Accenture signage is pictured in Warsaw, Poland, on Aug. 7, 2024.
leksander Kalka | Nurphoto | Getty Images
Shares of Accenture slid Thursday after the consulting firm said efforts to tighten federal spending have begun to weigh on its revenues.
Shares tumbled 7.3% after Accenture’s chief executive officer said in a fiscal second-quarter earnings call that the company’s Federal Services business has lost contracts with the U.S. government after recent reviews.
“Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024. As you know, 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,” chief executive Julie Spellman Sweet said in the Thursday call to several Wall Street analysts.
Accenture is among the first of the U.S. corporate giants to get hit by the Trump administration’s so-called Department of Government Efficiency, an effort headed by billionaire Elon Musk to downsize federal agencies and consolidate their office spaces.
Sweet said that Accenture’s Federal Services was also affected by guidance from the U.S. General Services Administration to all federal agencies to review their contracts with the top 10 highest paid consulting firms contracting with the U.S. government, and then end contracts that are not considered mission-critical to relevant 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,” Sweet said.
“We are seeing an elevated level of what was already a significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter FY 2025 earnings report in December,” Sweet added. “At the same time, we believe the fundamentals of our industry remain strong.”
Investors’ concerns about risks tied to slowing U.S. government spending outweighed Accenture’s better-than-expected quarterly earnings and revenue results released before Thursday’s market open. The company reported earnings of $2.82 per share on revenue of $16.66 billion, just higher than expectations of $2.81 per share in earnings on revenue of $16.62 billion, per FactSet.
Accenture shares have plunged 22.9% over the past month, bringing the stock down nearly 14.5% year to date.
Shares of consulting firm Booz Allen Hamilton slipped 8.1% on Thursday in sympathy.