Accenture’s quarterly bookings have declined for a second consecutive quarter, it has emerged. This downturn has been attributed primarily to reduced spending by the US government and broader economic uncertainties affecting the firm’s growth prospects. The company is undergoing a strategic reorganisation to enhance its AI consultancy services in response to these challenges.
Despite the decline in bookings, Accenture has revised its full-year financial outlook positively. The firm now expects free cash flow to range between $9bn and $9.7bn, up from previous estimates of $8.8bn to $9.5bn. Revenue for the upcoming fourth quarter is projected to be between $17bn and $17.6bn, indicating potential growth of 1% to 5% compared to the previous year, slightly surpassing analyst estimates of $17.08bn.
Accenture’s shares fell by 3% in premarket trading following these announcements. This occurred despite the company raising its earnings guidance for the year and reporting stronger-than-expected third-quarter results for fiscal 2025 (Q3 FY25). The firm now anticipates full-year earnings per share (EPS) to be between $12.77 and $12.89, which exceeds prior forecasts and consensus estimates.
Third-quarter performance exceeds analyst projections yet faces booking decline
For the third quarter, Accenture achieved an EPS of $3.49, surpassing analyst expectations of $3.31. The company’s revenue during this period reached $17.7bn, exceeding the forecasted $17.27bn. Despite securing $1.5bn in new generative AI bookings, total bookings fell by 6.6% year-over-year to $19.7bn, slightly below expectations.
“I am very pleased with our third quarter fiscal 2025 results, including our 30 clients with quarterly bookings greater than $100m, broad-based growth and continued expansion of our leadership in Gen AI,” said Accenture chair and CEO Julie Sweet.
Accenture’s gross margin experienced a minor decline to 32.9%, missing the consensus estimate of 33.3%. However, the company forecasts revenue growth between 6% and 7% on a local currency basis, with an anticipated modest foreign exchange impact of 0.2%. Operating margins are expected to see a 10-basis point improvement, reaching 15.6%.
The decline in bookings overshadowed Accenture’s robust quarterly revenue figures and revised annual forecasts, resulting in a stock value decrease of more than 6%. Consulting firms are facing pressure due to US tariffs and accompanying economic uncertainties, prompting many companies to reassess their spending strategies, according to reporting by Reuters.
Accenture CFO Angie Park noted that slower government spending is anticipated to impact fiscal fourth-quarter and annual revenues by approximately 2%, following minimal impacts last quarter. To counter these challenges, Accenture plans to focus more heavily on AI consulting through a new dedicated unit named Reinvention Services. This unit is tasked with integrating AI offerings more effectively into solution delivery.
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