By Akash Sriram
(Reuters) -Accenture forecast annual revenue growth above expectations on Thursday, bolstered by surging demand for its service that helps businesses integrate artificial intelligence tools in their operations.
Shares of Accenture (NYSE:ACN) rose more than 6%, after having fallen about 19% this year on market expectations for subdued demand for IT services as elevated interest rates force companies to rein in spending.
Accenture's generative AI business, which helps companies automate operations to save on costs and boost productivity, recorded an about 50% jump in new bookings quarter-over-quarter.
That far outpaced growth in Accenture's other core business as a go-to consultant and outsourcing service provider for companies migrating their operations to the cloud. Analysts expect slow demand for such services as enterprise spending plateaus.
Indian rivals Tata Consultancy Services (NS:TCS) and Infosys (NS:INFY) have flagged hits to their business from weak spending by U.S. and European clients.
"GenAI is acting as a catalyst for companies to more aggressively go after costs ... which creates significant opportunity for us," Accenture CEO Julie Sweet said in a conference call with analysts.
The company's new bookings, a metric indicating value of customer contracts with a spending commitment, rose to $21.06 billion for the third quarter from $17.25 billion a year ago.
Of that, $900 million in new bookings was for its GenAI services, compared with about $600 million in the prior three-month period, taking the total for the full year to more than $2 billion.
"While overall near-term demand remains weak, it does not appear to be deteriorating. The strong outsourcing bookings are noteworthy, which suggests demand for big transformation projects remains intact," Jefferies analyst Surinder Thind said.
The company expects annual revenue to grow between 1.5% and 2.5%, compared with analysts' expectations of 1.6%, according to LSEG data. It had earlier forecast growth of 1% to 3%, but on Thursday flagged a negative foreign-exchange impact of 0.7% for the fiscal year ending August.
Third-quarter revenue of $16.47 billion missed estimates of $16.53 billion, while adjusted profit per share of $3.13 also came in below estimates of $3.15.