Well, it was quite a different story that we heard from the Accenture top team last night than we heard from Logica the other day (see Logica confronts the inevitable). Let’s take a quick trot round the numbers. For its Q1 (to 30th Nov.), Accenture saw headline revenue growth of 17% to $7.1b, 14% up at constant exchange rates (CER). In fact, every one of Accenture’s vertical operating groups, geographies and service lines delivered double-digit growth (CER) – yes, even Europe (+10%).
Operating margins expanded 20bps yoy (and 10bps seq) to 13.9%, though gross margins fell 40bps yoy and 130bps seq to 31.8%. All of Accenture’s operating groups delivered double-digit margins. As usual, sell-side analysts tested management on the gross margin drop, which seemed out of line with the increase in utilisation (now 87%!) and the decrease in attrition (now 12%). Also as usual, management chanted the ‘we manage to the operating margin’ mantra, and the analysts promptly popped back into their boxes.
New bookings were up 23% yoy to $7.8b. Management made no change to its FY outlook, still forecasting 7-10% growth (CER), with EPS inching down in line with FX assumptions.
The underlying messages about the client base were very clear. First, of course, huge uncertainty about the economy. Second, demand is still about “projects that delivered near-term and structural cost take-out”, though management also talked about “large-scale transformation programs” (mainly in the context of ‘cost-out’), and extension of “mobile, data management flash analytics and social” capabilities. All ‘on trend’, as Gok would say.
So what are the real messages? Yes, it’s gold-standard execution. Yes, it’s intimate customer relationships (read ‘account control’). And yes, it’s an offshore-heavy global delivery network painstakingly built from the ground up over many years in anticipation of just this sort of economic climate.