Ernst & Young reports global revenue grew 4.1% despite coronavirus
Ernst & Young reported Thursday that its global revenues grew 4.1 percent in local currency terms to a record level of $37.2 billion in the fiscal year ending June 30, 2020, despite the impact of the novel coronavirus pandemic.
All EY service lines saw growth in fiscal year 2020. The assurance practice grew 3.1 percent, the advisory side grew 4.9 percent; the tax practice by 5.1 percent, and transaction advisory services by 2.8 percent, all in local currency. Revenue increased across all three geographic areas for EY: the Americas at 3.4 percent; Europe, Middle East, India and Africa (EMEIA) by 3.4 percent; and Asia-Pacific by 8.2 percent.
Among the top five markets, Japan led with double-digit growth of 10.8 percent and Greater China saw another strong year. In other parts of the world, Australia, Brazil, Korea and Norway delivered strong growth. Emerging markets also continued with strong growth and are up 6 percent. EY also recorded strong growth across the technology, consumer, private equity and wealth and asset management sectors, mainly thanks to demand for digital and technology-enabled services.
Over the past seven years, the EY international network of firms has seen 7.7 percent compound annual growth, although the member firms no doubt took a hit on revenue this year after the outbreak of the pandemic.
“The COVID-19 pandemic has affected people, businesses and communities everywhere, creating new challenges for us all,” said EY global chairman and CEO Carmine Di Sibio in a statement. “During this difficult period, our number one priority has been the safety of EY people, clients and communities. It is the determination and focus of EY people that enabled us to support EY clients around the world during this unprecedented time.”
He noted that in a matter of weeks, nearly 300,000 EY people began working remotely to support EY clients. The staff also created a variety of pandemic-related solutions for clients and provided pro-bono support to communities and governments. Those include helping the Chilean government set up digital triage tools to screen patients prior to entry in emergency rooms, and helping Australian government agencies transition their employees to remote work during the pandemic while enabling the delivery of new services. EY also supported the Canadian government’s supply of personal protective equipment for frontline services at a time when more than 60 countries halted exports of PPE. It also developed a Paycheck Protection Program Loan Forgiveness Platform for banks to meet the requirements of the CARES Act, and helped many of its banking clients with loan origination and underwriting resources to meet the surge of unprecedented demand.
Despite the pandemic, EY has been focusing on a “NextWave” strategy that it began last October to build value for its stakeholders. It’s built around several elements: human/people value; consumer/client value; social value; and financial value. “Now more than ever, we need to be absolutely focused on investing in EY people and services to help EY clients transform, innovate and address their most pressing issues for the long-term,” Di Sibio stated.
EY plans to make investments of $1.5 billion in people, technology, alliances and audits in fiscal year 2021 and build two redefined service lines: EY Consulting and EY Strategy and Transactions. The Strategy and Transactions line was introduced in July and was formerly known as Transaction Advisory Services. It now has an expanded strategy consulting offering, integrating EY-Parthenon with the former Transaction Advisory Services business and strategy capabilities moved from elsewhere in the firm. EY acquired the Parthenon Group in 2014. Upon its relaunch, EY-Parthenon immediately became the world’s fifth largest strategy organization by revenue. The new service line will focus on helping EY clients transform and execute their strategy to optimize the value of their organization and realize their potential.
The EY Consulting line was formerly known as Advisory. EY plans to significantly accelerate the expansion of technology consulting services through hiring and acquisitions.
To accelerate the digital transformation across member firms around the globe, EY plans to invest $1.5 billion in fiscal year 2021 in audit quality, technology solutions, people and strategic alliances. EY is continuing to build on investments of $700 million in audit innovation and quality since 2015 through its global Sustainable Audit Quality (SAQ) program. Priorities include EY Canvas, a global cloud-based audit technology platform that supports 145,000 EY audit engagements in 134 countries. EY has also developed technology for auditing cryptocurrency transactions with the EY Blockchain Analyzer and using artificial intelligence and natural language processing to analyze business documents and contracts through EY Document Intelligence.
During the COVID-19 pandemic, EY saw high demand for managed services as EY clients sought different ways to manage new risks, reduce costs and maintain business continuity. EY plans to continue to focus on AI, machine learning, predictive analytics and other technologies in the future. Those technologies have been especially helpful during the pandemic. As COVID-19 took hold, demand for virtual learning at EY increased 40 percent. The firm now operates one of the largest globally integrated learning platforms on SAP’s SuccessFactors. In fiscal 2020, EY people invested 16 million hours in learning, of which more than half was virtual.
The firm also announced the EY Tech MBA by Hult International Business School, becoming the first organization to offer an entirely virtual MBA for free to all people irrespective of rank, location or prior qualifications. It builds on the success of a digital credentials program known as EY Badges, which has surpassed 70,000 since its launch in 2017.
EY introduced 38 COVID-19 related solutions with 11 partners to meet the needs brought on by the pandemic in areas like crisis management, telehealth, case reporting and more. In fiscal year 2020, EY continued to expand its alliances with IBM and Procter & Gamble. It also built seven new alliances in FY 2020, including new agreements with PROS, Splunk and LeaseAccelerator. The year also saw 18 acquisitions in areas like cyber security, strategy, change management, design and technology, including SAP digital transformation.