2Q24 results broadly inline; FY24F guidance is lowered on macro uncertainty
- 2Q24 adj net income of US$1.8bn (-15% q-o-q, +3.0% y-o-y) was ~6% above consensus on lower-than-expected interest and tax expenses while revenue of US$15.8bn (-2.6% q-o-q, flat y-o-y) met consensus expectations.
- ACN clients are prioritizing large transformation projects resulting in slower revenue and limiting discretionary spending. ACN’s GenAI revenue in 2Q24 was US$650m, a 44% q-o-q increase
- ACN guides 3Q24F revenue of US$16.3bn-US$16.9bn, where the mid-point is inline; and lowers FY24F y-o-y growth range from 2%-5% to 1%-3%, on macro weakness.
ACN recorded adj net income of US$1.8bn (-15% q-o-q, +3.0% y-o-y) in 2Q24 (Aug YE), ~6% above consensus. Accenture PLC (ACN) reported adjusted (adj) net income (excluding one-off business optimization cost of US$87m (net of taxes)), of US$1.8bn (-15% q-o-q, +3.0% y-o-y). This was ~6% above consensus expectation of US$1.7bn, due to lower-than-expected interest and tax expenses. Effective tax rate in 2Q24 stood at 18% against consensus’ 23%. ACN reported adj operating income of US$2.2bn (-20% q-o-q, -1.2% y-o-y) inline with consensus. Adj operating margin declined to 13.7% in 2Q24 vs. 16.7% in 1Q24, on q-o-q decline in revenue and rising cost of revenue. ACN’s 2Q24 total revenue stood at US$15.8bn (-2.6% q-o-q, flat y-o-y), meeting consensus expectation and management guidance. Constrained spending in Europe Middle East and Africa (EMEA) and North America resulted in the q-o-q decline in revenue. ACN’s Consulting segment recorded US$8.0bn (-5.1% q-o-q, -3.1% y-o-y) in revenue while Managed Services’ revenue stood at US$7.8bn (flat q-o-q, +3.2% y-o-y). Revenue from all industry groups declined q-o-q with Financial Services witnessing the highest decline of 7.4% q-o-q. ACN’s new bookings in 2Q24 was US$21.6bn (+17% q-o-q, -2.3% y-o-y), second highest ever. ACN is witnessing clients prioritizing investments in large-scale transformation, leading to slower revenue generation and further limiting discretionary spending, especially in smaller projects. ACN recorded Generative AI (GenAI) revenue of US$650m in 2Q24 (+44% q-o-q), expanding the company’s lead in GenAI which is core to its clients’ reinvention.
ACN’s 3Q24F revenue guidance is inline with consensus; lowers its FY24F revenue growth guidance citing constrained spending and macro weaknesses. ACN expects revenue in 3Q24F to be within US$16.3bn-US$16.9bn, where the mid-range is inline with consensus. For FY24F, ACN has lowered the y-o-y growth range from 2%-5% to 1%-3%, largely due to macro uncertainty and delayed spending. ACN expects its adj operating margin (excluding business optimization costs) to be at 15.5% (prev 15.5%-15.7%) where FY23 adj operating margin was 15.4%.