KPMG Revenue Up- But Growth Slowing

KPMG’s revenue reached $29.75 billion for the Fiscal Year ending on September 30, 2019. This figure represents an increase of 6.2% from FY18, when the Big Four accounting firm accrued aggregated revenues of $28.96 billion. The FY19 figure represents a record for KPMG revenue in absolute terms. However, the rate of growth was slower than FY18, which topped FY17’s revenues by over 7%. In recent years, KPMG’s leadership has announced several strategic growth initiatives to preserve their pace of growth in an uncertain and competitive global marketplace. Nevertheless, the firm has been unable to accelerate its growth in revenue. This may be partly attributed to economic conditions and partly to inflated costs and leadership uncertainty within the firm.

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KPMG Revenue vs. Growth

Interestingly, however you break it down, KPMG’s various segments are all growing. If you drill down by region, you see that for the 2019 Fiscal Year KPMG reported growth across every region. Asia Pacific grew fastest at 9.3%, but this is also KPMG’s smallest region. In its larger regions, growth was more modest – 6.6% for the Americas and 4.7% for the EMEA region (Europe, the Middle East, Africa, and India).

Each of KPMG’s primary services also posted growth, with its Advisory services growing fastest at 7.9% and Tax & Legal Services growing at 7.8%. However, KPMG’s most well-known service—Auditing—only grew 3.7%.

Global Chairman and CEO Bill Thomas suggested the revenue was still cause for optimism. He highlighted the transitions in KPMG’s operations, saying,

“In addition to our enduring focus on quality and trust we’re also enhancing our leadership position in the digital transformation of professional services through an expected investment of $5 billion in innovation, people and technology over the coming five years. This will accelerate the digital transformation of KPMG and enable us to better serve clients as they continue to address their own transformations.”

It remains yet to be seen if this strategic growth initiative from KPMG will pay off.

KPMG Clara

One of the most notable services that makes up the KPMG growth strategy is KPMG Clara, an electronic auditing platform that consolidates the company’s data and analytics tools in a single interface. Other KPMG strategic growth initiatives have in recent years involved cutting excess costs (for example, shedding 1/3 of the company’s secretarial labor) and hiring more new accounting talent, bringing the workforce to a record 220,000 employees in FY19.

Global Economic Factors

Much of the slowdown in the growth of KPMG revenue can be attributed to global economic factors. For example, the United States added fewer jobs in FY18 than had been anticipated, and the growth of business in mainland China continued to slow. The damaging effects of this were magnified by tensions in the trade relationship between the United States and China. Growth in the tech sector—where much of the KPMG growth strategy has been concentrated—also slowed down in Q2 last year. Perhaps most significantly, the UK economy grew substantially weaker over the course of 2019. Rising domestic and international political tensions over the fallout of the UK’s Brexit negotiations and broader concern over a global economic slowdown contributed to this weakness. This resulted in KPMG profits falling by 14% in the United Kingdom over the course of the fiscal year. However, KPMG’s main competitors all faced these issues too.

KPMG vs. The Other Big 4

The fact remains that KPMG’s revenues reached record levels – we are not advocating for a doom and gloom outlook on the firm’s future. However, as the other Big Four firms show more substantial growth, a slowing growth rate is something to pay attention to because it can portend declining market share.

In terms of both revenue and growth, KPMG continued to lag behind each of the other Big 4 accounting firms—PricewaterhouseCoopers, Deloitte Touche Tohmatsu, and Ernst & Young. For the 2019 Fiscal Year, in local currency terms, PricewaterhouseCoopers earned revenue of $42.4 billion for an increase of 7% from FY18, Deloitte’s revenue was $46.2 billion for a 9.4% growth rate, and Ernst & Young earned $36.4 billion for a growth rate of 8%.

Possible Reasons For Slowing Growth

KPMG has perennially been the smallest of the Big 4 accounting firms, and clearly KPMG is losing share in a minor but notable way. Why? One reason may be its relative weakness in Asia and Technology (fast growing markets) and strength / reliance on Audit (a lower growth area).

In recent years, the firm has battled other significant barriers to its attempts to accelerate revenue growth. Some of these obstacles have involved a rapid turnover in leadership, with several high-profile and controversial departures of partners, some of which have invited increasing scrutiny from regulating authorities. This has also harmed the firm’s reputation, which may to some extent explain the slowdown in KPMG’s growth. Increased regulatory scrutiny has also changed KPMG’s operations, forcing KPMG to alter or even forego some of the services for which it was previously able to earn revenue. For example, KPMG has decided to no longer offer consultation and tax advice to the large companies that also pay for KPMG’s auditing services, amid accusations that these overlapping practices caused a conflict of interest.


In 2018, CEO Bill Thomas laid out a long-term strategy for ensuring KPMG’s revenue growth and continued competitiveness with its Big 4 rivals, saying “KPMG is continuing with a multi-year global investment program, investing more than US$4 billion in innovative new services, technology, and acquisitions over the next four years. This investment program is focused on transformative technologies, such as artificial intelligence and intelligent automation, cyber security, and our intelligent audit and tax platforms.” In addition to KPMG Clara, an example of the new services KPMG is offering to clients includes Revenue from Contracts with Customers, an educational course designed to help clients “gain a fundamental understanding of how and when revenue is to be recognized.”

Whether these new investments and initiatives will help KPMG increase its rate of growth and catch up to the revenue figures posted by its Big 4 rivals remains to be seen.

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Filed Under: Consulting Firms, KPMG