Accenture reported a second straight drop in quarterly new bookings on Friday and unveiled an organizational revamp to bolster its AI consulting services, as a cutback in U.S. government spending and economic uncertainty pressure growth.
The bookings decline overshadowed the consulting giant’s better-than-expected quarterly revenue and an increase in its annual forecasts, sending its shares down more than six per cent.
Consulting and IT firms are under pressure as U.S. tariffs and accompanying economic uncertainty force companies to rethink their spending plans, while the Trump administration’s cost-cutting efforts have led to contract cancellations and delays.
CFO Angie Park said slower government spending will have an impact of two per cent on its fiscal fourth-quarter and annual revenue, after recording an “immaterial” hit in the last quarter.
Bookings - which represent future revenue secured through contracts - fell six per cent to US$19.70 billion in the third quarter, below the Visible Alpha estimate of US$21.54 billion and worse than the three per cent decline in the previous quarter.
Accenture said 30 clients recorded quarterly bookings of greater than US$100 million, compared with 32 in the previous quarter. Generative AI bookings totaled about US$1.5 billion.
AJ Bell analyst Dan Coatsworth said Accenture had already rattled investors in March with warnings on U.S. government spending, and the latest bookings decline adds to concerns that securing new business was also getting harder.
“Earnings grew, but the market is more focused on what’s ahead, not what’s just happened.”
To navigate the uncertainty, Accenture plans to focus on AI consulting with the creation of a new business unit called reinvention services, which would combine its AI offerings and be led by Manish Sharma, the head of its Americas business.
Accenture posted third-quarter revenue of US$17.7 billion, beating analysts’ average estimate of US$17.30 billion, according to data compiled by LSEG. That growth was powered by higher spending by its clients in the financial services industry.
Profit per share of US$3.49 also beat estimates of US$3.32.
Accenture now expects annual revenue growth of six to seven per cent, compared with its earlier expectation of five to seven per cent.
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Reporting by Meghana Khare and Jaspreet Singh in Bengaluru; Editing by Shinjini Ganguli
