Accenture earnings, warns of weaker 2nd half

By | June 28, 2013
ACN Q3 Earnings

Accenture’s (ACN) reported Q3 earnings on Thursday (6/27). Revenues were basically flat at $7.2 billion, and net profits jumped up nicely to $810 million. It wasn’t all good news though. ACN said that bookings were slowing down to 3-4% YoY. No surprise that investors did not like hearing that. Looks like the stock is down 12% this morning.

Earnings webcasts. One of the easiest ways to learn about a company’s strategy, prospects and operating environment is to listen to the quarterly earnings conference calls. It’s free and informative.  The management team answers questions from their boss (the investor community). Full ACN earnings transcript here. Quotes below.

Weaker Geographies: Europe and Brazil

In Management Consulting, the macro environment continues to be challenging and volatile. Our clients held back on spending more than we expected, particularly in Europe and Brazil, and the environment is more competitive.

Stronger Demand Areas

Although our pipeline is down slightly, we do see growth in demand for transformational projects in operations, CRM and risk management.
Technology consulting bookings reflected demand for infrastructure consulting projects that span data centers, networks and workplaces, as well as IT strategy projects.
First, consulting bookings were almost $400 million lower than we expected in March, including a decline in smaller contracts that convert to revenue more quickly.
Our health administration and connected health offerings continued to be the primary drivers of growth.

Consultant Utilization

In Q3, our utilization was 88%, consistent with Q2. Attrition, which excludes involuntary terminations, was 12%, compared to 11% in Q2 and 13% in Q3 last fiscal year. Lastly, we expect that more than 50,000 people will join our company this fiscal year.

Digital Marketing

As I meet with CEOs around the world, it’s striking to see how digital is now a part of every conversation. Digital is fundamentally disrupting business models and requiring companies to rethink how they operate, from how they interact with customers and employees to how they manage their supply chains and collaborate with business partners.
Chief Marketing Officers are increasingly looking for integrated solutions that bring together strategy, technology and analytics, add scale to get more value out of their investments.

Consulting vs. Business Process Outsourcing

I think consulting, it’s all about launching projects, programs, if you will. So it’s slightly different from the mindset on outsourcing, which most of the time is more driven through cost optimization. Consulting is more about building for the future, if you will, for clients. And building for the future is requiring confidence, confidence in the economic outlook, confidence in the business.

Growth by Acquisition

And recently, we will use acquisition as a way for us to invest in fast-growing areas. And to execute our growth strategy, and this is exactly what we do, indeed, we set as an objective to deploy something like 15% of our free cash flow in acquisition,
Even if our headcount is relatively stable, we’re always going to bring in people, both for skill reasons and also just part of our ongoing pyramid refresh, which, by the way, is part of our profitability agenda as well, how we manage that headcount in the pyramids.

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