TLDR
- Accenture shares plummeted 14% during premarket hours following underwhelming Q3 performance and reduced annual revenue projections
- Third-quarter revenue reached $18.72 billion, falling short of the $18.75 billion consensus; earnings per share exceeded expectations at $3.80 versus $3.71 anticipated
- The consulting firm unveiled $4.18 billion worth of cybersecurity purchases, securing a controlling interest in Dragos plus complete acquisitions of runZero and NetRise
- Annual revenue growth projections were slashed to 3%–4%, a significant reduction from the previous 4%–6% estimate
- Morgan Stanley lowered its rating on ACN to Equal-Weight, pointing to AI spending diverting funds from traditional IT operations and absent signs of budget improvement
Accenture (ACN) shares experienced what could become their steepest single-session decline ever on Thursday, tumbling 14% to $133.95 during premarket activity after the global consulting powerhouse reported lackluster quarterly results and reduced its yearly revenue projections.
Shares were hovering near $155 prior to the earnings announcement. The 14% plunge erased approximately $20 billion from the company’s market capitalization within hours.
Earnings per share registered at $3.80 for the fiscal third quarter, surpassing Wall Street’s projection of $3.71. However, revenue totaling $18.72 billion fell marginally below the $18.75 billion consensus figure, and forward guidance left investors unimpressed.
Executives now anticipate full-year revenue expansion of 3% to 4% in local currency terms. This represents a pullback from the earlier projection of 4% to 6% — marking the second occasion this year that Accenture has lowered these expectations.
Fourth-quarter revenue was projected at $17.75 billion–$18.4 billion, undershooting the analyst consensus of $18.47 billion.
Adjusted earnings per share guidance received a modest upward revision, with the updated range of $13.78–$13.90 lifting the lower bound from $13.65 while maintaining the upper limit.
The revenue shortfall wasn’t the sole factor pressuring the stock. Accenture simultaneously revealed $4.18 billion in cybersecurity purchases — acquiring a controlling stake in industrial cybersecurity specialist Dragos alongside complete purchases of runZero and NetRise.
The transactions are slated to finalize in August or September and will bring companies generating combined annual recurring revenue of $208 million into Accenture’s established $10 billion cybersecurity operation.
Morgan Stanley Downgrades Ahead of Print
Mere days before the earnings release, Morgan Stanley reduced ACN to Equal-Weight from Overweight. The investment bank indicated that substantial AI investment was diverting resources from conventional IT services — and that the anticipated budget recovery had failed to emerge.
“We are not seeing the budget growth inflection we had previously expected,” analysts wrote.
The downgrade arrived as IT expenditure budgets continue facing constraints. Morgan Stanley characterized the prevailing interest-rate climate as a “neutral to negative signal,” with stable rates offering no assistance and any prospective increase creating additional pressure.
New contract bookings for Q3 totaled $19.3 billion, declining approximately 2% compared to the corresponding quarter last year. CEO Julie Sweet highlighted 104 quarterly contracts exceeding $100 million as proof that “demand for large-scale reinvention remains strong.” Investors remained skeptical.
Rivals Caught in the Crossfire
The negative impact extended beyond ACN. Infosys declined 3.8% and Cognizant retreated 4.4% ahead of the U.S. market opening, while French competitor Capgemini dropped 6.8% during Paris trading.
Jefferies analyst Surinder Thind noted back in March that he had observed no indication of recovering customer demand, directly challenging management’s optimistic messaging at that time.
Regarding artificial intelligence, Accenture has been establishing partnerships with companies like OpenAI and Anthropic instead of competing directly — creating agents for customer support and advertising applications, with TD Cowen observing the firm is simultaneously developing proprietary tools for client licensing.
Q3 new contract bookings measured $19.3 billion, versus $19.7 billion during the identical period one year earlier.
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