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MOSL: TECHNOLOGY-Accenture’s 3QFY21 result suggests a further acceleration in industry growth

TECHNOLOGY: Accenture’s 3QFY21 result suggests a further acceleration in industry growth

 

Accenture (ACN) reported strong 3Q earnings, increasing its FY21 revenue growth guidance by 300bp (midpoint) on better than expected demand environment. We see its 3QFY21 delivery and commentary as a positive read-across for our Indian IT Services coverage as it indicates continued robust demand in key industries.

 Key takeaways from the 3QFY21 earnings

• Strong operating performance: Revenue at USD13.3b (+16% YoY in CC terms and 20.7% YoY in USD terms) was 400bp above Bloomberg consensus estimates. ACN reported strong deal wins of USD15.4b (book-to-bill of 1.2x), up 40% YoY (Outsourcing TCV up 53% YoY), although marginally below its 2QFY21 peak.
• Consulting the main growth driver in 3QFY21: Consulting revenue was up 13% QoQ in USD terms, the fastest in the last four years. Outsourcing revenue was up 6% QoQ, the highest in the past 10 years.
• Guidance increased by 300bp: ACN maintained the pattern of raising its fiscal revenue growth guidance, increasing its FY21 guidance by a massive 300bp in 3Q (to 10-11%). It highlighted that this guide up is primarily led by higher organic demand and client spend.

Focus on acquisitive growth: ACN has increased its focus towards acquisitions, with expectations of deploying USD4b in FY21 and FY22. It expects at least 4% growth addition from acquisitions in FY22. On a YTD basis ACN has acquired 39 companies, including two at valuations upward of USD1b.