Accenture Q3 revenue matches estimates but forecast dips

image of Julie Sweet Accenture chair and CEO | Accenture Q1 24

Accenture has reported its financial results for the third quarter of fiscal 2023 with revenues of $16.6bn, an increase of three percent in US dollars and five percent in local currency, matching estimates amid reduced spend in an uncertain economic outlook.

It marks a dip in the company’s growth from last year’s Q3 results, where revenue was reported at $16.2, an increase of 22 percent in US dollars and follows the Q2 announcement that Accenture is streamlining operations and reducing costs.

The company reported total revenues for the FY23 to date at $48.1bn, an increase of ten percent in local currency and four percent in US dollars.

Q3 performance saw the vast majority of its industry groups increase in revenue with financial services revenue being $3.1bn; health and public service revenue at $3.3bn an increase of 14 percent; resources revenue at $2.3bn and product revenue boosting the company’s performance with $5.0bn, an increase of six percent. Communications, media and technology, however, let the company down this quarter with a reported revenue of $2.9bn, a decrease of eight percent.

Consulting revenues for the quarter were $8.69bn, a decrease of four percent in US dollars and one percent in local currency year-on-year. Managed Services revenues were $7.87bn, an increase of ten percent in US dollars and 13 percent in local currency YoY.

New bookings for the quarter remained steady at $17.2bn, up two percent in US dollars and four percent in local currency, with consulting bookings of $8.9bn and managed services bookings of $8.3bn.

GAAP operating income was $2.36bn, compared to $2.60bn for the third quarter last year, and operating margin was 14.2 percent compared to 16.1 percent for the third quarter last year. Adjusted operating income was $2.71bn and adjusted operating margin was 16.3 percent. GAAP diluted earnings per share were $3.15, compared to $2.79 for the third quarter last year.

Accenture expects revenues for the fourth quarter of fiscal 2023 to be in the range of $15.75bn-$16.35bn up 2-6 percent in local currency. The firm has also lowered its fiscal 23 guidance, expecting revenue growth to be in the range of 8-9 percent in
local currency, compared to 8-10 percent previously.

The results were accompanied by the recently announced strategic expansion of its relationship with Google Cloud to help organization reinvent their businesses with generative AI. This builds upon Accenture’s $3bn investment in AI where the company aims to scale its data and AI practice, doubling its talent to 80,000 people in an effort to leverage AI to achieve greater growth, efficiency and resilience.

Julie Sweet, chair and CEO of Accenture, said: “Our third quarter results reflect solid bookings and revenue and very strong adjusted operating margin, earnings per share and free cash flow, which demonstrates the rigor and discipline with which we run our business. The strength of our strategy to be our clients’ transformation partner of choice continues to resonate, with 26 clients with quarterly bookings of $100m or more; and our business model – which for decades has been built around the diversity of our markets, industries and services – along with our more than 730,000 talented people position us well to continue to deliver 360-degree value for our clients and stakeholders every day.”