Accenture Q4 FY’23 Earnings

The market focuses on three main headlines for earnings reports. These are EPS, revenue, and outlook. Accenture missed 2 of 3, and the market reacted. If not for “business optimization moving ahead of schedule,” the EPS number might have missed estimates, too, making it 3/3 misses.

This wasn’t a pretty earnings call. While Accenture did fall within FY23 targets from last year, the return to normal growth has taken longer than expected and seems to continue to push out as concerns continue with the macro environment.

Concerns about small deals have been highlighted throughout the year during earnings calls, but confidence remained for large deals. However, this changed today as Julie mentioned the “sense of caution is bleeding into overall demand.”

The largest laggard is once again CMT, which declined 12% from last quarter. If CMT results were removed from overall results, quarterly earnings would have enjoyed a 7% increase versus the actual 4%. Don’t worry CMT; we know you’ll eventually come back :).

New bookings for the quarter were $16.6B, representing a 10% decline from the same quarter last year. This is a significant driver of the decreased FY24 forecast (versus Wall Street consensus) and a big reason why the stock is down so much today.

While things weren’t pretty, it could improve in Q2 as the year-over-year comparisons get easier. Q1 will also be ugly, as it could have negative results for revenue and EPS over the previous year’s Q1. KC pointed out that the year’s second half will look better because the comparisons are easier. In other words, the numbers worsened as we progressed through 2023, so the bar to beat is lower.

As the market is forward-looking, lower-than-expected results are quickly recalculated into the share price. If the macroeconomic conditions continue to worsen, this could be recalculated again. However, the market might be correct if business goes as forecasted.

Also, Accenture raised its dividend by 15%! Sweet, I got to end it on the summary with something positive!

The People

• Accenture reported 732,819 employees, a slight increase (951) from last quarter. With a 14% quarterly attrition combined with layoffs, it means Accenture is still hiring to fill the spots left behind
• Voluntary attrition was 13% for the year versus 18% for FY 2022. While conditions are very challenging at Accenture, they may not be much better elsewhere right now

The Numbers

• Quarterly revenue of $16B, a 4% increase from Q4 FY23
• New bookings of $16.6B, a 10% decrease from Q4 FY23
• Growth was stronger in Europe (7%) and growth markets (6%) than NA (1%)

The Future

• FY24 earnings forecasted $11.97 – $12.32 per share versus Wall Street consensus of $12.40 per share (3% – 6% growth)
• Q1 revenues of $15.85B – $16.45B, which represents -2% to +2% growth
• Revenue growth for the year of 2% – 2.5% versus FY23

AI / Generative AI

Ok, I had to do it. Since the earnings call included a separate section for AI / Gen AI, I also had to do one! Here are the highlights:

• AI or Gen AI was mentioned ~44 times, a 39% decrease from the 72 mentions last quarter
• AI or Gen AI revenue doubled to $2M for the quarter, or .013% of total revenue
• Accenture trained 600,000 of its employees on the fundamentals of AI