Accenture increases revenue forecast for FY25 on macro tailwinds

The company said it expects to report annual revenue growth between 3% and 6%, the midpoint of which was below the analysts' average estimate of a 5.9% growth, according to LSEG data

Nasdaq-listed IT services provider Accenture has increased the annual revenue growth forecast to 3-6% for 2025, on the back of improvement in the macroeconomic environment and US Fed’s recent interest rate cut.

However, the growth forecast is slightly lower than Wall Street estimates. Accenture follows a September-August financial year.

Guided revenue range for the full fiscal 2025 is estimated to be about $16.85-17.45 billion.

For FY25, the company expects to spend $3 billion in acquisitions, less than half of what was spent in FY24.

Growth Forecast

The world’s largest IT firm missed its FY24 full-year revenue growth projection, ending the year with a 1% growth in USD terms YoY, compared its earlier projection of 1.5-2.5%.

Accenture's Key Numbers

The Dublin-headquartered IT giant saw its Q4 revenue at $16.4 billion, an increase of 3 percent from the year-ago period. For the full year, the revenue stood at $64.9 billion, an increase of 1 percent YoY. The operating margin for Q4 stood at 15%, declining sequentially by 130 basis points. Full year operating margin came in at 15.5%.

New Bookings

Accenture had new bookings of $20.1 billion for Q4, and a record high $81.2 billion for the full year. The company recorded Generative AI new bookings of $1 billion for the quarter, and $3 billion for the full year, according to the Nasdaq exchange filing.

Julie Sweet, chair and CEO, Accenture said, "We continue to accelerate our leadership in Generative AI, which we believe is the most transformative technology of the next decade, delivering $3 billion in new bookings for the year."

Accenture and TCS are the only two big IT companies which have so far declared revenue from this nascent technology.

Last month, Nasdaq-listed Cognizant Technologies beat the Street estimates for its April-June quarter performance even as revenue came in at $4.9 billion, higher than the consensus estimate of $4.8 billion. The performance came on the back of winning market share in an unchanged demand scenario and a recovery in its key financial services vertical.

Delving deeper

Geography-wise, quarterly revenue increased 5 percent year-on-year to $7.97 billion in North America year-on-year, while revenue from the Europe, Middle East, and Africa region increased by 2 percent to $5.64 billion. Revenue from other markets also increased by 3 percent.

On the verticals front, the largest one - products business – increased 4 percent at $4.95 billion year-on-year in Q4. Next in line, the health & public service vertical increased/decreased by 10 percent to $3.61 billion year-on-year. However, as seen in other IT companies, the financial services vertical did not perform well and decreased by 5 percent to $2.87 billion.

India Impact

Accenture's performance is widely regarded as a benchmark for the Indian IT industry, providing a glimpse into the expected outcomes for Indian IT companies. The second quarter of fiscal year 2024-25 earnings season commences on October 10, with bellwether Tata Consultancy Services (TCS).

Given that a substantial portion of Accenture's workforce is based in India, its results often serve as an indicator of the broader trends and potential outcomes within the Indian IT sector.