Accenture lowers, an IT services company, reduced its revenue projection for the fiscal year 2024 on Thursday after clients reduced their spending on the company’s consulting services due to a volatile economy. This caused its shares to fall by approximately 5.6% in premarket trade.
Accenture revised its previous prediction of 2% to 5% for full-year sales growth to 1% to 3%.
Accenture Lowers Revenue Forecast in the Face of Economic Uncertainties
Accenture is an IT services firm. Its shares fell by 5.6% in premarket trade on Thursday after it lowered its revenue prediction for the fiscal year 2024 due to clients cutting back on spending on its consulting services due to an unstable economy.
From its previous estimate of 2% to 5%, Accenture now projects full-year revenue growth in the range of 1% to 3%.
The industry that profited from rapid expansion during the epidemic has been severely impacted by high interest rates, and the company has been struggling with weak demand for its IT and consulting services.
The effects of Accenture’s workforce transformation on the business and rivals
Due to this, the corporation has started to fire workers. Accenture is expected to record $450 million in severance-related costs for this fiscal year, up from $1.1 billion for the prior year when it announced plans to eliminate 19,000 jobs, or 2.5% of its staff.
As spending slows down, rivals Tata Consultancy Services and Infosys, two of the leading consulting firms in India, also released dismal quarterly results late this year.
Baird Equity’s analysis of Accenture’s growth trends and revenue forecast
The business services sector has not grown as much over the last six quarters, according to Baird Equity analysts, and it “may take a couple of years for Accenture to return” to mid- to high-single-digit organic growth.
Additionally, based on LSEG data, the company predicted third-quarter sales in the range of $16.25 billion to $16.85 billion, which is less than the estimated amount of $17.01 billion.
Accenture’s Second Quarter Performance: Strong Adjusted Earnings Offset by Declining New Bookings and Segment Revenue and a Slight Revenue Miss
In the second quarter, new bookings—a crucial predictor of future sales—dropped 2% to $21.58 billion, while the company’s Communications, Media & Technology business saw an 8% decline in turnover year over year.
Accenture’s $15.80 billion in sales was announced, which was just less than the $15.84 billion analysts had predicted.
In comparison to an estimate of $2.66 per share, the company earned $2.77 per share on an updated basis.
Our Previous blog
Mustafa Suleyman, a pioneer of British AI, joins Microsoft.