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Accenture Has $1.5B To Spend On More Acquisitions This Fiscal Year

Accenture has been aggressive in terms of acquisitions recently and spent $200 million on nine buys in its first quarter of fiscal 2019.

Accenture, the Dublin-based solution provider, told investors on Thursday that it plans $1.5 billion worth of acquisitions for the remaining three quarters of its latest fiscal year, including the $200 million it has already spent this last quarter.

“We invested a little over $200 million in the quarter to acquire nine companies to bolster our skills and capabilities in our strategic, high growth areas of our business,” Chief Financial Officer David Rowland said during a first quarter earnings call Thursday. “And we continue to expect to invest up to $1.5 billion in acquisitions during fiscal 2019.”

Accenture has been aggressive in terms of acquisitions this year, with multiple buys every quarter, and Rowland said he does not expect that to slow down in 2019. He said while it’s hard to predict the timing of acquisitions as it relates to earnings, the company expected acquisitions to account for “a point and a half” of growth in 2019.

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The company posted strong first quarter results that were in line with the high end of its revenue guidance on the back of higher revenue in nearly all of its business groups.

“We again delivered revenue growth significantly ahead of the market, solid new bookings and expanded operating margin, while investing significantly in the business,” Pierre Nanterme, Accenture’s chairman and CEO said. “We continue to see significant demand for our services including digital, cloud and security, as well as new technologies, confirming the relevance of our growth strategy.”

Accenture said revenue for the first quarter of fiscal 2019 came in at $10.61 billion, compared with $9.88 billion for the year-ago quarter, an increase of 7 percent. Accenture had projected a range of $10.35 billion to $10.65 billion for the period ending November 30.

Growth came from communications, media, and technology, which was up 11 percent to $2.13 billion, health and public service which was up 4 percent, products, which grew to $2.93 billion up 8 percent. Financial services and banking was off one percent to $2.12 billion.

“We continue to leverage our innovation-led approach and the unique leadership position we have built across digital, cloud and security services, which together account for more than 60 percent of total revenues,” Nanterme told investors. “With the disciplined execution of our growth strategy, we remain confident in our ability to continue gaining market share, driving profitable growth and delivering value for our clients and shareholders.”

Analysts were concerned about whether larger market forces, such as stock market fluctuations and trade fights, could hurt earnings.

“When its raining hard, either you weather the rain or you build an umbrella,” Nanterme said. “At Accenture, we decided to build an umbrella.”

Nanterme said Accenutre’s client portfolio, which is made up of more than 180 of the “best brand” companies in the world will help, as well as Accenture’s position as a leader in the “new versus traditional IT,” the company’s strategy of offering diversified services to a wide range of customers: strategy, consulting, digital, technology, operations, and finally disciplined management, will see it through tough markets.

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