Accenture beats Q2, guides cautiously

Accenture (ACN) reported fiscal second-quarter profit of $1.83 billion, or $2.93 per share, exceeding the average analyst estimate of $2.86 per share from Zacks Investment Research. Revenue for the period came in at $18.04 billion, ahead of expectations of $17.83 billion or $17.84 billion cited in the reports.

The latest quarter marked an 8% year-on-year increase in revenue, highlighting continued demand for the company’s consulting, technology, operations, and digital services. New bookings, a key indicator of future revenue based on signed contracts, rose 6% to $22.1 billion in the second quarter.

Accenture (ACN), which has a workforce of about 774,000 people serving clients in more than 120 countries, also reiterated its outlook for the full fiscal year. The company expects full-year earnings in the range of $13.65 to $13.90 per share.

Despite the Q2 beat, Accenture issued a more cautious revenue forecast for its fiscal third quarter. The company expects Q3 revenue between $18.35 billion and $19.00 billion, with the midpoint slightly below analysts’ average estimate of $18.72 billion, according to LSEG data.

Management cited an uncertain economic environment in which clients are delaying large digital transformation projects. Enterprises are favoring cost control and short-term initiatives over broad IT overhauls, affecting the pace of growth in large-scale transformation work.

News of the softer-than-expected revenue outlook weighed on investor sentiment. Accenture shares were down about 3% in premarket trading following the guidance update.

Accenture shares have dropped 27% since the beginning of the year and are down 40% over the last 12 months, even as the S&P 500 (SPX) index has fallen 3% over the same year-to-date period. Earlier, following a mixed fiscal fourth quarter, the stock had declined 28.5% to trade at $195.65.

The company’s earlier Q4 results showed revenue of $18.74 billion, up 6% year on year and 1.2% above analyst expectations. That quarter featured an earnings-per-share beat but a slight miss on full-year EPS guidance, contributing to a weaker share price reaction.

Accenture’s latest update comes against a backdrop of mixed earnings across the broader IT services and consulting group. Eight tracked companies in the segment collectively delivered Q4 revenues that exceeded consensus by 0.6%, while guidance for the next quarter’s revenue was in line with expectations.

Despite generally in-line or better revenue performance, share prices in the group have struggled. On average, IT services and consulting stocks are down 25% since their latest earnings releases, reflecting investor caution toward the sector.

Gartner, another major player in technology research and advisory services, reported Q4 revenue of $1.75 billion, up 2.2% year on year and in line with analyst estimates, alongside an earnings beat. Still, Gartner’s stock has fallen 21.9% since its report and trades at $158.03, underscoring the broader pressure on sector valuations.