July5 , 2022

Accenture beats quarterly revenue estimates but tempers 2022 view

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IT major Accenture Plc beat third-quarter revenue expectations as more businesses turned to the IT services provider to digitise their operations. Revenue for the quarter ended 31 May was $16.16 billion. Analysts on average had expected $16.03 billion in revenue. Accenture reported new bookings of $17 billion, the company’s second-highest ever, a 10% increase in US dollars.

Operating income rose 23% to $2.6 billion, with operating margin of 16.1%, an expansion of 10 basis points.

Julie Sweet, Accenture’s Chair & CEO, said, “Our very strong financial results for the third quarter reflect continued broad-based demand across markets, services, and industries, and the continued recognition of the outstanding talent of our 710,000 people. We continue to gain significant market share, and our services have never been more relevant as our clients turn to us as the trusted partner for the solutions they need to accelerate growth and become more resilient and efficient.”

But in light of the strong US dollar, which is denting the value of overseas earnings, IT consulting firm Accenture Plc predicted its fourth-quarter revenue below expectations and tempered its fiscal 2022 profit forecast. 

The dollar in recent months has appreciated significantly against other currencies as weaker global economic growth drives investors toward safe havens. The dollar index is near two-decade highs. Steps by the Federal Reserve to tighten its monetary policy and increase interest rates also support the dollar. Typically, a stronger dollar eats into the profits of companies that have sprawling international operations and convert foreign currencies into dollars.

“The strength of the US dollar depresses the value of overseas earnings,” said Anthony Carfang, managing director of Carfang Group LLC, a provider of treasury services. “Companies have to grow their overseas revenues just to be even,” with 2021, he added.

Foreign exchange headwinds have also forced firms including Microsoft and Salesforce to temper their expectations for the year.

Accenture, which makes more than half of its revenue from outside the United States, said it now expects a negative foreign-exchange impact of 4.5% in fiscal 2022, worse than its previous forecast of a 3% forex hit.

Shares of the firm fell 2.8% in trading before the bell. They were down about 31% so far this year. 

Accenture cut the higher end of its annual profit forecast range. It expects fiscal 2022 earnings per share to be in the range of $10.61 to $10.70, compared with its previous estimate of $10.61 to $10.81.

It also forecast fourth-quarter revenue to be in the range of $15.0 billion to $15.5 billion, compared with analysts’ average expectation of $15.70 billion, according to IBES data from Refinitiv.

The forecast reflects the firm’s assumption of a negative 8% foreign-exchange impact, Accenture stated. 

(With Agency Inputs)

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