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Accenture Q1 forecast shows revenue below estimates due to IT spending cut, inflation, stronger dollar

The Dublin-headquartered company forecast current-quarter revenue between $15.20 billion and $15.75 billion, compared with analysts' average estimate of $16.07 billion

September 22, 2022 / 05:59 PM IST

IT services firm Accenture Plc sees revenue for the first quarter (September-November) of fiscal year 2023 below estimates, due to the adverse effects of IT spending cuts, soaring inflation and a stronger dollar, as per the forecast shared on September 22.

The Dublin-headquartered company forecast current-quarter revenue between $15.20 billion and $15.75 billion, compared with analysts' average estimate of $16.07 billion, according to data from Refinitiv.

The forecast reflects the assumption of about 8.5% negative foreign-exchange impact, the company said.

For fiscal year 2023, Accenture expects revenue growth of 8% to 11% in local currency and diluted EPS of $11.09 to $11.41.

Foreign exchange headwinds have intensified since Accenture's third-quarter results, with the U.S. dollar at a two-decade high against a basket of currencies and up about 16% so far this year amid sharp Fed rate hikes and rising geopolitical tensions.

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This has impacted companies with significant overseas operations including Microsoft, Salesforce and IBM.

Analysts worry a protracted economic slowdown could dent robust IT spending with the cracks already showing after Salesforce cut its annual revenue and profit forecast noting "measured" spending from clients.

A strong dollar typically eats into profits of IT companies that convert foreign currencies into dollars.

Accenture Q4 Results Highlights

- Revenue for the quarter ended August 31 was $15.40 billion compared with analysts' average estimate of $15.39 billion, according to data from Refinitiv.

- New bookings are $18.4 billion for fourth quarter and a record $71.7 billion for full year, a 21% increase in U.S. dollars and 25% increase in local currency over full-year fiscal 2021 new bookings.

- For full fiscal year, revenues are $61.6 billion, a record increase of 22% in U.S. dollars and 26% in local currency; operating margin expands 10 basis points to 15.2.

- For full fiscal year, EPS are $10.71, a 17% increase from $9.16 for fiscal 2021 and a 22% increase from adjusted fiscal 2021 EPS of $8.80, which excluded $0.36 in gains on an investment.

- Free cash flow is $3.6 billion for fourth quarter and a record $8.8 billion for full year.

"Our exceptional performance in fiscal 2022 is a testament to our ability to create enduring 360° Value for all our stakeholders: clients, people, shareholders, partners and communities. The depth, breadth and relevance of our services uniquely position us to help our clients achieve resilience, agility and growth across every part of the enterprise," Accenture's chair and CEO Julie Sweet said.

With Reuters inputs
Moneycontrol News
first published: Sep 22, 2022 04:55 pm
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