Accenture warns of weaker fiscal 2024 as IT spending remains under pressure

IT services firm Accenture forecast full-year earnings and first-quarter revenue below Wall Street targets on Thursday, signaling that high inflation and interest rates pressures will hurt demand through next year.

Shares of the company fell nearly 5% in trading before the bell after the company's fourth-quarter revenue also missed estimates.

The US Federal Reserve's forecast earlier this month that it would leave interest rates elevated for longer than widely expected, has added to concerns that enterprise spending will take longer-than-expected to return to healthy levels.

Indian IT services giant Infosys halved its full-year revenue forecast in July, citing delayed decision-making on future projects from clients, while Tata Consultancy Services also flagged soft demand.

Accenture expects first-quarter revenue in the range of $15.85 billion to $16.45 billion, while analysts polled by LSEG forecast $16.43 billion.

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The company also forecast fiscal 2024 adjusted earnings per share to be in the range of $11.97 to $12.32, below estimates of $12.45. The mid-point of its revenue growth forecast of 2% to 5% in local currency also fell short of estimates.

Unlike other tech executives, Accenture CEO Julie Sweet said in June she does not expect generative artificial intelligence to be a big growth driver next year, focusing instead on companies finishing their migration to the cloud.

Accenture's revenue rose 4% to $16 billion in the fourth quarter ended Aug. 31, compared with estimates of $16.08 billion.

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