Accenture’s GenAI bookings hit $2Bn amid revenue challenges
DUBLIN, IRELAND — Technology services giant Accenture reported a significant milestone in its generative artificial intelligence (GenAI) business.
The company secured $900 million in GenAI project bookings for the three months ending in May, bringing the total to approximately $2 billion for the first nine months of the current fiscal year.
This achievement underscores Accenture’s robust growth in the rapidly evolving technological landscape.
Accenture, which operates on a September-August financial calendar, had previously recorded $100 million in GenAI projects in the same period last year.
During the second and first quarters of the current fiscal year, the company secured $650 million and $400 million in GenAI projects, respectively.
The third quarter’s GenAI deals accounted for 4.3% of Accenture’s total order bookings of $21.1 billion, a significant increase from the 0.6% share in the year-ago period.
Accenture’s revenue guidance adjustment for Q3
Despite the impressive growth in GenAI orders, Accenture’s overall revenue for the third quarter of FY24 saw a slight decline.
The company reported revenues of $16.5 billion, marking a 0.6% decrease from the same period last year.
This decline has led Accenture to revise its full-year revenue growth expectations to between 1.5% and 2.5%, down from the earlier forecast of 1% to 3% for the fiscal year ending in August 2024.
Accenture’s chair and chief executive officer, Julie Sweet, highlighted GenAI’s impact on the company’s performance.
“With over $900 million in new GenAI bookings this quarter, we now have $2 billion in GenAI sales year to date, and we have also achieved $500 million in revenue year to date. This compares to approximately $300 million in sales and roughly $100 million in revenue from GenAI in FY23,” Sweet said during a post-earnings discussion with analysts.
Accenture leads in GenAI adoption
Accenture’s early success in GenAI contrasts with other major technology services firms, such as Tata Consultancy Services, Infosys, and HCL Technologies, which are still developing their AI strategies.
While TCS claims to have a $900 million AI deals pipeline, other firms have not disclosed their earnings from this technology, which is considered a significant risk to the outsourcing industry.
Analysts have noted Accenture’s GenAI business’s potential to grow even further.
Keith Bachman from BMO Capital Markets pointed out that the $2 billion in bookings year-to-date in FY24 compares to about $2.2 billion in Azure AI revenues in the prior three reported quarters through March 2024.
Additionally, Piper Sandler & Co analysts Arvind Ramnani and John Nuttestimated that Accenture’s GenAI business could become a $4 billion venture in the current financial year.
GenAI as a catalyst for growth
Amid ongoing macroeconomic uncertainties, Accenture’s management remains optimistic about the future of GenAI.
“GenAI is acting as a catalyst for companies to more aggressively go after cost, build digital core, and truly change the ways they work, which creates significant opportunity for us,” Sweet added.
Accenture’s focus on GenAI and its strategic investments in this technology are expected to drive future growth.
The company’s ability to secure large-scale GenAI projects and its leadership in the AI space position it well to capitalize on the growing demand for AI-driven solutions.
