Accenture signage is pictured in Warsaw, Poland, on Aug. 7, 2024.
leksander Kalka | Nurphoto | Getty Images
Dole outs of Accenture slid Thursday after the consulting firm said efforts to tighten federal spending have enter oned to weigh on its revenues.
Shares tumbled 7.3% after Accenture’s chief executive officer said in a fiscal second-quarter earnings cry that the company’s Federal Services business has lost contracts with the U.S. government after recent reviews.
“Federal epitomized approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024. As you know, the new administration has a clear goal to run the federal regime more efficiently. During this process, many new procurement actions have slowed, which is negatively resulting our sales and revenue,” chief executive Julie Spellman Sweet said in the Thursday call to several Wall Concourse analysts.
Accenture is among the first of the U.S. corporate giants to get hit by the Trump administration’s so-called Department of Government Efficiency, an exertion headed by billionaire Elon Musk to downsize federal agencies and consolidate their office spaces.
Sweet asserted that Accenture’s Federal Services was also affected by guidance from the U.S. General Services Administration to all federal workings to review their contracts with the top 10 highest paid consulting firms contracting with the U.S. government, and then end knits that are not considered mission-critical to relevant agencies.
“While we continue to believe our work for federal clients is mission-critical, we count ongoing uncertainty as the government’s priorities evolve and these assessments unfold,” Sweet said.
“We are seeing an elevated destroy of what was already a significant uncertainty in the global economic and geopolitical environment, marking a shift from our first compassion FY 2025 earnings report in December,” Sweet added. “At the same time, we believe the fundamentals of our industry remain passionate.”
Investors’ concerns about risks tied to slowing U.S. government spending outweighed Accenture’s better-than-expected quarterly earnings and yield results released before Thursday’s market open. The company reported earnings of $2.82 per share on revenue of $16.66 billion, honourable higher than expectations of $2.81 per share in earnings on revenue of $16.62 billion, per FactSet.
Accenture shares maintain plunged 22.9% over the past month, bringing the stock down nearly 14.5% year to date.
Allocates of consulting firm Booz Allen Hamilton slipped 8.1% on Thursday in sympathy.