March 19 - Accenture said on Thursday that it expects quarterly revenue to fall short of analysts' estimates as clients maintain a cautious approach to spending on large IT transformation initiatives in an uncertain economic environment. The Dublin, Ireland-based firm saw its shares fall more than 3% in premarket trading.
The company said clients are prioritizing cost control and short-term efforts over major digital transformation projects, a shift that has complicated Accenture's operating backdrop. Management expects a roughly 1% revenue reduction for fiscal 2026 tied to a slowdown in its federal business, as government agencies trim spending and reallocate budgets.
Analysts have argued that artificial intelligence should underpin longer-term growth for Accenture, but they also warned that weak demand rooted in client caution is unlikely to fully recover before 2028.
For the fiscal third quarter, Accenture provided a revenue outlook in a range of $18.35 billion to $19.00 billion. The midpoint of that range sits slightly below analysts' average estimate of $18.72 billion, based on data compiled by LSEG. Accenture said its forecast reflects the company's best view of the potential impact of the conflict in the Middle East.
Looking at recent results, Accenture's revenue increased 8.3% to $18.04 billion for the second quarter, topping estimates of $17.84 billion. The company reported earnings of $2.93 per share in the quarter, compared with $2.82 per share a year earlier. New bookings, a forward-looking metric based on contracted work, grew 6% to $22.1 billion in the second quarter.
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Accenture's guidance and the reaction in premarket trading underscore the market's sensitivity to changes in client spending patterns on large-scale IT work, federal budget shifts and geopolitical uncertainty.
Key developments:
- Accenture warned quarterly revenue will be below analysts' estimates as clients pull back on large IT transformation projects.
- The company anticipates a 1% revenue impact for fiscal 2026 from a slowdown in its federal business.
- Second-quarter revenue rose 8.3% to $18.04 billion, with profit of $2.93 per share and new bookings up 6% to $22.1 billion.
Market reaction and context:
- Shares fell more than 3% in premarket trading after the company issued its guidance.
- Accenture said its outlook accounts for the potential impact of the conflict in the Middle East.
- Analysts expect AI to support growth over the long term but see a recovery in demand lagging until after 2028 given current client caution.