- Accenture shares slumped to their lowest level since 2017 on Thursday after the consulting group cut its revenue forecasts, stoking investor fears that the rapid advance of AI is undermining traditional IT and outsourcing businesses.
- The company's stock suffered its largest single-day percentage decrease on record after posting mixed results for the fiscal third quarter and tempering its growth expectations for the fiscal year.
- Accenture's outlook disappointed as it forecast revenue of between $17.75 billion and $18.4 billion in the three months through August, falling short of the $18.47 billion analysts had anticipated.
- The company reported a 2% drop in new bookings for the quarter ended May 31, indicating a decline of 3% in local currency terms compared with the same period last year.
- Shares closed 18% lower, sharply extending a decline that accelerated over the past year as concern mounted about the impact of AI.
- CEO Julie Sweet stated that the disappointing figures were partly due to the war in the Middle East, which hit revenue by $100 million more than expected in the most recent quarter.
- Accenture's market capitalisation has fallen from more than $200 billion after a post-Covid consulting boom to less than $80 billion.
- Accenture's AI investments are draining resources away from IT services, according to Morgan Stanley.
- The company has been plagued by several years of weak spending by companies on discretionary consulting projects, which some investors see as an indicator of the disruption being wrought by AI.
- Accenture is searching for growth in new areas and has dramatically increased its budget for acquisitions, which will hit $9 billion this fiscal year, more than double its original plan.
- On Thursday, Accenture unveiled three acquisitions aimed at expanding its offerings to companies that are racing to shore up their cyber defences against new AI models that can find and exploit security vulnerabilities.
- The deals have a combined enterprise value of $4.2 billion, including the acquisition of runZero, a vulnerability assessment firm, and NetRise, a device security specialist.
Accenture's stock suffered its largest single-day percentage decrease on record after the consulting giant posted mixed results for the fiscal third quarter and tempered its growth expectations for the fiscal year. The company expects to reel in less revenue as artificial intelligence upends the consulting services industry and clients pause business due to the conflict in the Middle East.2
Accenture reported a 2% drop in new bookings for the quarter ended May 31, with forecasts predicting revenue between $17.75 billion and $18.4 billion for the upcoming quarter, below analyst expectations of $18.47 billion. Shares closed 18% lower, extending a decline that has seen its market capitalization fall from over $200 billion to less than $80 billion.4568
CEO Julie Sweet attributed the disappointing figures partly to the Middle East conflict, which she said impacted revenue by $100 million more than expected. She noted that corporate IT budgets have not risen overall, leading Accenture to seek growth in new areas and increase its acquisition budget to $9 billion this fiscal year, more than double its original plan.7
The company announced three acquisitions aimed at enhancing its cybersecurity offerings, including runZero, NetRise, and a majority stake in Dragos, with a combined enterprise value of $4.2 billion. As AI continues to disrupt the consultancy market, investors are questioning how Accenture will maintain its service value.111314
“Accenture's shares plummeted to their lowest level since 2017 following a disappointing earnings report and a gloomy outlook. The company is grappling with the impact of AI on its traditional consulting business and has announced significant acquisitions to adapt.”
Financial Times
WSJ