Tough times: IT consulting major Accenture may log subpar revenue in Q4

Information technology (IT) consulting major Accenture expects revenues for the fourth quarter of FY23 (June-August 2023) to be in the range $15.75-16.35 billion, an increase of 2-6 per cent in the local currency but below Street estimates, indicating a slowdown in its technology budget as clients turn cautious.

Accenture said the forecast “reflects the company’s assumption of a flat foreign-exchange impact compared with the fourth quarter of fiscal 2022”. Accenture’s financial year ends on August 31. For FY23, the company lowered its revenue growth guidance to 8-9 per cent in the local currency, as against 8-10 per cent previously.

Revenues for the third quarter stood at $16.6 billion, an increase of 3 per cent in dollars and 5 per cent in the local currency, in line with estimates. New bookings for the quarter were $17.2 billion, with consulting bookings of $8.9 billion and managed services bookings of $8.3 billion.

“Our third-quarter results reflect solid bookings and revenue and very strong adjusted operating margin, earnings per share and free cash flow, which demonstrates the rigour and discipline with which we run our business,” said Julie Sweet, chair and chief executive officer, Accenture.

IT services companies across the globe are seeing a slowdown as some discretionary work is being cancelled or delayed. However, analysts say the demand for cost-optimisation deals remains healthy.

“(The) IT services industry is facing a slowdown in demand due to cancellations or delay in ramp-up of discretionary projects. These projects are short-term and largely relate to non-revenue generating middle office work (such as implementing new CRM cloud), whereas projects related to revenue generation and cost optimisation are moving forward. Almost every deal now has a cost-saving component,” according to research firm ISG.

Revenues from North America stood at $7.72 billion, an increase of 1 per cent in dollars and 2 per cent in the local currency compared to the same period last year.

Revenues from Europe stood at $5.62 billion, an increase of 5 per cent in dollars and 7 per cent in the local currency compared with the third quarter of fiscal 2022. As for growth markets, it was $3.23 billion, an increase of 1 per cent in dollars and 9 per cent in the local currency compared with the third quarter of fiscal 2022.