Accenture Posted Solid Sales Growth in Q3

The consulting giant also showed disappointing order bookings, but management stated that it's all within the limits of normal lumpiness.

Anders Bylund
Anders Bylund
Jul 3, 2019 at 12:45PM
Technology and Telecom

Global outsourcing and consulting specialist Accenture (NYSE:ACN) recently reported results for the third quarter of 2019. A modest revenue gain combined with wider operating margins to deliver double-digit percentage growth on the bottom line.

Here's a closer look at Accenture's report.

Accenture's third-quarter results: The raw numbers

Metric

Q3 2019

Q3 2018

Change

Revenue

$11.1 billion

$10.7 billion

3.7%

Net income attributable to Accenture

$1.25 billion

$1.05 billion

19%

GAAP earnings per share (diluted)

$1.93

$1.60

21%

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

What happened with Accenture this quarter?

  • Accenture's sales rose 9% year over year in North America, balancing out a 3% decline in Europe. Growth markets fell in between with a 5% revenue boost. As a reminder, management's revenue guidance for this quarter pointed to roughly $10.9 billion.
  • Five of the company's six reportable operating segments held their revenue within 5% of the year-ago period's results. Natural resources were the sole outlier, reporting 13% sales growth.
  • This was the seventh consecutive quarter of double-digit percentage growth in the resources division, which consists of the products and services Accenture provides to clients in the industries of energy, utilities, chemicals, and natural resources.
  • More than 60% of the third quarter's revenue was produced by operations under Accenture's "the New" banner. This collection of businesses related to cloud computing, data security, and digital services posted "strong double-digit growth."
  • New order bookings during the quarter added up to $10.6 billion, down from $11.8 billion in the previous quarter and $11.7 billion in the year-ago period.¬†Sixty-five percent of these incoming orders fell under "the New."
A smiling businessman points to an out-of-shot laptop screen while a smiling woman looks on.

Consultants consulting, as they do. Image source: Getty Images.


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What management had to say

In a conference call with Wall Street analysts, CFO KC McClure said that the order bookings were within management's expectations.

"As you know, quarterly bookings can be lumpy, which you've seen in our year-to-date results, and that is consistent with our historical pattern," McClure said. "Looking forward, we have a very strong pipeline, and we expect strong bookings in Q4."

CEO David Rowland added some color commentary on the bookings later in the call. "To be clear, we're not concerned about bookings," Rowland said. "The bookings are lumpy as they have always been in our business, and I would focus more on the confidence that we have in the fourth quarter than I would the fact that quarter three, it was at $10.6 billion."

Looking ahead

Accenture's management offered the following guidance for the end of fiscal year 2019:

  • Top-line sales should rise by approximately 9% in the fourth quarter, landing near $11 billion. This target includes a 2% headwind from foreign exchange trends.

  • GAAP earnings are expected to stop in the neighborhood of $1.70 per diluted share, approximately 8% above the fourth-quarter result in 2018.