Accenture Reports Strong FY 2024 Results

Accenture (NYSE: ACN) has reported a successful close to its fiscal year 2024, led by CEO Julie Sweet and CFO KC McClure during the fourth-quarter earnings call. Despite challenging market conditions, the company demonstrated strong financial performance, including:

• 14% increase in bookings, totaling a record $81 billion
• 2% growth in revenue, reaching $65 billion
• Adjusted earnings per share (EPS) increased by 2% to $11.95
• Strong free cash flow of $8.6 billion, with $7.8 billion returned to shareholders
• Investment in GenAI technology tripled revenue, achieving approximately $900 million

Key Takeaways

• Record Bookings: Full fiscal year bookings reached $81 billion, a 14% increase.
• Revenue Growth: Revenue grew by 2% in local currency, totaling $65 billion.
• Adjusted EPS: Adjusted EPS rose to $11.95, marking a 2% improvement.
• Cash Flow: Free cash flow was robust at $8.6 billion, with a significant return to shareholders.
• GenAI Impact: Investments in GenAI technology significantly boosted revenue.

Company Outlook

• For FY ’25, Accenture projects revenues between $16.85 billion and $17.45 billion, with expected growth rates of 3% to 6% in local currency.
• Operating margins are anticipated between 15.6% and 15.8%, with EPS ranging from $12.55 to $12.91.
• Approximately $3 billion is planned for acquisitions, and at least $8.3 billion is expected to be returned to shareholders.

Financial Highlights

Bearish

• Adjusted effective tax rate decreased from 27.4% to 26.2%.
• Free cash flow decreased to $3.2 billion from $5 billion.
• Cash balance declined from $9 billion to $5 billion.

Bullish

• Adjusted operating margin expanded by 10 basis points to 15.5%.
• Revenue growth in sectors like public service and industrial markets.
• Managed services growth driven by large transformation deals.

Misses

• No specific misses reported during the earnings call.

Q&A Highlights

• Accenture added approximately 24,000 employees in Q4, mainly in technology roles.
• Consulting outlook for FY ’25 is set at low to mid-single digits due to cautious macroeconomic conditions.
• Continued growth is expected in GenAI bookings going into FY ’25.
• Emphasis on strong acquisition capabilities and the integration of GenAI to enhance efficiency.

Concluding Thoughts

Accenture’s fourth-quarter earnings call highlighted a year of strategic growth, particularly in GenAI, which has greatly contributed to the revenue stream. The company is optimistic about leveraging digital transformation for continued success in FY ’25, focusing on technology advancements and talent acquisition.

InvestingPro Insights

Accenture’s FY ’24 performance reflects significant achievements in revenue and EPS growth, with a market capitalization of $220.73 billion and strong investor confidence indicated by a P/E ratio of 31.8 and a Price to Book ratio of 7.95. The company has raised its dividend for four consecutive years and maintained a strong track record in cash flow sustainability.