Accenture forecasts Q4 revenue below expectations amid inflation worries

IT services company Accenture Plc on June 23 forecast fourth-quarter revenue below estimates amid high inflation worries and in anticipation of the impact of a stronger dollar on its overseas earnings, Reuters reported. The shares of the company fell 2.8 percent in trading before the bell.

As per IBES data from Refinitiv, Accenture had forecast Q4 revenue to be somewhere between $15 billion to $15.5 billion, while analysts were, on average, expecting revenue to be around $15.70 billion.

The report quoted Accenture as saying that “the forecast reflects the company's assumption of a negative eight percent foreign-exchange impact.”

Notably, revenue for the quarter ended May 31 was $16.16 billion, while analysts had on average expected revenue of $16.03 billion.

The Reuters report stated that a hawkish federal reserve coupled with heightened geopolitical tensions have driven gains in the dollar against a host of currencies over the past year. Usually, a strong dollar adversely affects the profits of a company that operates globally and converts foreign currencies into dollars and Accenture is among them; over half of the company’s revenue comes from outside the United States.

Meanwhile, Seeking Alpha has reported that Accenture has raised FY2022 revenue growth to 25.5 percent to 26.5 percent in local currency versus a prior outlook of 24 to 26 percent. The company is reportedly expecting an operating margin of 15.2 percent and free cash flow in the range of $8 billion to $8.5 billion; additionally, it’s now expecting a negative 4.5 percent foreign-exchange impact.