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Can Accenture’s Consulting Business Deliver in Fiscal Q3 2018?

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Consulting business trend

Accenture’s (ACN) consulting business, which makes up more than 50% of its total revenue, has maintained strong double-digit growth in the last two quarters driven by solid demand for its products and services across different organizations.

In the graph above, we can see the revenue growth of Accenture’s consulting business over the last five quarters. The business has maintained an increasing revenue trend. During the period, the consulting business has grown at a compound annual growth rate of 4%. In the chart above, we can see that Accenture has generally witnessed a higher revenue trend in the second half of its fiscal year than in the first half.

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In fiscal Q2 2018, the consulting business’s revenue improved 17.1% YoY (year-over-year) to nearly $5.2 billion. Likewise, the net bookings of the business came in at $5.7 billion in fiscal Q2 2018 compared to $4.6 billion in the previous year’s quarter. In the last two quarters, the company generated bookings of over $5.7 billion, which was quite high compared to the previous eight quarters.

Key drivers

Such strong growth in the company’s consulting business has been mainly attributable to higher demand for digital, cloud, and security-related services across different enterprises around the world. Moreover, the company’s aggressive acquisition strategy may not only gain market traction but also boost its consulting revenue growth.

A strong alliance with Microsoft (MSFT) and SAP (SAP) could further act as a strong catalyst for Accenture’s consulting revenue growth.

New contract wins coupled with the adoption of new technologies by customers may further drive the company’s consulting revenue.

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