Shares of Accenture plc (NYSE: ACN) dropped by nearly 10% to $294, as the company reported Q2 FY25 earnings that fell short of investor expectations, particularly in new bookings and revenue guidance. The global IT and consulting giant posted new bookings of $20.9 billion, marking a 3% decline in USD terms and remaining flat in local currency. This drop in bookings has raised concerns about slowing demand, particularly in North America, a key market for Accenture. Additionally, the company’s generative AI-related bookings stood at $1.4 billion, highlighting its growing focus on AI-driven business solutions, though this segment is still in its early stages of revenue contribution.
Accenture’s total revenue for the quarter came in at $16.7 billion, reflecting a 5% year-over-year growth in USD and 8.5% in local currency. The operating margin improved 50 basis points (bps) year-over-year, reaching 13.5%, though it was down 20 bps compared to the adjusted operating margin. The company reported diluted earnings per share (EPS) of $2.82, which represented a 7% increase YoY and a 2% rise over adjusted EPS from the previous year. Free cash flow for the quarter stood at $2.68 billion, reflecting Accenture’s ability to generate strong cash reserves despite macro-economic headwinds. Additionally, the company declared a quarterly cash dividend of $1.48 per share, maintaining its commitment to returning capital to shareholders.
Accenture narrowed its full-year revenue growth forecast to 5%-7% in local currency, citing macroeconomic uncertainty and delayed decision-making cycles among its enterprise clients. The company also maintained its estimate of a foreign exchange impact of approximately -0.5%, reflecting currency fluctuations that could impact revenue growth. Additionally, operating margin is now projected between 15.6%-15.7%, reflecting an expansion of 10-20 bps over adjusted operating margin. Accenture also provided an updated EPS guidance range of $12.55 to $12.79, suggesting modest earnings growth compared to previous projections.
The sharp decline in Accenture’s stock price highlights investor concerns over slowing growth in new bookings, which is a key metric indicating future revenue visibility.
