Key Takeaways:
- Accenture reported Q3 revenue of $18.7B, missing consensus of $18.8B.
- New bookings fell 2% to $19.3B, while EPS of $3.80 beat estimates.
- The company cut its full-year revenue growth forecast to 3%-4% from 3%-5%.
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Accenture tumbles 11% on sales miss, cuts full-year revenue outlook
Accenture reported fiscal Q3 revenue of $18.7 billion, missing estimates, and cut its full-year growth outlook, sending shares down 11 percent.
"The investors, I think, are missing the AI tailwind and how we're positioning ourselves for the long-term," Julie Sweet, chief executive officer of Accenture, said on CNBC. "AI scaling will take some time."
Adjusted earnings per share rose 9 percent to $3.80, topping the $3.71 consensus. New bookings totaled $19.3 billion, down from $19.7 billion a year earlier and missing expectations for 7 percent growth. Operating margin expanded 20 basis points to 17 percent. The company generated $3.6 billion in free cash flow and returned $2.2 billion to shareholders through buybacks and dividends.
Accenture now expects full-year revenue growth of 3 percent to 4 percent in local currency, down from its prior forecast of 3 percent to 5 percent. Excluding an estimated 1 percent impact from its US federal business, growth would be 4 percent to 5 percent. The consulting business showed particular weakness, with enterprise IT spending slowing as companies evaluate AI projects.
The results also weighed on other IT services stocks. Shares of Cognizant Technology Solutions fell 3.2 percent, while Infosys declined 2.1 percent in sympathy, as investors reassessed growth prospects for the sector. Rival consulting firms including McKinsey and Boston Consulting Group have also accelerated their own AI investments, intensifying competition for Accenture's traditional labor-based model.
The guidance cut and bookings miss triggered analyst downgrades on the 2027 outlook. The stock holds an IBD Composite Rating of 25 out of 99, with its Accumulation/Distribution Rating of E indicating more institutional selling than buying over the past 13 weeks.
The decline suggests the market is pricing in a structural shift in Accenture's business model as AI automates tasks traditionally handled by consultants. Investors will watch the fiscal Q4 report in September for signs that the Dragos acquisition and AI reinvention services can reverse the bookings trend.
This article is for informational purposes only and does not constitute investment advice.
[1] Accenture Just Had Its Worst Day in Years. Is AI Coming for the Consulting Business?[2] Accenture Tumbles On Fiscal Q3 Sales Miss, Weak Guidance - Investor's Business Daily[3] Accenture CEO Julie Sweet says AI transformation will 'take some time' as stock price takes another hit - Business Insider[4] Accenture shares tumble on slashed revenue growth outlook - Yahoo Finance[5] Accenture tumbles on fiscal Q3 sales miss, weak guidance
