IT major Accenture Plc beat third-quarter revenue expectations as more businesses turned to the IT services provider to digitize their operations. Revenue for the quarter ended May 31 was $16.16 billion. Analysts were expecting an average of $16.03 billion in revenue. Accenture reported new bookings of $17 billion, the company’s second largest ever, a 10% increase in US dollars.
Operating income increased 23% to $2.6 billion, with an operating margin of 16.1%, an expansion of 10 basis points.
Julie Sweet, President and CEO of Accenture, said, “Our very strong financial results for the third quarter reflect broad-based demand across markets, services and industries and the continued recognition of our 710,000 people of outstanding talent. We continue to achieve significant market share. continue, and our services have never been more relevant as our customers come to us as trusted partners for the solutions they need to accelerate growth and become more resilient and efficient.”
But in light of a stronger US dollar, which is hurting the value of overseas earnings, IT consulting firm Accenture Plc forecast lower-than-expected fourth-quarter revenue and lowered its fiscal 2022 profit forecast.
The dollar has appreciated significantly against other currencies in recent months as weak global economic growth pushes investors to a safe haven. The dollar index is near a two-decade high. The dollar has also been supported by moves by the Federal Reserve to tighten its monetary policy and increase interest rates. Typically, a stronger dollar eats into the profits of companies that have international operations and convert foreign currencies into dollars.
“The strength of the US dollar undermines the value of foreign earnings,” said Anthony Carfang, managing director of Carfang Group LLC, a provider of Treasury services. With 2021, “companies will have to increase their overseas revenues equally,” he added.
Forex headwinds have also forced firms including Microsoft and Salesforce to lower their expectations for the year.
Accenture, which makes more than half of its revenue from outside the United States, said it now expects a negative foreign exchange impact of 4.5% in fiscal 2022, up from its previous forecast of a 3% foreign exchange hit. is even worse.
Shares of the firm fell 2.8% in trading before the bell. They were down about 31% so far this year.
Accenture cut the high end of its annual profit forecast range. It expects fiscal 2022 earnings per share to be in the range of $10.61 to $10.70, compared to its previous estimates of $10.61 to $10.81.
It forecast fourth-quarter revenue to be between $15.0 billion and $15.5 billion, compared to analysts’ average expectation of $15.70 billion, according to Refinitiv’s IBES data.
Accenture said the forecast reflects the firm’s assumption of a negative 8% foreign exchange impact.
(with agency input)