Accenture's Digital/Cloud Business Off The Charts, Stock Hits New 52-Week High

Accenture's digital/cloud services business is gaining momentum, soaring 30 percent in the most recent quarter, up from over 20 percent in the first half of the year.

Accenture CEO Pierre Nanterme told Wall Street analysts in a conference call on Thursday that the $30 billion giant's broad move to digital/cloud services in every segment of its business is paying off.

"We gained substantial market share and accelerated our growth in digital-related services," said Nanterme after the company posted results for the quarter well above Wall Street expectations. Digital/cloud-related services now account for 20 percent of Accenture's overall sales.

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The big digital/cloud gains helped propel the company's shares to a new 52-week high this week. Accenture's shares, which closed June 1 at $96.19, hit $100.47 on Thursday before closing at $99.48. On Friday, Accenture shares traded down 38 cents to $99.10.

The share gains came after the Dublin-based company reported diluted earnings per share, excluding charges of $1.30 per share on sales of $7.8 billion for its third fiscal quarter ended May 31. The Wall Street consensus was $1.23 per share on sales of $7.54 billion, according to Thomson Reuters. Without the impact of the declining euro, which negatively affects international sales and profits, Accenture's sales for the quarter would have been up 10 percent.

"Today, the right entry point around the world is this unique combination of digital-related services and cloud-enabled services," said Nanterme. "So if you’re digital-rich and cloud-rich, then you have probably the right formula to drive more growth in each and every market."

Accenture has become a model for how a large systems integrator can transform to compete in an intensely competitive and fast-moving cloud services marketplace.

Accenture now has 28,000 employees working in its digital/cloud-related services business focused on all five Accenture businesses: Accenture Strategy, Accenture Consulting, Accenture Digital, Accenture Technology and Accenture Operations.

"Demand for digital is pervasive across the entire business," said Nanterme. "And we’re leveraging our digital capabilities in the services we provide to clients in every industry around the world."

Some of the new digital projects include a partnership with Pizza Hut, where Accenture is developing and operating a cloud-based platform, aimed to improve online sales and expand its digital marketing capabilities through enhanced customer segmentation, analytics and mobility.

Accenture also is working with a leading global ship-building company to develop an Internet-of-Things-connected platform to enable realtime monitoring of its shipping fleet.

Simultaneously, Accenture also is partnered with Rio Tinto, a global mining company, to accelerate its journey toward becoming a digital business. Nanterme said Accenture is doing this by migrating its enterprise IT systems to an As-a-Service solution on the Accenture Cloud Platform.

Accenture said it expects sales for the current quarter to be in the range of $7.45 billion to $7.70 billion. The Wall Street consensus had been $7.58 billion before the new guidance.

For fiscal 2015, Accenture said it now expects diluted earnings per share of $4.67 to $4.72, including charges, compared with the prior estimate of $4.61 to $4.71.

With $4 billion in cash, Nanterme said Accenture will continue to look at making acquisitions, including "digital native" companies, to continue its momentum. In fact, he said acquisitions will further improve the company's "competitiveness and our relevance in the business."

Accenture has completed some 45 acquisitions over the last several years as it moved to transform the business, including a deal to buy Swedish digital consulting company BrightStep on Tuesday.

PUBLISHED JUNE 26, 2015