Accenture, a prominent IT services provider, revised its fiscal-year 2024 revenue forecast downwards due to economic uncertainties, resulting in a 5.6% decline in premarket trading shares. The company now anticipates a modest revenue growth of 1% to 3%, compared to the earlier projection of 2% to 5%. This adjustment comes amidst a challenging landscape where clients are trimming expenditures on consulting services amidst an uncertain economy.
The firm has been struggling with subdued demand for its IT and consulting offerings, exacerbated by high interest rates that have slowed down an industry previously buoyed by rapid expansion during the pandemic. As a consequence, Accenture has initiated employee layoffs, with severance-related costs expected to reach $450 million this fiscal year, following a $1.1 billion expenditure in the previous year, during which approximately 19,000 jobs were cut, representing 2.5% of its workforce.
Tata Consultancy Services and Infosys, both leading consulting firms in India, also reported disappointing quarterly results earlier in the year, reflecting a downturn in spending. Analysts from Baird Equity note that industry growth has been decelerating for the past six quarters, with Accenture potentially requiring a couple of years to return to mid- to high-single-digit organic growth.
Additionally, the company predicts third-quarter revenue to fall within the range of $16.25 billion to $16.85 billion, below the estimated $17.01 billion according to LSEG data. New bookings, a crucial indicator of future revenue, declined by 2% to $21.58 billion for the second quarter, while revenue from its Communications, Media & Technology segment dropped by 8% year-over-year. Accenture’s reported revenue of $15.80 billion was slightly lower than analysts’ expectations of $15.84 billion. On an adjusted basis, the company earned $2.77 per share, surpassing the estimated $2.66 per share.
