Shares of IT services giant Accenture fell 2.6 percent on June 20, in premarket trading, after the company said new bookings decreased 6 percent to $19.7 billion in Q3FY25, dragged down by deal delays and cancellations.
Sweet made the comments after being asked whether the new bookings were down as a result of US federal contracts being cancelled.
Last quarter, the Nasdaq-listed IT services provider confirmed that the company’s federal services revenue has taken a hit due to a shift in government priorities.
“The new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” Sweet said during the company’s earnings call on March 20.
After Donald Trump took over as the President of the US, he appointed entrepreneur Elon Musk to head a department, the Department of Government Efficiency (DOGE), for "modernising federal technology and software to maximise governmental efficiency and productivity".
Moreover, macroeconomic conditions have added to the woes of the company.
"We continue to see a significantly elevated level of macroeconomic uncertainty compared to 2024," Sweet further said, adding that clients are facing everything at once, such as macroeconomic uncertainty, geopolitical risks, and a sluggish US federal contracting environment.
Consulting bookings dropped to $9.1 billion, while managed services fared slightly better at $10.6 billion.
Q3FY25 Performance
Despite the bookings drop, the company raised the upper end of its annual revenue growth forecast to 6-7 percent, from 5-7 percent earlier.
In another positive, the company’s organic growth is back, Accenture's Chief Financial Officer is Angie Park, said in the conference call. In Q3, organic growth accounted for 3-4 percent of the 8 percent overall growth.
Nonetheless, operating margin slipped 80 basis points to 16.8 percent.
Accenture’s numbers are closely tracked in India, home to a significant portion of its global workforce. The company’s results often set the tone for the broader Indian IT sector, especially as clients pull back on discretionary tech spending.
Headcount fell sharply by 10,000 to 7,91,000 in the quarter, reversing last quarter’s net addition of 2,000 employees. Attrition rose by three percentage points to 16 percent.
Gen AI Picture
Nevertheless, one bright spot continues to shine: Generative AI.
The company clocked $1.5 billion in new Gen AI-related bookings in Q3, up from $1.4 billion in the prior quarter. Accenture has now racked up $7.1 billion in cumulative Gen AI bookings since it began reporting them separately.
It also added 30 clients with deal values exceeding $100 million during the quarter.
Alongside its largest Indian rival, Tata Consultancy Services, Accenture is among the few large IT players breaking out Gen AI revenue.
Additonally, Accenture announced changes in its “growth model” to reinvent itself for the age of AI. Accordingly, it will deliver measurable value through AI-enabled platforms and multi-service solutions across business divisions of Strategy, Consulting, Song, Technology, and Operations.
The formation of a new integrated business unit, Reinvention Services, under Manish Sharma, aims to accelerate this momentum.
As Chief Services Officer, Sharma will lead efforts to embed AI and data at scale across industries, with the goal of building faster, more transformative solutions for clients navigating a rapidly changing digital landscape.
Sharma, the current CEO of the Americas, will also become Accenture’s first Chief Services Officer.
John Walsh, Accenture’s current global Chief Operating Officer, will become CEO of the Americas, succeeding Sharma. Kate Hogan, the current Chief Operating Officer of the Americas, will become the global Chief Operating Officer, succeeding Walsh.
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