Accenture Announces Major Business Overhaul – But Stock Drops Despite Q3 Beat, Guidance Hike

Accenture (ACN) shares moved lower in pre-market trading Friday despite the company posting a third-quarter earnings beat and lifting its full-year forecast.

The consulting giant also announced an overhaul of its existing business structure and leadership team, which will come into effect starting in September. The company said the revamp is to serve clients better and speed up the delivery of AI-driven solutions. 

Accenture’s stock was down more than 4% in early trading following the announcements. Despite the downward trend, Stocktwits data showed that retail sentiment around the shares jumped to ‘extremely bullish’ territory from ‘bullish’ a day ago and ‘bearish’ a week earlier. 

The company reported earnings per share (EPS) of $3.49, beating Wall Street’s estimate of $3.32, according to Koyfin data. Its revenue came in at $17.7 billion, ahead of the estimated $17.3 billion.

Accenture also reported new bookings of $19.7 billion, a decrease of 6% as compared to the prior year’s quarter, of which generative AI bookings accounted for $1.5 billion.

Its operating cash flow at the end of the third quarter (Q3) stood at $3.68 billion as compared to $3.14 billion during the previous year, with free cash flow of $3.52 billion, an increase of $3.02 billion in Q3 2024.

Accenture also raised its full-year forecast, now expecting revenue growth between 6% and 7%, up from its previous forecast of 5% to 7%. Operating cash flow is estimated to come in between $9.6 billion and $10.3 billion, up from $9.4 billion and $10.1 billion. Free cash flow is expected between $9 billion and $9.7 billion, up from the previous forecast of $8.8 billion to $9.5 billion. 

In its bid to ‘reinvent’ itself, Accenture said that all of the company’s core services – strategy, consulting, marketing, design, technology, and operations – will now be combined into one unit dubbed ‘reinvention services.’ The new entity will be led by Manish Sharma, who will become Accenture’s first Chief Services Officer.

Joe Walsh will replace Sharma as the CEO of the Americas, and Kate Hogan will take over for Walsh as global COO. The company also announced that Kate Clifford will be taking over as the new global HR chief. 

Accenture’s stock has fallen by more than 13% this year but has gained over 7% in the last 12 months. 

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