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In its most recent 10-K filing, the company disclosed that its contracts with U.S. federal government agencies accounted for approximately 17% of its North American revenues in fiscal 2024.
Accenture (ACN) shares fell as much as 7% on Thursday noon, hitting an eight-month low, as investors focused on risks tied to federal spending cuts despite the company reporting strong second-quarter earnings and raising its fiscal-year guidance.
The stock is on track for its steepest one-day decline in nearly a year, according to Koyfin.
The global consulting giant posted earnings of $2.82 per share, narrowly surpassing the consensus estimate of $2.81. Revenue increased 5% year-over-year to $16.7 billion, slightly ahead of the $16.6 billion analysts had forecast.
New bookings for the quarter totaled $20.9 billion, a 3% decline from a year earlier, while artificial intelligence-related bookings amounted to $1.4 billion.
Accenture also raised its fiscal-year guidance, projecting earnings between $12.55 and $12.79 per share, up from a previous range of $12.43 to $12.79. The company tightened its revenue growth forecast to 5% to 7%, compared to prior guidance of 4% to 7%.
Despite these strong numbers, investors reacted to concerns over potential risks from the federal government’s cost-cutting measures, a sentiment shared by some analysts who noted the possible impact on Accenture’s federal contracts ahead of its earnings.
The Department of Government Efficiency (DOGE), an initiative established by President Donald Trump’s administration to reduce federal spending, poses a potential headwind for Accenture.
The company disclosed in its most recent 10-K filing that its contracts with U.S. federal government agencies—handled through Accenture Federal Services—accounted for approximately 17% of its North American revenues in fiscal 2024.
“The new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” CEO Julie Sweet said on the company’s earnings call.
While Sweet emphasized that Accenture’s work for federal clients is "mission-critical," she cautioned that the company expects "ongoing uncertainty as the government's priorities evolve and these assessments unfold."
Meanwhile, retail sentiment around Accenture’s stock improved but remained within the ‘bullish’ zone even as chatter surged to ‘extremely high’ levels.
According to platform data, message volume on the ticker increased 375% in the 24 hours before its earnings.
Many retail traders echoed concerns over the potential impact of the Elon Musk-led DOGE on Accenture’s business.
Accenture shares are down 15% this year and have fallen 19% over the past 12 months.
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