Accenture the latest company to highlight strong AI demand
Accenture (ACN) reported strong Q4 results, with both earnings per share (EPS) and revenue slightly surpassing consensus expectations. The company delivered adjusted EPS of $2.79, in line with the consensus estimate, reflecting a 3% increase year-over-year. Revenue for the quarter reached $16.41 billion, slightly ahead of the $16.39 billion expected by analysts, and up 2.6% year-over-year. These results were driven by continued strength in the Managed Services segment and solid performance across several key industries, despite some softness in specific areas like financial services.
New bookings were a standout metric in the quarter, totaling $20.1 billion, a 21% increase year-over-year. This growth was driven by a 41% surge in Managed Services bookings, which amounted to $11.6 billion. Consulting bookings also contributed, albeit more modestly, with $8.6 billion in new contracts. For the full fiscal year, Accenture set a new record with $81.2 billion in total bookings, representing a 13% increase in U.S. dollars and a 14% increase in local currency. This robust demand underscores the company’s ability to secure large, long-term contracts even in a challenging macroeconomic environment.
Accenture’s guidance for fiscal 2025 indicates cautious optimism. The company expects revenue growth of 3-6% year-over-year, with EPS projected to rise by 5-8%, reaching a range of $12.55 to $12.91. Operating cash flow is expected to be between $9.4 billion and $10.1 billion, while free cash flow is forecasted to range from $8.8 billion to $9.5 billion. These projections are largely in line with analyst expectations, signaling steady growth ahead. Additionally, the company announced that its board has approved an additional $4 billion in share repurchase authorization, bringing the total capacity to approximately $6.7 billion.
The demand environment, as described by management, remains resilient, with particular strength noted in health and public service, which saw a 10% year-over-year revenue increase. CEO Julie Sweet emphasized Accenture’s ability to adapt and thrive by leveraging its scale and continued investments in areas like generative AI, which has become a critical growth driver. The company secured $1 billion in AI-related bookings during the quarter, contributing to a total of $3 billion in AI bookings for the fiscal year, highlighting the increasing importance of AI in its service offerings.
Despite strong overall performance, there were some areas of weakness. Financial Services revenue declined by 5.1% year-over-year to $2.87 billion, missing the $3.01 billion consensus estimate. The Resources segment also saw flat growth in U.S. dollars, although it achieved a 3% increase in local currency. These challenges were offset by stronger performances in other segments, such as Health & Public Service and Products, which posted 10% and 4.2% year-over-year growth, respectively. This diversification across industries helps Accenture mitigate risks associated with sector-specific slowdowns.
Accenture’s capital return plans were another highlight of the quarter. The company declared a quarterly cash dividend of $1.48 per share, a 15% increase from the previous quarter, underscoring its commitment to returning capital to shareholders. Over the full fiscal year, Accenture returned $8.3 billion to shareholders through dividends and share repurchases. The additional $4 billion share repurchase authorization further signals confidence in the company’s future cash flow generation and financial health.
In summary, Accenture’s Q4 performance demonstrates its strong positioning in the market, with robust new bookings and solid financial results. While some industry segments faced headwinds, the company’s diversified portfolio and strategic focus on high-growth areas like AI have enabled it to continue delivering value to shareholders. With cautious but optimistic guidance for fiscal 2025, Accenture is well-positioned to navigate the current economic environment while capitalizing on emerging opportunities, particularly in AI and digital transformation.