PwC’s global revenue growth lags big four rivals

The firm’s Australian operation has also been rocked by a tax leaks scandal which led to the forced sale of its public sector consulting arm for $1. Australian revenue still grew by 12 per cent, to $3.2 billion, in the year to June with the scandal hitting only the final months of its FY23 results.

Business is slowing

Like other big four firms, PwC’s business slowed in the most recent financial year, from revenue growth of 13.4 per cent in the previous 12 months. Clients have pulled back on consulting work amid economic uncertainty, and a drought of merger and acquisition activity has hit deal advisory work.

Revenues in the advisory business were $US22.6 billion, up 13 per cent but a sharp deceleration from a 23.5 per cent rise the previous year. Audit revenues increased by 8.9 per cent to $US18.7 billion, while the tax and legal services practice was up 12.5 per cent to $US11.8 billion.

PwC has been working to sell more through partnerships with technology companies such as Google and Microsoft – a critical growth driver at Deloitte – and the firm reported 40 per cent growth in revenue from such alliances, though it was from a low base.

“It’s not about top-line growth, it’s about sustainable growth, and it is going to be important to get the pay-off from that investment,” Mr Moritz said.

Mr Moritz is set to retire as global chairman at the end of his second term next June. The race to succeed him was thrown open earlier this month when Tim Ryan, his successor as head of PwC’s US business, decided to pull out of the running. A decision is expected around the end of the year.

Margins squeezed

PwC does not report global profit figures, but Mr Moritz said that margins had been squeezed by inflation, including increases in staff pay, and by investment in new areas such as artificial intelligence and the completion of 17 acquisitions. Capital for such investments has come from the sale of the mobility business last year and, before that, the disposal of its US government consulting business.

The pressure on profits is set to continue in the current financial year, he said, because of a tougher economic environment. Clients are taking longer to sign deals, and opting for piecemeal contracts rather than committing to long-term projects. “Everybody’s expecting more for less and people want more optionality,” he said.

PwC is nonetheless continuing to expand its staff, which numbered 364,000 at the end of June. It said it would take the total to 400,000 by the end of this financial year, hitting a target of 100,000 net new jobs globally two years early.

Mr Moritz said the pace of hiring had been fastest in the Americas and Asia in the past year, but would shift to Europe as new climate regulations go into force, driving demand for audits of environmental data and consulting work for the companies affected.

Financial Times