Clients have been cautious about signing deals and seeking to negotiate down the value of existing deals – CFO, Accenture
Accenture Ltd. said its fiscal third-quarter earnings fell 5.4% amid weakness in both consulting and outsourcing, with clients wary of signing consulting deals and seeking to renegotiate existing contracts. But the company raised its fiscal-year earnings guidance and increased its operating margin.
Speaking on an investor call, executives said that they still saw considerable weakness in both parts of the business, and particularly in consulting. Clients have been cautious about signing deals, and have been seeking to negotiate down the value of existing deals, Chief Financial Officer Pamela Craig said. Chief Executive Bill Green said that there was a dearth of "transformational" consulting deals. But he said that new trends in technology, particularly cloud computing, would offer significant new opportunities for Accenture in the future.
For the quarter ended May 31, the company posted earnings of $444 million down from $469.1 million a year earlier. Revenue decreased 16% to $5.54 billion. Net revenue, or revenue before reimbursements, shrank 16% to $5.15 billion. In March, the company predicted revenue between $5.1 billion and $5.3 billion. Gross margin rose to 32.5% from 31.5% on improved outsourcing contract profitability. Consulting revenue fell 20%, while outsourcing revenue decreased 9%. In local currencies, the figures fell 9% and rose 3%, respectively. Net revenue in the European region fell the most, with a 23% decline. The company projects fiscal fourth-quarter revenue of $5 billion to $5.2 billion, below analysts' predictions for $5.26 billion.
Source: The Wall Street Journal
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