After rising 8% this year and hitting record levels earlier this week, Accenture shares suffered a setback as the consulting and outsourcing services provider issued lower-than-expected guidance for the full fiscal year.
Accenture reported that net revenue for the second quarter rose 4.75 to $8.32 billion, benefiting from strong demand for its digital, cloud and security-related services, which account for more than 45% of revenue. Net income fell to $838.8 million or $1.33 per share in the quarter, from $1.33 billion or $2.08 per share, a year earlier.
“We are pleased with our financial results for the second quarter and first half of fiscal 2017,” Pierre Nanterme, Accenture’s chief executive, said in a news release.
“Our strong performance reflects our continued rotation to new, high-growth areas such as digital, cloud and security services … as well as our increasingly innovation-led approach to creating cutting-edge solutions for clients,” he added.
But Accenture shares fell 4.5% to $120.76 in trading Thursday. Analysts on average had expected profit of $1.30 per share and revenue of $8.34 billion.
“High investor optimism was met with just ho-hum results,” Edward Jones analyst Bill Kreher told Reuters. “I do not think it is more than that. It is a natural pause.”
Accenture said revenue from its consulting unit, which contributes a higher profit margin than its outsourcing business, increased 2.6% in the quarter ended Feb. 28 — the slowest growth in more than a year.
The company’s profit was hurt by in part by higher operating costs, which rose 4.3 percent to $7.62 billion. For the year ending in August, it now expects adjusted profit of $5.70 to $5.87 per share compared to a prior forecast of $5.64 to $5.87 per share.
The guidance “largely fell short of market expectations,” Reuters said.