60% of Accenture's Sales Came From "The New" In 2018

Outsourcing and consulting giant Accenture (NYSE: ACN) 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

Continue Reading Below

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%

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.

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:

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. 10 stocks we like better than AccentureWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.* David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Accenture wasn't one of them! That's right -- they think these 10 stocks are even better buys. Click here to learn about these picks! *Stock Advisor returns as of August 6, 2018

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Accenture. The Motley Fool has a disclosure policy.