Accenture Delivers Q2 Beat & Raises Fiscal 2022 Outlook

Accenture (NYSE: ACN) reported stronger-than-expected fiscal Q2 results, significantly topping both earnings and revenue estimates. The quarterly beat was driven by robust demand across all markets, regions, and industries as well as significant market share gains.

Markedly, the Ireland-based multinational information technology services and consulting company raised its FY2022 outlook well ahead of analyst expectations.

Despite the beat and raised outlook, shares of Accenture fell 1.7% on March 17 to close at $319.50.

Q2 Outperformance

Q2 adjusted earnings of $2.54 per share grew 14% year-over-year and significantly beat analysts’ expectations of $2.15 per share. The company reported earnings of $2.23 per share in the prior-year period.

Furthermore, revenues jumped 24% year-over-year to $15 billion and also impressively exceeded consensus estimates of $13.14 billion. The increase in revenues reflected a record level of new bookings, which increased 22% to $19.6 billion.

Segment-wise, both consulting and outsourcing saw record new bookings of $10.9 billion and $8.7 billion, respectively.

FY2022 Outlook

Based on robust Q2 results, management raised its financial guidance for FY2022.

For FY2022, the company now forecasts adjusted earnings in the range of $10.61 to $10.81 per share, much higher than the consensus estimate of $9.68 per share. Previously, the company expected Fiscal 2022 adjusted earnings to range between $10.32 and $10.60.

Furthermore, revenues are projected to grow between 24% and 26%, versus the prior guidance range of 19% to 22%.

However, Accenture now expects operating margins to improve 10bps to 15.2%, compared to previously expected operating margin expansion of 10 to 30 basis points.

Notably, for the fiscal third quarter, revenues are projected to grow between 22% and 26% to $15.70 billion to $16.15 billion, again, much higher than the consensus estimate of $13.95 billion.

CEO Comments

Accenture CEO Julie Sweet commented, “The trust we have earned from our clients and partners, our continuous innovation and our ability to consistently attract the best people are directly linked to our commitment to creating 360° value for all our stakeholders — clients, people, partners, shareholders and communities.”

Wall Street’s Take

Following the upbeat Q2 results, Cowen analyst Bryan Bergin increased the price target on Accenture to $375 (17.4% upside potential) from $370 and reiterated a Buy rating.

Bergin is bullish on Accenture meeting its raised FY22 outlook based on strong ongoing momentum coupled with record bookings and a healthy pipeline.

He further stated, “Despite growing macro concerns, ACN has not encountered meaningful client consternation, incl Europe where it expects DD 2H22 growth. Wage inflation weighs modestly NT in a reduced AOM view, but confident bookings pricing & durable demand views are more important.”

Overall, the stock has a Strong Buy consensus rating based on 8 Buys and 2 Holds. The average Accenture price target of $408.00 implies 27.7% upside potential from current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 85% Bullish on ACN stock, compared to a sector average of 68%.

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