Accenture (ACN) shares sank 14% in premarket trading Thursday after the consulting and technology services giant lowered the top end of its annual revenue growth outlook, raising fresh concerns about enterprise spending on discretionary IT projects. The downward revision overshadowed better-than-expected quarterly earnings and a series of acquisitions aimed at bolstering its cybersecurity business.
Revenue Outlook Trimmed
The company now expects fiscal-year revenue growth of 3% to 4%, down from its prior range of 3% to 5%. Accenture also forecast fourth-quarter revenue between $17.75 billion and $18.4 billion, below the $18.47 billion consensus estimate compiled by LSEG. The weaker guidance signals that corporate clients remain cautious on technology spending, a trend that has weighed on the broader IT services sector.
Q3 Earnings Beat but Bookings Slip
For the quarter ended May 31, Accenture reported net income of $2.34 billion, up from $2.2 billion a year earlier. Earnings per share came in at $3.80, exceeding the FactSet consensus of $3.71. Revenue rose 5.6% year over year to $18.72 billion, narrowly missing Wall Street's $18.78 billion target.
The company raised the lower end of its adjusted earnings forecast, now expecting annual earnings of $13.78 to $13.90 per share, compared with prior guidance of $13.65 to $13.90. However, new bookings slipped to $19.3 billion from $19.7 billion a year ago, underscoring softer demand conditions.
Cybersecurity Expansion Accelerates
Accenture announced a major push into cybersecurity with acquisitions valued at a combined $4.18 billion. The company will acquire a majority stake in industrial cybersecurity firm Dragos, and fully purchase asset intelligence company runZero and device security specialist Netrise. The deals, expected to close in August or September pending regulatory approvals, add companies with combined annual recurring revenue of $208 million.
The acquisitions strengthen Accenture's cybersecurity division, which already generates roughly $10 billion in annual revenue, and broaden its offerings in protecting industrial operations and critical infrastructure such as power grids, factories, pipelines, and data centers. The move comes amid rising concerns about AI-driven cyber threats and geopolitical risks. Earlier this week, Accenture also announced acquisitions of Alfahealth and Industries eXcellence Group.
Analyst Skepticism Grows
Despite the acquisition push, investor sentiment had been souring ahead of the earnings report. Morgan Stanley downgraded Accenture to Equal-Weight from Overweight earlier this week, citing that massive investments in artificial intelligence are diverting resources from traditional IT services. "We are not seeing the budget growth inflection we had previously expected," the bank's analysts wrote.
Accenture derives roughly half of its revenue from consulting, a segment that has faced pressure as corporate clients continue to constrain technology spending. Analysts have also questioned whether the company's recent acquisitions, which are increasingly product-oriented rather than service-based, can deliver meaningful revenue contributions. The current interest-rate environment adds another layer of uncertainty, with Morgan Stanley describing it as a "neutral to negative signal" for technology budgets.
Jefferies analyst Surinder Thind earlier this year expressed doubts about a recovery in customer demand despite management's optimistic commentary. Thursday's sharp decline suggests investors remain focused on slowing enterprise technology spending and weakening demand trends, even as Accenture bets heavily on cybersecurity and AI-related opportunities.
For broader context on the tech sector's recent struggles, see our coverage of the AI and chip rout that sank the Nasdaq 2.2%. The impact of Accenture's guidance cut on Indian IT firms is detailed in TCS, Infosys lead Indian IT rout.
This article is for informational purposes only and does not constitute financial advice.
