Accenture Q2 Results Review - Uncertainty Persists; Long-Term Demand Continues Strong: Axis Securities

Axis Securities Report

Accenture Plc.’s Q2 FY24 results stood below street expectations on all financial and operational fronts. Revenue for the quarter stood at $15.8 billion, flat in local currency YoY and a decline of 0.1% in USD terms. It registered GAAP earnings per share of $2.63 for the quarter while adjusted EPS stood at $2.77, reporting 10% YoY growth.

The company’s new bookings stood at $21.6 billion, which was its second-highest ever. It reported a managed services book/bill of $11.6 billion while consulting business bookings stood at $10.52 billion.

Overall, Q2 FY24 bookings are resilient, indicating robust demand despite prevailing uncertainties. Robust client relationships are reflected in the top 30 clients with quarterly bookings of ~ $100 million, and the company continues to witness strong demand for Gen AI – the great accelerator of reinvention – with over $600 million in new bookings.

Impact on Indian IT services companies

We believe strong investments in new edge technologies like digital technologies, cloud transformation, IoT, generative AI, and machine learning across verticals will support and accelerate the company’s revenue growth moving forward.

However, near-term macroeconomic headwinds may impact the automation spend across verticals. On a vertical front, the banking, financial services and insurance vertical witnessed a stronger impact due to a fall in the rural banking sector from North America.

On the other hand, the manufacturing, automobile, retail, pharmaceutical and healthcare industries are witnessing strong traction across geographies.

IT services companies in India are receiving strong deal bookings despite near-term challenges.

While we remain optimistic about the long-term prospects of IT services companies in India, near-term challenges may impact their earnings growth momentum.

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