Accenture Sees Financial Payoff After A Year Of Big Investments In Its Cloud, Digital And Security Practices

Accenture’s increased focus on its digital, cloud and security practices has proven to be a successful business strategy with those operations accounting for the majority of the company’s revenue growth in both the fourth quarter and fiscal 2016 ended Aug. 31.

CFO David Rowland said during an earnings call early Thursday that although growth in the solution provider giant’s core businesses outpaced that of the market, Accenture’s ’new’ technology services, including cloud, digital and security services, were largely responsible for the company's overall growth in the fourth quarter and in fiscal 2016.

’We invest for that growth and we look at it as a key part of our business,’ Rowland said on the conference call with Wall Street analysts following the release of the quarterly and full-year financial reports.

[Related: Accenture Scoops Up Another Cloud Provider, Acquiring Top Workday Partner]

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Accenture reported $8.49 billion in revenue in the fourth quarter ended Aug. 31, up 8 percent from $7.89 billion in the same quarter last year.

For the full fiscal year, Accenture’s new technologies segment accounted for 40 percent of the company’s $32.88 billion in net revenue, which was up 6 percent year over year from $31.05 billion in fiscal 2015.

That 40 percent consisted of $9.5 billion of revenue from digital services, $4.5 billion from cloud services and $700 million of revenue from the company’s new security services group. Those businesses also accounted for about 40 percent of Accenture's fourth-quarter sales.

The increases were due, in part, to the company’s recent investments in its new technology practices, including the June consolidation of security resources into a single security practice headed by former Deloitte executive Kelly Bissell.

In fiscal 2016, Accenture invested more than $930 million of capital in acquisitions, on top of the nearly $800 million it invested in acquisitions he previous year.

Pierre Nanterme, Accenture chairman and CEO, said on the call that he was ’delighted’ that 70 percent of those acquisitions have been moves to expand the company’s security, cloud and digital practices.

In its latest quarter alone, Accenture struck deals for five acquisitions aimed at those market segments, including deals with three digital services companies [MOBGEN in the Netherlands, Tecnilógica in Spain and dgroup in Germany] and two security companies [Maglan in Israel and Redcore in Australia.]

’We continue to see strong demand from our clients for large-scale, mission-critical transformation programs. The broad range of services we provide across our five businesses, together with our deep industry expertise, continues to differentiate Accenture and we remain the partner of choice for the world’s leading companies,’ he said.

CFO Rowland said that in all, the company invested most of its $930 million capital allocation fund for the fiscal year in the 15 acquisitions. ’We are at a period that requires us to make a significant level of investment to differentiate ourselves,’ Rowland said.

The Dublin-based company, No. 2 on the CRN Solution Provider 500 list, reported that net earnings in its fourth quarter reached $1.12 billion, a nearly 44 percent gain over the same period last year. Earnings per share (GAAP) were $1.68 compared to $1.15 EPS in the same quarter in fiscal 2015.

For the full fiscal year, Accenture reported $4.31 billion in earnings, up 33 percent year over year, and $6.45 EPS compared to $4.76 in fiscal 2015.

Nanterme said the company will continue to invest in its new technologies businesses ’with a particular focus on digital, cloud and security services.’