(Reuters) - Accenture Plc forecast second-quarter revenue below analysts’ estimates and said concerns about slowing global growth continue to persist, sending its shares down more than 5 percent.
The consulting and outsourcing services provider, which gets about half of its revenue from outside the United States, said its revenue forecast included a hit from a stronger dollar.
Chief Executive Officer Pierre Nanterme also flagged macro-economic uncertainties and said the traditional IT services model was under pressure, but added that clients were reallocating money to digital and cloud services.
Strong growth in digital, cloud and security-related services business, which the company calls it “the New”, helped Accenture beat first-quarter revenue and profit estimates.
“The shares are down primarily on more macro concerns with doubts around what happens to revenue growth rate in the next months if there is a slowdown,” said Harshita Rawat from Bernstein.
“The quarter itself was fine, in line, but obviously with Accenture the bar was also very high.”
The Dublin-based company forecast of $10.10 billion to $10.40 billion, including a 4 percent hit from foreign exchange. At the midpoint of that range, the estimate was below the average analysts’ expectation of $10.32 billion, according to IBES data from Refinitiv.
Accenture has shifted its focus to offering digital and cloud services, which include everything from managing clients’ social media marketing strategies to helping them move to the cloud, as the IT services industry struggles with falling margins.
The company has spent billions of dollars on acquisitions in the last five years to strengthen its digital and cloud services business and stave off competition from rivals Cognizant Technology Solutions Corp and IBM Corp.
It made at least five small acquisitions in the last three months alone and expects to invest up to $1.5 billion in acquisitions during fiscal 2019.
These actions have made “the New” business a major growth driver, accounting for more than 60 percent of its total sales.
Net income attributable to the consulting and outsourcing services provider rose to $1.28 billion, or $1.96 per share, in the first quarter ended Nov. 30, from $1.12 billion, or $1.79 per share, a year earlier.
Its profit beat analysts’ average estimate of $1.86 per share. Net revenue rose 7.4 percent to $10.61 billion, beating estimates of $10.52 billion.
Reporting by Sonam Rai in Bengaluru; Editing by Anil D'Silva and Shounak Dasgupta