Key Takeaways
- Accenture shares plunged 14% during premarket hours following disappointing Q3 performance and reduced annual revenue projections
- Third-quarter revenue totaled $18.72 billion, falling short of the $18.75 billion analyst forecast; earnings per share exceeded expectations at $3.80 versus $3.71
- The firm unveiled $4.18 billion worth of cybersecurity deals, securing majority ownership in Dragos while acquiring runZero and NetRise outright
- Annual revenue growth projections were slashed to 3%–4% from the previous 4%–6% estimate
- Morgan Stanley reduced its rating on ACN to Equal-Weight, pointing to AI spending pressures on traditional IT operations and stagnant budget expansion
Shares of Accenture (ACN) were headed toward their steepest single-session decline in company history Thursday, plummeting 14% to $133.95 during premarket activity following the consulting powerhouse’s underwhelming earnings release and downward revision to its yearly revenue forecast.
Prior to the results announcement, shares were hovering near $155. The dramatic 14% decline erased approximately $20 billion from the company’s market capitalization within hours.
The firm posted adjusted earnings of $3.80 per share for its fiscal third quarter, surpassing the Street’s $3.71 projection. However, quarterly revenue totaling $18.72 billion fell just shy of the $18.75 billion consensus figure, while forward-looking guidance left investors underwhelmed.
Executives now project full-year revenue expansion of 3% to 4% on a local currency basis. This marks a downward revision from the prior 4% to 6% forecast — representing the second such reduction within the current fiscal year.
Fourth-quarter revenue expectations were set at $17.75 billion–$18.4 billion, trailing the analyst consensus of $18.47 billion.
Adjusted earnings per share guidance received a modest upward adjustment, with the updated range of $13.78–$13.90 lifting the lower bound from $13.65 while maintaining the upper limit.
The disappointing forecast wasn’t the sole factor pressuring shares. Accenture simultaneously revealed $4.18 billion in strategic cybersecurity investments — acquiring controlling interest in industrial security specialist Dragos alongside complete acquisitions of runZero and NetRise.
These transactions are slated to finalize between August and September, bringing companies with collective annual recurring revenue of $208 million into Accenture’s current $10 billion cybersecurity portfolio.
Morgan Stanley Cuts Rating Before Results
Shortly before the earnings announcement, Morgan Stanley lowered its rating on ACN to Equal-Weight from Overweight. The investment bank highlighted how substantial AI-related investments were diverting resources from core IT service offerings — while the anticipated budget environment improvement had failed to emerge.
“We are not seeing the budget growth inflection we had previously expected,” analysts noted.
The downgrade arrived amid continued constraints on IT expenditure budgets. Morgan Stanley characterized the prevailing interest-rate landscape as presenting a “neutral to negative signal,” with stagnant rates offering no assistance and potential increases threatening further tightening.
Third-quarter contract bookings reached $19.3 billion, representing approximately a 2% year-over-year decline. CEO Julie Sweet highlighted 104 deals exceeding $100 million during the quarter as proof that “demand for large-scale reinvention remains strong.” Market participants remained unconvinced.
Rivals Caught in the Crossfire
The negative sentiment extended to competing firms. Infosys declined 3.8% while Cognizant retreated 4.4% ahead of U.S. market open, and French competitor Capgemini tumbled 6.8% during Paris trading.
Jefferies analyst Surinder Thind noted as far back as March that client demand showed no signs of recovery, contradicting management’s optimistic messaging at that time.
Regarding artificial intelligence initiatives, Accenture has pursued collaborative arrangements with companies including OpenAI and Anthropic rather than direct competition — creating automated agents for customer service and marketing applications, with TD Cowen observing the company is simultaneously developing proprietary solutions for client licensing.
New bookings for Q3 totaled $19.3 billion, compared with $19.7 billion in the prior-year period.
