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Accenture CEO Julie Sweet: IT Growth To Exceed Macro Impacts
Joseph F. Kovar
‘We believe that the current macro is making it even clearer to clients that they need to change more, not less. And that two of the five key forces of change that we have identified for the next decade—the need for total enterprise reinvention, enabled by tech, data and AI and the ability to access, create and unlock the potential of talent—are critical to succeed in the near-medium and long term,’ says Accenture CEO Julie Sweet.
Growth in IT spending will continue to outweigh any economic slowdown in 2023, helping solution providers like Accenture going forward.
That’s the word from Accenture CEO Julie Sweet, who Friday told financial analysts at her company’s first fiscal quarter 2023 financial analyst call that customers’ requirement for growth, cost optimization and resilience are a very positive sign for the New York-based company.
Over the last quarter, the economic estimates for 2023 have continued to decline according to multiple reports, Sweet said during her prepared remarks. At the same time, the latest industry estimates for 2023 technology spending continue to show robust growth of 5 percent, she said.
[Related: Here Are Accenture’s 23 Acquisitions In 2022]
“So what does today‘s market mean for our clients?” she said. “We believe that the current macro is making it even clearer to clients that they need to change more, not less. And that two of the five key forces of change that we have identified for the next decade—the need for total enterprise reinvention, enabled by tech, data and AI and the ability to access, create and unlock the potential of talent—are critical to succeed in the near-medium and long term.”
Accenture sees this continuing across industries and markets with two common themes, Sweet said.
“First, all strategies continue to lead to technology, particularly cloud, data, AI and security,” she said. “And second, companies remain focused on executing compressed transformation to achieve lower costs, stronger growth, more agility and greater resilience faster.”
Accenture’s strategy positions the company for continued industry leadership because of its unique strengths that customers need to navigate today and succeed tomorrow, Sweet said.
“We are able to do so because of our deep strategy and consulting expertise across industries, allowing us to be a trusted adviser during different economic cycles because we bring the expertise coupled with the real-life practical experience they need. … And our global footprint allows us to act at scale and with speed,” she said.
For the quarter, Accenture delivered bookings of $16.2 billion, with 24 customers with quarterly new bookings over $100 million, Sweet said.
“[This demonstrates] our clients’ continued commitment to transformation and our ability to understand and anticipate our clients’ needs, whether for growth, cost optimization or resilience, and our ability to deliver compressed transformations. … We estimate that we’re going more than two times the market while delivering margin expansion of 20 basis points,” she said.
For the quarter, Accenture invested $686 million in acquisitions, said KC McClure, the company’s CFO.
For its first fiscal quarter 2023, which ended Nov. 30, Accenture reported revenue based on U.S. dollars of $15.75 billion, up 5 percent over the $14.97 billion the company reported for its first fiscal quarter 2022.
Total revenue beat analyst expectations by $160 million, according to Seeking Alpha.
This included consulting revenue of $8.44 billion, up 1 percent over last year, and managed services revenue of $7.30 billion, up 11 percent.
North American revenue was reported at $7.62 billion, up 10 percent; European revenue hit $5.07 billion, down 0.5 percent; and growth market revenue was $3.05 billion, up 3 percent.
Accenture also broke out revenue by industry group, with product revenue of $4.67 billion, up 4 percent; health and public services revenue of $3.00 billion, up 10 percent; communications, media and technology revenue of $2.98 billion, up 3 percent; financial services revenue of $2.96 billion, up 2 percent; and resources revenue of $2.14 billion, up 10 percent.
On a GAAP basis, Accenture reported net income for the quarter of $2.00 billion, or $3.08 per share, up from last year’s $1.92 billion, or $2.73 per share. That beat analyst expectations by 18 cents per share, according to Seeking Alpha.
Looking ahead, Accenture expects second fiscal quarter 2023 revenue of $15.20 billion to $15.75 billion, which would be an increase of 6 percent to 10 percent when measured by local currency.
For its full fiscal year 2023, Accenture expects total revenue growth of 8 percent to 11 percent in local currency, with earnings per share in the range of $11.20 to $11.52, or up year over year by 5 percent to 8 percent.
Despite the growth in its financials, investors Friday drove Accenture share prices down by 16.6 percent to $264.48 per share by the end of the trading day, with prices essentially flat in after-market trading.