Accenture: Accenture faces revenue hit: CEO Julie Sweet warns of uncertainty

Accenture's stock took a sharp 7% dip on Thursday following CEO Julie Sweet's warning that the consulting giant is facing a revenue hit due to cost-cutting measures implemented by the Trump administration. While Sweet acknowledged potential growth opportunities arising from shifting government priorities, she underscored the ongoing uncertainty impacting Accenture's federal business. Speaking during Accenture's second fiscal quarter 2025 earnings call, Sweet maintained that the company remains on track for strong growth. However, she admitted that recent federal policy changes have slowed procurement actions, directly affecting Accenture Federal Services, which contributed 8% of the company's global revenue and 16% of its Americas revenue in fiscal 2024. "As you know, the new administration has a clear goal to run the federal government more efficiently," Sweet stated. "During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue. Additionally, the General Services Administration (GSA) has instructed federal agencies to review contracts with the top 10 highest-paid consulting firms, including Accenture Federal Services. The GSA's guidance aims to terminate contracts deemed non-essential, leading to ongoing uncertainty as these assessments unfold." Reports suggest that the GSA has already canceled approximately 1,700 consulting contracts across federal agencies since President Trump's inauguration, highlighting the scale of disruption facing government contractors. Beyond federal contracts, Sweet pointed to a broader climate of economic and geopolitical uncertainty affecting business outlooks. This marks a notable shift from Accenture's first-quarter earnings report in December. While she remained optimistic about the company's positioning, Sweet acknowledged the challenges posed by global trade dynamics, tariff discussions, and fluctuating consumer sentiment. "What we've seen in recent weeks is an elevated level of uncertainty," she said. "There's a global conversation around tariffs, not just in the Americas but in Europe as well. We're seeing major spending shifts in areas like defense, where we have been investing and are well-positioned." AI and Business Growth Despite the challenges in the federal sector, Accenture's AI business continues to gain momentum. Sweet reported $1.4 billion in new generative AI bookings and approximately $600 million in revenue from AI services during the quarter. The company has increased its AI and data workforce to 72,000 employees, with a target of 80,000 by the end of fiscal 2026. "Our clients are focused on reinvention, and generative AI is a key driver," Sweet noted. "They are investing in building digital cores, improving cost efficiency, and scaling AI-driven solutions across various industries." For its second fiscal quarter, Accenture reported $16.66 billion in revenue, a 5% increase year-over-year. Consulting revenue stood at $8.28 billion (up 3%), while managed services revenue reached $8.38 billion (up 8%). The company's Americas revenue rose 9% to $8.55 billion. Looking ahead, Accenture expects third-quarter revenue between $16.9 billion and $17.5 billion, with full-year revenue growth projected at 5% to 7%. The company plans to invest $2 billion to $3 billion in acquisitions in fiscal 2025. Julie Sweet's Health Update Last month, Sweet disclosed that she has been diagnosed with early-stage breast cancer but emphasized that her prognosis is excellent. She will undergo surgery next week, followed by radiation treatment, but will continue to lead Accenture's operations, albeit with reduced travel. "We have an incredible Global Management Committee supported by amazing teams worldwide," she reassured employees in an internal memo. "I am confident that we will continue to deliver 360-degree value for our clients, people, shareholders, partners, and communities." Despite mounting challenges, Accenture remains focused on navigating policy shifts while leveraging AI-driven innovation to sustain its long-term growth.