Accenture 1Q14 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

3% local currency revenue growth

“We generated revenues of $7.1 billion, a 3% increase in local currency and above the midpoint of our guided range.”

Energy business a bright spot but rest of natural resources cyclically bad

” The energy business continues to be the real bright spot globally with double-digit growth. But cyclical challenges in natural resources continue to negatively impact the overall growth rate of our Resources business. Having said that, we do still expect to have positive growth for the year.”

Starting to see pickup in some important European economies

“We’re starting to see good pickup in growth in important countries such as Switzerland, the U.K., Italy, Germany and France. And in Asia-Pacific, we grew revenues 4% in local currency, driven by continued strong growth in Japan.”

Global economic environment remains challenging especially EM

“I want to comment on the global economic environment which, frankly, continues to be challenging especially in the emerging markets.”

Guiding to 3-6% revenue growth. 7-10% EPS growth.

“we now expect net revenue for the full fiscal 2014 to be in the range of 3% to 6% growth in local currency.”

“For earnings per share, we now expect full year diluted EPS for fiscal 2014 to be in the range of $4.50 to $4.62 or 7% to 10% growth”

Volume of work strong, but pricing is a headwind

“We do see a situation in consulting in particular where from a volume standpoint we’re actually seeing very strong growth, and in fact, I would say that our volume growth is where we expected, if not better. The pricing environment is impacting that such that we’re getting the net result in our revenue growth in consulting in particular.”

There is demand in the marketplace, but focused on cost control

“the level of client discussions that are taking place and clients’ willingness to contract work is actually quite strong.

Having said that, if there is a common theme and we’ve talked about this for several quarters now, clients are by and large focused on cost optimization. I think that is a trend that we see almost in every industry and every market around the world.

And so clients are moving forward, driving the business forward, looking at investments that they need to make, but they’re doing it with an eye towards being very cost conscious in the contracting investments they’re making in their business.”

Accenture is investing in growth though

“you’ll see that our headcount growth over the last couple of quarters has been meaningful and so we have more heads, more payroll, base pay comp. We also have slightly lower utilization on the margin as we’ve been building bench in certain areas in anticipation of revenue ramping”

Accenture digital growing double digits

“We are more end-to-end than anyone else in digital marketing. Our Mobility organization is just on fire. And, as you know, there is great demand for analytics. And, of course, through the creation of Accenture Digital, we have the unique ability now to create synergies among these three capabilities and be even more end-to-end. So we’re extremely pleased with Digital.”

Brazil turning the corner?

“I’m pleased to report that indeed in Q2 we feel that we are turning the corner with Brazil coming back flattened, hopefully positive for the reminder of the year.”