M+E Daily

Accenture continued to see strong demand for its digital, cloud and security-related services in its fiscal second quarter (ended Feb. 28), according to company executives.

“We continue to see favorable market conditions in most areas of our business, especially as it relates to” the demand for digital, cloud and security – services that play “to our strength as a leader in innovating and leading in the new,” CFO David Rowland said on a March 23 earnings call.

What’s especially pleasing is that digital, cloud and security represent “high-growth areas” for the company, CEO and chairman Pierre Nanterme told analysts on the call.

Nanterme also provided an update on the company’s Accenture Interactive digital marketing business that’s part of its Accenture Digital division. “In less than only seven years” or so, he said Accenture has “created the largest digital pure player in digital marketing.” The company was “very pleased” that “Advertising Age” ranked Accenture Interactive the world’s number one digital agency network, he said, adding Accenture Interactive was “very close to” being a $6 billion business, “making us a category leader.”

Accenture’s total second-quarter revenue (before reimbursements) grew 5% from a year earlier, to $8.3 billion. But profit slipped to $887.2 million ($1.33 a share) from $1.4 billion ($2.08 a share).

The results “position us very well to achieve our full year financial guidance,” Rowland said on the call. Accenture now expects revenue for the year will grow 6-8% rather than its 5-8% prior forecast.

“Growth continues to be broad-based, with positive growth in the vast majority of our industries and geographic markets more than offsetting cyclical market pressures that continue in a few concentrated areas of our business,” including communications and media, Rowland told analysts.

Total Accenture Communications, Media &Technology (CMT) revenue inched up 1% in the second quarter, “reflecting solid positive growth in North America and double-digit growth in the growth markets, partially offset by continued contraction” in Europe, he said.

Within CMT, there were “significant double-digit growth” in software and platforms, as well as “positive growth in electronics and high tech,” he said. But communications and media “contracted” in the second quarter, mainly due to European weakness, he said, predicting revenue growth in its European communications and media business “will continue to be challenged for the rest of the year.”

Accenture, meanwhile, is continuing to heavily invest for the future, Nanterme told analysts. “We have stepped up our pace of acquisitions, investing more than $800 million of capital in the first half of the fiscal year” alone, he said, pointing out the company completed or announced 11 acquisitions in the second quarter that will further strengthen the company’s capabilities. It’s also opening 10 new innovation hubs in the U.S., he said, noting Accenture recently opened the first one in Houston, Texas.

Accenture is also “extensively” incorporating artificial intelligence (AI) and robotics into its business, he said, adding: “We believe strongly that the combination of artificial intelligence, machine learning [and] Robotic Process Automation in the coming five years will make a significant difference in [the] correlation between labor” and revenue.