Key facts
- Accenture shares fell 18% on Thursday, their worst single-day drop in years.
- The company reported fiscal third-quarter earnings per share of $3.80, up 9% year-over-year.
- Third-quarter revenue grew 6% to $18.7 billion.
- Accenture now expects full-year revenue growth of 3% to 4% in local currency, down from 3% to 5%.
- New bookings for the quarter were $19.3 billion, down from $19.7 billion a year earlier.
- Accenture is acquiring cybersecurity firms Dragos, runZero, and NetRise for approximately $4.18 billion.
Accenture shares plummeted 18% on Thursday, marking their worst single-day performance in years, as the tech consulting firm's outlook and concerns about artificial intelligence overshadowed its fiscal third-quarter results. The stock was trading around $128 and is down more than 50% year-to-date.
Despite a seemingly healthy quarter with earnings per share rising 9% year-over-year to $3.80 and revenue growing 6% to $18.7 billion, the market reacted negatively to Accenture's revised full-year revenue growth forecast. The company now expects growth of 3% to 4% in local currency, a reduction from the previously guided 3% to 5% range. New bookings also saw a slight decline to $19.3 billion from $19.7 billion a year prior.
Adding to investor concerns, Accenture announced it would spend approximately $4.18 billion to acquire cybersecurity firms Dragos, runZero, and NetRise. This significant investment in operational technology cybersecurity comes as organic growth cools, a move that analysts suggest is a difficult ask for investors.
The deeper fear driving the stock's decline this year is the potential impact of AI on Accenture's core business of building software and integrating systems. If AI tools can perform these tasks more efficiently, it could reduce the need for billable hours. Accenture's consulting revenue grew only 1% in local currency last quarter, fueling this worry.
However, CEO Julie Sweet stated that AI is expected to be a tailwind, as enterprises need more assistance to implement AI across their operations. The company reported $2.2 billion in advanced AI work bookings in its fiscal first quarter and believes AI will increase demand for its services. The cybersecurity acquisitions are also framed as a response to the growing need to secure AI-integrated infrastructure.