What To Expect From Accenture Through FY’19 After Slowdown In Revenue Growth

by Trefis Team
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Accenture (NYSE:ACN) announced its fiscal Q4 results on September 27, reporting 11% growth in net revenues to $10.1 billion. 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 August ended quarter, with Consulting revenues increasing by 12% to $5.5 billion while Outsourcing revenues rose 9% on a y-o-y basis to $4.6 billion. Accenture has witnessed healthy demand across sectors, including communications, media & technology (CMT), financial services and resources. While growth slowed down in Q4 from the mid-teens in previous quarters, it was primarily due to tougher year-over-year comparisons to a strong Q4 last year. Going forward, Accenture’s management expects the positive growth trend to continue through fiscal 2019 as well. We have created an interactive dashboard that previews Accenture’s FY’19 earnings expectations, based on the company’s guidance and our own estimates. If you think differently, you can change expected segment revenue, operating margin, and net margin for Accenture to gauge how these changes will impact its expected EPS.

Key Growth Metrics

Accenture’s management has given positive guidance for the current fiscal year, with combined Consulting and Outsourcing revenues expected to increase in high single digits. Similar to previous years, 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. As a result, we forecast Accenture’s net revenues to increase by 6-7% to $42 billion for the year.

However, Accenture’s management expects operating profit margins to be around 30-40 basis points lower on a year-over-year basis, which can largely be attributed to new accounting standards. We expect Accenture’s net income and diluted earnings per share to increase by 5-6% over FY’18 to $4.7 billion and $7.11, respectively. Our forecasts are in line with consensus estimates, and are close to the upper end of the guided range.

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