Key takeaways from Accenture’s (ACN) This fall 2023 earnings report

Shares of Accenture plc (NYSE: ACN) had been down 4% on Thursday after the corporate delivered combined outcomes for the fourth quarter of 2023 and offered full-year steering that got here beneath Avenue expectations. The inventory has gained 12% year-to-date. Listed below are the important thing factors from the earnings report:

Earnings beat, income miss

For the fourth quarter of 2023, Accenture reported revenues of $15.98 billion, which had been up 4% year-over-year, however narrowly missed estimates of $16.07 billion. GAAP internet earnings decreased 17% to $1.37 billion, or $2.15 per share, versus final 12 months. Adjusted EPS rose 4% to $2.71, beating analysts’ projections of $2.66.

Enterprise efficiency

On its quarterly convention name, Accenture stated the macro atmosphere turned out to be tougher than anticipated throughout the 12 months, with decrease discretionary spend, slower decision-making, and headwinds within the communications, media and know-how industries. Nonetheless, the corporate continues to see robust demand in areas like cloud migration and modernization, trendy ERP, and information and synthetic intelligence (AI).

Accenture plans to speculate $3 billion in AI. Though in early phases, generative AI is maturing quickly and the corporate believes it could generate important worth from this over time. Accenture presently has round 300 tasks in AI throughout all industries with banking, public service, shopper items and utilities main in exercise. Whereas a few of its extra digitally mature shoppers need to transfer quicker, others are both testing the waters or selecting to attend till they’re higher ready.  

Accenture’s new bookings for the fourth quarter dropped 10% YoY to $16.6 billion. Consulting made up 51% of latest bookings whereas Managed Providers accounted for 49%. In This fall, revenues from Managed Providers elevated 10% YoY whereas revenues from Consulting fell 2%.  

Through the quarter, revenues grew 1% in native foreign money in North America, pushed by development in public service, well being and utilities. This development was partly offset by declines in areas like communications and media, software program and platforms, banking and capital markets, and excessive tech. Revenues elevated 7% in Europe and 6% in Progress Markets in native foreign money, helped by development in banking and capital markets, chemical compounds and pure sources, industrial, power, and public service.

Decrease-than-expected outlook

For the primary quarter of 2024, Accenture expects revenues to vary between $15.85-16.45 billion. For the total 12 months of 2024, the corporate expects revenues to develop 2-5% in native foreign money. GAAP EPS is predicted to vary between $11.41-11.76, representing a YoY enhance of 6-9%. Adjusted EPS is estimated to vary between $11.97-12.32, representing development of 3-6% YoY. Analysts had been projecting EPS of $12.45 for the total 12 months.

Capital return

Through the fourth quarter, Accenture repurchased or redeemed 3.2 million shares for $1 billion, and paid dividends of $706 million. The Board of Administrators authorised $4 billion in further share repurchase authority, bringing whole excellent authority to approx. $6.5 billion. The corporate additionally raised its quarterly dividend by 15% to $1.29 per share, payable on November 15 to shareholders of report on October 12.