Accenture Stock Plunges 20% After Revenue Miss, Cites AI and Middle East Conflict
Accenture (NYSE: ACN) reported third-quarter fiscal 2024 results that fell short of analyst revenue expectations, triggering a historic stock decline. The company attributed the shortfall to the disruptive impact of AI on consulting services and client uncertainty stemming from the conflict in the Middle East.
Financial Results
- Revenue: $18.7 billion for the quarter ended May 31, 2024. This represents a $1.0 billion increase year-over-year but fell slightly below the analyst consensus estimate of $18.76 billion.
- New Bookings: Declined 2% compared to the same period last year.
- Earnings: Diluted earnings per share (EPS) rose 9% year-over-year to $3.80.
- Guidance (Q4): Revenue forecast for the three months through August is between $17.75 billion and $18.4 billion, below the consensus estimate of $18.47 billion.
- Full-Year Outlook: Local-currency revenue growth is expected to be 3% to 4%. Adjusted EPS guidance is set at $13.78 to $13.90.
"The investors, I think, are missing the AI tailwind and how we're positioning ourselves for the long-term." — CEO Julie Sweet
CEO Commentary & Market Context
CEO Julie Sweet noted that the Middle East conflict directly reduced revenue by $100 million in the three months through May and impacted sales by approximately $400 million. Despite this, she emphasized strong demand for large-scale transformation, highlighting 104 quarterly client bookings of $100 million or more year-to-date—a 13% increase.
Sweet advised investors to hold judgment, stating that "AI scaling will take some time" and that "there's a lot of work to do to scale."
According to Bloomberg Intelligence, weak sales and soft bookings reinforce concerns that AI may be disrupting demand across consulting and managed services. The report also noted that the Middle East conflict has hit discretionary spending, further softening demand for consultants.
Market Reaction & Restructuring
Accenture shares fell 20% in early New York trading on Thursday, marking their worst one-day drop on record. For the year, the stock has fallen approximately 50%.
In response to shifting market dynamics, Accenture has undertaken significant restructuring. Last year, it consolidated its strategy, consulting, song, technology, and operations services into a single unit called "reinvention services." Sweet said the company aims to make it easier to bring solutions, embed data and AI, and scale across its client base and into new markets.
The company is also making a major acquisition push. Accenture has agreed to acquire a majority stake in Dragos, as well as all of runZero and NetRise, for a combined enterprise value of approximately $4.2 billion.