Accenture will be marking its ten years as a public company next month on 19 July, CEO Pierre Nanterme told investors on its Q3 analyst call. In that time, Accenture’s shares have quadrupled from an IPO price of $15 to their current record level of $57, giving it a market cap of c$36bn. They have also risen 12% since the start of the year.
Taking a look at Accenture’s Q3 it’s not hard to see why. Both revenue and profit for the three months to 31 May were ahead of expectations. At a headline level, net revenue grew 21% and 15% in local currency to $6.7bn, and operating profits rose 18% to $949m (although the margin dipped slightly to 14.1% vs. 14.4% in Q310). Both of its key service lines outsourcing and consulting grew 12% in local currency to $2.75bn and $3.97bn respectively.
In almost all markets Accenture is growing significantly - its three geographies, Americas, EMEA and Asia Pacific, notched up double-digit growth. And it is winning market share in most areas - communications & high tech, financial services, products and resources all grew in double-digits. The only blip was health & public services, which grew 3% only thanks to healthcare demand in connected health and electronic medical records. However public services are in decline, which Nanterme said is due to “continued budget pressure and economic uncertainty, particularly in U.S. state and local and several countries in EMEA and the Americas.” Nonetheless, he is optimistic that there will be opportunities once the public services divisions have been repositioned, in areas such as welfare benefit and pensions, finance and HR, and border protection. However we don't expect there to be much improvement in the short term.
Accenture’s global delivery model is giving it a clear advantage in the market. It now employs 58%, or 130,000, of its 223,000 strong workforce in low cost territories, which is way ahead of the competition. Capgemini for instance has c38% offshore, but is aiming for 50%. Utilisation remains an impressive 85%, and attrition is 15%, down from 17% in Q310. It also upped its hiring target this year to 66,000, from 64,000 previously.
To top it all, Accenture raised its outlook for FY11 net revenue growth of between 14% and 15% in local currency, from 11% to 14% previously. Earnings per share expectations were also raised. Most of the IT Services CEOs we meet look upon Accenture as the ‘Gold Standard’. This is the one they ‘aspire to be’. These results will just reinforce that, and no doubt cause much trepidation.