Accenture Adjusts Revenue Forecast Amid Economic Uncertainty
In a recent announcement, IT services provider Accenture has revised its fiscal-year 2024 revenue projections downward, signaling a cautious stance in the face of an uncertain economic landscape. The forecast adjustment has led to a 5.6 per cent dip in the company’s shares during premarket trading.
The revised revenue growth is now anticipated to be between 1 per cent and 3 per cent, a notable decrease from the previously projected 2 per cent to 5 per cent. This change comes as clients are tightening their belts, particularly in consulting services expenditures, which has been a core area for Accenture.
Accenture’s challenges mirror a broader trend within the IT and consulting sectors, where demand has softened considerably. The industry, which saw accelerated growth during the pandemic, is now facing headwinds due to rising interest rates. In response to these market conditions, Accenture has initiated workforce reductions, with severance-related costs expected to reach $450 million this fiscal year. This follows a substantial $1.1 billion in severance costs from the previous year, which corresponded with the company’s decision to eliminate approximately 19,000 jobs, equating to 2.5 per cent of its workforce.
Accenture’s competitors, including Tata Consultancy Services (TCS.NS) and Infosys (INFY.NS), have also felt the impact of reduced spending, as evidenced by their lackluster quarterly results. Analysts from Baird Equity have observed a deceleration in industry growth over six consecutive quarters and suggest that it may take several years for Accenture to regain its stride towards mid- to high-single-digit organic growth.
For the third quarter, Accenture projects revenue to be in the range of $16.25 billion to $16.85 billion, which falls short of the $17.01 billion estimate based on LSEG data. Additionally, new bookings—a critical measure of potential future revenue—declined by 2 per cent to $21.58 billion for the second quarter. The Communications, Media & Technology segment of the business reported an 8 per cent decrease in revenue year-over-year.
Despite these challenges, Accenture’s reported revenue stands at $15.80 billion, only marginally below the anticipated $15.84 billion by analysts. On an adjusted basis, earnings per share reached $2.77, surpassing the predicted $2.66 per share.
