Accenture Reports Strong FY ’24 Results, Anticipates Growth for FY ’25

Accenture has reported a successful conclusion 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 robust financial performance, including a 14% rise in bookings and a 2% growth in revenue. Adjusted earnings per share (EPS) also saw a slight increase. With a strategic focus on reinvention through technology and maximizing shareholder value, Accenture is well-positioned for the upcoming fiscal year.

Key Takeaways

• Full fiscal year bookings for Accenture reached a record $81 billion, representing a 14% increase.
• Revenue for FY ’24 grew by 2% in local currency, totaling $65 billion.
• Adjusted EPS rose by 2%, reaching $11.95.
• Free cash flow was robust at $8.6 billion, with $7.8 billion returned to shareholders.
• Investments in GenAI technology saw revenue triple to approximately $900 million.
• The company is optimistic about leveraging digital transformation for growth in FY ’25.

Company Outlook
Accenture anticipates FY ’25 revenues to range between $16.85 billion and $17.45 billion, with growth rates of 3% to 6% in local currency. Operating margins are expected to be between 15.6% and 15.8%, with EPS forecasted at $12.55 to $12.91. The company aims to invest around $3 billion in acquisitions and return at least $8.3 billion to shareholders. There may also be a move to tap long-term debt markets to enhance liquidity while maintaining a low net leverage ratio.

Bearish Highlights

• The adjusted effective tax rate fell from 27.4% to 26.2%.
• Free cash flow decreased to $3.2 billion from the previous year’s $5 billion.
• The cash balance dropped from $9 billion to $5 billion as of August 31, 2024.

Bullish Highlights

• Adjusted operating margin increased by 10 basis points to 15.5%.
• Revenue growth was observed in various sectors, particularly public service and industrial markets.
• Managed services experienced significant growth driven by large transformation deals.

Misses

• No specific misses were reported during the earnings call.

Q&A Highlights

• The company added approximately 24,000 employees in Q4, mainly in technology roles.
• The consulting outlook for FY ’25 is projected at low to mid-single digits due to cautious macroeconomic conditions.
• GenAI bookings demonstrated significant growth, with expectations for continued increases in FY ’25.
• The firm highlighted its strong acquisition capabilities and the integration of GenAI to enhance efficiency and customer engagement.

Accenture’s fourth-quarter earnings call highlighted a year of strategic growth and investment, particularly in GenAI, which has become a significant contributor to the company’s revenue stream. With a clear focus on assisting clients in their digital transformation journeys, Accenture is poised to continue its growth trajectory into fiscal year 2025, bolstered by a strong consulting book-to-bill target and growth in managed services. The company’s leadership expressed confidence in their ability to navigate the macroeconomic landscape while maintaining solid financial health, as shown by their commitment to shareholder returns and prudent financial management. Looking ahead, the transition to GenWizard technology and an ongoing emphasis on talent acquisition and innovation are expected to drive success in the coming fiscal year.