A temporary Accenture office during the World Economic Forum in Davos, Switzerland, in 2022. The company beat Wall Street estimates for third-quarter revenue on Friday.ARND WIEGMANN/Reuters
Accenture ACN-N reported a second straight drop in quarterly new bookings on Friday and unveiled an organizational revamp to bolster its AI consulting services, as a cutback in U.S. government spending and economic uncertainty pressure growth.
The bookings decline overshadowed the consulting giant’s better-than-expected quarterly revenue and an increase in its annual forecasts, sending its shares down 5 per cent before the bell.
Consulting and IT firms are under pressure as U.S. tariffs and accompanying economic uncertainty force companies to rethink their spending plans, while the Trump administration’s cost-cutting efforts have led to contract cancellations and delays.
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Accenture said bookings – which represent future revenue secured through contracts – fell 6 per cent to US$19.70-billion in its fiscal third quarter, below the Visible Alpha estimate of US$21.54-billion and worse than the 3 per cent decline in the previous quarter.
CEO Julie Sweet said 30 clients recorded quarterly bookings of greater than US$100-million, compared with 32 in the previous quarter. Generative AI bookings totaled about US$1.5-billion.
Rival IBM also reported a small consulting revenue drop in April and said 15 of its U.S. government contracts worth about US$100-million were shelved under the cost-cutting drive, while Indian IT firms including Infosys have warned of a tough year ahead.
To navigate the uncertainty, Accenture plans to focus on AI consulting with the creation of a new business unit called reinvention services, which would combine its AI offerings and be led by Manish Sharma, the head of its Americas business.
Sharma will be succeeded by chief operating officer John Walsh, while Americas COO Kate Hogan will take over as global COO.
In the May quarter, Accenture posted revenue of US$17.7-billion, beating analysts’ average estimate of US$17.30-billion, according to data compiled by LSEG. That growth was powered by higher spending by its clients in the financial services industry.
Profit per share of US$3.49 also beat estimates of US$3.32.
Accenture now expects annual revenue growth of 6 per cent to 7 per cent, compared with its earlier expectation of 5 per cent to 7 per cent.