IT services provider Accenture beat Wall Street estimates for third-quarter revenue on Friday, driven by growing demand for the consulting giant's AI-driven services from enterprise customers.
The company reported revenue of $17.7 billion for the quarter ended May 31, compared with analysts' average estimate of $17.30 billion, according to data compiled by LSEG.
Accenture follows a September-August financial year.
Shares of the company fell 2.6% in premarket trading after Accenture said new bookings decreased 6% to $19.7 billion in the third quarter.
"We continue to see a significantly elevated level of macroeconomic uncertainty compared to 2024," Julie Sweet, CEO, Accenture, said while addressing analysts in a conference call. She added that clients are facing everything at once, such as macroeconomic uncertainty and geopolitical risks.
The IT industry is grappling with a weak US federal contracting environment as the Trump administration has slowed new contracts and cut existing agreements in a bid to reduce federal spending.
The company said these changes have not had a material impact on its operations or financial condition.
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.
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.
The company has increased the upper end of the annual revenue growth guidance between 6 percent and 7 percent, compared with its prior forecast of 5 percent and 7 percent.
The world’s largest IT services company reported a decrease in headcount by 10,000 employees to 7,91,000 in Q3FY25. In the previous quarter, the company had added about 2,000 employees.
The Dublin-headquartered firm's attrition rate increased by 3 percentage points to 16 percent for the quarter.
Meanwhile, total bookings stood at $19.7 billion, down 6 percent year-over-year. Meanwhile, operating margin for the quarter decreased by 80 basis points to 16.8 percent.
While new bookings in consulting were $9.1 billion, those of managed services' new bookings stood at $10.6 billion.
Gen AI numbers
The company signed 30 clients with bookings over $100 million each and $1.5 billion in new Generative AI (Gen AI)-related bookings this quarter.
Accenture and TCS are the only two big IT companies that have so far declared revenue from this nascent technology.
In Q2, Gen AI bookings stood at $1.4 billion.
The Dublin-based services company has generated approximately $7.1 billion in Gen AI bookings since it began reporting these figures separately.
Accenture's US-based IT services rival Cognizant Technology Solutions beat Street estimates for the first quarter of 2025 last month, on the back of large deals in health sciences and financial services.
Revenue came in at $5.1 billion, up 7.5 percent year-over-year or 8.2 percent in constant currency (CC), above the high end of its guidance range and analyst estimates of $5.07 billion, the Teaneck-headquartered firm said on May 1.
Delving deeper
Geography-wise, quarterly revenue increased 9 percent year-on-year to almost $9 billion in North America, while revenue from the Europe, Middle East, and Africa region increased by 6 percent to $6.2 billion. Revenue from other markets also increased by 4 percent to $2.5 billion.
On the vertical front, the largest one - products business – increased 7 percent at $5.3 billion year-on-year in Q3. Next in line, the health & public service vertical increased by 7 percent to $3.8 billion year-on-year. The financial services vertical increased by 13 percent to $3.3 billion.
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