IT services provider Accenture forecast second-quarter earnings below Wall Street’s targets on Tuesday, anticipating cautious spending by clients as macroeconomic uncertainty remains looming.
Analysts expect IT services spending to remain muted in the near term, as businesses usually decide their annual budgets only after February. Accenture itself has shown slower budget-related decision-making, especially in technology and media companies.
Accenture’s revenue from the communications, media and technology industry group fell 10% in the first quarter, while sales from North America, the company’s largest market, fell 1% to $7.56 billion.
“We continued to see lower discretionary spending, which is impacting our consulting type of work,” CEO Julie Sweet told analysts in an earnings call. “If you look around the environment, there are not many green shoots on the economic side.”
Tata Consultancy Services, India’s No. 1 IT services exporter, reported weaker-than-expected quarterly results in October, while Infosys cut the top end of its full-year revenue forecast as clients remained hesitant to spend on discretionary projects. Both companies are Accenture’s competitors in outsourcing.
Accenture shares fell 2.6% in pre-bell trading.
The company reiterated its fiscal 2024 revenue and profit forecasts as it expects big digital transformation deals to materialize in its results in the “back half of our year.”
It recorded generative artificial intelligence sales of more than $450 million in the first quarter and expects customers to shift from experimentation to scaling up their GenAI projects in 2024.
Accenture expects revenues in the range of $15.40 billion to $16 billion. Analysts polled by LSEG had forecast revenue of $16.29 billion.
Its revenue in the first quarter ended Nov. 30 rose 3%, to $16.22 billion.
Unlock a world of Perks! From insightful newsletters to real-time stock tracking, breaking news and a personalized news feed – it’s all here, just a click away! Login Now!
This story was published by a wire agency feed without modifications to the text.
Catch all Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates and Live Business News.
More or less
Published: 20 Dec 2023, 07:27 IST