Accenture Plc Ends Fiscal 2017 on a High Note

Consulting and outsourcing provider Accenture (ACN 0.04%) reported fiscal fourth-quarter earnings on Thursday morning. Here's what you need to know.

Accenture's fourth-quarter results: The raw numbers

Data source: Accenture. GAAP = generally accepted accounting principles.

What happened with Accenture this quarter?

Accenture's fourth-quarter revenue landed near the top of management's guidance for the period. The company also rose above the midpoint of its updated full-year earnings targets.

• The company signed $10.1 billion of new order bookings during the quarter. The book-to-bill ratio for the full year stopped at 1.1, adding clarity to Accenture's near-term growth prospects. As a reminder, values above 1.0 for this metric point to existing contracts supporting year-over-year revenue increases in the next few quarters.
• The year-ago period included a $249 million after-tax windfall from the sales of transportation consultant Navitaire and parts of the Duck Creek Technologies insurance software business. Backing out these one-time earnings boosters would place Accenture's earnings at $1.31 per share in the fourth quarter of 2016, resulting in a 13% apples-to-apples earnings boost.
• Fourth-quarter sales increased by 4% in the North American market, 10% in Europe, and 14% in the rest of the world, known as "growth markets" in Accenture's own nomenclature.
• Accenture's focus on "the New" -- an umbrella term for the company's cloud computing, data security, and digital services -- continued with an $18 billion revenue haul for the full fiscal year. After this 30% year-over-year increase, "the New" produced roughly half of Accenture's total sales in fiscal year 2017.

Management issued the following guidance targets:

• In the first quarter of 2018, net revenue should increase by approximately 7% year over year and land near $9.2 billion. This forecast includes an expected 2% tailwind from currency exchange trends.
• Looking through to the next full fiscal year, Accenture expects net revenue growth to continue at roughly 7% while GAAP earnings should land near $6.48 per diluted share -- a 19% increase. Free cash flows should hold steady at approximately $4.5 billion.

Image source: Getty Images.

What management had to say

"We are pleased with our excellent financial results for both the fourth quarter and the full fiscal year 2017," said Accenture CEO Pierre Nanterme in a prepared statement. "Our durable performance over the last few years reflects the successful rotation of our business to high-growth areas such as digital, cloud and security services, which accounted for approximately 50 percent of total revenues in fiscal 2017. Our strategy is clearly differentiating Accenture in the marketplace, enabling us to gain significant market share."

Looking ahead

The shift into "the New" is not stopping at 50%, but should continue over the next several years. This strategy makeover is driving both revenue growth and widening profit margins, and should keep Accenture relevant in the global consulting and outsourcing arenas as the marketplace evolves.