Accenture share price: Why did the Dublin-based IT giant’s stock nosedive 7% after Q2 results? EXPLAINED | Stock Market News
Source: Live Mint
Accenture Share Price: Shares of Accenture Plc cracked over seven per cent on the New York Stock Exchange (NYSE) after the world’s biggest information technology (IT) services company declared its second-quarter earnings results. The Dublin, Ireland-based IT major hiked its full-year revenue growth guidance to 5-7 per cent, higher than market estimates.
On Thursday, shares of Accenture opened at $296.15 on the American stock exchange and swung to a day’s low of $291.51 before settling 7.26 per cent lower at $300.91 on the NYSE. Accenture Plc also flagged macroeconomic uncertainty in the US market during its post-earnings call with analysts.
The weakness in the IT stock also dragged Wall Street’s tech-heavy Nasdaq Composite index, which settled 59.16 points, or 0.33 per cent lower to 17,691.63 on Thursday. The S&P 500 index fell 12.40 points to 5,662.89.
Accenture share price cracks 7%: What’s dragging the stock?
The consultancy firm said the Trump administration’s efforts to reduce federal spending have delayed and cancelled its new contracts. The new US administration and its Department of Government Efficiency (DOGE), led by tech billionaire Elon Musk, have implemented measures to slash spending and reduce the size of the federal workforce.
The IT services company, employing nearly 800,000 employees worldwide, said new procurement actions had decreased amid US President Donald Trump’s spending crackdown, hurting its overall sales and revenue.
Accenture Chief Executive Officer Julie Sweet said on a call about earnings that federal services accounted for about eight per cent of its global revenue and about 16 per cent of its Americas revenue in the 2024 fiscal year.
Accenture said its federal services unit is facing a slowdown. The US General Services Administration instructed all federal agencies to review their contracts with consulting firms and cancel unnecessary contracts. The weakness in the tech stock also dragged the American Depository Receipt (ADR) shares of India’s leading IT giants Infosys and Wipro on the NYSE.
Accenture Q2 Results
Accenture has raised the lower end of its annual revenue growth forecast, betting on growing demand for its services to help global clients integrate artificial intelligence (AI) powered tools into their operations. Accenture follows a September-August financial calendar.
New bookings for Accenture, a key indicator of future revenue, fell three per cent to $20.9 billion in the second quarter. According to news agency Reuters, Accenture expects annual revenue to grow between five per cent and seven per cent, compared with its prior forecast of four per cent to seven per cent.
Accenture’s consulting service segment, which accounts for 59 per cent of its revenue, reported second-quarter revenue of $8.3 billion, which fell short of the average analyst estimate of $8.54 billion. Accenture reported second-quarter revenue of $16.66 billion, compared with estimates of $16.62 billion.
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