-=Accenture (ACN) reported earnings on Thur 21 March 24 (b/o)

 

Accenture beats by $0.11, reports revs in-line; guides Q3 revs below consensus; lowers FY24 guidance

• Reports Q2 (Feb) earnings of $2.77 per share, excluding non-recurring items, $0.11 better than the FactSet Consensus of $2.66; revenues fell 0.1% year/year to $15.8 bln vs the $15.85 bln FactSet Consensus.
• Co issues downside guidance for Q3, sees Q3 revs of $16.25 billion to $16.85 billion, excluding non-recurring items, vs. $17.02 bln FactSet Consensus.
• Co issues lowered guidance for FY24, sees EPS of $11.97-12.20 from $11.97 to $12.32, excluding non-recurring items, vs. $12.24 FactSet Consensus. For fiscal 2024, the company now expects revenue growth to be in the range of 1% to 3% in local currency, compared to 2% to 5% previously (Factset consensus calls for revenue growth of +3.2%).
• For fiscal 2024, the company continues to expect operating cash flow to be in the range of $9.3 billion to $9.9 billion; property and equipment additions to be $600 million; and free cash flow to be in the range of $8.7 billion to $9.3 billion.
• Accenture plc has declared another quarterly cash dividend of $1.29 per share for shareholders of record at the close of business on April 11, 2024. This dividend, which is payable on May 15, 2024, represents a 15% increase over the quarterly dividend rate of $1.12 per share in fiscal 2023.

• What led to downbeat guidance? ACN is traversing an uncertain macroeconomic environment, underscored by geopolitical, economic, and industry-specific headwinds. As a result, the company is noticing customers thoughtfully prioritizing larger business transformations.
• Meanwhile, even though AI is nearly universally recognized as a crucial piece of technology, ACN's clients face challenges utilizing AI at scale as the technology is merely a small subset of what is needed.
  • For example, organizations must have the right digital core, change their processes, and upskill their workforce to build new capabilities around AI.
  • Additionally, AI remains in its early stages, leading to some lack of knowledge about how it can be leveraged to improve operations.
• Because of the formidable economic landscape, ACN noted that it is hard to predict the current IT services spending cycle. Management mentioned that at the turn of the new year, spending was further tightened, particularly on smaller projects. As such, budgets look slightly more constrained for CY24 than last year.
• On a lighter note, ACN remarked that it continues taking market share. It also witnesses upward momentum as its clients understand the importance of a technology-led transformation.
• Nevertheless, the near term continues to contain multiple hurdles despite early interest in AI as businesses operate conservatively in light of elevated macroeconomic uncertainty.