Accenture shares sink 14% on weaker guidance, Q3 revenue miss

Accenture Plc

shares plunged more than 14% on Thursday after the IT services and consulting major narrowed the upper end of its annual revenue growth forecast and issued fourth-quarter guidance that fell short of Wall Street expectations.

The Dublin-headquartered company expects fourth-quarter revenue of $17.75 billion to $18.4 billion, below analysts' estimate of $18.47 billion.

The company now expects annual revenue growth of 3% to 4% in constant currency terms, compared with its earlier forecast of 3% to 5%. Excluding the roughly 1% impact from its US federal business, Accenture expects revenue growth of 4% to 5%, down from its previous outlook of 4% to 6%.

For the third quarter, Accenture reported earnings per share of $3.80, up from $3.49 a year earlier and ahead of expectations. Revenue rose 5.6% to $18.7 billion, although it marginally missed estimates of $18.76 billion.

Total bookings declined 1.9% to $19.32 billion, reflecting a 15% drop in managed services bookings, partly offset by a 13% increase in consulting bookings.

The company raised its full-year adjusted earnings per share outlook to a range of $13.78-$13.90, while maintaining its operating cash flow and free cash flow guidance. It continues to expect free cash flow between $10.8 billion and $11.5 billion for the year.

Chief Executive Officer Julie Sweet said demand for large-scale business reinvention remains strong, noting that Accenture has recorded 104 client bookings worth more than $100 million year-to-date, up 13% from a year earlier. She also highlighted growing demand for large-scale artificial intelligence transformation programmes.

As part of its expansion strategy, Accenture announced plans to acquire a majority stake in cybersecurity company Dragos and fully acquire runZero and NetRise in a combined deal valued at $4.18 billion. The company said the acquisitions would strengthen its position in operational technology security and create a new platform for future growth.

Despite the earnings beat and continued momentum in AI-related projects, investors focused on the softer revenue outlook, sending the stock sharply lower and weighing on sentiment across the global IT services sector.

The weakness spread across the technology services sector. Infosys ADRs were down around 7%, while Wipro ADRs and Cognizant Technology Solutions fell 8%. In Europe, Capgemini extended losses to as much as 11%, while Sopra Steria dropped as much as 6%.