REUTERS - Accenture Plc’s bets on digital and cloud service businesses are paying off, the consulting and outsourcing giant’s results showed on Thursday, although it again warned of problems from political wrangling over Obamacare.
Accenture’s quarterly revenue beat estimates and their forecast for growth in fiscal 2018 was in line with analysts’ expectations, leaving the company’s shares broadly flat.
Chief Executive Pierre Nanterme said on an earnings call that the outsourcing service provider had been seeing prolonged weakness in the North American market on lower client spending due to uncertainty surrounding proposals by Republicans to replace the Affordable Care Act.
Anticipation of certain reforms were creating “wait-and-see positioning” from their clients, he said.
The company forecast net revenue growth for the fiscal year 2018 to be in the range of 5 to 8 percent.
Analysts on average were expecting revenue of $37.26 billion, according to Thomson Reuters I/B/E/S, reflecting a near 7 percent growth rate from a year earlier.
The company’s revenue from what it calls “the New” – digital, cloud and security-related services - grew about 30 percent to $18 billion for the year ended August 31 and accounted for about 50 percent of its total revenue.
In the past three years, the company has deployed about $3.4 billion in roughly 70 acquisitions, spending $1.7 billion in fiscal year 2017 alone, much of it on digital and cloud-related businesses.
“Over the next 2-3 years, Accenture should generate mid-high single digit constant currency revenue gains driven by sustainable, double-digit gains from “the New”,” Evercore ISI analyst David Togut wrote in a client note.
The company’s net revenue for the fourth quarter rose to $9.15 billion, beating estimates of $9.01 billion.
However, net income for diluted earnings per share fell to $974.2 million, or $1.48 per share, in the quarter ended August 31, from $1.12 billion, or $1.68 per share, a year earlier.
Analysts on an average were expecting $1.47 per share, according to Thomson Reuters I/B/E/S.
The company also forecast fiscal 2018 profit in the range of $6.36 and $6.60 per share but the mid-point of $6.48 was slightly below expectations of $6.50 per share.
Shares of Accenture fell as much as 3 percent in early trade but then pared losses to trade flat at $136.51 on Thursday. At Wednesday’s close of $136.64, they had risen nearly 17 percent this year.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur