Earnings Preview: Accenture (ACN) likely had a strong start to fiscal 2025

For Accenture plc. (NYSE: ACN), 2024 was a fruitful year marked by positive financial performance. The professional service firm effectively navigated a challenging market environment leveraging its agile business model and continuous innovation. As the company prepares to report Q1 earnings, it is estimated that the uptrend continued in the early months of the new fiscal year.

On Tuesday, Accenture’s stock opened at $357.06, above its 52-week average price. After recovering from a one-year low in June, the stock has delivered returns of around 24%. The favorable demand scenario and the company’s resilience to macro headwinds signal an uptick in overall performance when market conditions improve.

What to Expect

Typically, Accenture’s stock makes strong moves after earnings. For the first quarter, market watchers forecast adjusted earnings of $3.42 per share, which represents a 4.6% year-over-year increase. The positive earnings outlook reflects an estimated 5.6% increase in Q1 revenues to $17.13 billion. That is broadly in line with the management’s top-line guidance. The report is scheduled for release on Thursday, December 19, at 6:40 am ET. In the prior quarter, both earnings and revenue topped Wall Street’s expectations.

From Accenture’s Q4 earnings call:

“Our clients turn to us for our unique combination of services across Strategy, Consulting, Song, Industry X, Technology, and Operations. Our strategists and deep industry, functional, customer, and technology consultants work hand in hand with our clients and across services to shape and deliver these reinventions. Our investments in our advanced platforms, our assets and solutions, our process expertise, the insights from our scale and diversification, and our ability to both design and build the solutions combined with our Managed Services are key differentiators for us.”

By making significant investments in generative AI, Accenture has once again put reinvention into action. The AI-focused investments and the company’s early leadership in that area have positioned it for strong growth in fiscal 2025. Those initiatives are significant considering the cautious enterprise spending on technology. The strong booking growth witnessed in FY24 is indicative of the success of the company’s strategy to be the reinventing partner for customers embarking on large-scale transformations.

Q4 Results

In the past four years, the company’s quarterly earnings have consistently beaten estimates, except for one instance. In the August quarter, earnings rose 3% from the prior year to $2.79 per share, on an adjusted basis. Including special items, net income attributable to the company increased in double-digits to $1.68 billion or $2.66 per share. The bottom line benefitted from a 3% increase in Q4 revenues to $16.4 billion.

Shares of Accenture traded lower on Tuesday afternoon, reversing the modest uptrend seen in the early hours of the session.