Accenture isn’t cashing in too much from the AI revolution.
Accenture is tumbling in early trading after unveiling disappointing Q4 sales guidance along with its ho-hum Q3 results.
The Ireland-based firm reported Q3 sales of $18.72 billion, slightly under Wall Street’s $18.76 billion estimate. Earnings per share of $3.80 bested the consensus call for $3.71. But for the current quarter, management sees sales ranging from $17.75 billion to $18.4 billion; analysts anticipated $18.5 billion.
The consulting giant is in the business of helping companies “reinvent” themselves, a process that it’s also in the midst of itself in light of how consulting has been rattled by the emergence of AI. And to do that, it’s enlisted the help of the enemy at the gates, striking a myriad of AI-linked partnerships as well as M&A. That list swelled today with the announcement of a handful of cybersecurity acquisitions.
On a related note, during the conference call, management indicated that many "lumpy bigger" managed services deals had been pushed back into fiscal year 2027 for company-specific reasons.
Accenture’s new bookings also disappointed at $19.32 billion versus an estimate of $20.66 billion. Breaking down those results, its consulting business was better than expected, but managed services underwhelmed. The latter relates to revenues the firm generates from customers continuing to use Accenture to run those solutions on an ongoing basis.
It could mean lots of things, one of which is that companies are happy to use Accenture’s advice to generate an AI strategy, but are able to implement those changes themselves.
I flagged Accenture’s bookings as a key chart to watch for 2026, based on the idea that Fortune 500 companies that want to build out an AI strategy would be turning to the consulting company (as well as its peers) for help.
(In hindsight, probably a dumb call — should’ve gone with ARR at Anthropic and OpenAI, but in my defense there was no guarantee those numbers would be updated as frequently as they’ve been so far this year!)
These results, and the trend, are pretty uninspiring.
Separately, management boosted the amount of cash it plans to return to shareholders this fiscal year by $200 million to “at least” $9.5 billion. But as we discussed in Monday’s EntryPoint newsletter, it’s capex that’s hot, and shareholder returns are not. A Goldman Sachs basket of buyback-heavy firms came into this week with the worst annual performance relative to their capex-heavy peers.