Accenture Plc (NYSE:CAN) shares slipped on Thursday, despite the consulting and outsourcing giant topping forecasts with its quarterly profit and revenue and raising its full-year guidance.
The Dublin-based group reported a rise in net income to US$863.7mln in the three months ended February 28, from US$838.8mln in the year-ago period.
Boss “very pleased” with numbers
Excluding a one-time, US$137mln charge related to the recent US tax changes, Accenture earned US$1.58 per share (Q2 2017: US$1.33). Wall Street analysts had been looking for US$1.49.
Net revenue jumped 15% to US$9.59bn in the period – ahead of the US$8.32bn it generated last year and higher than the average analyst estimate of US$9.31bn.
The outperformance was largely down to better-than-expected sales growth in both the consulting and outsourcing business, while Accenture also benefited from investments in its digital and cloud services.
In fact, the company spent more than US$1bn last year to boost its offerings in these divisions, which it calls ‘The New’, as it looks to better compete with the likes of IBM (NYSE:IBM) and Cognizant Technology Solutions Corp (NASDAQ:CTSH).
Pierre Nanterme, Accenture’s chairman and chief executive, said: “We are very pleased with our strong financial results for the second quarter.
“We continue to benefit from the substantial investments we are making to scale our leadership positions in high-growth areas including digital, cloud and security services, which together now account for more than 55% of total revenues.”
Margin pressures overshadow results
However, Accenture also flagged margin pressures in the year ahead, which overshadowed the second quarter results.
The firm now expects fiscal 2018 operating margin – a profit as a percentage of revenue – of 14.8%.
That’s in line with fiscal 2017, but lower than the 10- to 30-basis-point expansion it had previously suggested.
There was some better news in terms of outlook for investors though, with Accenture raising its net revenue growth forecasts to 7-9% for 2018, up from 6-8%.
It also increased its adjusted earnings per share guidance to US$6.61-US$6.70, from US$6.48-US$6.66.
Accenture shares are down 6.5% to US$151.50 in afternoon trading.