Accenture is DOGE’s first corporate casualty, shares dive on contracts warning

Accenture, a leading consulting firm, faced a setback as its shares plummeted by 7.3% following a statement from its CEO about the impact of tightening federal spending on its revenues. The company’s Federal Services business lost contracts with the U.S. government after recent reviews, leading to a significant decline in revenue.

Chief executive Julie Spellman Sweet highlighted that the Federal Services segment accounted for 8% of Accenture’s global revenue and 16% of its Americas revenue in FY 2024. The Trump administration’s Department of Government Efficiency, spearheaded by Elon Musk, aimed to streamline federal agencies and consolidate office spaces, resulting in a reduction of contracts for Accenture.

Additionally, guidance from the U.S. General Services Administration to review contracts with the top 10 highest-paid consulting firms further impacted Accenture’s Federal Services division. Despite considering their work mission-critical, the company faced uncertainties as government priorities evolved and assessments unfolded.

Although Accenture reported better-than-expected quarterly earnings and revenue, investors remained concerned about the risks associated with slowing U.S. government spending. The company’s earnings of $2.82 per share on revenue of $16.66 billion slightly exceeded expectations, yet Accenture’s shares experienced a significant decline of 22.9% over the past month, bringing the year-to-date decrease to 14.5%.

In a show of sympathy, shares of Booz Allen Hamilton, another consulting firm, also slipped by 8.1% on Thursday. The industry continues to face challenges amidst the evolving economic and geopolitical landscape, highlighting the need for companies to adapt to changing government policies and priorities.