Accenture Q2 below estimates, but full-year profit forecast up
Accenture, recently chosen as the lead contractor for the Obamacare enrollment website, raised its full-year profit forecast and the lower end of its revenue forecast.
The company also reported lower-than-expected results for the second quarter due to weak demand in its consulting business, which has been hit in the past few quarters as companies cut down on discretionary spending.
"Operating results ... reflect lower contract profitability, primarily due to pricing pressures and higher payroll costs and, to a lesser extent, lower margins in the early stages of a few large contracts," Accenture said in a statement.
The company's shares were slightly down in trading before the bell.
HP said in February that revenue from its technology consulting business dropped 4 per cent in the quarter ended January but that the business was more profitable.
Accenture on Thursday raised its profit forecast to $4.50 to $4.62 per share for the financial year ending August 31, from $4.44 to $4.56 per share.
The company said it expects full-year revenue growth of 3-6 per cent in local currency, compared with its previous forecast of 2-6 per cent.
The company's net income fell to $722.3 million, or $1.03 per share in the second quarter ended February 28 from $1.19 billion, or $1.65 per share, a year earlier.
Analysts on average were expecting earnings of $1.04 per share, according to Thomson Reuters I/B/E/S.
Revenue before reimbursements increased 1 per cent to $7.13 billion, but fell short of analysts' expectation of $7.21 billion, according to Thomson Reuters I/B/E/S.
Revenue from the consulting business fell 1 per cent in U.S. dollar terms, declining for the sixth time in the last seven quarters. It accounted for more than half of total revenue last year.
Revenue from the smaller outsourcing business rose 4 per cent.
Shares of the company, which have risen 10 per cent in the last six months, were at $82.05 in premarket trading.
Copyright Thomson Reuters 2014