Accenture Gets Booed Off Stage Despite a Standing Ovation Earnings Beat…

How do you get a standing ovation and booed off the stage at the same time? Look no further than Accenture, the consulting giant, who just put on a clinic on how to do exactly that. 

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For starters, Q3 revenue clocked in at $17.7 billion, topping estimates by a hair. Meanwhile, EPS came in at $3.49, which was also a beat. Two for two on top and bottom lines, and so far everything looked great. That is, until the same villain that crushed Booz Allen Hamilton had its way with Accenture. Bookings, the thing that actually tells you if anyone wants to pay these people next quarter, dropped 6% to $19.7 billion. That’s two straight quarters of George Costanza shrinkage, as analysts wouldn’t take less than $21.5 billion. 

(Source: Investopedia) 

And yet, it gets worse. CFO Angie Park, who probably wishes she’d called in sick, admitted U.S. government spending is drying up, and not in the “oh, it’ll rebound” way… more like “kiss 2% of your revenue goodbye and start updating the resume” way. If this sounds like you’ve heard this story before, it’s because you have. Booz Allen experienced and pretty much stated the same exact situation during their recent earnings as D.C. is officially allergic to consulting invoices, which is a plot twist nobody saw coming.

(Source: Reuters) 

Naturally, the market took one look at those bookings and instantly decided to yeet Accenture shares. The stock dropped nearly 7% by lunch, and the falling knife doesn’t seem like it'll stop falling any time soon. Of course, management’s answer to the mess was the time-honored tradition of announcing a reorg and hoping nobody asks follow-up questions. Simply put, Accenture announced the “reinvention services” initiative, putting Manish Sharma (America’s reigning king of PowerPoint) at the helm. The whole pitch is “we're all in on AI now”, as if that’s supposed to soften the blow of the booking bloodbath. 

To be fair, Accenture claims $1.5 billion in AI-related bookings this quarter. But to me, this reorg seems too little, and too late. Which is precisely why investors are having none of it. Not to mention the stock is already down -18.32% YTD. Meaning, to investors, the only thing getting reinvented are excuses. 

(Source: Giphy) 

But alas, that’s where we are at the moment. ccenture wants you to look at the “up and to the right” charts and ignore the fact that clients are quietly slipping out the side door. Maybe the new AI unit will save them. Maybe the government will remember how to spend money. Or maybe it’s just another round of rearranging the deck chairs while the iceberg gets closer. Who knows.

In the meantime though, keep your eyes on bookings across the whole consulting space, because apparently, when it comes to Accenture and Booz, their stock price lives and dies by bookings. Until next time, friends…

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.