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Accenture Embraces Sturdy Q3FY21 Results

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Few months ago, Accenture acquired Core Compete, a cloud analytics service company, to enhance its applied intelligence practice. Today, the IT giant unveils its earnings as of Q3FY21. Its revenue of $13.3 billion exceeded the guided range by $300 million. On a year-over-year (y-o-y) basis, revenues climbed by 16 percent in local currency and 21 percent in USD.

According to analysts, this reflects a rapid conversion of order book to revenue for several of the company's projects. The company's fiscal year runs from September to August.

New bookings for the quarter totaled $15.4 billion, up 39 percent from the previous quarter, with consulting bookings totaling $8.0 billion and outsourced bookings totaling 47.4 billion.

In local currency terms, the company boosted its FY21 revenue growth target from 6.5-8.5 percent a quarter ago to 10-11 percent. The company's revenue growth guidance at the start of FY21 was two to five percent. Analysts regard the company's strong 3QFY21 results and commentary as a positive sign for Indian IT companies, indicating that demand in key industries will continue.

Revenues were $13.26 billion, up from $10.99 billion in the third quarter of fiscal 2020, representing a 21 percent rise in US dollars and a 16 percent increase in local currency. The company's revenue guidance range of $12.55 billion to $12.95 billion was exceeded by about $300 million this year. The foreign-exchange impact for the quarter was about positive five percent which was consistent with the company's second-quarter results release expectation.

The IT giant witnessed a 39 percent increase in order inflow to $15.4 billion in 3QFY21, with outsourcing order inflow up 52 percent to $7.4 billion. Even for huge agreements, the management stated that the pipeline remains solid. It's no brainer since Accenture competes directly with Indian IT firms in the outsourcing market.

“Our outstanding financial results reflect our continued momentum driven by the demand for digital transformation, the depth and breadth of our client relationships with the world's leading companies, our talented people, and the strength of our business across geographic markets, industries, and services,” said Julie Sweet, chief executive officer, Accenture.

Regarding the outsourcing revenues, the IT giant recorded a total of $6.00 billion with 20 percent in US dollars and 16 percent in local currency.

Consulting revenues rose up to $7.26 billion, with 21 percent in USD and 16 percent in local currency.

The quarter's gross margin (gross profit as a percentage of revenues) was 33.2 percent, compared to 32.1 percent in the previous quarter. In the third quarter, selling, general, and administrative (SG&A) expenses were $2.29 billion, or 17.2 percent of revenues, compared to $1.82 billion, or 16.5 percent of revenues, in the previous year's third quarter.

Operating income climbed by 24% to $2.12 billion, or 16.0 percent of revenues, in the third quarter of fiscal 2020, compared to $1.71 billion, or 15.6 percent of revenues in the third quarter of fiscal 2020.

“Our outstanding financial results reflect our continued momentum driven by the demand for digital transformation, the depth and breadth of our client relationships with the world's leading companies, our talented people, and the strength of our business across geographic markets, industries, and services,” said Julie Sweet, chief executive officer, Accenture.

The company's effective tax rate for the third quarter was 25.0 percent, down from 25.5 percent in the previous quarter.

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