Accenture’s stock dipped almost 7.5% to $285 per share last week after the company reported a decline of 6% in its new bookings at $19.7 billion in Q3 2025. The managed services new bookings dropped 10% y-o-y to $10.6 billion while the consulting new bookings came in slightly lower at $9.1 billion. However, the silver lining was the sharp rise in Generative AI new bookings of $1.5 billion, 67% up y-o-y, taking the total Gen AI bookings volume to $5.1 billion for the last twelve months.
While Accenture saw weakness in its new bookings for the second consecutive quarter, the top-line continued to grow to $17.7 billion, 8% higher during the quarter, ahead of the market expectations. Consulting revenue came in at $ 9.08 billion (7% higher y-o-y), while the managed services revenue was $8.72 billion (up 9% y-o-y). Americas revenue, which now includes Latin America, grew 8% to $8.97 billion, despite the challenges from the slow U.S. federal contracting landscape. Financial services (13% y-o-y) and Health & Public services (7% y-o-y) continued to drive the revenue growth during the period.
Gross margin was slightly lower at 32.9%, down from 33.4% y-o-y, mainly due to higher labor costs during the quarter. However, the operating margins (GAAP) expanded to 16.8%, up from 16.0% y-o-y, owing to effective cost control at the operating level. As a result, GAAP EPS came in at $3.49 per share, 15% higher y-o-y.
At the end of Q3 2025, Accenture held cash and cash equivalents (including short-term investments) of over $9.6 billion against debt and lease obligations of $8.2 billion. The company generated free cash flow of $3.52 billion, up nearly $500 million y-o-y, owing to a strong cash conversion mechanism. It also announced a quarterly dividend of $1.48 per share, which was 15% higher compared to the same quarter of last year.
Of late, Accenture has prioritized share buybacks over acquisitions, reflecting the management’s solid confidence in its stock vs. investing in startups or paying dividends. During Q3 2025, the company repurchased 6 million shares for a sum of $1.8 billion, leaving $3.3 billion in its share buyback authorization.
Going forward, the management expects macro headwinds and project cancellations to continue, with a 2% headwind anticipated in Q4 2025 revenue that is expected to be within $17.0 to $17.6 billion. However, the company raised its full-year FY 2025 revenue guidance to 6% to 7% from 5% to 7%. It also increased the diluted EPS guidance to $12.77 to $12.89 per share from the previous expectations of $12.55 to $12.79 per share. Free cash flow is estimated to be in the range of $9.0 to $9.7 billion, higher from the prior guidance of $8.8 to $9.5 billion.
Over the last few quarters, Accenture has been focused at growing its Gen AI business, relying on an acquisition-led strategy to gain quick access to the Gen AI space to offset the global slowdown in its core businesses (consulting and managed services). The company has invested over $297 million across 4 strategic acquisitions and investments in Q3 2025, and around $789 million on 15 acquisitions during 9M 2025. As a result, the company’s Gen AI business generated $700 million in Q3 2025 and $1.8 billion in 9M 2025, with bookings at $1.5 billion and $4.1 billion for the respective periods. Further, the company has increased its data and AI workforce to ~75,000, on track to achieve its goal of reaching 80,000 people by the end FY 2026.
During the Q3 call, the company’s CEO Julie Sweet highlighted its plans to continue to expand its Gen AI leadership with the launch of ‘Reinvention Services’. The Reinvention Services unit will be a consolidation of five service lines – Strategy, Consulting, Technology, Operations and Song – into a single segment. This will be launched on September 1, 2025, and will be led by Manish Sharma as Chief Services Officer. The current COO John Walsh will become the CEO for the Americas operations.
Sweet also outlined the rationale behind this restructuring and the plan going forward during the call. She explained – “Once we fully implement our new model, we will be able to bring more leading solutions faster and embed data and AI more easily into our solutions and delivery. We will also be able to help our people learn and apply AI more easily as this technology continues to evolve quickly. We will continue to manage our business through our geographic markets, the Americas, EMEA and APAC and go to market by industry.”
Though Accenture’s strategy to hedge the macro risks with a Gen AI-centric pivot sounds reasonable, a decline in new bookings for two consecutive quarters warrants cautiousness. Further, a debt-backed acquisition strategy, coupled with weakness in its core businesses, could negatively impact its margins and in turn its stock price in the near term. Thus, execution and delivering of Gen AI expansion plans would play a crucial role in determining Accenture’s future growth.
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