AI Boom Spurs Accenture’s Optimistic Revenue Forecast for 2024

Last updated: June 27, 2024

accenture_offices_in_israelAccenture predicts stronger-than-expected annual revenue growth, driven by soaring demand for AI integration services. Shares surged over 6%, reversing some of this year’s 19% decline amid concerns about IT spending cuts due to high interest rates.

Accenture’s generative AI division, which aids companies in automating operations to cut costs and boost productivity, saw a 50% increase in new bookings from the previous quarter.

This growth eclipsed that of Accenture’s other core services, including consulting and cloud migration, where demand has plateaued as enterprise spending levels off.

Rival firms Tata Consultancy Services and Infosys have reported similar challenges, noting reduced spending by U.S. and European clients.

“GenAI is acting as a catalyst for companies to more aggressively go after costs … which creates significant opportunity for us,” said Accenture CEO Julie Sweet during a call with analysts.

The company’s new bookings—a measure of contract value with spending commitments—rose to $21.06 billion in Q3, up from $17.25 billion a year earlier.

Of this, $900 million was for GenAI services, compared to $600 million in the prior quarter, bringing the annual total to over $2 billion.

“While overall near-term demand remains weak, it does not appear to be deteriorating. The strong outsourcing bookings are noteworthy, which suggests demand for big transformation projects remains intact,” commented Jefferies analyst Surinder Thind.

Accenture expects annual revenue growth between 1.5% and 2.5%, surpassing the 1.6% forecast by business analysts, according to LSEG data.

The company had initially projected 1% to 3% growth but noted a 0.7% negative foreign-exchange impact for the fiscal year ending in August.

Q3 revenue of $16.47 billion fell short of the $16.53 billion estimate, while adjusted earnings per share of $3.13 also missed the $3.15 forecast.

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