Accenture issued revenue guidance below expectation, reflecting the potential impact of recessionary fears on the global IT services industry.
The IT consultancy firm expects to earn between US$15.20 billion and US$15.75 billion during the current fiscal quarter ending November 30. Analyst firms, such as Refinitiv, estimate the company will make over US$16 billion during the period.
Accenture posted US$15.40 billion in revenue for the fourth quarter of fiscal year 2022 on the back of a record jump in the number of new contracts for consultancy services.
The Irish-American professional services provider, whose annual gross profit rose a staggering 17% between 2020 and 2021, expects the stronger US dollar to negatively impact its earnings.
Unlike Indian IT providers, Accenture bills most of its European clients in local currencies. In recent weeks, the euro and the British pound have trendedn at record lows against the US dollar, with the Dollar Index reaching 114.
Non-US clients account for nearly 60% of Accenture’s revenue, meaning the rising US dollar has the potential to erode its profit margin significantly.
Cloud vendor Salesforce also cut revenue guidance, saying some of its customers had become “more measured” about their spending.
Rising fears of a recession are also a significant reason behind the potential decrease in IT spending.