ACCENTURE REPORTED Q2FY25 REVENUES OF US$16.7 BILLION

News: Accenture reported Q2FY25 revenues of US$16.7 billion, up 5%  in US$ terms and 8.5% in local currency on a YoY basis and down 5.8% on a QoQ basis. Reported revenue came in at the upper end of the company’s guided range of US$16.2–16.8 billion. The adjusted operating margin declined by ~320 bps QoQ/~20 bps YoY to 13.5%. New bookings for the quarter stood at US$20.91 billion (with US$10.47 billion from consulting and US$10.44 billion from managed services), down 3% in US$ terms . Meanwhile, GenAI-related bookings grew 17% QoQ to US$1.4 billion and ~US$600 million were recorded in revenue, indicating strong demand for AI integration services. Geography wise in US$ terms on a YoY basis the growth was led by Americas and EMEA which grew by 9% and 4% respectively, whereas APAC declined by 3%. Segment wise, on a YOY basis in US$ terms, Products (30% of the mix), Health (22% of mix), Financial Services (18% of mix), CMT (16% of mix) and Resources (14% of the mix) grew by 6%, 8%, 7%, 3% and 1% respectively. The net employees for the quarter stood at 801,099, up 8% YoY. Attrition for the quarter stood at 13%, up ~100 bps  QoQ. For Q3FY25, management has guided for revenues in the range of $16.9–17.5 billion, translating to a 3–7% growth in local currency. For FY25, revenue growth expectations have been revised to 5–7% in local currency from the previous 4–7% range. The operating margin guidance has been slightly narrowed to 15.6–15.7%, compared to 15.6–15.8% earlier.

View: The company reported decent YoY revenue growth and raised its Q3 and FY25 revenue guidance at the lower band, driven by superior growth in Q2. However, it maintained the upper end of its full-year growth forecast at 7%, reflecting a cautious stance on the macroeconomic environment. The tone of Accenture’s outlook remains neutral to cautious, with the margin guidance also seeing a minor compression of 10 bps at the upper band to 15.7% for the fiscal year. Consulting revenue was fueled by digital transformation projects, including cloud migration and AI-led initiatives. However, overall deal bookings remained muted, with AI deal growth being a silver lining. Client spending on smaller, short-duration contracts showed signs of slowing, and going forward, there is an indication that clients may shift their focus toward cost-based deals—a reflection of the delayed recovery in discretionary spending amid economic uncertainty in the US. In managed services, the company expects high single-digit growth, making it a key monitorable for Indian IT services companies. For the third consecutive quarter, management indicated no significant change in demand, with discretionary spending remaining unchanged. CEO Julie Sweet highlighted rising economic and geopolitical risks, along with federal spending cuts under the Trump administration, as factors impacting revenue. With Accenture’s cautious commentary, focus now shifts to India’s top five IT service providers—TCS, Infosys, HCLTech, Wipro, and Tech Mahindra—which are set to announce their FY25 earnings next month. Their guidance and deal momentum will be key indicators of demand trends in the sector.

Impact: Neutral