Accenture Tops Q1 Revenue Expectations While Shifting AI Revenue Reporting Strategy
Accenture reported a revenue of $18.74 billion for the first quarter which was higher than the analysts consensus estimate of $18.52 billion. The growth was mainly driven by the demand of technology consulting services and the overall digital transformation initiatives.
In spite of the fact that the company managed to surpass the revenue expectations, the shares of Accenture showed a varied movement in the pre-market trading. This was one of the reasons why investors were a little cautious in reacting to the company’s change in its AI reporting strategy.
AI Revenue Reporting Changes
Accenture announced in a significant change that it will not be reporting the AI revenue figures as a standalone. The reason is that different AI bookings and revenues have become less significant since AI capabilities are now integrated in almost all service lines.
Executives mentioned that in the future, the work across transformation, cloud, and consulting will be AI-based, so it will be less reflective of the company’s operational structure to report AI separately.
Growth Drivers and Bookings Mix
During this quarter, Accenture new bookings amounted to $20.9 billion. The consulting services bookings were around $9.88 billion while the managed services accounted for approximately $11.06 billion.
The advanced AI bookings registered a 12 percent increase to $2.2 billion showing that clients are continuously interested in AI-enabled solutions even though the company is reframing the way it reports those results.
Leadership Comments
Chair and CEO Julie Sweet credited the strong performance at the top of Accentures guided range and the strong market share gains. She mentioned the workforce, the ecosystem partners, and the client collaborations as the main factors for the results.
Sweet emphasized that the companys positioning in digital, cloud, and AI markets is still a great advantage for clients to integrate technology and improve operational productivity.
Profitability and Margin Trends
The operating margin for the quarter was 15.3% compared to 16.7% of the previous year, which was primarily attributable to the business optimization and the investments made in the growth areas. The company is putting pressure on the margin but still going ahead with a strategy that mixes investment for the short term with value creation for the long term through diversified technology offerings.