Global software stocks rally after Accenture reports strong earnings

Investing.com -- Global software and IT services stocks rallied Thursday after Accenture PLC reported quarterly earnings and revenue that comfortably topped Wall Street estimates, sparking fresh optimism across a sector that had been grappling with cautious enterprise spending.

Accenture shares soared 18% in morning trading, lifting a wide swath of its industry peers. Globant SA surged 10%, while Capgemini SE climbed 9%. Cognizant Technology Solutions Corp. and Infosys Ltd. both advanced 8%, EPAM Systems Inc. jumped 7%, and International Business Machines Corp. added 5%.

For its fiscal fourth quarter, Dublin-based Accenture reported revenue of $18.7 billion, up 6.3% from a year earlier and well ahead of the $18.04 billion expected by analysts. Net income expanded sharply as earnings per share rose to $3.29 from $2.25 in the prior-year period.

The results were bolstered by robust order intake. New bookings for the quarter reached $22.2 billion, up 4.2% year-over-year and beating consensus expectations of $20.04 billion. Consulting bookings rose 6% to $9.4 billion, while managed services bookings grew 2.7% to $12.77 billion.

Profitability also improved. Accenture’s operating margin widened to 15.3% from 11.6% a year ago, driven by operational efficiencies, while gross margin ticked up to 32% from 31.9%.

For the first quarter, the IT consulting giant forecast revenue between $18.95 billion and $19.6 billion, representing year-over-year growth of 2% to 6%. Looking further ahead to fiscal 2027, the company projects revenue growth of 3% to 6% and earnings per share in the range of $14.39 to $14.81, alongside an operating margin between 15.9% and 16.1%. Accenture also reiterated its commitment to capital return, stating it plans to return at least $9.5 billion to shareholders via buybacks and dividends during the year.

The strong performance provided a welcome surprise for Wall Street following a more subdued previous quarter. In a note to clients, TD Cowen analyst Bryan Bergin highlighted the solid close as a notable reversal from a tough third quarter, observing that the bounceback amid a muted macroeconomic backdrop was poised to drive a strong market reaction.

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