Accenture’s (NYSE: ACN) financial performance has not been very impressive this year, mainly due to a slowdown in the consulting market amid macro uncertainties and a reduction in tech spending. Meanwhile, the fast-paced digital transformation has provided a much-needed boost to the company, making it a preferred consultant for customers migrating their IT workloads to the cloud. Accenture also sees significant consulting and outsourcing opportunities in AI deployment and enterprise automation.
Shares of the professional services company currently trade at the levels seen six months ago. The value has increased at a steady pace after dipping to a 12-month low in May. Last week, the stock stayed almost flat, as investors remained cautious ahead of the upcoming earnings.
Estimates
In the most recent quarter, Accenture’s earnings fell short of expectations, marking the first miss in more than three years. Revenue remained broadly in line with estimates, as it did in the trailing quarters. As the company prepares to report results for the final three months of fiscal 2024, market watchers predict a year-over increase in key metrics – adjusted net income is seen increasing to $2.78 per share from $2.71 per share last year on revenues of $16.38 billion, which represents a 2.5% growth. The company will be publishing the Q4 report on Thursday, September 26, at 6:40 am ET.
The Accenture leadership forecasts Q4 revenue in the range of $16.05 billion to $16.65 billion. In the third quarter, the top-line performance was negatively impacted by weakness across all operating segments. Total revenue decreased 1% year-over-year to $16.5 billion. As a result, earnings per share, excluding special items, dropped 2% annually to $3.13. Reported profit declined 3% to $1.93 billion or $3.04 per share.
From Accenture’s Q3 2024 earnings call:
“We are able to help our clients with this AI rotation because of our broad services across strategy and consulting, technology and operations, as well as everything customer, through Song and digital manufacturing and engineering through Industry X, and our relevance across the functions of the enterprises in 13 industries. Our privileged position in the technology ecosystem has never been more important. We are working closely with our ecosystem partners to help our clients understand the right data and AI backbone that is needed and how to achieve tangible business value.”
Road Ahead
Accenture made a series of acquisitions this year, including SOKO and Logic which joined its fold in the third quarter, as part of its efforts to build expertise and expand into new growth areas. The strong balance sheet and healthy cash flow enable the company to deploy capital across its geographic markets effectively. Meanwhile, tightening corporate spending and economic uncertainties remain a concern for the business, as far as returning to the high growth path is concerned.
Anticipating to benefit from the upswing in bookings and favorable shift in client spending in the final months of the year, the management projects a 1.5-2.5% increase in full-year revenue. It is looking for adjusted earnings in the range of $11.85 per share to $12.00 per share for fiscal 2024.
ACN made modest gains on Monday morning, after staying almost flat in recent sessions. It is down about 4% since the beginning of the year.