Key Takeaways
- Accenture shares plunged 14% during premarket hours following disappointing Q3 results and a reduced annual revenue projection
- The company reported $18.72 billion in quarterly revenue, falling short of the $18.75 billion forecast; earnings per share exceeded expectations at $3.80 versus $3.71
- The firm unveiled $4.18 billion worth of cybersecurity company purchases, including majority ownership of Dragos plus complete acquisitions of runZero and NetRise
- Annual revenue growth projections were reduced to 3%–4% from the earlier 4%–6% forecast
- Morgan Stanley lowered its rating on ACN to Equal-Weight, pointing to AI spending pressures on traditional IT operations and stalled budget improvements
Shares of Accenture (ACN) headed toward their steepest single-session decline ever on Thursday, plummeting 14% to $133.95 during premarket hours after the global consulting powerhouse reported underwhelming quarterly results and lowered its yearly revenue projections.
The equity was hovering near $155 prior to the earnings release. The 14% collapse erased approximately $20 billion in market capitalization within hours.
Earnings per share reached $3.80 for the company’s fiscal third quarter, surpassing Wall Street’s projection of $3.71. However, quarterly revenue of $18.72 billion slightly trailed the $18.75 billion consensus forecast, while forward guidance underwhelmed investors.
Executives now project full-year revenue expansion of 3% to 4% measured in local currency. This marks a reduction from the prior 4% to 6% outlook — representing the second downward revision Accenture has made this fiscal year.
Fourth-quarter revenue was projected between $17.75 billion and $18.4 billion, falling below 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 results weren’t the sole factor pressuring shares. Accenture simultaneously unveiled $4.18 billion in cybersecurity company acquisitions — securing majority control of industrial cybersecurity specialist Dragos while purchasing runZero and NetRise outright.
The transactions are projected to finalize in August or September and will incorporate businesses generating combined annual recurring revenue of $208 million into Accenture’s current $10 billion cybersecurity operations.
Morgan Stanley Cuts Rating Before Results
Mere days ahead of the earnings announcement, Morgan Stanley lowered ACN to Equal-Weight from Overweight. The investment bank cited substantial AI investments draining resources from conventional IT service offerings — while the anticipated budget expansion failed to emerge.
“We are not seeing the budget growth inflection we had previously expected,” analysts wrote.
The downgrade arrived as information technology spending allocations remain constrained. Morgan Stanley characterized the prevailing interest-rate landscape as a “neutral to negative signal,” with stable rates offering no assistance and potential increases creating additional pressure.
New contract bookings for Q3 totaled $19.3 billion, declining approximately 2% compared to the year-ago quarter. Chief Executive Julie Sweet highlighted 104 quarterly contracts exceeding $100 million as proof that “demand for large-scale reinvention remains strong.” The market remained skeptical.
Competitors Feel the Impact
The damage extended beyond ACN. Infosys declined 3.8% and Cognizant dropped 4.4% ahead of U.S. market open, while French competitor Capgemini tumbled 6.8% during Paris trading.
Jefferies analyst Surinder Thind noted back in March that he had observed no indications of recovering client demand, directly challenging management’s optimistic messaging at that time.
Regarding artificial intelligence, Accenture has been forging alliances with companies like OpenAI and Anthropic instead of entering direct competition — creating agents for client support and marketing applications, with TD Cowen observing the company is also developing proprietary tools for client licensing.
Q3 new contract bookings reached $19.3 billion, versus $19.7 billion during the comparable period last year.
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