- Accenture shares fell nearly 14% in pre-market after weak revenue outlook
- Full-year revenue growth forecast narrowed to 3%-4% in local currency
- Q4 revenue guidance of $17.75B-$18.40B missed analyst estimates
Shares of Accenture Plc. tumbled nearly 14% in pre-market trading on Wednesday after the global IT services giant issued a weaker-than-expected revenue outlook despite reporting improved profitability and raising its earnings guidance for the full year.
Accenture futures were trading 13.75% lower at $134.50 as of 8:15 a.m. EST, indicating a sharp gap-down opening. The stock has now slumped 49.8% over the past 12 months and is down 41.85% so far this year. The sell-off was triggered primarily by disappointing revenue guidance for the current quarter and signs of slowing demand, overshadowing an otherwise solid earnings performance.
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Accenture narrowed its full-year revenue growth forecast to a range of 3% to 4% in local currency. Excluding the impact of its US federal business, which is expected to reduce growth by around one percentage point, revenue is projected to grow between 4% and 5%.
The company also forecast revenue of $17.75 billion to $18.40 billion for the quarter ending August, below Bloomberg's analyst consensus estimate of $18.47 billion.
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New bookings, a key indicator of future revenue, declined to $19.3 billion during the quarter from $19.7 billion a year earlier. Revenue increased by $1 billion to $18.7 billion, representing growth of 6% in US dollar terms and 3% in local currency.
Despite the softer revenue outlook, Accenture delivered improvements in profitability. Operating margin expanded by 20 basis points to 17%, while diluted earnings per share rose 9% year-on-year to $3.80. The company also raised its fiscal 2026 earnings guidance, projecting GAAP diluted earnings per share of between $13.38 and $13.50, implying growth of 10% to 11%.
Adjusted diluted earnings per share are expected to range from $13.78 to $13.90, representing year-on-year growth of 7% to 8%.
Accenture continued to generate robust cash flows during the quarter. The company reported free cash flow of $3.6 billion and returned $2.2 billion to shareholders through a combination of share buybacks and dividends.
Of the total capital returned, $1.2 billion was used to repurchase or redeem approximately 6 million shares, while another $1 billion was distributed through dividends. The board also increased the quarterly dividend by 10% to $1.63 per share.
Accenture maintained its full-year free cash flow guidance in the range of $10.8 billion to $11.5 billion.
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