Accenture (NYSE: ACN) is an international leader in consulting and outsourcing. The company helps clients with strategic planning, business process optimization and digital transformation.
In mid-December, Accenture released a report for 1 quarter of 2022, which pleasantly surprised investors:
- revenue increased by 27%, up to $14.965 billion, — vs market consensus of $14.22 billion;
- net income per share added 20%: increased from 2,32 to 2,78 $ when forecasting in 2,63 $. However, if you look at the statistics, then such results for the company are a common thing. Management over the past two years in 88% cases managed to earn more, than analysts expected;
- new orders increased by 30% - to a record high of $ 16.8 billion, of which $9.4 billion is consulting services, and 7.4 billion dollars - outsourcing;
- record financial results allowed management to announce an increase in its quarterly dividend by 10% and an increase in the annual revenue forecast, net earnings per share and FCF.
Let's take a closer look at the company's results.
Sales structure of the company
Accenture business is divided by sales geography, by clients and by type of work.
Sales geography. The company operates in three geographic markets and serves customers in over 120 countries.. Main market - North America, which brings Accenture more 45% income.
Europe is in second place with a slight lag. 34%, and developing countries close the top three, which includes the states of the Asia-Pacific region, Latin America, Africa and Middle East. With regard to financial results in 1 quarter of 2022, then all three segments worked approximately the same: growth was 26-29% against the backdrop of increased demand from customers.
Clients. Accenture divides its customer base into 5 industries:
- Telecommunications, media and IT.
- financial services.
- healthcare.
- Consumer goods.
- Energy enterprises.
Moving on to the results 1 quarter of 2022, it is worth noting, what have grown better than the rest 2 industry with the highest income: consumer goods and telecommunications. Indicators increased by 33 And 32% respectively - against 17-24% in the other three segments. The main reason for good results is simple - the increase in the number of orders.
Type of work. The company divides revenue by type of work into two segments: consulting and outsourcing services.
The largest income of the consulting services segment is brought by orders for digital transformation of business, and outsourcing is given the most orders for the modernization and maintenance of client applications. IN 1 Consulting services were the engine of growth in the quarter, who grew by 33% due to strong demand in North America and Europe, and outsourcing services grew the most modest - only by 21%.
Sales structure of the company, billion dollars
| By sales geography | 1к2021 | 1к2022 | The change |
|---|---|---|---|
| North America | 5,481 | 6,907 | 26% |
| Europe | 3,967 | 5,100 | 29% |
| Developing markets | 2,313 | 2,958 | 28% |
| By clients | 1к2021 | 1к2022 | The change |
|---|---|---|---|
| Consumer goods | 3,206 | 4,282 | 33% |
| Telecommunications, media and IT | 2,333 | 3,084 | 32% |
| financial services | 2,346 | 2,918 | 24% |
| healthcare | 2,211 | 2,730 | 23% |
| Energy companies | 1,664 | 1,952 | 17% |
| By type of work | 1к2021 | 1к2022 | The change |
|---|---|---|---|
| Consulting | 6,332 | 8,392 | 33% |
| Outsourcing | 5,429 | 6,573 | 21% |
Sales structure of the company by geography
The company's sales structure by customers
The company's sales structure by type of work
Profit
Accenture's Net Income 1 quarter of 2022 increased from $ 1.522 to $ 1.82 billion, this automatically led to an increase in earnings per share from 2,32 to 2,78 $.
At the same time, if you do not take into account a one-time profit of $ 120 million, or 0,15 $ per share, which the company received from investments in 1 quarter of 2021, the result is even more impressive.: Adjusted earnings per share in the current quarter increased by 0,61 $ — with 2,17 to 2,78 $. This was influenced by 4 Factor:
- Increasing revenue and improving operating results: +0,64 $.
- Decrease in share capital amid buyback: +0,01 $.
- Increase in tax rate: −0,03 $.
- Losses due to higher income among uncontrolled shares: −0,01 $.
Key financial results of the company, billion dollars
| 1к2021 | 1к2022 | The change | |
|---|---|---|---|
| Revenue | 11,762 | 14,965 | 27% |
| EBITDA | 2,359 | 2,935 | 24% |
| EBITDA margin | 20% | 20% | 0 P. P. |
| Net profit | 1,522 | 1,820 | 20% |
| FCF | 1,510 | 0,349 | −77% |
| net debt | −8,525 | −5,572 | −35% |
Management forecasts
According to management forecasts, revenue in 2 quarter will grow by 22-26%, up to 14.3-14.75 billion dollars, with a market consensus of $14.08 billion. And for the whole of 2022, income will grow by 19-22%, up to 60.134-61.65 billion dollars, with a market forecast of growth in 13,67%, up to $57.44 billion.
Sales and operating margin will increase to 15.2-15.4%. Maintaining the effective tax rate between 23 to 25% will help the company to earn 10.32-10.6 net earnings per share in 2022 $ - against the previous forecast of 9.9-10.18 $ and market forecast in 10,13 $.
In addition to strong revenue and net income forecasts, Accenture also reported, which increases its operating and free cash flow projections. The first will rise to $8.4-8.9 billion compared to the previous forecast of $8.2-8.7 billion, and the second will increase to 7.7-8.2 billion dollars against 7.5-8 billion dollars.
What will shareholders get
Against the backdrop of record financial results, the company's management announced the next dividend payment in the amount of 0,97 $, which increased by 10% quarter to quarter. Register Closing Date - 13 January 2022. The current quarterly dividend yield is 0,2%.
Besides, management increased the volume of the share buyback program by $ 3 billion - to 5,6. For 1 quarter Accenture bought back 2.4 million shares for the amount of 0.845 billion dollars, taking into account the forecast of the board of directors, in the next three quarters of 2022, on average, shareholders will additionally receive about a billion dollars through buyback.
In total, the company expects to pay shareholders $6.3 billion in 2022., and in 1 Accenture paid out $ 1.458 billion in earnings to shareholders. Taking into account the current capitalization of $264 billion, the total profitability of the company in 2022 will be 2,4%.
What's the bottom line?
Accenture posted strong financial results in the first quarter of 2022 thanks to strong order growth: The company's revenue increased by 27%, net profit — on 20%. In addition, management improved its guidance for 2022 and announced an increase in share buybacks.. Not surprising, that the market reacted positively to such financial results: the company's shares rose by 6,74%.
As a result, is it worth buying Accenture shares now or is it better to wait for a correction?? It all depends on, what growth rates will the company demonstrate: if the values are in the region of 20-25%, then the current estimate for the multiplier EV / EBITDA — 25 - may still grow, And if there is a decline, e.g. to average results, then EV / EBITDA is unlikely to be able to withstand such high values. Nevertheless, today the market is observing exactly the first scenario..
