Accenture beats expectations but warns of federal spending headwinds
Accenture Plc posted stronger-than-expected fourth-quarter results, showing resilience despite investor concerns over federal spending cuts and a broader slowdown in the consulting sector.
The global consultancy and outsourcing firm said revenue grew 7% in the quarter, even as it cautioned that reductions in US government spending on consultants will weigh on growth in the coming year.
Fourth-quarter revenue and earnings beat
For the fiscal fourth quarter, Accenture reported revenue of $17.6 billion, topping Wall Street’s estimate of $17.4 billion and reflecting 7% year-over-year growth.
Net income came in at $2.25 a share, down 15% from the prior year, but adjusted earnings rose 9% to $3.03 per share.
Analysts polled by FactSet had expected $2.98.
Bookings, a key measure of future revenue potential, reached $21.3 billion, up from $20.1 billion in the same quarter last year and sequentially higher than $20.9 billion in the previous quarter.
Generative artificial intelligence bookings rose to $1.8 billion, compared with $1.5 billion in the prior quarter and $1 billion a year earlier, underlining strong demand for AI-driven services.
Shares of Accenture fell about 0.87% to $237.9 in premarket trading.
The stock remains down roughly 32% year to date, as concerns about spending cuts and industry headwinds have weighed heavily on investor sentiment.
Federal spending cuts to impact growth
Looking ahead, Accenture said US federal spending cuts will slow its growth in fiscal 2026.
The company expects a 1% to 1.5% revenue hit from its federal business, which represents about 8% of overall revenue.
Excluding this drag, Accenture projected revenue growth of 3% to 6%. Including the federal impact, management guided to growth of 2% to 5%.
The firm also forecast adjusted earnings per share of $13.52 to $13.90 for fiscal 2026, compared with Wall Street’s consensus estimate of $13.77.
Despite the near-term challenges, analysts at Stifel suggested investor concerns may be overdone, noting the limited contribution of federal contracts to Accenture’s total revenue base.
Accenture has previously flagged risks from US President Donald Trump’s push to curb government consultancy spending, which has created uncertainty for the sector.
In April, the US government cancelled a $4 billion IT contract awarded to Deloitte, Accenture, and Booz Allen Hamilton.
The company’s shares have fallen sharply over the past year as investors priced in this potential slowdown, along with broader volatility across IT and consulting markets.
Strategic investments and AI push
Even as it navigates near-term headwinds, Accenture plans to expand its workforce globally, including in the US and Europe, citing continued demand from clients.
The company also confirmed plans to establish a new campus in India, with Reuters reporting it could add 12,000 jobs in the country.
Chief Executive Officer Julie Sweet emphasized the firm’s investment in artificial intelligence, describing its 7% annual revenue growth to $69.7 billion as evidence of Accenture’s ability to help clients “reinvent and lead with AI.”
The company has begun training its more than 700,000 employees in agentic AI, designed to work autonomously alongside human staff.
Accenture also announced it would return at least $9.3 billion in cash to shareholders in fiscal 2026, around $1 billion more than the previous year, and will record an $865 million charge as part of a six-month business optimization program.
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Accenture beats expectations but warns of federal spending headwinds
Accenture Plc posted stronger-than-expected fourth-quarter results, showing resilience despite investor concerns over federal spending cuts and a broader slowdown in the consulting sector.
The global consultancy and outsourcing firm said revenue grew 7% in the quarter, even as it cautioned that reductions in US government spending on consultants will weigh on growth in the coming year.
Fourth-quarter revenue and earnings beat
For the fiscal fourth quarter, Accenture reported revenue of $17.6 billion, topping Wall Street’s estimate of $17.4 billion and reflecting 7% year-over-year growth.
Net income came in at $2.25 a share, down 15% from the prior year, but adjusted earnings rose 9% to $3.03 per share.
Analysts polled by FactSet had expected $2.98.
Bookings, a key measure of future revenue potential, reached $21.3 billion, up from $20.1 billion in the same quarter last year and sequentially higher than $20.9 billion in the previous quarter.
Generative artificial intelligence bookings rose to $1.8 billion, compared with $1.5 billion in the prior quarter and $1 billion a year earlier, underlining strong demand for AI-driven services.
Shares of Accenture fell about 0.87% to $237.9 in premarket trading.
The stock remains down roughly 32% year to date, as concerns about spending cuts and industry headwinds have weighed heavily on investor sentiment.
Federal spending cuts to impact growth
Looking ahead, Accenture said US federal spending cuts will slow its growth in fiscal 2026.
The company expects a 1% to 1.5% revenue hit from its federal business, which represents about 8% of overall revenue.
Excluding this drag, Accenture projected revenue growth of 3% to 6%. Including the federal impact, management guided to growth of 2% to 5%.
The firm also forecast adjusted earnings per share of $13.52 to $13.90 for fiscal 2026, compared with Wall Street’s consensus estimate of $13.77.
Despite the near-term challenges, analysts at Stifel suggested investor concerns may be overdone, noting the limited contribution of federal contracts to Accenture’s total revenue base.
Accenture has previously flagged risks from US President Donald Trump’s push to curb government consultancy spending, which has created uncertainty for the sector.
In April, the US government cancelled a $4 billion IT contract awarded to Deloitte, Accenture, and Booz Allen Hamilton.
The company’s shares have fallen sharply over the past year as investors priced in this potential slowdown, along with broader volatility across IT and consulting markets.
Strategic investments and AI push
Even as it navigates near-term headwinds, Accenture plans to expand its workforce globally, including in the US and Europe, citing continued demand from clients.
The company also confirmed plans to establish a new campus in India, with Reuters reporting it could add 12,000 jobs in the country.
Chief Executive Officer Julie Sweet emphasized the firm’s investment in artificial intelligence, describing its 7% annual revenue growth to $69.7 billion as evidence of Accenture’s ability to help clients “reinvent and lead with AI.”
The company has begun training its more than 700,000 employees in agentic AI, designed to work autonomously alongside human staff.
Accenture also announced it would return at least $9.3 billion in cash to shareholders in fiscal 2026, around $1 billion more than the previous year, and will record an $865 million charge as part of a six-month business optimization program.
The post Accenture beats expectations but warns of federal spending headwinds appeared first on Invezz
Read More
Hackers breach US federal firewalls as ArcaneDoor cyber-espionage expands