Accenture’s first quarter results met Wall Street’s expectations for both revenue and adjusted earnings, but the market responded negatively following the report. Management attributed the quarter’s performance to broad-based growth across consulting and managed services, with particular strength in managed services and double-digit growth in cloud and security. CEO Julie Sweet noted, “Our clients continue to prioritize large scale transformations and we are their reinvention partner of choice,” highlighting the company’s strong bookings and increasing adoption of generative AI (Gen AI) solutions. However, the quarter also saw operating margin contraction and ongoing investments in workforce training and strategic acquisitions, which weighed on profitability.
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Accenture (ACN) Q2 CY2025 Highlights:
- Revenue: $17.73 billion vs analyst estimates of $17.33 billion (7.7% year-on-year growth, 2.3% beat)
- EPS (GAAP): $3.49 vs analyst estimates of $3.32 (5.2% beat)
- Adjusted EBITDA: $3.55 billion vs analyst estimates of $3.50 billion (20% margin, 1.5% beat)
- Revenue Guidance for Q3 CY2025 is $17.3 billion at the midpoint, above analyst estimates of $17.08 billion
- EPS (GAAP) guidance for the full year is $12.83 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 16.8%, in line with the same quarter last year
- Market Capitalization: $190.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Accenture’s Q2 Earnings Call
- Jason Kupferberg (Bank of America) asked if there were any signs of clients pausing new initiatives outside the U.S. federal segment. CFO Angie Park and CEO Julie Sweet replied that no broad-based pauses were observed, but noted ongoing client discussions amid recent uncertainty.
- Tien-Tsin Huang (JP Morgan) pressed on operating margin dynamics and whether cost pressures or pricing changes contributed. Park explained that gross margin declined due to higher subcontractor costs and business optimization actions, while pricing remained relatively stable in a competitive market.
- Bryan Keane (Deutsche Bank) inquired about changes in client budgets and discretionary spending. Sweet responded that budgets remain similar to previous quarters, with discretionary spending still constrained except for some improvement in banking and capital markets.
- James Faucette (Morgan Stanley) sought clarification on recent demand trends by geography and sector. Sweet emphasized that no slowdown had been observed, but acknowledged increased global uncertainty, particularly regarding tariffs and consumer sentiment.
- Darrin Peller (Wolfe Research) asked about the durability of large transformational contract demand and the potential for pent-up client budgets if uncertainty resolves. Sweet highlighted the ongoing client focus on large-scale reinvention regardless of the macro environment, and noted increasing adoption of Gen AI solutions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of generative AI adoption and monetization across new and existing clients, (2) the resolution and impact of U.S. federal contract reviews on revenue stability, and (3) the company’s ability to sustain managed services growth while controlling margin pressures. Progress on strategic acquisitions and workforce upskilling efforts will also be important indicators of execution.
Accenture currently trades at $304.07, in line with $306.21 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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