Shares dropped 18% after the quarter on investor concerns tied to significant revenue headwinds from the Middle East conflict and the deferral of large managed services deals into FY 2027, overshadowing solid underlying growth and margin progress.
- Revenue growth was negatively impacted by approximately $100 million related to the Middle East conflict, affecting consulting services both directly in the region and indirectly worldwide.
- Sales in the Middle East declined about $400 million, with additional delays in EMEA deal decision-making noted.
- A couple of large managed services contracts were pushed into the next fiscal year, creating near-term revenue deferral.
- Despite pressures, the company added roughly $1 billion in revenue over Q3 of FY 2025 and saw broad-based growth across geographies and industries.
- Margins expanded, EPS grew, and free cash flow remained strong, while accelerating investments in AI capabilities and strategic acquisitions, including OT cybersecurity platforms.
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