Accenture's Q1 FY25 Earnings Reveal Strong Growth in Generative AI, Boosting Tech Industry Outlook

Accenture quarterly numbers point to strong GenAI prospects

Accenture's latest earnings boost Indian IT sector outlook. GenAI bookings hit a record high. North American demand shows signs of recovery. The company raised its FY25 growth forecast. Indian IT firms expect strong Q3 results and a robust FY26. Accenture's hiring continues to grow, mostly in India.India's $254-billion technology outsourcing industry, key to helping bridge an unexpectedly wide current account gap through a period of tepid demand for merchandise goods globally, has significant positives emerging from Accenture's latest quarterly earnings after the world's tech-services leader signalled robust GenAI prospects and early signs of demand revival in North America. "Accenture's better-than-expected results send positive year-end signals for the Indian IT industry," said Pareekh Jain, founder of consultancy firm EIIR Trend. "The fact that Accenture grew across all industries and geographies, along with an increase in guidance, indicates that the demand environment is improving. The growth in GenAI orders and headcount are also positive signals." Accenture called it a milestone quarter in GenAI with $1.2 billion in new bookings up from $1 billion in Q4FY24. Revenue for Q1FY25 from GenAI stood at approximately $500 million as compared with $900 million in FY24. This is its highest GenAI bookings in any quarter, showing the optimism of increased spending on the new technology by clients. "Two key takeaways for the Indian IT industry are that Indian service providers are likely to post good Q3 results in January 2025, and there is hope that FY26 (starting April) will outperform FY25 due to a better macro environment and accelerated GenAI adoption," Jain added. Accenture, which follows a September-August financial year, upgraded its FY25 outlook to 4-7% growth, from estimates of 3-6% provided in Q4FY24. Its headcount also continued to grow in the September to November period witnessing an increase of around 24,000 employees, with most additions across India. "Though Accenture maintains that the demand environment is the same, strong consulting revenue and booking growth indicate a positive shift in demand environment for Indian IT firms," said an ICICI Securities report after the Accenture earnings were announced. "The opportunity lies in large-sized transformation deals, towards which Accenture has made a pivot, leading to its robust growth uptick." For Accenture's Q1FY25 earnings, consulting business recovered strongly however a key concern is the slow growth in outsourcing bookings. Yet, "the uptick in outsourcing growth, financial services, North America and strong hiring momentum are the key positive takeaways for Indian IT," the ICICI Securities report added. "The guidance upgrade is due to faster-than-expected execution of the deals won earlier. Improvement in outsourcing growth is positive for the Indian IT Services sector. We maintain a positive stance on the sector, and expect a sustainable strong demand environment, along with opportunities from GenAI, to drive healthy earnings growth over the next three years," said a Nuvama (formerly Edelweiss) Institutional Equities report. For Q2FY25, Accenture's growth guidance is 5-9%, which includes slightly more than 3% growth indicated from inorganic streams - with 4% in H1FY25 and 2% in H2FY25. The Ireland-headquartered firm's management highlighted that Q1FY25 saw $242 million in investments across five acquisitions. Accenture CEO Julie Sweet, in a post-earnings conference call, said the overall spending environment is the same and that the clients who really want to go into AI are prioritising spending as opposed to spending more. "January, February is where we really see what the client budgets are going to be looking at... right now it still generally feels more like a prioritisation within current budgets. And so, we'll see what happens in January and February," Sweet said.

Accenture's stock moves higher as generative AI demand powers strong earnings beat - SiliconANGLE

Accenture's stock moves higher as generative AI demand powers strong earnings beat Shares of the professional services company Accenture plc moved higher after it posted a strong earnings and revenue beat in its fiscal 2025 first quarter results and increased its outlook for the full year. The company reported earnings before certain costs such as stock compensation of $3.59 per share, easily beating Wall Street's target of $3.42 per share. Revenue for the period rose 9%, to $17.7 billion, surpassing the analysts' forecast of $17.1 billion. All told, Accenture delivered a net income of $2.31 billion in the quarter, rising 13% from the $2 billion profit it recorded one year ago. For the current quarter, Accenture is looking for revenue of between $16.2 billion and $16.8 billion, the midpoint of which falls just below the Street's forecast of $16.6 billion. However, its long-term forecast is looking much better, as it increased its fiscal 2025 revenue outlook from between 3% to 6%, to a new range of 4% to 7%. Investors liked what they saw, and Accenture's stock gained more than 7% during the regular trading session today. The information technology management and consulting firm reported $18.7 billion worth of new bookings during the quarter, up 1% from a year earlier, with new artificial intelligence-related bookings coming to $1.2 billion. It has emerged as a significant beneficiary of enterprise's demand for generative AI tools in particular, assisting organizations with the intricacies of training, fine-tuning and deploying sophisticated large language models within their IT environments. During the quarter, Accenture revealed it's partnering with Nvidia Corp. to help kick-start adoption of one of the hottest new trends in the AI sector at the moment, namely agentic AI. Agentic AI is the word used to describe more advanced and autonomous AI systems that can make decisions and take actions independently, based on their environment, goals and training. Whereas traditional AI models operate strictly within the bounds of pre-programmed instructions and responses, AI agents are able to learn, adapt and respond in a more dynamic way. The partnership with Nvidia will see 30,000 Accenture consultants work with clients to build AI agents in 120 countries, the company said at the time. Accenture Chair and Chief Executive Julie Sweet hailed the company's "strong start" to the new fiscal year. "We delivered broad-based revenue growth across both consulting and managed services, and across each market and industry group, gaining market share," she told investors. On a conference call with analysts, Sweet said the demand environment at present was "more of the same", with many of its clients currently focused on implementing "large-scale transformations" that require the company's expertise. "We do not currently see an improvement in overall spending by our clients, particularly on smaller deals," Sweet added. However, she promised that the company will be well-positioned to capitalize on such deals when market conditions improve. She also talked about generative AI, saying that it has become a "catalyst for reinvention", playing a significant role in driving the company's quarterly revenue growth.

Accenture shocks markets for a good reason: Stock rockets 7%

Accenture's stock surged after robust first-quarter earnings, driven by increased artificial intelligence bookings. The consulting firm reported a revenue of $17.7 billion, surpassing both last year's figures and analysts' projections. Its net income reached $2.28 billion, equating to $3.59 per share, exceeding estimates. The surge in revenue reflects Accenture's strategic focus on AI, with significant contributions identified from the Americas and EMEA regions, particularly in public service and health sectors. AI-driven growth has been a cornerstone of the company's recent success, as the company embraced Generative AI, generating $1.2 billion in new bookings and achieving $500 million in revenue during the quarter. New bookings, a key indicator of future revenue, increased to $18.7 billion, up from $18.4 billion a year prior. This growth indicates a strong pipeline for Accenture, as businesses are prioritizing AI-driven transformation and operational efficiency. In response to this heightened demand, Accenture has expanded its data and AI workforce to 69,000 and plans to reach 80,000 by 2026. Consequently, Accenture revised its annual revenue growth outlook to a range of 4% to 7%, an increase from the previous 3% to 6%. However, the midpoint of this forecast fell slightly short of analysts' expectations. For the second quarter, Accenture projects revenue between $16.2 billion and $16.8 billion, with the midpoint also below market consensus. Despite lowering its full-year earnings per share (EPS) projection, the company expects EPS to be between $12.43 to $12.79, with continued growth of 9% to 11% from last year. Accenture cited negative impacts from exchange rates as a contributing factor to the revised EPS forecast. Investors reacted positively to the strong earnings report, with Accenture's shares rising by 6.5% in early trading and achieving a 7% gain by Thursday morning. This marks a significant recovery for Accenture's shares after experiencing losses on the previous day.

Accenture Stock Surges as Earnings Top Estimates and AI Bookings Grow

Thursday's gains brought Accenture shares back into positive territory for the year, recovering from Wednesday's losses. Shares of Accenture (ACN) surged Thursday after the professional services and consulting firm reported first-quarter results that topped analysts' expectations and lifted its full-year revenue growth forecast. Accenture posted $17.7 billion in revenue for the quarter, up from $16.2 billion the same time last year and above the $17.1 billion analysts projected as artificial intelligence (AI) bookings climbed. The company recorded $2.28 billion in net income, or $3.59 per share, better than the $1.98 billion, or $3.10 per share, the company reported a year ago. Those figures also beat analysts' estimates compiled by Visible Alpha. Accenture said it anticipates second-quarter revenue of $16.2 billion to $16.8 billion, with analysts expecting roughly $16.66 billion. The company also lifted its full-year revenue outlook, projecting growth of 4% to 7% compared to fiscal 2024, up from 3% to 6% previously. However, the Ireland-based firm lowered its full-year earnings per share (EPS) projection, warning exchange rates would have a negative impact of 0.5% compared to last year. Accenture had previously expected it to have a 1.5% positive effect. The company now expects EPS between $12.43 to $12.79, down from $12.55 to $12.91 previously, which still amounts to growth of 9% to 11% from last year. Accenture shares were up 7% Thursday morning, putting them back in the green for the year after recovering from Wednesday's losses.

Accenture Hits Record $4.2 Billion in Generative AI Sales

Accenture in its latest earnings call Q1 FY25 reported record generative AI bookings of $1.2 billion. Bringing the total to $4.2 billion since September 2023, this marks the highest quarterly bookings in the segment, reflecting growing client investments in generative AI. In its last earnings call in September 2024, Accenture announced $1 billion revenue from generative AI, which was a jump from $900 million in the previous quarter. The company was the first in its industry to disclose generative AI deal values. In June 2023, it reported $100 million in pure-play generative AI projects for the quarter. The sales are almost double as reported in the last quarter. "It's not really different from the kinds of productivity that we've been experiencing. And here, of course, there's an added wrinkle in that generative AI. In order for us to use it with our clients, they have to allow us to use it and they have to prioritise," said Julie Sweet, Accenture's CEO, during the company's post earnings call. She emphasised that organisations must first invest in building robust data foundations before scaling AI initiatives. "We do not currently see an improvement in overall spending by our clients, particularly on smaller deals. When those market conditions improve, we will be well positioned to capitalise on them as we continue to meet the demand for the critical programmes our clients are prioritising." In the August 2024 quarter, Accenture secured $1 billion in generative AI orders, bringing its yearly total to $3 billion. The segment accounted for 6.4% of its overall $18.7 billion bookings for the quarter. Accenture has also added 24,000 employees in the quarter, bringing its total workforce to 799,000, with a significant portion of hiring concentrated in India. Sweet added that the company has steadily increased its data and AI workforce, reaching approximately 57,000 practitioner. Despite its strong performance, Accenture maintained a cautious outlook on the global economy. The company's revenue for the first quarter stood at $17.69 billion, a 7.8% sequential increase, leading to a revision in full-year growth projections to 4-7%, up from 3-6%. Indian IT firms, however, are yet to disclose such revenues from generative AI. In October, Accenture partnered with NVIDIA to launch Accenture NVIDIA Business Group, aimed at helping enterprises scale AI adoption. This initiative includes training for 30,000 professionals globally to assist clients in reinventing processes and expanding the use of enterprise AI systems.

Accenture Raises Fiscal Forecast With Focus On GenAI, Workforce Training

'GenAI continues to be a catalyst for reinvention across the enterprise, and building out the data foundation necessary to capitalize on AI is an increasing part of that growth,' says Accenture Chair and CEO Julie Sweet. Accenture overcame a stable demand environment to grow its first fiscal quarter 2025 revenue and increase its full-year guidance on the back of an expanding emphasis on GenAI, its growing list of acquisitions, and on training its quickly growing workforce. It was a message investors wanted to hear as they drove the company's share prices up by over 7 percent to $372.16 per share by the end of the trading day. Accenture Chair and CEO Julie Sweet Thursday told analysts during the company's first fiscal quarter 2025 financial analyst conference call that said she was very pleased with Accenture's performance in the quarter as it delivered on its strategy to position the company for strong growth in fiscal year 2025. [Related: Accenture Places $3B AI Bet Following Multiple Acquisitions] "Our clients continue to prioritize large-scale transformations, and we are their reinvention partner of choice, as reflected in our bookings of $18.7 billion, including 30 clients with quarterly bookings greater than $100 million," she said. Accenture had what Sweet called another "milestone" quarter in GenAI with $1.2 billion in bookings and about $500 million in revenue. Accenture is responding by investing in its business and people, with $242 million invested across five acquisitions and with about 14 million training hours provided in the quarter to help bring the latest in solutions and technology to clients, provide employees with marketable skills and reinvent its services using GenAI. "We increased our data and AI workforce to approximately 69,000, continuing progress against our goal of 80,000 by the end of fiscal year 2026," she said. "We are proud to be recognized by Fortune as one of the world's best workplaces, jumping from No. 10 to No. 6." During the quarter, Accenture expanded by about 24,000 employees. Among Accenture's acquisitions in the first fiscal quarter were U.S.-based Award Solutions, which Sweet said expands the company's learning offerings tailored to the unique needs of telecom network leaders, network operations, performance engineers and IT professionals; Germany-based health-care management consultancy Consus.health; Germany-based SAP-focused management and technology consulting firm Camelot Management Consultants; and Joshua Tree Group, a U.S.-based supply chain consulting firm specializing in distribution center performance. The company expects to spend $3 billion on acquisitions for all of fiscal 2025. Accenture's demand environment in the quarter was similar to what the company has been seeing, Sweet said. "Our clients are focused on reinvention, which means large-scale transformations," she said. "We do not currently see an improvement in overall spending by our clients, particularly on smaller deals. When those market conditions improve, we will be well positioned to capitalize on them as we continue to meet the demand for the critical programs our clients are prioritizing as expected." Building the strong digital core required for reinvention was a strong driver of Accenture's growth this quarter, Sweet said. "GenAI continues to be a catalyst for reinvention across the enterprise, and building out the data foundation necessary to capitalize on AI is an increasing part of that growth," she said. "Themes around achieving both cost efficiencies and growth continue across the demand we're seeing. [Through] our strategy to be the reinvention partner of choice and how we are bringing together our services, our ecosystem relationships and our scaled investments in cutting-edge platforms like SynOps and GenWizard, as well as technologies like GenAI to drive value for our clients, we are helping our clients build their digital cloud core, including in the cloud, which saw double-digit growth this quarter." When asked by an analyst whether Accenture sees market conditions improving going forward, Sweet said that last year was a time of constrained spending, particularly on smaller deals, but since then the company has pivoted to a focus on winning more larger reinvention clients. "The idea was to go after the demand, which is in the larger reinventions, and that that would position us to get back to strong growth in '25 as those deals begin to layer in," she said. "And so what you're seeing is the result of what we're really proud of, which was quite a bit of agility last year, that when the market changed, we changed. As you know, these are not easy deals to do quickly, and we quickly pivoted last year, went after the demand, and then put ourselves in this position. And that's why we did underscore that the market environment has not changed. This is the result of the strategy we executed, which we're uniquely able to do because we have all the skills and capabilities. We have the mix of consulting and managed services." When asked whether the upcoming change in the U.S. presidency and its focus on efficiency will have any impact on Accenture, Sweet said her company is excited because its competencies in federal are around driving efficiencies and helping keep the country secure. "We're working with a U.S. federal agency on securing critical infrastructure," she said. And on changing citizen services, we work across very important agencies. And so we believe that we're super well-positioned to continue to help the mission of the federal government to secure itself, to help citizens and to drive more efficiencies, which will be tied very much to cloud, data and AI. And what really makes us uniquely positioned is that we believe that there's going to be an even greater appetite for taking commercial solutions to the federal government. And we are very uniquely positioned because we have strong government expertise, but we've got commercial and private sector solutions. We're the leader with every major ecosystem partner. ... The vast majority of what we do is mission-critical to the federal government. So we see a real opportunity to continue to partner with the new administration as we've partnered with all administrations." For its first fiscal quarter 2025, which ended Nov. 30, Accenture reported revenue of $17.69 billion, up about 9 percent over the $16.22 billion the company reported for its first fiscal quarter 2024. That included communications, media and technology revenue of $2.86 billion, up 7 percent; financial services revenue of $3.17 billion, up about 4 percent; health and public service revenue of $3.81 billion, up about 13 percent; product revenue of $5.43 billion, up about 12 percent; and resources revenue of $2.42 billion, up about 6 percent. Of the total revenue, $9.05 billion came from consulting, up 7 percent, while $8.64 billion came from managed services, up about 11 percent. Revenue from Accenture's Americas business totaled $8.73 billion, up 9 percent, while GenAI new bookings totaled $1.2 billion. Accenture also reported GAAP net income of $2.32 billion, or $3.59 per share, up from last year's $2.01 billion, or $3.10 per share. For its second fiscal quarter 2025, Accenture expects revenue to be in the range of $16.2 billion to $16.8 billion, up 5 percent to 9 percent over its second fiscal quarter 2024 revenue. For all of fiscal 2025, Accenture raised its expected year-over-year revenue growth to 4 percent to 7 percent, up from its previous estimate of 3 percent to 6 percent. Accenture also expects GAAP earnings for the year of $12.43 per share to $12.79 per share, up from its expectations of $12.55 per share to $12.91 per share. The new estimates would represent growth of 9 percent to 12 percent over fiscal year 2024.