REUTERS - Consulting and outsourcing services provider Accenture Plc reported better-than-expected quarterly revenue and profit as its investments to boost digital and cloud services pay off.
Shares of the company were up 5.4 percent on Thursday and was the biggest boost on the S&P 500. They touched a record high of $124.96 earlier in the session.
Increasing demand for digital services from businesses has forced IT service providers to beef up their security, cloud and analytics services. Accenture said it would continue with its push to the services which it refers to as “The New”.
“We will continue to invest in high-growth areas ... with a particular focus on digital, cloud and security services,” Chief Executive Pierre Nanterme said in a statement.
In fiscal year 2016, the company invested more than $930 million in acquisitions, 70 percent of which in “The New”. The company spent about $800 million on acquisitions last year.
Accenture said in September it would buy three companies: DayNine, a partner of human resources software provider Workday Inc, Octo Technology, a technology consultancy firm based in France, and Kurt Salmon, a unit of Management Consulting Group Plc.
Accenture is relying on digital services to gain market share from rivals including IBM Corp and India’s Infosys Ltd and Tata Consultancy Services Ltd.
Revenue from Accenture’s “The New”, which includes digital, cloud and security-related services, accounted for 40 percent of total revenue in fiscal year 2016, up from about 30 percent in the previous year.
“I think what differentiates Accenture from its competitors is...they were very early to make digital investments...and (that) is now bearing fruit,” Edward Jones analyst Bill Kreher said.
Accenture said it expected first-quarter revenue between $8.40 billion and $8.65 billion. Analysts on average had expected $8.59 billion, according to Thomson Reuters I/B/E/S.
Net income rose to $1.13 billion, or $1.68 per share, in the fourth quarter ended Aug. 31 from $788.13 million, or $1.15 per share, a year earlier.
Excluding items, the company earned $1.31 per share, beating the average analyst estimate by 1 cent.
Revenue rose 7.6 percent to $8.49 billion, above the estimated $8.43 billion.
Reporting by Rishika Sadam in Bengaluru; Editing by Sayantani Ghosh and Don Sebastian