Discover what’s happening behind the numbers and how Accenture plans to bounce back
Accenture, one of the world’s top IT and consulting firms, recently released its Q3 results for fiscal year 2025. On the surface, the numbers looked strong. Revenue rose to $17.7 billion, which was an 8% increase compared to the same quarter last year. The company also posted an earnings per share (EPS) of $3.49, which beat analyst expectations.
Operating margins improved, and cash flow remained solid, crossing $3.5 billion. Despite these positive figures, the stock price fell sharply. This decline was largely due to a major concern that overshadowed all the good news: a noticeable drop in new bookings.
The Real Problem: Falling New Bookings
The core issue in Accenture’s Q3 performance was the drop in new contracts. New bookings fell to $19.7 billion, which is about 6% lower than the same period last year. Bookings are very important for companies like Accenture because they show how much future work the company has secured. While current revenue reflects past bookings, falling bookings today suggest future revenue may be weaker.
This was the second quarter in a row where Accenture saw a decline in bookings. Investors and analysts expected bookings closer to $21.5 billion, so this shortfall was significant. The decline was seen in both major areas of the business: consulting and managed services. Consulting revenue was around $9.08 billion, and managed services reached about $10.62 billion, but both areas failed to meet internal and market expectations.
What Caused the Drop in Demand?
Several factors contributed to the drop in bookings. One major issue was the reduction in spending by the U.S. government. Accenture does a lot of business with government agencies, especially in the United States, and recent budget cuts or delays in contract approvals led to lower-than-expected growth. This government pullback had a noticeable impact on Accenture’s overall performance, and the company’s executives warned that it could reduce revenue by about 2% in the coming fiscal year.
Another major problem was the general hesitation among clients to commit to new projects. Global economic uncertainty is causing many companies to pause or delay new spending. This is especially true in industries like finance, healthcare, and energy, where budgets are being cut or cautiously managed. Clients are avoiding large-scale consulting projects, particularly those that are not seen as essential. This cautious approach has affected Accenture’s growth and is likely to continue into the next quarter.
The Stock Market Reaction
The drop in bookings was enough to shake investor confidence. Despite beating expectations for revenue and earnings, Accenture’s share price fell between 7% and 11% after the results were announced. This shows how much weight investors give to forward-looking indicators like bookings. For a company like Accenture, current success matters less if the future pipeline of work isn’t growing. The market responded to this concern, making it one of the sharpest single-day drops for the company in recent years.
Strategic Changes: Focus on AI and “Reinvention Services”
To respond to these issues and prepare for the future, Accenture is making some major changes. The company has announced a new business segment called “Reinvention Services.” This new division will combine strategy, technology, consulting, and operations with a strong focus on artificial intelligence, especially generative AI. The idea is to help clients fully redesign and modernize their businesses using AI. Accenture believes this new structure will allow it to deliver greater value and attract more clients who are interested in digital transformation.
Manish Sharma will lead this new business segment, while John Walsh will take over as the new U.S. leader. The company is also increasing its focus on AI training for its employees, with more than 500,000 staff members expected to be trained in using generative AI tools. Several high-profile AI projects have already been launched with companies like Nestlé, Vale, and Fincantieri, showcasing how AI is being used in areas like manufacturing, logistics, and marketing.
A Mixed Forecast for the Coming Quarter
Accenture has adjusted its forecast for the full fiscal year. The company now expects overall revenue growth between 6% and 7%, which is a slight increase from earlier estimates. EPS has also been raised slightly. However, the guidance for Q4 remains cautious. Revenue for the next quarter is expected to be between $17 billion and $17.6 billion, representing only modest year-over-year growth.
Cash flow expectations have been raised to between $9 billion and $9.7 billion for the full year. The company also increased its dividend by 15% to $1.48 per share and bought back $1.8 billion worth of its shares, signaling strong confidence in its long-term value. Still, unless the company can show an improvement in bookings and client demand, investors are likely to remain cautious.
Challenges Ahead
Accenture’s results highlight a larger trend in the global IT and consulting industry. Many companies are facing delays in project approvals and reductions in client budgets. The slowdown in discretionary spending—meaning spending that companies can avoid or delay—is affecting not just Accenture, but other IT giants as well, especially those based in India. With global economic uncertainties continuing, especially in the U.S. and Europe, consulting firms are struggling to maintain the same level of demand as they did a year or two ago.
Accenture’s Q3 FY25 results were strong in terms of revenue, profit, and operational performance, but the market focused on the fall in new bookings. This drop raised concerns about future growth and highlighted broader problems in the global consulting market. The company is moving quickly to focus on AI and business transformation services, but success in these areas will take time. For now, the pressure is on Accenture to rebuild its pipeline of new deals and prove that its new direction can deliver steady growth in an uncertain economic environment.
