Accenture CEO: ‘Ongoing uncertainty’ from Trump cost-cutting plans
“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,” says Julie Sweet
Accenture stock fell seven per cent Thursday after CEO Julie Sweet warned that the consulting giant would take a revenue hit as a result of the Trump administration’s focus on trimming costs while also mentioning potential opportunities from the shifts in policy priorities.
While Sweet said at the company’s second fiscal quarter 2025 earnings call that the company was very pleased with the quarter’s results, she said that growth has been affected in a couple of areas with changes being put in place by the current administration.
She did not mention US President Trump or Elon Musk-led Department of Government Efficiency (DOGE).
The first is at Accenture Federal Services, which accounted for about eight per cent of Accenture’s global revenue and 16 per cent of its Americas revenue in fiscal 2024.
“As you know, the new administration has a clear goal to run the federal government more efficiently,” she said.
“During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.
“In addition, the General Service Administration has instructed all federal agencies to review their contracts with the top ten highest paid consulting firms contracting with the US government, which includes Accenture Federal Services.
The GSA’s guidance would try to terminate contracts that are not deemed mission-critical by the relevant federal agencies.
“While we continue to believe our work for federal clients is mission-critical, we anticipate ongoing uncertainty as the government’s priorities evolve and these assessments unfold.”
That said, changes in the federal government also present potential opportunities, Sweet said.
“Based on our significant experience across federal and commercial clients, we see major opportunities over time for us to help consolidate, modernise, and reinvent the federal government, to drive a whole new level of efficiency,” she said.
The Wall Street Journal, citing a person familiar with the matter, reported that the General Services Administration has terminated about 1,700 consulting contracts across various federal agencies since Trump was inaugurated.
The second impact from changes in Washington, DC, is an elevated level of what was already significant uncertainty in the global economic and geopolitical environment, Sweet said.
“[This marks] a shift from our first quarter FY25 earnings report in December.
“At the same time, we believe the fundamentals of our industry remain strong, and we are very well-positioned with our clients because all strategies continue to lead to reinventions or new ways of working tech, data, and AI.
“We are confident in executing our strategy to help clients reinvent.”
When asked by an analyst during the question-and-answer portion of the conference call about Accenture’s second fiscal quarter federal business growth rate and expectations for the second half of the year, Sweet said that Accenture does not give that kind of guidance other than at the end of the fiscal year.
Accenture is pleased with its second fiscal quarter performance and that it was able to update its guidance for the full year, she said.
“[We’re] pleased with how our business is sufficient with the larger deals coming online, which was a very deliberate part of our strategy.
“And then, as you think about Q3 and the full year, it includes our current estimates and assumptions of the potential impact of Federal and the overall environment.”
When asked about potential risks to Accenture’s federal revenue, Sweet declined to be any more specific.
“We’ve been clear about the guidance range we’re giving for the quarter and for the year.
“It reflects our best view of the impact that’s coming from both the slowing of new procurement actions and the assessments of the work that we’re doing.”
Sweet, responding to an analyst question about a possible slowdown in spending, said that the company has not seen a slowdown in the last few weeks.
“What we commented on is in that there’s been an elevated level of what was already significant uncertainty last few weeks,” she said.
“There’s a couple of big themes around that.
“Obviously, tariffs, and it is not just an Americas discussion.
“There’s also consumer sentiment, which is a little bit more of an Americas discussion.
“We’re already in the heart of the discussions of clients globally who are talking about it.
“You’re seeing for example, in Europe, there was an announcement of major spending in areas like defence, where we’ve been investing and are well positioned.”
Accenture’s AI business continues to bloom
Aside from the impact of changes in the federal business, Sweet used her prepared remarks to discuss Accenture’s advances in the AI business.
“We had another milestone quarter in GenAI, with $1.4bn in new bookings and approximately $600m in revenue.
“We continue to invest significantly in our business to drive additional growth in highly strategic areas with over $250m deployed primarily across six strategic acquisitions.
“We also invested in our people with approximately 15 million training hours this quarter, designed to help us bring the latest in solutions and technology to our clients, provide our people with marketable skills and reinvent our services using Gen AI,” she explained.
“We increased our data and AI workforce to approximately 72,000 [employees], continuing progress against our goal of 80,000 by the end of FY26.”
Accenture’s clients continue to be focused on reinvention, and GenAI is a catalyst for reinvention, Sweeny said.
“They’re focused on building the digital core with more AI being built in, which is driving our growth, and on areas such as the customer and core operations, including supply chain and Industry X,” she said.
“For our clients, the twin themes of achieving both cost efficiency and growth continue.
“The number of clients embracing GenAI is increasing significantly, and we are starting to see some tangible examples of scale in data and AI.”
Accenture by the numbers
For its second fiscal quarter 2025, which ended 28 February, Accenture reported total revenue of $16.66bn (£12.87bn), an increase of five per cent over its second fiscal quarter 2024 revenue.
That revenue was almost divided evenly between the company’s two major businesses, with consulting revenue of $8.28bn, up three per cent, and managed services revenue of $8.38bn, up eight per cent.
By industry group, Accenture reported communications, media, and technology revenue of $2.73bn, up three per cent; financial services revenue of $3.01bn, up seven per cent; health and public service revenue of $3.61bn, up eight per cent; produces revenue of $5.05bn, up six per cent; and resources revenue of $2.26bn, up one per cent.
Americas revenue rose nine per cent year-on-year to $8.55bn.
Accenture also reported GenAI new bookings of $1.4bn.
The company also reported GAAP net income of $1.82bn or $2.82 per share, up from last year’s $1.71bn or $2.63 per share.
Looking ahead
Looking ahead, Accenture expects revenue for its fiscal third quarter 2025 to be in the range of $16.9bn to $17.5bn.
For full fiscal 2025, Accenture expects revenue growth in the range of five per cent to seven per cent.
The company also expects full year earnings to be in the range of $12.55 to $12.79 per share, or five per cent to seven per cent growth over adjusted fiscal 2024.
Accenture also expects to invest about $2bn to $3bn in acquisitions in all of fiscal year 2025.
David Harris contributed to this report.
This article originally appeared on CRN UK sister website CRN.