Accenture cuts outlook on Middle East hit

Accenture (ACN) said the Iran war reduced third-quarter revenue in its Middle East business by $400 million, with the impact falling heavily on its consulting activities in the region. Management described the disruption as a significant factor behind softer results in the quarter.

Chief Executive Julie Sweet stated on a post-earnings call that the indirect impact from the conflict "really started in the last few weeks" of the period. The company indicated that client decision-making and project activity in the region had been affected as the situation intensified.

On the back of these developments, Accenture’s (ACN) quarterly sales forecast came in below Wall Street estimates. The company also lowered its annual sales expectations, citing the conflict-driven headwinds as a key reason for the revised outlook.

Accenture warned of "more impact in the fourth" quarter from the Middle East conflict, signalling that the drag on revenue is expected to continue beyond the most recent reporting period. The company did not specify the potential scale of the additional impact but highlighted ongoing uncertainty in affected markets.

The weaker forecast and lowered annual guidance triggered a sharp reaction in financial markets. Accenture’s shares fell more than 14% following the earnings update, reflecting investor concern about the conflict’s effect on near-term growth.

The selloff extended beyond Accenture, contributing to broader weakness in IT consulting and related technology names. The company’s update was viewed as an indicator of how geopolitical shocks can rapidly affect demand for discretionary consulting and technology projects.

Julie Sweet noted that some industries where Accenture has a large presence were already under strain before the latest disruption. She pointed to the automotive sector as one example, where conditions had been challenging even prior to the recent escalation.

Higher gas prices linked to the conflict have put additional pressure on such sectors, compounding existing issues. This has added another layer of complexity to client spending plans and the timing of new transformation initiatives in markets touched by the war.