What To Expect From Accenture’s Fourth Quarter Earnings

by Trefis Team
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Accenture (NYSE:ACN) is scheduled to announce its fiscal Q4’18 results on September 27. 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 has been evident in each of the three quarters of fiscal 2018, and is expected to continue through the fourth quarter as well. We have a positive outlook for the fourth quarter, and resulting full year results based on the company’s guidance and our own estimates, which we have summarized in an interactive earnings preview dashboard for Accenture. 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.

Key Growth Drivers

In the most recent quarter ended May, Consulting revenues increased 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 Accenture’s net revenues increasing 14% to $19.1 billion in the period. Consulting revenues were up 15% to $10.3 billion, while Outsourcing revenues rose 12% on a y-o-y basis to $8.8 billion in the six month period. Accenture has witnessed healthy demand across sectors, including communications, media & technology (CMT), financial services and resources. Accenture’s management has given positive guidance for the fourth fiscal quarter, with combined Consulting and Outsourcing revenues expected to increase around 10% to $10 billion for the quarter. As a result, full year revenues are expected to be up by 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. A limited increase in operating expenses has led net income and earnings per share to increase in the high teens to $3.4 billion and $5.16, respectively. We expect Accenture’s net income and EPS to show similar growth in the fourth quarter as well.

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