Accenture forecasts Q2 revenue below estimates on muted IT spending. The IT services company Accenture predicted lower-than-expected second-quarter revenue on Tuesday, citing clients’ cautious spending as a continuing concern due to macroeconomic uncertainties.
Analysts predict that spending on IT services will stay restrained in the foreseeable future since companies often announce their yearly budgets after February. Accenture has acknowledged that budget decision-making is taking longer than expected, particularly in the internet and media sectors.
While revenues from North America, the company’s largest market, dropped 1% to $7.56 billion in the first quarter, Accenture’s revenue from the communications, media, and technology sector group declined 10%.
CEO Julie Sweet informed investors during an earnings call, “We continued to see lower discretionary spend, which impacts our consulting type of work.”
“If you look around the environment, there are not a lot of green shoots on the economic side.” October saw lower-than-expected quarterly results from India’s top exporter of IT services, Tata Consultancy Services (TCS.NS), and a reduction in the upper end of Infosys’s annual revenue projection due to clients’ continued reluctance to spend on discretionary projects. These businesses compete with Accenture in the outsourcing market.
Before the bell, shares of Accenture dropped 2.6% in trade. The company restated its revenue growth and profit projections for the upcoming fiscal year of 2024, citing the “back half of our year” as the time when significant agreements related to digital transformation should be realized.
Sales of generative artificial intelligence (GenAI) topped $450 million in the first quarter, and by 2024, the company anticipates that clients will move from testing to project scale.
Accenture projects $15.40 billion to $16 billion in sales. LSEG surveyed analysts, and they predicted sales of $16.29 billion.
Its sales increased 3% to $16.22 billion in the first quarter that concluded on November 30.