Sign in

    Accenture PLC (ACN)

    Q2 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$380.44Last close (Mar 20, 2024)
    Post-Earnings Price$363.99Open (Mar 21, 2024)
    Price Change
    $-16.45(-4.32%)

    What went well

    • Accenture is taking market share and building momentum on their strategy to be the reinvention partner, with a record 30 clients with bookings over $100 million.
    • The company has recorded $1 billion in generative AI sales in the first 6 months, the fastest they have ever built sales in an emerging technology, positioning them as a leader in GenAI.
    • Accenture's ability to invest heavily in acquisitions and new technologies, with investments more in the first half of the year than all of last year, supports future revenue growth and underscores the resilience of their strategy.

    What went wrong

    • Clients are increasing in-house IT capabilities, potentially reducing demand for Accenture's services, as some clients are doing more work internally.
    • Accenture's growth guidance relies on significant improvement in Q4, which may be uncertain given current market conditions and visibility similar to prior years.
    • Heavy investment in acquisitions may impact margins, and lower cash balance may reduce interest income, potentially affecting EPS growth in the second half of the year.

    Q&A Summary

    1. Revenue Guidance Visibility
      Q: How certain is Q4 revenue guidance?
      A: We have no difference in visibility compared to previous years; we base our 1% to 3% guidance on our standard analysis.

    2. Client Spending Constraints
      Q: When will clients resume shorter-cycle spending?
      A: Clients have just set their budgets amid macro uncertainty, so we assume constraints will continue; recovery depends on macro conditions.

    3. Impact of GenAI on Growth
      Q: Will GenAI bookings convert to large deals?
      A: We see strong $100 million-plus bookings layering in, but clients must build digital cores first to leverage AI fully, offering long-term opportunities.

    4. Margin Expansion and Investments
      Q: How will acquisitions affect margins?
      A: Despite flat margins, we expect 10 basis points expansion; we're investing heavily in people and businesses, forecasting EPS growth of 3% to 5%.

    5. Clients Insourcing IT
      Q: Are clients doing more IT internally?
      A: Some clients are increasing internal IT efforts, while others outsource more; it varies based on their strategies.

    6. Lowered Tax Rate Guidance
      Q: Is the lower tax rate a one-off?
      A: Annual factors influenced our tax rate; this year, favorable conditions let us reduce guidance by 1%.

    7. Services in Tech Spending Context
      Q: Why are services lagging other tech areas?
      A: Services are more discretionary and easier to pause; clients cut back amid uncertainty, though major transformations proceed.

    8. Revisiting Bookings with AI
      Q: Are clients relooking at past bookings for AI?
      A: We haven't seen changes in contracted work; focus is on new sales and smaller projects in our guidance.

    9. LearnVantage and Udacity Deal
      Q: What's the rationale behind LearnVantage?
      A: Talent is CEOs' top priority; LearnVantage, with Udacity, provides scalable tech training from board level to technologists, aiding clients in AI-driven reinvention.

    Related Publications