After A Strong Q3, What To Expect From The Rest Of Accenture’s FY’18

by Trefis Team
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Accenture (NYSE:ACN) announced its fiscal Q3 results on June 28, reporting 16% growth in net revenues. The company has reported solid growth in revenues despite intense and growing competition in both the Consulting and Outsourcing businesses in recent quarters. This trend continued in the May ended quarter, with consulting revenues increasing by 18% to $5.7 billion while outsourcing revenues rose 14% on a y-o-y basis to $4.6 billion. This largely mirrored the trend observed in the first half of the fiscal year, with both streams reporting mid-teens revenue growth. Accenture has witnessed healthy demand across sectors, including communications, media & technology (CMT), financial services and resources. A limited increase in operating expenses led net income and earnings per share to increase over 50% to $1.1 billion and $1.60, respectively. We expect this trend to continue through the August ended quarter as well.

Expectations for Full Year Results

Accenture’s management has given positive guidance for the fourth fiscal quarter, with combined Consulting and Outsourcing revenues expected to increase around 10% to $38 billion. Similar to previous quarters, strong growth in bookings for digital-related strategy and consulting services is expected to continue to be the key driver of that revenue growth. Moreover, Accenture has been able to strategically position itself in these domains through acquisitions over the past few years. These acquisitions have not only diversified the company’s geographical footprint but also augmented its portfolio of services in the Cloud, Internet of Things, and cyber security domains. In addition to revenue growth, Accenture’s operating profit margin is also likely to be slightly higher on a y-o-y basis for the fourth quarter. We have summarized our expectations for Accenture, based on the company’s guidance and our own estimates, in an interactive dashboard that previews FY’18 earnings expectations. If you think differently, you can change expected segment revenue, operating margin, and net income margin for Accenture to gauge how these changes will impact its expected EPS.

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