Accenture Slumps As Wall Street Pulls Back On IT Spending
Accenture Plc lowered its revenue outlook and warned it’s seen financial services customers pull back their spending on its software.
(Bloomberg) -- Accenture Plc shares tumbled the most in four years after the company lowered its revenue outlook and warned it’s seen financial services customers pull back their spending on its software.
The technology giant said it now expects revenue for its fiscal 2024 year to climb as much as 3%, which is down from an earlier forecast that revenue would climb as much as 5%, according to a statement. The move came as revenue tied to its financial services business declined 6% to $2.8 billion.
“The corporates have put themselves on a diet,” Chief Executive Officer Julie Sweet said on a conference call with analysts. “They are not able to allocate extra budget. They’re prioritizing their budget. So you’re seeing more of a substitution right now as opposed to ‘Hey, we need to do this, let’s add to the budget.’ And that’s tied to the uncertain macro.”
Accenture’s shares slumped 6.8% at 10:48 a.m. in New York after earlier dropping as much as 8.1%, which was the biggest intraday drop since March 2020.
The results are the latest sign that the economic uncertainty that’s engulfed global markets is impacting consultancies, leading many to dismiss staff and introduce hiring freezes. A year ago, Accenture announced it would cut 19,000 jobs — about 2.5% of its workforce at the time — over the following 18 months.
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“We see clients continuing to prioritize investing in large-scale transformations which convert to revenue more slowly, while further limiting discretionary spending particularly in smaller projects,” Sweet said. “We also saw continued delays in decision-making and a slower pace of spending.”
Under Sweet, Accenture has been trying to expand its work in the world of generative artificial intelligence. She announced earlier this year that the company is planning to open 10 innovation hubs for the technology, which creates visual works or text based on simple prompts.
In its fiscal second quarter ending in February, the company had $600 million in bookings tied to generative AI. That brought the total for the first half of the fiscal year to $1.1 billion, the company said.
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