Accenture stock dips on slashed full-year outlook
Shares of Accenture (ACN) are trading lower Thursday morning following the company's decision to cut its full-year revenue forecast. The move comes on the heels of Accenture reporting mixed second quarter earnings results. While the company missed analyst estimates for revenue, coming in at $15.8 billion against expectations of $15.82 billion, it surpassed adjusted earnings per share (EPS) expectations.
Yahoo Finance's Seana Smith and Brad Smith break down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
SEANA SMITH: Trending ticker that we are watching here at Yahoo Finance and that's Accenture. Shares are under pressure, off nearly 7%. The company cutting its full year revenue forecast. It's saying that it expects revenue growth of 1% to 3% in 2024. That's opposed to the prior 2% to 5% growth it had been expecting and digging into these results and exactly what this could signal or does signal about demand going forward.
They did see a bit of strength within the AI offerings and the IT spending, which is happening there. But they are seeing some weakness in other areas, which is one of the reasons that we did see a bit of a reaction to the stock. We are seeing a reaction to the stock in intraday trading today.
BRAD SMITH: Yeah, consulting revenues took a little bit of a hit as well. That for the quarter was $8.02 billion. And folks will know that that's about a 3% decrease in both the US and local currency compared with the second quarter of fiscal 2023.
And so that considered, you've got the managed services revenue that was higher by about 3%. So all things considered here, when you look at both of these businesses, which are really the biggest and lion's share contributors to that total and holistic revenue number, which actually came in flat, you're going to want to hear more about how this company is really within the business outlook that it even did update and provide to the Street that is disappointing being factored into the stock price here on the day. Where they're seeing more demand for consultation in generative AI as well a lot of different spends that companies could potentially be putting forward, it's a clear market opportunity for any type of consultancy business out there. Larger question of if some of the tech behemoths that have also added on consultation to their business structures, like an IBM, if they're picking up more of that, perhaps windfall or market share as more companies are trying to figure out how to diligently spend toward some of their AI ambitions right now.
SEANA SMITH: Yeah, exactly. In terms of those AI projects, Jefferies calling out in their reaction note that they are seeing or they expect to see a continued acceleration given the fact that they are seeing this boost here for the fiscal second quarter. Bookings totaling $600 million, up 50% quarter over quarter. So it just goes back to the AI excitement, the importance of companies, or what they feel is very important to be investing in AI here as they position their companies for the future.
