News

Published: June 23, 2023
Updated: June 23, 2023

Accenture Falls Short of Revenue Expectations, Full-Year Growth at 8-9%

Global IT giant Accenture has reported its third-quarter earnings, with revenue reaching $16.6 billion, representing a 3% increase in US dollars and 5% in local currency compared to the same period last year. However, the company's fourth-quarter revenue forecast of $15.75 billion to $16.35 billion falls below Wall Street's estimates. Additionally, Accenture expects full-year revenue growth of 8-9%, lower than the previously projected range of 8- 10%. This article provides an overview of the earnings report and its implications for Accenture.

Q3 Revenue Performance:

Accenture's Q3 revenue amounted to $16.6 billion, reflecting a 3% growth in US dollars and a 5% growth in local currency compared to the corresponding quarter in the previous year. The company's solid bookings and strong adjusted operating margin, earnings per share, and free cash flow demonstrate its disciplined business approach.

Fourth-Quarter Revenue Forecast:

For the fourth quarter of 2023, Accenture expects revenue in the range of $15.75 billion to $16.35 billion, indicating a 2-6% increase in local currency. This projection assumes a flat foreign-exchange impact compared to the same quarter in fiscal 2022. However, this forecast falls below the expectations of analysts, who anticipated revenue of $16.35 billion.

Full-Year Growth Outlook:

Accenture's full-year revenue growth for 2023 is now anticipated to be in the range of 8-9% in local currency, revised down from the previous projection of 8-10%. The company also adjusted its assumption of the foreign-exchange impact on results in US dollars, expecting it to be approximately negative 4% compared to fiscal 2022's negative 4.5% impact.

Operating Margin and Cash Flow Expectations:

Accenture projects a GAAP operating margin of 14.2% for fiscal 2023, slightly higher than the previously estimated range. The adjusted operating margin, including business optimization costs, is expected to reach 15.4%, expanding by 20 basis points from the previous year. The company maintains its operating cash flow outlook of $8.7 billion to $9.2 billion, with property and equipment additions now expected to be around $600 million.

CEO's Perspective:

Julie Sweet, Chair and CEO of Accenture, highlights the company's solid results in bookings, revenue, and operating margin, emphasising its position as a trusted transformation partner for clients. The diverse markets, industries, and services along with a talented workforce of over 730,000 people contribute to delivering value to clients and stakeholders.

While Accenture's Q3 earnings demonstrated growth in revenue and operating margin, the company's fourth-quarter revenue forecast fell short of expectations. Lower demand in the United States has impacted the IT sector. However, Accenture remains confident in its business model and strategic approach, positioning itself to provide comprehensive value to clients and stakeholders in the long run.