Accenture, Infosys and Online Blockchain are expanding their blockchain operations as the technology matures and new opportunities within the space emerge. However, a global shift away from high-growth tech stocks has harmed the share performance of all three companies this year.
Accenture [ACN], Infosys [INFY] and Online Blockchain [OBC.L] are three firms with considerable blockchain ambitions — but which have each seen their share prices struggle this year. As of 28 September’s market close, services giant Accenture had fallen 36% so far this year, while Infosys and Online Blockchain have seen respective 32.3% and 72.6% declines.
These losses are in line with a broader decline in blockchain technology-related stocks. The Amplify Transformational Data Sharing ETF [BLOK], which invests 80% of net assets into companies directly involved in the development and utilisation of blockchain technologies, has seen a decline of 52.4% so far this year. Accenture, is the fund’s third-top holding, with a 4.78% weighting. BLOK’s decline far outpaces the 22% decline year-to-date for the S&P 500 and the 23.4% decline seen in the tech-heavy NASDAQ Composite.
Possible headwinds specific to blockchain include the cryptocurrency market crash, compounding the impact of investors turning away from high-growth tech stocks.
Accenture financials perform well amid tech initiatives
Accenture’s core operations focus on IT and consulting services with the company valued at almost $165bn. The Dublin-headquartered company has been investing significantly in its business, with $1.1bn going to extending its research and development capabilities as well as $3.4bn across 38 acquisitions.
Last week, it announced a positive set of fourth-quarter and full-year FY 2022 results, for the period ending in August. Revenues of $15.4bn for Q4 marked a 15% increase year-over-year. The quarterly dividend also rose by 15%.
For the full year, $61.6bn revenues marked a record uptick of 22% over the previous year. Annual earnings per share also rose by 22%. Accenture returned $2.5bn to investors in cash dividends and repurchased 2.1 million shares.
Looking ahead, there are concerns that consulting and IT services spending may decline as economic conditions worsen. Nonetheless, after no increase in the share price after the earnings release, 17 MarketBeat analysts offer a consensus ‘hold’ recommendation, with nine such recommendations compared to eight ‘buy’ votes, on the stock as of 28 September. Their median price target is a 29.5% upside on the latest close of $261.93.
Digital revenues increasingly important for Infosys
Indian consulting and IT services company Infosys is working to drive the adoption of cross-industry blockchain solutions. The $72bn-cap company was rated as a leader in blockchain services in reports carried out by both RadarView and Everest Group this year.
In its annual results released in April, for the year ending March, Infosys noted it was able to grow its number of clients slightly, to 1,741 up from 1,626 a year before. However, the number of fortune 500 clients fell by five to 184 and the rate is has been acquiring new clients has slowed. Revenues and net profits each rose year-over-year, with revenues increasing one-fifth to over $16bn and net profits rising 13% to just under $3bn. Digital sales accounted for 57% of revenues, a nod towards the pivotal role that the digital segment, including blockchain, could play in Infosys’ growth going forwards.
While the release did not change the path of the stock, the consensus of analysts at the Financial Times and MarketBeat rate the stock a ‘hold’, with median price target upsides of 22.7% and 34% respectively at the time of writing.
Online Blockchain hopes for tech-enabled recovery
With a market valuation of £1.7m, Online Blockchain is considerably smaller than Infosys and Accenture. With no profit and relatively light assets, the stock has proven vulnerable as investors search for stability during the tech-stock sell-off.
The company saw revenues of £65,000 for 2021, while administrative expenses totalled £425,000 as the company invests in the development of new technology. In its full-year report, CEO Clement Chambers described 2021 as “a breakthrough year” after the launch of the Umbria Narni Bridge, enabling the transfer of tokens between the Ethereum and Polygon networks. The cross-chain bridge has since broadened to facilitate the movement of tokens between Ethereum and Binance Smart Chain, and Ethereum and Fantom, among others.
The UK-headquartered company has a considerable 17.5% holding in ADVFN [AFN.L] which provides global stock, cryptocurrency, forex and commodities market information. As a result, the financial performance of Online Blockchain is strongly linked with ADVFN’s. In Online Blockchain’s 2021 results, Chambers stated the company was pleased with a “very positive” pre-tax profit of £1.6m, alongside the announcement of the company’s inaugural dividend, in ADVFN’s full-year results.