A Year Into COVID-19, Accenture Returns To Pre-Pandemic Growth: CEO
Joseph F. Kovar
‘COVID has hit a giant fast-forward button to the future and we believe the demand to innovate at unprecedented speed and scale with rapid adoption of cloud, AI, and other disruptive technologies, is accelerating. For digital leaders, we see them no longer strictly competing for market share, but to build their vision of the future faster than the competition,’ says Accenture CEO Julie Sweet.
A year after the start of the COVID-19 pandemic, Accenture has not only returned to the kind of growth it expected in the past, but has been able to press the “giant fast-forward button” on technology that resulted from the pandemic, according to CEO Julie Sweet.
Sweet on Thursday told analysts during the global solution provider’s second fiscal quarter 2021 financial analyst conference call that her company over the last year saw its clients simultaneously transform multiple parts of their enterprise and reskill their people in what previously would have been sequential programs.
“They are doing so to re-platform their businesses in the cloud, address cost pressures, build resilience and security, adjust their operations and customer experiences, and find new sources of growth,” she said. “COVID has hit a giant fast-forward button to the future and we believe the demand to innovate at unprecedented speed and scale with rapid adoption of cloud, AI, and other disruptive technologies, is accelerating. For digital leaders, we see them no longer strictly competing for market share, but to build their vision of the future faster than the competition. And for digital laggards, they are determined to not simply catch up, but to leapfrog.”
Yet despite the boost to digital transformation offered by the COVID-19 coronavirus pandemic, that transformation is in reality only starting, Sweet said.
“The move from approximately 20 percent to 80 percent in the cloud alone is a huge undertaking, and it is just the start as companies will then continue to invest to grow and innovate on their new cloud foundations, which leads me to the role we are playing,” she said. “In Q2, our engines of growth across Accenture have roared to the life to meet these needs of our clients and we see strong momentum going into Q3.”
For instance, Sweet said, Accenture in September 2020 created Accenture Cloud First to bring industry cloud and state-of-the-art change management and transformation together. Intelligent platform services, which Sweet said is essential to building the clients’ digital cores, is back to high single-digit growth. Accenture’s applied intelligence business, in combination with its data and AI solutions, along with security, both had strong double-digit growth in second fiscal quarter, she said.
Accenture’s operations business grew double-digits as companies sought to digitize their enterprises, while its interactive business improved and grew high single-digits as companies continue to shift to digital channels, Sweet said. Accenture’s Industry X digital transformation services grew strong double-digits driven by the need for product and engineers to accelerate the time to market of smarter and develop more efficient and flexible manufacturing facilities, she said.
“These engines of growth are multi-service, bringing the best of Accenture’s strategy in consulting, interactive technology, and operation services together to create value,” she said. “We are distinctive, because no other competitor has our scale and breadth of services, which allows us to seamlessly serve the different dimensions of compressed transformations.”
Accenture currently has nearly 537,000 employees, and on-boarded over 100,000 people virtually over the last 12 months, with new innovative approaches, Sweet said.
The strength of Accenture’s second fiscal quarter 2021 financial growth stands out given it is compared to a very strong second fiscal quarter 2020, which had just concluded before the pandemic started, Sweet said.
“[Let’s look] back 12 months ago, on March 19, only 8 days after the pandemic was declared, when we were all together to announce our outstanding fiscal year ‘20 Q2 financial results,” she said. “Results you may not remember, because at the time, we were all focused on the go-forward potential impact of the pandemic.”
At the time, Accenture had just declared 8 percent revenue growth, its then highest bookings ever of $14.2 billion, and strong underlying profitability and free cash flow, and announced that 18 clients had bookings over $100 million in the quarter, Sweet said.
Despite the pandemic of the last 12 months, Accenture delivered 5.4 percent revenue growth in local currency, bookings of $16 billion, and strong profitability and free cash flow. The company also saw 18 clients with bookings over $100 million, and continues to take market share faster than it did pre-COVID, she said.
And for the last 12 months, we have remained consistent,” she said. “We gave guidance every quarter which we met or beat. We deliberately invested in our people and preserved our talent to continue to serve our clients as demand came back. And we continued to significantly invest in our business and our communities. And throughout, we have lived our core values, including maintaining without pause our commitment to make more progress on diversity and inclusion and sustainability.”
For its second fiscal quarter 2021, which ended February 28, Accenture reported revenue of $12.19 billion, up about 8 percent over the $11.14 billion the company reported for its second fiscal quarter 2020.
This included consulting revenue of $6.44 billion, up 4 percent over last year’s $6.17 billion, and outsourcing revenue of $5.65 billion, up 14 percent over last year’s $4.97 billion.
Revenue from North America reached $5.63 billion, up 7 percent over last year’s $5.26 billion.
Revenue was $140 million above the company’s previous guidance.
Net income on a GAAP basis was $1.46 billion, or $2.23 per share, up from last year’s $1.25 billion, or $1.91 per share. On a non-GAAP basis, net income was $1.3 million, or $2.03 per share, down from last year’s $1.21 billion, or $1.84 per share.
Based on the strength of Accenture’s second fiscal quarter results and the confidence in the second half of the fiscal year, the company is increasing all elements of its full year outlook.
For its third fiscal quarter 2021, Accenture expects revenue to be in the range of $12.55 billion to $12.95 billion, which would represent growth of 10 percent to 13 percent. For all of fiscal 2021, revenue is now expected to rise 6.5 percent to 8.5 percent over fiscal 2020.