We are now entering the quarterly results season in earnest for the main IT Services companies. With TCS announcing at the end of last week and Accenture last month. Closely followed by, Wipro and Infosys planning to stage their results call this Wednesday, and HCL Technologies on Friday.
In preparation Market Prescience has prepared this chart comparing the results so far – which will get updated as new results are published. Exhibit 1 just shows has a chart showing revenue growth and a chart with operating margin – at the moment for Accenture and TCS. It’s worth noting that although these words won’t change the charts will update. So if you are reading this in March and there are 20 companies here and not 2 it will still make sense!
Exhibit 1 – IT Services quarterly results 2018 to 2020 for players with published Q4 2020 results
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Source: Market Prescience Analysis of Company Financials. (See note below for details)
Although it’s probably too soon to draw conclusions about the market in general, partly because there are just two companies results and because these two providers are TCS and Accenture. Given that they have been consistently strong financial performers for the last 5 years – this does show the bounce back seen on average in Q3 2020 has continued thus far in Q4 2020 with these firms. Again, not wanted to generalize based on two data points it looks like margins are continuing to improve, although Accenture’s operating margin tends to “saw-tooth” from quarter to quarter, fluctuating up down up from quarter to quarter. As Q4 2020 is an even calendar quarter Accenture’s margin is uplifted, but the trend over the past 4 quarters is on the rise, as it is for TCS. This is something I will be looking at in more detail as the results start to come in – given the travel restrictions and lower rates on on-premises work it’ll will be interesting to see if this persists.
Additionally, the Market Prescience web site has an Industry Analysis page it will be keeping up-to-date with the top line results as they come in. This will look to provide aggregated quarterly and annual analysis based on the financial results. We are also expanding the underlying data which will feed into our forth coming quarterly and annual analysis. BTW if there is a view of the data which you think would be useful – by all means contact me jamie_snowdon@marketprescience.com and I will look to include it.
Happy New Year!
Note regarding financial performance data. All quarters are as close to the calendar quarter as possible. Some margin data has been estimated – either by splitting annual or half-year totals or from the management commentary for example, Atos & Capgemini Q3 was estimated from full-year guidance. Q3 2020 data will be appended as it is announced. It is also worth noting that Capgemini’s revenue growth for Q2 & Q3 2020 has been boosted by the acquisition of Altran. Comparing Capgemini Q3 2020 revenue with the combined Q3 2019 revenue of both companies would have shown a decline of -5.6%. Fujitsu has changed the way it reports its revenue for the current financial year, as we go forward we will use the whole Technology Solutions revenue figures and replace the previous revenue data as it becomes available – so the growth rates may not be accurate until further analysis is done when we get a complete fiscal year with the new reporting structure. We have used historical growth rates to avoid mismatched peaks caused by restating the data for some quarters.
