Anindita Chatterjee
Updated on: October 14, 2024 4:06 pm GMT
Accenture’s recent financial report for the fourth quarter of fiscal 2024 reveals a solid performance driven by strategic growth initiatives and robust new bookings, underscoring the company’s continuing resilience in the competitive consulting landscape. As businesses increasingly pivot towards digital solutions and artificial intelligence (AI), Accenture is well-positioned to capitalize on these trends, showing promise for even stronger results in the upcoming fiscal year.
Strong Quarter Performance
Accenture reported fourth-quarter revenues of $16.41 billion, slightly surpassing analysts’ expectations of $16.39 billion. This marks a 3% increase compared to the previous year in U.S. dollars and a 5% rise in local currency. The results came in above the company’s guidance of $16.05 billion to $16.65 billion for the quarter.
- Earnings per Share (EPS): The adjusted EPS stood at $2.79, up 3% year-over-year, beating the consensus of $2.77.
- Operating Income: Adjusted operating income reached $2.46 billion, or 15.0% of revenues, which is a slight improvement from 14.9% the previous year.
Despite facing a negative foreign exchange impact of around 2%, Accenture’s core business segments showed varied performances that underscore the diversity of its service offerings.
Segment Performance Highlights
Each of Accenture’s key business segments demonstrated unique growth trajectories, reflecting market dynamics and customer demand:
- Products: Revenues climbed to $4.95 billion, an increase of 4% in U.S. dollars and 6% in local currency.
- Health & Public Service: This sector saw the most significant growth, with revenues rising by 10% in U.S. dollars and 11% in local currency, totaling $3.61 billion.
- Financial Services: Revenues in this segment fell to $2.87 billion, down 5% compared to last year.
- Resources: Keeping steady, this segment recorded $2.22 billion, remaining flat in U.S. dollars and increasing by 3% in local currency.
- Communications, Media & Technology: Revenues grew by 2% to $2.75 billion in U.S. dollars, with a 5% rise in local currency.
New Bookings and Client Relationships
Accenture’s new bookings also highlighted its ongoing business strength, totaling $20.1 billion for the quarter. This includes:
- Consulting bookings: $8.6 billion.
- Managed services bookings: $11.6 billion.
Julie Sweet, Accenture’s chair and CEO, emphasized the significance of these results: “We delivered full-fiscal year new bookings of $81 billion, including a record 125 quarterly client bookings of more than $100 million.”
Accenture now stands at 310 Diamond clients, showcasing its commitment to building strong relationships with major enterprises.
Cash Flow and Shareholder Returns
Accenture reported operating cash flow of $3.39 billion and free cash flow of $3.18 billion for the fourth quarter. Reflecting a commitment to returning value to shareholders, the company declared a quarterly cash dividend of $1.48 per share, representing a 15% growth compared to previous dividends.
In addition, Accenture’s board approved an additional $4 billion in share repurchase authority, bringing the total to around $6.7 billion, further enhancing shareholder value.
Looking Ahead: Fiscal 2025 Projections
As Accenture prepares for fiscal 2025, the company projects a revenue range of $66.84 billion to $68.79 billion. This outlook exceeds the consensus forecast of $68.72 billion, showcasing confidence in its growth strategy and market positioning.
- First Quarter Revenue: Expected to be in the range of $16.85 billion to $17.45 billion.
- Adjusted EPS for Fiscal 2025: Estimated between $12.55 and $12.91, slightly above analysts’ consensus of $12.85.
- Operating and Free Cash Flow Expectations: Projected operating cash flow of $9.4 billion to $10.1 billion and free cash flow of $8.8 billion to $9.5 billion.
Sweet noted, “Our successful strategy to lead reinvention for clients and continued investments in our business have positioned Accenture for strong growth in fiscal 2025.”
Stock Market Response
Following the earnings report, Accenture’s stock has seen a positive response in the premarket, rising approximately 3.55% to $349.01. This uptick reflects investor confidence in Accenture’s ability to drive continuous growth amid evolving market conditions.
Key Takeaways
Accenture’s fourth-quarter results and outlook for fiscal 2025 highlight its strategic focus on innovation and client relationships. Here are key takeaways:
- Strong revenue and earnings performance exceeding analyst expectations.
- Significant new bookings, particularly in consulting and managed services.
- A commitment to delivering value through dividends and stock repurchases.
- Anticipated growth driven by investments in AI and digital transformation solutions.
With an eye towards the future, Accenture is maneuvering successfully through the changing business landscape, positioning itself to lead in key growth areas, particularly with investments in generative AI technology. As the digital economy continues to evolve, Accenture’s strategies seem set to not only sustain but also enhance its competitive edge.
To learn more about how Accenture is doing and what their stock options are, check out the latest information.
