Accenture (ACN) Falls Short of Revenue, EPS Expectations in Fiscal Q4
Image courtesy of 123rf.com

Accenture (ACN) Falls Short of Revenue, EPS Expectations in Fiscal Q4

Accenture reported a mixed performance in the third quarter of fiscal 2024, with revenues of $16.5 billion.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Accenture (NYSE: ACN) reported its financial results for the third quarter of fiscal 2024, ending May 31, 2024, showcasing a mixed performance. The company recorded revenues of $16.5 billion, a slight decrease of 1% in U.S. dollars but an increase of 1.4% in local currency compared to the same period last year.

Consulting revenues were $8.5 billion, while managed services revenues reached $8.0 billion. The company’s GAAP operating margin improved to 16.0%, up from 14.2% in the previous year, indicating a positive trend in operational efficiency.

Accenture achieved significant milestones in new bookings, which totaled $21.1 billion, marking a 22% increase in U.S. dollars and a 26% increase in local currency.

The company also reported over $900 million in new bookings related to generative AI, contributing to a total of $2 billion in AI-related bookings for the fiscal year to date. Despite these achievements, GAAP earnings per share (EPS) for the quarter were $3.04, a 3% decrease from the previous year’s $3.15. Adjusted EPS also saw a decline, falling 2% to $3.13 from $3.19.

Accenture Falls Short of Revenue, EPS Forecasts in Fiscal Q3

When comparing Accenture’s actual performance to market expectations, the results present a nuanced picture. Analysts had anticipated an EPS of $3.17 and revenue of $16.6 billion for the quarter.

Accenture’s reported EPS of $3.04 fell short of expectations by $0.13, and even the adjusted EPS of $3.13 did not meet the forecasted figure. This shortfall in EPS can be attributed to higher effective tax rates and increased noncontrolling interests, which partially offset gains from a lower share count.

On the revenue front, Accenture’s $16.5 billion slightly missed the expected $16.6 billion, though it was within the company’s adjusted guidance range of $16.10 billion to $16.70 billion.

The minor revenue decline of 1% in U.S. dollars was more than offset by a 1.4% increase in local currency, highlighting the impact of foreign exchange rates on the company’s financials. Despite these challenges, Accenture’s strong new bookings and continued investment in generative AI and other strategic areas underscore its commitment to growth and innovation.

Accenture Updates Business Outlook for Fiscal 2024, Expects Full Year Revenue Growth of 1.5% to 2.5%

Accenture has updated its business outlook for fiscal 2024, reflecting cautious optimism. The company now expects full-year revenue growth of 1.5% to 2.5% in local currency, slightly narrowing the previous range of 1% to 3%.

This adjustment accounts for an anticipated negative foreign-exchange impact of 0.7%, a revision from the earlier flat expectation. Accenture continues to project a GAAP operating margin of 14.8% and an adjusted operating margin of 15.5% for the full year.

For the fourth quarter of fiscal 2024, Accenture forecasts revenues between $16.05 billion and $16.65 billion, representing a 2% to 6% growth in local currency.

The company also anticipates GAAP EPS to range from $11.29 to $11.44 and adjusted EPS from $11.85 to $12.00 for the full year, reflecting a slight downward revision from previous estimates. These projections include the effects of business optimization costs and gains from investments, indicating a balanced approach to managing operational efficiencies and strategic investments.

Strategic Initiatives and Shareholder Returns

Accenture’s strategic initiatives focus on driving growth and delivering value across multiple dimensions. The company has made 35 acquisitions year-to-date, deploying $5.2 billion in capital to strengthen its capabilities and market position.

Additionally, Accenture’s commitment to generative AI, with $900 million in new bookings this quarter alone, highlights its proactive approach to leveraging emerging technologies for competitive advantage.

Regarding shareholder returns, Accenture declared a quarterly cash dividend of $1.29 per share, a 15% increase over the previous year’s rate. The company also repurchased or redeemed 4.3 million shares for $1.4 billion during the quarter, with a remaining share repurchase authority of approximately $3.3 billion as of May 31, 2024.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.