June 23, 2016 / 11:20 AM / 3 years ago

Accenture revenue beats on strong demand for digital services

(Reuters) - Accenture Plc posted better-than-expected quarterly net revenue, driven by demand for its digital services like cloud and security, particularly in its consulting unit.

Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013. REUTERS/Albert Gea/File Photo

However, shares of the company fell 1.26 percent to $117.49 in early trading after it forecast mid-range for its fourth-quarter revenue slightly below analysts’ average estimate.

Accenture, incorporated in Ireland, said it expects fourth-quarter revenue of between $8.25 billion and $8.50 billion. Analysts were expecting revenue of $8.39 billion, according to Thomson Reuters I/B/E/S.

To cope with competition, the company has been investing heavily in its digital business, as more enterprise clients shift to technologies like analytics, cloud and security services.

“We are even now considering the next play...I’m thinking about artificial intelligence,” Chief Executive Pierre Nanterme said on a conference call.

The company, whose competitors include, IBM Corp, India’s Infosys Ltd, acquired analytics consulting company OPS Rules and Israel’s Maglan to boost its cyber security portfolio in the third quarter.

“They are using higher revenue growth to invest in different parts of the business to sustain their model going forward...so the lower margin profile this year seems more discretionary than a sign of fundamental weakness,” Stifel Nicolaus analyst David Grossman said.

The company, which offers consulting and outsourcing services, said it expects full year net revenue growth to be in the range of 9.5 percent to 10.5 percent in local currency, up from previous estimate of 8-10 percent.

Net revenue from Accenture’s consulting business, which accounts for a little more than half of total revenue, rose 12.4 percent in the third quarter and outsourcing business revenue rose 4.2 percent.

The net income attributable to Accenture rose to $897.2 million, or $1.41 per share, in the third quarter ended May 31, from $793.7 million, or $1.24 per share, a year earlier.

Analysts on average had expected a profit of $1.41 per share and revenue of $8.34 billion.

Net revenue, or revenue before reimbursements, rose to $8.43 billion from $7.77 billion.

Reporting by Rishika Sadam in Bengaluru; Editing by Martina D'Couto and Shounak Dasgupta

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