Propelled by a huge jump in its technology-related business, Accenture posted record sales during the first quarter of its 2016 fiscal year as the solution provider began to capitalize on its recent acquisition of Cloud Sherpas and a new partnership with cloud giant Amazon Web Services.
Accenture – No. 2 on CRN’s Solution Provider 500 list – raked in a record $8 billion in net revenue during the quarter, which ended Nov. 30. That number topped Zacks Investment Research expectations of about $7.9 billion and was up slightly from $7.89 billion in the same quarter last year.
Digital, cloud and security business continue to be a big focus for the Dublin-based company, generating nearly 40 percent of total revenue, according to CEO Pierre Nanterme.
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"Clearly our investment in this area is differentiating Accenture in the marketplace and driving significant growth," Nanterme said during the company's earnings call Thursday morning.
Meanwhile, Accenture reported $869 million in net income, lower than Zacks' estimate, and down from $892 million during Q12015. The solution provider cited a higher tax rate for its pre-tax profits.
Accenture's stock dropped 4.6 percent near midday on Thursday on the New York Stock Exchange following the release of its report.
But the company reported a 9 percent increase in bookings during the recently completed quarter, thanks in large part to a 24 percent growth in consulting bookings over the year due to increased demand for digital services.
The jump in bookings was above average, CFO David Rowland said, who added that the first quarter of the year is usually slow for bookings.
Yet, because of that unexpected rise, Accenture upped its guidance for the full fiscal year, increasing the company’s projected growth by about 1 percent to a range of 6 to 9 percent. But that would trail growth for fiscal year 2015, which was 11 percent.
Accenture is growing faster than the market, Nanterme said, stating that the company was taking a larger share of the market thanks to its focus on "The New," a term used to describe the solution provider’s combined cloud, digital and security practices.
"Cloud is increasingly becoming the stopping point for clients who want to create new services faster and who want to get access to new capabilities in a more cost-effective way," he said.
Nanterme said Accenture is already capitalizing on the investments it has made in the cloud space. He noted that after the company announced its acquisition of CloudSherpas in September and its AWS partnership a month later, Accenture has begun to help clients across the globe take advantage of cloud and capitalize on the as-a-service model.
"Digital-related services continues to be the dominant related growth theme as we continue to be a market leader in the rotation to the new," said Rowland.
According to Rowland, the company is going to continue to push growth throughout the rest of the fiscal year, having already closed four acquisitions in the first quarter. It ended the quarter with an invested capital of $600 million, which is more than halfway to meeting Accenture's goal of having invested between $900 million and $1 billion by the end of the fiscal year, Rowland said.
Accenture's individual operating groups were generally successful in boosting revenue, led by its health and public service division, which earned 4 percent more year over year. Meanwhile, both financial services and products saw increases of 2 and 3 percent, respectively. The only division to lose revenue was the products group, which lost 4 percent.
Accenture’s largest growth by geography came from North America and Europe, which grew 11 and 12 percent, respectively.
PUBLISHED DEC. 17, 2015