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Accenture (ACN) reported Q3 revenue of USD18.7bn, up 6% YoY (3% in LC) and closer to the midpoint of its local currency (LC) guidance. Growth in Q3 was impacted by the Middle East conflict, resulting in a ~USD100mn revenue impact and ~USD400mn sales impact, driven by weaker discretionary spending and slower decision-making. It has lowered the midpoint of revenue growth guidance to 3.5% for FY26 (vs 4% earlier). AI is expected to be a key industry tailwind, driving enterprise reinvention and unlocking new growth and efficiency opportunities for clients. ACN plans to increase its FY26 M&A investment to ~USD9bn (vs the earlier USD5bn allocation and USD3bn deployed in 9MFY26) to expand into higher-growth, more non-FTE revenue areas such as AI, data, cybersecurity, data centers, and IP-led assets. Downward revision in the mid-point of FY26 growth guidance, factoring in the impact of ME conflicts, soft deal bookings, and right-shifting of a couple of large managed services deals into FY27, raises concern on near-term growth visibility and is expected to weigh on stock performance, despite undemanding valuations. The NIFTY IT Index has underperformed the broader markets by 5%/20% over 3M/6M, respectively, driven by concerns over slower growth, evolving AI narrative, questions around sustainability of the business model, partially offset by rupee depreciation. We prefer mid-caps given better growth visibility. Our pecking order is INFO, LTIM, TCS, HCLT, TECHM, and WPRO in large caps.

Q3 revenue came closer to the mid-point of the guidance

Revenue grew 6% to USD18.72bn in Q3 (3% in LC). Consulting revenue grew 4% YoY to USD9.33bn (1% in LC), while Managed Services revenue rose 8% to USD9.39bn (5% in LC). New bookings declined 2% YoY to USD19.3bn (down 3% in LC), including bookings in Consulting worth USD10.26bn (up 13% YoY; book-to-bill: 1.1x) and in Managed Services worth USD9.06bn (down 15% YoY; book-to-bill: 1.0x). Both GAAP and adjusted operating margin expanded 20bps YoY to 17% in Q3. Voluntary attrition (annualized) in Q3 was 14%, up 1% QoQ and down 2% YoY. Headcount increased by ~8k employees YoY, taking total headcount to 798.7k (1.6/1% QoQ/YoY).

Broad-based growth momentum; Financial Services growth moderates further

Revenue growth in Q3 was broad-based across industry groups, led by CMT (9% YoY in LC), Financial Services (3%), Products (3%), and Resources (1%) and flat for Health and Public Services. By geography, the Americas grew 1% YoY in LC, driven by Software & Platforms, High Tech, and Industrials, partially offset by a decline in Public Service; within the Americas, growth was led by the US. EMEA grew 4% on the back of strength in Public Service and Software & Platforms; within EMEA, growth was led by the UK and Italy. Asia Pacific grew 8%, driven by Public Service, Banking & Capital Markets, and Insurance; within APAC, growth was led by Japan, Australia, and Singapore.

Lowers the midpoint of FY26 revenue growth guidance to 3.5% in LC

ACN lowers the midpoint of its revenue guidance to 3.5%, with a revised range of 3-4% in LC (vs 3-5% earlier) for FY26 (incl inorganic contribution of ~1.5%). Excluding the estimated 1% impact from the US federal business, growth would be 4-5%. The guidance assumes a >2% forex impact on reported USD revenue. ACN stated a GAAP operating margin of 15.3% (vs 15.2-15.4% earlier) for FY26, implying a 60bps YoY expansion. It guided adj operating margin of 15.8% (vs 15.7-15.9% earlier), up 20bps YoY. ACN expects Q4FY26 revenue of USD17.75-18.4bn (1-5% in LC), assuming a -0.5% forex impact. It retains OCF/FCF guidance of USD11.5-12.2bn/USD10.8-11.5bn in FY26.

A readthrough for Indian IT peers

ACN’s commentary was slightly negative as moderating Q4 guidance, a lower FY guidance mid-point, and softer deal bookings (down 3% YoY in LC) point to near-term growth pressure amid a challenging macro backdrop. The management indicated that AI is not expanding client budgets, with spending largely being reallocated, challenging the nearterm ‘AI lifts the wallet’ thesis. Clients are increasingly shifting toward ready-to-deploy solutions, creating opportunities in embedded expertise, data-led offerings, and IP/platform-based models. ACN is therefore pursuing a ‘build, buy, and partner’ strategy while allocating more capital toward higher-growth, non-FTE, product- and platform-led areas where Indian peers remain underpenetrated. Accenture Edge, targeting the companies in the USD300mn-USD3bn revenue segment, could pose a challenge for Indian players that cater to this mid-market client base, as ACN brings enterprise-grade scale, delivery quality, and strong ecosystem-led pull-through.

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