Outsourcing and consulting giant Accenture (ACN -0.19%) reported fourth-quarter results early Thursday morning. The company exceeded its own guidance targets across the board, but set the bar for the next year at a more modest level. Here's a closer look at Accenture's results and forward-looking targets.
Accenture's fourth-quarter results: The raw numbers
|
Metric |
Q4 2018 |
Q4 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Net revenue |
$10.15 billion |
$9.15 billion |
11% |
|
Net income |
$1.03 billion |
$974 million |
5.9% |
|
GAAP earnings per share (diluted) |
$1.58 |
$1.48 |
6.5% |
Data source: Accenture.
What happened with Accenture this quarter?
- Management's guidance targets for this period had pointed to roughly $9.93 billion in top-line revenue and GAAP earnings near $1.53 per diluted share.
- Accenture saw solid year-over-year growth in both of its mainstay business areas. Consulting revenue rose 12% year over year to $5.5 billion, while outsourcing sales increased by 9%, landing at $4.6 billion.
- Breaking the quarter down by reportable segments instead, natural resources led the way with a 20% revenue jump. Communications, media, and technology followed with a 15% revenue increase, just ahead of a 12% increase in product sales. Rounding out the rear guard, health and public service's 6% revenue growth edged out a 3% increase from financial services.
- In geographic terms, Accenture saw 11% higher sales in North America and 8% revenue growth in Europe. The rest of the world delivered a 15% revenue boost.
- Operations under Accenture's "The New" banner saw sales rising 25% year over year. This combination of cloud computing, data security, and digital services now accounts for roughly 60% of the company's full-year revenue.
Image source: Getty Images.
What management had to say
In a conference call with analysts, CEO Pierre Nanterme explained how the company takes lessons from its consulting business and applies them to its own business plans:
... we're spending $700 million in R&D at Accenture. Their job is to anticipate the next waves, and putting them in incubation in what we call in-strategy growth initiatives. So, we incubate. We're starting to test business models. When we're getting to a level of maturity, and we see the opportunity to scale and create an impact with clients, then we industrialize, and move to the big business of Accenture. So, we learn about this process of incubation to industrialization.
Looking ahead
Management took a conservative approach to its full-year guidance targets this time. CFO David Rowland described the global macroeconomy as "incrementally more volatile than it was last year at the same point in time," due to trade wars and the specter of a potential "hard Brexit." Easing these tensions would presumably allow Accenture to beat these sales targets.
- Accenture expects something like 10% revenue growth in the first quarter of 2019, stopping near $10.5 billion. This target includes a 2% headwind from expected currency exchange effects.
- The currency effect should grow to a roughly 2.5% revenue obstruction for the full fiscal year 2019, leading to approximately 6.5% year-over-year sales growth. Earnings should stop near $7.12 per share, 6% above the just-reported fiscal year.
