accenture plc: Accenture expects lower-than-estimated revenue on IT spending cut, dollar rise

On Thursday, IT services firm Accenture Plc expects lower-than-expected first quarter revenues, weighed down by IT spending cuts due to high inflation and the impact of a stronger dollar.

Foreign exchange headwinds have intensified since Accenture’s third quarter results, with the US dollar at its two-decade high against a basket of currencies and rising about 16% so far this year due to sharp rate hikes of the Fed and growing geopolitical tensions.

This impacted companies with major overseas operations, including Microsoft, Salesforce, and IBM.

Analysts fear that a prolonged economic slowdown could dent robust IT spending with the cracks already shown after Salesforce cut its annual revenue and profit forecast by tracking customer “measured” spend.

A strong dollar typically consumes the profits of IT companies that convert foreign currencies into dollars.

According to data from Refinitiv, the company expects revenues for the current quarter to be between $ 15.20 billion and $ 15.75 billion, compared to analysts’ average estimate of $ 16.07 billion.

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The forecast reflects the assumption of a negative foreign exchange impact of approximately 8.5%, the company said.

Revenue for the quarter ended August 31 was $ 15.40 billion compared to analysts’ average estimate of $ 15.39 billion, according to Refinitiv data.

(Reporting by Chavi Mehta in Bengaluru; Editing by Vinay Dwivedi)

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