Accenture Earnings Beat Estimates. Why the Stock Is Dropping.

Accenture reported fiscal first-quarter adjusted earnings that beat analysts’ estimates. (Pau Barrena /AFP via Getty Images)

Key Points

• Accenture’s first-quarter adjusted earnings of $3.94 a share beat analysts’ estimates. Revenue rose 5% to $18.7 billion in local-currency terms.
• New bookings increased 10% in local currency to $20.9 billion, including $2.2 billion from AI offerings.
• The company maintained its annual adjusted earnings guidance of $13.52 to $13.90 a share.

Accenture fell Thursday even though the consulting company reported earnings and revenue that were ahead of expectations, while confirming its outlook.

Accenture reported fiscal first-quarter adjusted earnings of $3.94 a share, up 10% from the same period the previous year. Revenue rose 5% to $18.7 billion in local-currency terms.

Analysts had expected adjusted earnings of $3.74 a share from revenue of $18.53 billion, according to FactSet.

New bookings, which represent the company’s potential for future revenue, were up 10% in local currency to $20.9 billion. Bookings attributed to artificial-intelligence offerings came to $2.2 billion.

“We delivered revenue growth of 5% in local currency, at the top of our guided range, while continuing to gain market share. We also strengthened our leadership in advanced AI and deepened our ecosystem partnerships to help clients realize value,” said CEO Julie Sweet in a statement.

The strong print wasn’t enough to calm investors’ fears about AI cannibalizing the information-technology and consulting sectors. Accenture shares ended Thursday down 1.4%.

Accenture shares had slumped 22% this year as of Wednesday’s close. The stock has followed a similar path to shares of Salesforce and Adobe —down 23% and 20% this year, respectively—two software businesses that traders worry will be automated out of relevance. Federal spending cuts also weighed on Accenture shares during the first half of the year due to the company’s exposure to government contracts.

Accenture backed its previous guidance for full-year adjusted earnings in the range of $13.52 to $13.90 a share, a 5% to 8% increase. Revenue is forecast to grow 2% to 5% in local currency.

Write to Adam Clark at adam.clark@barrons.com