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Boosted by an ongoing cloud and digital transformation trend that has greatly accelerated since the onset of the pandemic, IT consulting and outsourcing company Accenture (ACN) issued an impressive beat-and-raise quarterly report that has shares rallying. In addition to comfortably exceeding analysts' 1Q22 EPS estimates, the company's revenue growth rate continued to increase, reaching its highest level in over five years at +27%. With ACN acquiring multiple smaller companies over the past several months, the company's aggressive M&A strategy is padding the top-line, while bolstering its capabilities in key technology areas. Most notably, acquisitions have enhanced ACN's positioning in cybersecurity, artificial intelligence (AI), blockchain, and digital.

Strength was broad-based across ACN's diverse set of offerings, resulting in record new bookings of $16.8 bln ($9.4 bln for consulting, $7.4 bln for outsourcing), up 30% from last year. During recent earnings conference calls, CEO Julie Sweet has explained that most companies are still in the early stages of their digital journeys. Furthermore, she believes that as new technologies launch and as companies look to gain competitive advantages, the cloud and digital transformation process will play out over many years. This bullish observation is evident in ACN's upside guidance for Q2 and its enhanced outlook for FY22, which now calls for revenue growth of 19-22% compared to its prior forecast of 12-15% growth.

A key factor that's enabling ACN to capitalize on the secular trends is the creation of Accenture Cloud First, a group of 70,000 cloud professionals using ACN's full capabilities to support cloud migrations and the roll out of new IT infrastructure. When the company launched this endeavor in September of 2020, it invested $3 bln in capital to get it off the ground and running. The investment has been paying off, as illustrated by Sweet's comment last quarter that Accenture Cloud First was the biggest driver behind a 44% increase in overall cloud business to $18 bln.

ACN's cloud-based services garner the most attention, but it's cybersecurity business is also experiencing healthy growth. Fueled by an ever-increasing number of cyber-attacks and a growing complexity of these attacks, robust demand for ACN's security consulting and managed services pushed the segment's revenue higher by 29% to $4.4 bln. Recent acquisitions, such as its April 29, 2021, purchase of Openminded and its June 29, 2021, buy out of Sentor, have also made the company more competitive in the cybersecurity space.

The main takeaway is that ACN's long-running strategy to strengthen its cloud and digital capabilities has positioned it perfectly to capitalize on a digital transformation trend that will continue to evolve in the coming years.