging economies. This acquisition is aimed at bolstering Accenture’s CAS (Consumer Goods and Services) software platform that helps the sales process of consumer goods companies. In addition NewsPage will help Accenture capture greater market share in the software market in emerging economies. [3]

The acquisition of Octagon will help Accenture better cater to its pharmaceutical clients by achieving efficient global regulatory submissions. This will enable companies to get their drugs in the research pipeline quickly to the market and at a lower cost. Efficient regulatory compliance also ensures the drugs meet all necessary standards, ensuring safety. The services offered will range from clinical data collection to regulatory submissions management and will also help extend Accenture’s BPO services to the pharmaceutical industry. [4]

We currently have a $74 Trefis Price Estimate for Accenture which is nearly 10% higher than its current market price.

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Notes:
  1. Accenture Filings, www.sec.gov, Sept 27, 2012 []
  2. Accenture Earnings Call Transcript, www.seekingalpha.com, Sept 27, 2012 []
  3. Accenture To Acquire NewsPage, newsroom.accenture.com, August 30, 2012 []
  4. Accenture Newsroom, newsroom.accenture.com, August 2, 2012 []
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