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Accenture CEO Julie Sweet: $4 Billion In M&A ‘Next Wave Of Growth’

‘Scale in terms of our financial capacity, experience in terms of our track record of the successful integration of approximately 200 companies, since 2013, and the trust we have earned in the market that attracts leading companies to want to join the Accenture family,’ says Sweet.

Accenture is expected to pump $4 billion into its M&A campaign by the end of its fiscal year, snapping up dozens of companies as the consulting giant looks to broaden its skillset and capabilities and deepen its industry and functional expertise.

With 39 acquisitions closed or announced year to date, two with a purchase price of more than $1 billion each, according to Accenture CEO Julie Sweet, Accenture is “raising the bar” to create “360-degree client value” so that they can digitally transform their enterprises.

“These 39 acquisitions are well-balanced with 10 in North America, 17 in Europe and 12 in growth markets,” said Sweet in the firm’s most recent quarterly earnings conference call on Thursday. “Our level of investment demonstrates, as well, how scale, experience, and trust matters. Scale in terms of our financial capacity, experience in terms of our track record of the successful integration of approximately 200 companies, since 2013, and the trust we have earned in the market that attracts leading companies to want to join the Accenture family.”

Dublin, Ireland-based Accenture’s fiscal year ends Aug. 31.

Whether it’s growing Accenture’s Industry X industrial digital transformation business with newly acquired Umlaut, a German-based engineering consulting and services firm, or acquiring Virginia-based analytics company, Novetta, to broaden Accenture Federal Services, Sweet said Accenture continues to be in the position to build unique capabilities and partnerships “to combine the power of digital with traditional engineering services.”

“[This is] all to drive continued innovation and the next wave of growth,” she said.

Going forward, the dynamics in the market Accenture is seeing are recovery from the lower spending patterns that were brought on from the COVID-19 pandemic, according to Sweet, and a more sustained growth and demand as companies raise to modernize and accelerate their digital implementations.

[Related: Accenture Investing $3 billion In Cloud First Initiative]

Cloud is an even more critical enabler as companies are increasing their focus on enterprise-wide transformations and rapidly moving to digital and cloud-powered models,” she said. “These strategic priorities are multi service and are powered by our unparalleled technology ecosystem relationships.”

Another strong focus is on security. Accenture has seen double-digit growth which was driven by advisory, cyber defense and manage security services. With acquiring Novetta, which serves U.S. federal organizations, Accenture can scale and diversify across federal business, specifically in the national security sector, which Sweet said is experiencing substantial growth.

“We’re going to make acquisitions to scale…to add new skills and opportunities,” Sweet said. “We’ve built a lot of interactive through acquisitions [through] those renewed skills and capabilities [as well as] deepen industry and functional knowledge. This is a continuation of that. The advantage we have is our financial capacity to make investments and to increase our investment for the benefit of our clients and all of our stakeholders. When we see the right opportunities, we’re going to continue to have that discipline around making strategic acquisitions.”

During the quarterly earnings conference, Accenture reported revenue of $13.3 billion, as of May 31, 2021, an increase of 21 percent over the same period last year. It also saw a 24 percent increase in operating income, totaling $2.1 billion, over the same period as last year.

So far this fiscal year, Accenture promoted a record 117,000 people, including about 1,200 managing directors.

“Our outstanding financial results reflect our continued momentum driven by the demand for digital transformation, the depth and breadth of our client relationships with the world’s leading companies, our talented people and the strength of our business across geographic markets, industries and services,” Sweet said during the conference.

Revenues were about $300 million over the top end of the company’s range, which were estimated to be $12.55 billion to $12.95 billion. Consulting revenues for the third quarter were $7.26 billion, a 21 percent increase in U.S. dollars over the same period last year. Outsourcing revenues were also up 20 percent over the same period last year totaling at $6 billion.

The company’s operating income for the quarter increased 24 percent, to $2.12 billion, compared with $1.71 billion for the third quarter of 2020. The was also a 25 percent increase in net income for the quarter, at $1.57 billion, compared to $1.25 billion for the same time period last year.

New bookings for the third quarter were $15.4 billion, an increase of 39 percent from the third quarter last year.

For the fourth quarter, Accenture expects revenues to be between $13.1 billion and $13.5 billion.

Accenture stock closed Thursday at $291.56, up more than 2 percent.

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