Accenture forecasts first-quarter revenue below estimates on IT spending cut, higher dollar

IT major Accenture Plc forecast first-quarter revenue below estimates, weighed down by IT spending cuts amid surprisingly hot August inflation data and impact from a stronger dollar. Revenue for the quarter ended 31 August was $15.4 billion. Analysts on average had estimated $15.39 billion in revenue.

For fiscal 2023, the Dublin, Ireland-based company expects revenue growth to be in the range of 8% to 11% in local currency.

Foreign exchange headwinds have intensified since Accenture’s third-quarter results, with the American dollar at a two-decade high against a basket of currencies and up about 16% so far in 2022 amid sharp US Federal Reserve rate hikes and rising geopolitical tensions.

This has impacted firms with significant overseas operations including Microsoft, Salesforce and IBM.

Analysts worry a protracted economic slowdown could dent robust IT spending with the cracks already showing after Salesforce cut its annual revenue and profit forecast noting “measured» spending from clients.

Strong dollar eats into profits of IT firms

A strong dollar typically eats into profits of IT companies that convert foreign currencies into dollars. The dollar leapt as high as 145.405 yen for the first time since August 1998, but then swung sharply back to as low as 143.50, before last trading 0.45% higher than Wednesday at 144.75.

The dollar index, which measures the greenback against a basket of six counterparts, including the yen, euro and sterling, had earlier risen as high as 111.79 for the first time since mid-2002.

Accenture forecast current-quarter revenue between $15.20 billion and $15.75 billion, compared with analysts’ average estimate of $16.07 billion, as per data from Refinitiv.

The forecast reflects the assumption of about 8.5% negative foreign-exchange impact, the IT services firm stated.

Julie Sweet, chair and CEO, Accenture, said, “Our exceptional performance in fiscal 2022 is a testament to our ability to create enduring 360° Value for all our stakeholders: clients, people, shareholders, partners and communities. The depth, breadth and relevance of our services uniquely position us to help our clients achieve resilience, agility and growth across every part of the enterprise. Records across all financial metrics — new bookings, revenues, EPS and cash flow, reflect the continued successful execution of our growth strategy. We delivered these results while proudly making progress on our sustainability goals, including advancing inclusion and diversity; exceeding 85% renewable electricity use in our offices and centers globally; and continuing to make a positive impact on the communities where we work and live. I want to thank our 721,000 incredibly talented people, whose dedication and passion make us a trusted partner to our clients as we help them embrace today’s accelerated pace of change.»

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