Delivering in fiscal 2018

Accenture delivered outstanding financial results in fiscal 2018, reflecting excellent demand for our differentiated services—as well as our continued success in putting innovation at the heart of how we serve clients across industries and around the world.

I am particularly pleased that we delivered double-digit revenue growth in local currency for the third time in four years, gaining significant market share. Our performance was broad-based once again, with strong revenue growth across all operating groups and geographic regions—double-digit or high single-digit growth in each case. We also delivered excellent earnings per share and record free cash flow—enabling us to return substantial cash to shareholders while continuing to make significant investments in the business.

Here are some highlights:

  • We delivered record new bookings of $42.8 billion, a 12 percent increase in local currency.
  • We grew net revenues 10.5 percent in local currency to $39.6 billion—another all-time high.
  • We delivered diluted earnings per share of $6.34, compared with $5.44 in fiscal 2017. After excluding $0.40 per share in charges related to tax law changes in fiscal 2018 and a $0.47 per share pension settlement charge in fiscal 2017, adjusted EPS of $6.74 in fiscal 2018 increased 14 percent.
  • Operating margin was 14.8 percent, consistent with our adjusted fiscal 2017 operating margin of 14.8 percent, which excludes the 150 basis-point impact of the pension settlement charge.
  • We generated very strong free cash flow of $5.4 billion and returned $4.3 billion in cash to shareholders through dividends and share repurchases.
  • We announced a 10 percent increase in our semi-annual dividend, to $1.46 per share, shortly after fiscal year-end.

These excellent results enabled us to deliver significant shareholder value in fiscal 2018. Accenture shares provided a 32 percent total return for the year ended August 31—12 percentage points above the S&P 500 Index.

Over the last five fiscal years, we have delivered compound annual revenue growth of 9 percent in local currency and 10 percent compound annual growth in adjusted earnings per share. Our compound annual total return to shareholders for this five-year period was 21 percent, compared with 15 percent for the S&P 500.

Driving differentiation

Our strong and durable performance reflects the successful execution of our growth strategy. In 2013, we recognized that the technology revolution would significantly disrupt companies and entire industries globally. We began moving aggressively and strategically to further differentiate Accenture in the new digital world—to help clients disrupt rather than be disrupted, and to capture new growth opportunities in a very competitive environment.

Today, our business is focused on providing end-to-end capabilities at scale across the full spectrum of professional services—spanning strategy, consulting, digital, technology and operations. By combining our market-leading capabilities across these businesses with our deep industry expertise, Accenture is uniquely positioned to drive large-scale transformation for our clients. We are shaping strategy in the C-suite, delivering cutting-edge technology solutions and running operations for our clients—giving us an unmatched capability to integrate our services and commit to tangible client outcomes.

Accenture remains the partner of choice for many of the world’s leading companies and largest government agencies on mission-critical transformation programs. For example, we are helping DowDuPont with its post-merger preparations to separate into three new companies.

We serve more than three-quarters of the FORTUNE Global 500 and 92 of the top 100. We also continue to build strong, long-term relationships with our clients, and 97 of our top 100 clients have been with us for 10 years or more.

Another key component of our growth strategy is the significant investments we have made in new, high-growth areas to drive our differentiation and competitiveness. In particular, our rapid rotation to “the New”—digital, cloud and security services—has clearly set us apart, and we further strengthened our leadership position in these areas in fiscal 2018. Net revenues from the New grew about 25 percent in local currency to $23 billion—approximately 60 percent of total revenues—more than double the revenues just three years ago.

Innovating in the New

While the New has now become core to our business, we continue to invest and innovate to capture the next waves of growth. During fiscal 2018, we evolved Accenture Digital to be even more relevant to our clients by focusing on three key market sectors:

  • To further strengthen Accenture Interactive—which was again recognized by Ad Age as the world’s leading provider of digital marketing services—we launched Intelligent Marketing Operations, combining platforms, analytics and artificial intelligence to run marketing campaigns as a seamless managed service.
  • We also launched Accenture Industry X.0, which is focused on the digital reinvention of industries with smart, connected products and services using the Internet of Things, connected devices and digital platforms.
  • In addition, we created Accenture Applied Intelligence by bringing together our capabilities in advanced analytics and artificial intelligence, which we are increasingly embedding at the heart of our clients’ businesses.

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Acquisitions are essential to building critical skills and capabilities in strategic, high-growth areas, which enhance our differentiation and drive organic growth. In fiscal 2018, we deployed more than 70 percent of our total acquisition investment of $658 million to extend our leadership position in Accenture Digital. Key acquisitions in Accenture Interactive included Mackevision in Germany, Meredith Xcelerated Marketing in the United States, HO Communication in China and Altima in France. We also completed several acquisitions that enhanced our Industry X.0 and Applied Intelligence capabilities, including US-based Pillar Technology and Kogentix.

Another priority for Accenture is continuing to leverage our unique position as the leading partner of the key players in the technology ecosystem—including SAP, Microsoft, Oracle, Salesforce and Workday—which are also rotating to the New with cloud-enabled platforms incorporating advanced analytics, artificial intelligence and machine learning capabilities.

Accenture is the clear global leader in implementing these platforms—through our Intelligent Platform Services—to meet the needs of our clients. For example, we are helping a wide range of clients around the world to transform their businesses with SAP S/4HANA solutions—from The Hershey Company in the United States, to Latin American utility Celsia, to Lion, Australia’s largest brewer.

We continue to invest in our unique Accenture Innovation Architecture, where we collaborate with clients in new ways to develop, scale and deliver disruptive, leading-edge solutions. Our Innovation Architecture combines specialized capabilities across the company—from research, ventures and labs to studios, innovation centers and delivery centers.

We continue to grow our network of more than 100 world-class innovation facilities, which are strategically located in key innovation capitals around the globe. In fiscal 2018, we opened six Liquid Studios, where we accelerate software development, and nine innovation hubs—in Atlanta, Boston, Canberra, Columbus, Detroit, San Francisco, Tokyo, Washington, D.C., and Zurich—which bring together multiple elements of our Innovation Architecture.

Through our open innovation program, we have engaged with more than 5,000 start-ups and made 28 strategic minority investments over the last five years. In areas like blockchain, extended reality and quantum computing, we already are investing in and developing solutions in the “next New” technologies. We worked with Anheuser-Busch InBev and several other organizations to successfully test a blockchain prototype that eliminates the need for printed shipping documents, providing significant efficiencies and speeding up ocean cargo transactions.

Another important indicator of our innovation capabilities is our intellectual property portfolio, which now includes more than 6,800 patents and pending patent applications in areas like artificial intelligence, blockchain, cybersecurity, extended reality and the Internet of Things. Our intellectual property is an important corporate asset that differentiates Accenture’s services and drives value for us in the marketplace.

Our people and our communities

As a talent- and innovation-led organization, Accenture’s top priorities include attracting the best people and investing to further develop their highly specialized skills. In fiscal 2018, we invested more than $925 million in the development of our people, leveraging continuous learning opportunities that are customized for the individual in an on-demand, digital environment. We continue to make substantial investments in re-skilling, and have now trained more than 290,000 people in New IT, including automation, Agile development and intelligent platforms.

We are particularly focused on building the best possible leadership team in our industry. During fiscal 2018, we promoted about 700 new managing directors and hired nearly 300 from outside Accenture—adding very significant specialization and industry expertise.

Accenture is deeply committed to inclusion and diversity, offering an inclusive environment regardless of age, disability, ethnicity, gender, religion or sexual orientation. We embrace diversity as a source of innovation, creativity and competitive advantage. Women now make up 42 percent of our global workforce, and we work proactively to ensure pay equity among our people.

I am especially proud that Accenture was named the top company—Number 1—on the Thomson Reuters Diversity & Inclusion Index, as well as Number 2 on CR Magazine’s list of “100 Best Corporate Citizens.” We also were recognized once again by Ethisphere as one of the “World’s Most Ethical Companies” and by FORTUNE as one of the “100 Best Companies to Work For.”

With our partners, our clients and our communities, we innovate to improve the lives of millions of people around the world—now and for generations to come. Through our Tech4Good initiative, we collaborated with Grameen Foundation India to apply artificial intelligence and augmented reality to help disadvantaged women access financial services.

Leveraging digital solutions, we made further progress toward our Skills to Succeed goal of equipping 3 million people by 2020 with the skills to get a job or build a business. We are supporting both Skills to Succeed and Tech4Good through our new commitment to invest more than $200 million over three years in education, training and skills initiatives.

We are minimizing our environmental footprint and fostering sustainable growth for Accenture and our clients, and reached our goal of a 50 percent reduction in per-employee carbon emissions three years ahead of schedule. We remain committed to helping to accelerate the global shift to a low-carbon economy and reducing the impact of climate change.

In closing, I want to thank all Accenture people around the world for their unique passion and dedication to our clients and our business, which truly enabled us to deliver such strong financial results in fiscal 2018. As we move into the new year, we have excellent momentum in our business and are very well-positioned in the marketplace. With our highly differentiated capabilities, the significant investments we are making, and our disciplined management of the business, I am very confident in our ability to continue gaining market share and delivering value for all our stakeholders.

Pierre Nanterme
Chairman & CEO
October 24, 2018

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