December 2019

IT & Business Services Quarterly Earnings Synopsis – Q3 2019

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We are pleased to present our review and synopsis of results and earnings call commentary for Q3 2019. This summary includes the most recent financial results for key publicly traded companies in the IT Services sector (mix of buyers in Managed Services, Cloud Services, IT Services, and IT Consulting, among other service offerings in the technology market) for the period June–September 2019.

M&A Indicators:

+M&A activity is essential for revenue growth. Many IT Services firms are growing mid-single digits and are being very selective in their target acquisition profiles, selecting for next-generation capabilities growing at a 20%+ YoY rate. As such, most of the companies we outline continue to stress the importance of select M&A activity with careful considerations around fit: technology, geographic, cultural, etc.

+Technology focus drives M&A buying considerations. Most have realized that it is essential for them to bring on new talent and capabilities through acquisitions. Ideal candidates for acquisitions are companies that have experience and offer services in next-generation segments like cloud, data, IoT, and cyber security services. We continue to observe that the technology leaders are cloud-focused, both infrastructure (AWS, Azure, GCP, etc.) and applications (Google, Microsoft, ServiceNow, Adobe), creating a large ecosystem for consulting services and implementations.

+Our view is that the IT Services M&A market remains strong. Q3 M&A activity remained significant with all the firms contained in this report either having done a transaction in the last quarter or planning on completing further acquisitions within the next quarter or upcoming year. See the Key Transactions Section in this report for further details.