Accenture’s digital play driving major revenue growth
Accenture’s pivot towards digital services is driving major growth, contributing more then 60 per cent of its $11.10bn third quarter revenues (Reuters)
Key points:
- While IT services faces margin pressure, digital, marketing and cloud services, termed ‘the New’ segment by Accenture, driving growth
- "All of our growth, and this is by design, comes from our rotation to ‘the New’," – interim CEO David Rowland said.
- 65 per cent of $10.6bn third quarter bookings came from ‘the New’ segment
“Strong double digit growth” is something the advertising holding companies – any company – would give their eye teeth for. Accenture’s share price has climbed 30 per cent this year and it’s sitting on $4.2bn in free cashflow.
That combination suggests its buying spree (listed at the end of this article) may yet have some way to go, given the growth acquisitions to date appear to be delivering at circa 15 per cent operating margin.
That compounds the threat Accenture and others pose to traditional ad groups. Moreover, according to Edmund Tadros, professional services editor at the Australian Financial Review, it’s not just the big clients that are in the consultants' cross hairs.
"They're now going down into the middle markets," Tadros told Mi3. "Some of the biggest growth areas are in the middle markets where they are trying to bring their scale and efficiency to smaller clients."
