Accenture raises annual forecast, posts strong growth on record orders

Company announces one-time bonus, equal to one week of base pay, for employees below managing director

IT consulting firm Accenture on Thursday raised its full-year revenue forecast, reporting an 8 per cent increase in second quarter revenue (in dollar terms) helped by record bookings of $16 billion.

The company announced a one-time bonus, equal to one week of base pay, for employees below managing director to recognise “the exceptional contributions and dedication of all Accenture people to its clients during this challenging year”.

The company employed over 5 lakh people globally at the end of last fiscal year. There was no data available to ascertain how many people fall below the designation of managing director.

Accenture raised its full year revenue growth forecast to between 6.5 and 8.5 per cent in local currency, up from the 4-6 per cent it had forecast earlier, including a reduction of about 1 percentage point from a decline in revenues from reimbursable travel costs.

Accenture expects operating margin for the full fiscal year to be in the range of 15.0 per cent to 15.1 per cent, up from the 14.8-15.0 per cent it expected earlier.

Accenture has, over the last year, doubled down on its digital services by aggressively investing in cloud-based technology.

For the second quarter, ended February 28, 2021, Accenture reported an 8 per cent increase in revenue, at $12.1 billion. Revenue growth for the quarter was reduced about 2 percentage points by a decline in revenues from reimbursable travel costs, the firm said.

Net income for the quarter rose 16.8 per cent to $1.46 billion, compared to $1.25 billion in the year ago period.

Operating income was $1.65 billion, an 11 per cent rise over the same period last year, and operating margin was 13.7 per cent, an expansion of 30 basis points.

New bookings for the quarter were a record $16 billion, with bookings in both consulting and outsourcing, at $8 billion each.

“With our outstanding second-quarter financial results, we have returned to overall pre-pandemic growth ahead of expectations while continuing to take market share faster than before the pandemic. We have seen another quarter of strong, broad-based demand for our services across geographic markets and industries, and delivered record new bookings as well as excellent profitability and free cash flow,” said Julie Sweet, Accenture’s chief executive officer, in a statement.

The firm saw double digit revenue growth in three key industry verticals- communications, media and technology (11 per cent), financial services (14 per cent) and health and public service (16 per cent).

During the second quarter, Accenture repurchased or redeemed 4.6 million shares for a total of $1.18 billion, including about 2.7 million shares repurchased in the open market, it said in a statement.

Revenue from North America grew 7 per cent in dollar terms to $5.63 billion, revenue from Europe increased 11 per cent to $4.03 billion and Growth Markets saw a revenue increase of 8 per cent to $2.43 billion.

For the current quarter, Accenture expects revenue in the range of $12.55 billion to $12.95 billion, a 10 to 13 per cent growth in local currency, reflecting the company’s assumption of a positive 4.5 per cent foreign-exchange impact compared with the third quarter of fiscal 2020.