Accenture CEO Julie Sweet: Really starting to see clients scale & embed generative AI in everything
Accenture CEO Julie Sweet joins CNBC's 'Squawk on the Street' to discuss the company's most recent quarter.
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CNBC
2 hours ago
- CNBC
Easy returns cause big trouble for Amazon sellers, but return rates show signs of slowing
Returns on Amazon are free and easy for shoppers, but they're risky and expensive for the small businesses that sell a majority of the goods on the world's biggest e-commerce site. Returns have driven some sellers to exit the popular Fulfillment by Amazon program, while others told CNBC they'd like to leave the platform altogether. At the heart of the problem is a big rise in returns fraud, which has led to customers mistakenly receiving used products when they ordered something new. In two particularly egregious examples involving baby products described to CNBC, Amazon sent customers used diapers and a chiller with someone else's rotten breastmilk inside. "I really don't think that consumers understand how many small businesses are on Amazon and how their return habits affect small businesses and families like mine," said Rachelle Baron, owner of Beau and Belle Littles, which sells reusable swim diapers on Amazon. Baron said her business tanked after a return incident with Amazon. The e-commerce platform shipped soiled swim diapers to customers after the used baby products had been returned to Amazon, Baron said. "There was actually two diapers that were sent out that were poopy," she said. In 2024, nearly 14% of all U.S. retail returns were fraudulent, up from 5% in 2018, according to a report by the National Retail Federation. In total, the report found that returns cost retailers $890 billion in 2024. Amazon started charging sellers in its fulfillment program (FBA) a new fee in June 2024 for items that exceed certain return rate thresholds. Sellers who sign up for FBA rely on Amazon for logistics, including shipping, packing and returns. In September, a couple months after the fee went into effect, e-commerce group Helium 10 saw return rates for U.S. Amazon sellers drop nearly 5%. "It's forcing the seller to have higher quality listings and higher quality products," said Helium 10 General Manager Zoe Lu. Amazon has also started adding a warning label to some "frequently returned items," which could be contributing to the dip. However, the new fee may also be leading to rising prices. One survey by e-commerce analysis company SmartScout found that 65% of sellers said they raised prices in 2024 directly because of Amazon fee changes. Other sellers told CNBC returns fraud is the reason they've raised prices. In total, CNBC talked to seven Amazon sellers to find out how they're handling the rising cost of returns. "We're running at about just over 1% net profit on Amazon, totally due to fraud and return abuse," said Lorie Corlett, who sells Sterling Spectrum protective cases for hot wheels. She said her return rate is 4% on Amazon and only 1% on other marketplaces like Walmart. "It's really Amazon that's accountable at the end of the day. People would stop doing it if Amazon held them accountable." Amazon told CNBC it has no tolerance for fraudulent returns and that it takes action against some scammers. Those measures include denying refunds and requiring customer identity verification. Mike Jelliff sells professional music gear through his GeekStands brand on Amazon and eight other marketplaces. He said his return rate on Amazon is three times higher than the average he sees elsewhere. "On eBay, we're allowed to block specific customers out," Jelliff said. "But on Amazon, that customer is still allowed to repurchase from us." Jelliff showed CNBC the system of about 40 cameras he's installed in his Tyler, Texas, warehouse to track every outgoing item, incoming return and unboxing. He uses the images when filing appeals with Amazon, including when customers request refunds claiming they never receive an item. He keeps a blacklist of repeat offenders who commit this kind of fraud and those who return used and damaged items, which become a total loss for him. Amazon has made some improvements to its returns process, said Jelliff, who doesn't rely on FBA. This includes Amazon allowing small businesses to make multiple appeals when fighting a fraudulent return. Amazon has also let Jelliff opt-out of automatic return labels for items above $100 starting in 2023, and his return rate has been dropping since. Figuring out which returns are fraudulent and which are ready for re-sale is labor-intensive and item specific, experts said. That creates plenty of room for error. "Because it's such a large operation, things are missed," said Lu of Helium 10. "I think they're probably missed on the margins, but these stories are very impactful because it is such a reckoning for the brand." Ceres Chill founder Lisa Myers, who once relied on Amazon to handle returns for her business as part of FBA, has one of these stories. In 2023, Amazon sent one of Ceres Chill's products to a customer with someone else's rotten breastmilk inside, said Myers, adding that the customer wrote a review saying, "she will never forget that smell." "To have something, and I don't mean to be dramatic, but dangerous, somebody else's bodily fluids in your kitchen rotting in something that you had intended to use for your child is unacceptable," Myers said. "That's the moment I broke down crying and just sat down and thought, I have no idea how this could have happened." Myers said she left FBA after the incident, leaving behind benefits like having her products labeled with Amazon's Prime badge. "It hurts our business to not participate in Fulfilled by Amazon," Myers said. "It's just we're not willing to, we will never put profit over the safety and, frankly, mental health of our customers." Instead, Myers outsources all her returns to baby resell specialist Goodbuy Gear, which is on track to re-sell 200,000 returned baby products this year. Kristin Langenfeld started GoodBuy Gear when she was a new mom struggling to find a good quality, used jogging stroller. "We've spent the last nine years building out a database that has all of the products and the variations, the common issues, the recalls," Langenfeld said. "For some of these, there's 40 points that we inspect on the item itself, and it's really complicated." Langenfeld showed CNBC the process at her warehouse in Malvern, Pennsylvania, where each item is inspected for about 15 minutes and is typically handled by at least four employees. The resource intensive process is paying off. She says 33 new sellers signed up in 2024, three times more than the previous year. And with business growing 50% year-over-year, she's upgrading to a bigger warehouse in Columbus, Ohio. She was inspired to handle returns after visiting a major retailer's returns warehouse five years ago. "Taped on the floor were signs that said 'incinerate,' 'destroy,'" she said. Returns generated an estimated 29 million metric tons of carbon emissions in 2024, and 9.8 billion pounds of returns ended up in landfills, according to reverse logistics software provider Optoro. Amazon has faced criticism for destroying millions of pounds of unused products. In 2022, Amazon told CNBC it was "working towards a goal of zero product disposal," but wouldn't give a timeline for that ambition. Three years later, that goal is still in the works, with Amazon telling CNBC in a statement, "The vast majority of returns are resold as new or used, returned to selling partners, liquidated, or donated." In 2020, Amazon added two new options for sellers to re-home returns. "Grade and Resell" allows all U.S. FBA sellers to have Amazon rate the return and mark it as "used" before re-selling it. FBA Liquidation allows sellers to recoup some losses by offloading palettes of goods for re-sale on the secondary market through liquidation partners like Liquidity Services. There's also an FBA Donations program that's been around since 2019, allowing sellers to automatically offer eligible overstock and returns to charity groups through the non-profit Good360. Amazon told CNBC these seller programs give a second life to more than 300 million items a year. For shoppers wanting to keep returns from incineration or landfills, Amazon also has options. Amazon Resale has used and open-box goods, Amazon Renewed sells refurbished items and Amazon Outlet sells overstock. Daily deal site Woot!, bought by Amazon for $110 million in 2010, also sells scratched and dented items. Customers can also trade in certain electronics, like Amazon devices, phones and tablets, for Amazon gift cards or send them to the company's certified recycler. "I hope the change that we're able to make as a country is that we stop making crap," Langenfeld said. "We should make high quality products that are meant for resale."
CNBC
6 hours ago
- CNBC
After Zuckerberg spent billions on an AI 'dream team,' he has to deliver for Meta shareholders
When Mark Zuckerberg feels the heat, he opens his wallet. The 41-year-old Facebook founder and Meta CEO is on a spending spree like never before in an effort to position his company at the forefront of the artificial intelligence boom and make up for recent costly mistakes in a market that's rapidly revolutionizing the business world. Following last week's stunning $14.3 billion investment in Scale AI, which brought with it Meta's hiring of the startup's founder, Alexandr Wang, and a small group of his top staffers, Meta now plans to hire former GitHub CEO Nat Friedman and his business partner, Daniel Gross, who had been CEO of $32 billion AI startup Safe Superintelligence, CNBC reported this week. Meta previously tried to buy Safe Superintelligence, which was launched a year ago by OpenAI co-founder Ilya Sutskever, sources told CNBC. According to other sources, Meta had previously been in talks to buy Perplexity AI, which was valued at $14 billion in a funding round in May. The people who spoke to CNBC about the various dealmaking pursuits asked not to be named due to confidentiality. Zuckerberg told investors at the top of the most recent earnings call in April, "The major theme right now, of course, is how AI is transforming everything we do." At the same time, Meta upped its capital expenditures range for the year to between $64 billion and $72 billion from between $60 billion and $65 billion to reflect more data center investments in AI and potentially higher hardware costs. What Zuckerberg didn't say then is that he was about to start shelling out mounds of cash to revamp his AI organization. "Mark Zuckerberg is in founder mode and he's not going to be stopped," said Gil Luria, an analyst at D.A. Davidson, in an interview on Friday with CNBC's "Money Movers." Luria has a buy rating on the stock, but said that to win in AI, Meta needs to be successful with the next round, with the dream team that they're building." At Meta, AI is being embedded across the company, from its core online advertising unit and Instagram algorithms to its effort to build the metaverse. Better AI models and technology enhance the company's existing business, both by improving ad targeting and by bringing down costs. However, the building of fundamental models used by the vast community of developers — where the company competes with Google, OpenAI, Anthropic and others — is where Meta is viewed by many as a laggard. Meta's unique open-source approach is built around the Llama family of models. Its most recent update in April, the Llama 4 AI models, was not well received by developers. At the time, Meta only released two smaller versions of Llama 4 and said it would eventually release a bigger and more powerful "Behemoth" model. "On the heels of a successful rollout of Llama 3 a year ago, Llama 4 that came out this year was an absolute failure, almost by his admission," Luria said, referring to Zuckerberg. "Meta can't afford to fail in having the leading AI model. So they're out in the marketplace desperately trying to replace their AI team right now." Meta didn't respond to a request for comment for this story. Bringing on Scale AI's Wang was Zuckerberg's most headline-grabbing move yet. While Meta is gaining a 49% stake in the startup, Zuckerberg's real prize in the deal was hiring Wang, a dropout from the Massachusetts Institute of Technology who started his company at age 19. Zuckerberg then turned his attention to Github's Friedman and Gross, who have been investing together at their venture firm NFDG. They will work on products under Wang, one source familiar with the matter told CNBC on Thursday. Meta, meanwhile, will get a stake in NFDG, according to multiple sources. A Meta spokesperson didn't comment on the planned hires and said the company "will share more about our superintelligence effort and the great people joining this team in the coming weeks." Not all of Zuckerberg's recruits are costing billions of dollars. Some are in the tens or hundreds of millions. That's according to OpenAI CEO Sam Altman. Altman said on the latest episode of the "Uncapped" podcast, which his brother hosts, that Meta has tried to lure OpenAI employees by offering signing bonuses as high as $100 million, with even larger annual compensation packages. "I've heard that Meta thinks of us as their biggest competitor," Altman said on the podcast. "Their current AI efforts have not worked as well as they have hoped and I respect being aggressive and continuing to try new things." Meta technology chief Andrew Bosworth told CNBC's "Closing Bell Overtime" on Friday that Altman is countering the offers. "The market is setting a rate here for a level of talent which is really incredible and kind of unprecedented in my 20-year career as a technology executive," said Bosworth, who joined Meta in 2006. Wall Street is mostly giving Zuckerberg the benefit of the doubt, for now. Meta shares were flat this week after slipping about 2% last week. Shares are still up 17% for the year, outpacing the Nasdaq and all the company's megacap peers. Analysts at Argus maintained their buy recommendation on the stock this week and lifted their price target to $790 a share from $725 a share. The stock closed on Friday at $682.35. "The company's ability to capitalize on GenAI advances in advertising targeting is a particularly relevant opportunity to drive advertising spending, which is the company's lifeblood," the Argus analysts wrote. D.A. Davidson's Luria said that Zuckerberg has put more pressure on himself to turn Meta into a long-term AI leader, but said he won't bet against him. Luria said: "The last time Mr. Zuckerberg felt like he was under the gun," he snapped up Instagram for $1 billion, a deal that set the stage for Facebook to become a dominant player in mobile. That was in 2012, just as Facebook was about to hit the public market. Luria also highlighted Zuckerberg's controversial $19 billion purchase of WhatsApp two years later. He sees the Meta CEO making an equally bold wager in AI. "He's going to rebuild the team and they're going to come back," Luria said.
Yahoo
8 hours ago
- Yahoo
Accenture PLC (ACN) Q3 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
Revenue: $17.7 billion, 7% growth in local currency. Bookings: $19.7 billion, including 30 clients with bookings over $100 million. GenAI Revenue: Over $700 million in Q3, with year-to-date bookings of $4.1 billion. Operating Margin: 16.8%, a 40 basis points increase from last year. Earnings Per Share (EPS): $3.49, reflecting 12% growth over last year. Free Cash Flow: $3.5 billion. Cash Balance: $9.6 billion as of May 31. Share Repurchases and Dividends: $2.7 billion returned to shareholders. Consulting Revenue: $9 billion, up 7% in US dollars. Managed Services Revenue: $8.7 billion, up 9% in US dollars. Gross Margin: 32.9% compared to 33.4% last year. Sales and Marketing Expense: 9.9% of revenue. General and Administrative Expense: 6.1% of revenue. Days Services Outstanding: 47 days. Acquisitions: $789 million invested in 15 acquisitions year-to-date. Warning! GuruFocus has detected 4 Warning Sign with ACN. Release Date: June 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Accenture PLC (NYSE:ACN) reported strong quarterly bookings of $19.7 billion, with 30 clients having bookings greater than $100 million. The company achieved a 7% revenue growth in local currency, surpassing their guided range, and continued to gain market share. Accenture PLC (NYSE:ACN) expanded its operating margin by 40 basis points and delivered a 12% EPS growth over the previous year's adjusted EPS. Significant investments were made in strategic areas, including $297 million in acquisitions and increasing their data and AI workforce to approximately 75,000. The company was recognized as a top workplace, earning the number six spot on the Great Place to Work list and increasing its brand value by 27% to $103.8 billion. New bookings decreased by 6% in US dollars and 7% in local currency compared to the previous quarter. Gross margin slightly declined to 32.9% from 33.4% in the same quarter last year. The federal business had an immaterial impact on overall growth, with a projected 2% headwind in Q4. Attrition ticked up slightly, although it remains within normal levels. The pace of acquisitions was slower this year due to tough market conditions, impacting inorganic growth contributions. Q: Can you provide insights into leadership changes and talent retention given some headcount numbers and departures? A: Julie Sweet, CEO: Attrition ticked up slightly this quarter, but it's within normal ranges. Our leaders are in demand, and we have a deep bench of leaders. We have a strong track record of implementing new growth models and driving growth. Q: How is the heightened uncertainty affecting your guidance and client interactions? A: Julie Sweet, CEO: Despite the uncertainty, we are generating revenue above guidance due to our resilient model. We focus on what clients need, which is reinvention, and we have pivoted to meet these needs. Our ability to adapt quickly is due to our trusted relationships and diversified services. Q: How is the demand for Gen AI compared to other projects, and what is the pace of acquisitions? A: Julie Sweet, CEO: Gen AI demand remains strong and is increasingly embedded in everything we do. Angie Park, CFO: Our acquisition strategy remains the same, focusing on scaling and expanding capabilities. This year, acquisitions are slower due to market conditions, but we expect about 3% inorganic contribution. Q: Are there any changes in the types of companies or skill sets you're targeting for acquisitions? A: Julie Sweet, CEO: Our acquisition strategy is aligned with our business strategy, focusing on capabilities that drive growth. We evaluate whether to build or buy based on our needs and market conditions. The strategy remains dynamic and evolves with our business goals. Q: What are the implications of the new growth model on the financial model? A: Julie Sweet, CEO: The new growth model is driven by market opportunities and is not focused on cost-cutting. It's about integrating services to fuel growth and leveraging AI across our offerings. This change is expected to drive the next chapter of growth. Q: Can you elaborate on the bookings composition and client priorities? A: Julie Sweet, CEO: Clients are focused on large transactions that make a difference, which aligns with our strengths. There's a focus on cost efficiency and reinvestment in core business areas. The themes include tech, data, AI, and future readiness. Q: How are you managing headcount and hiring plans? A: Angie Park, CFO: We ended Q3 with 790,000 people, a 5% increase year-over-year. Utilization is at 92%. Headcount doesn't directly correlate with revenue; our guidance reflects demand for services. Q: How is blockchain technology impacting your business, particularly in financial services? A: Julie Sweet, CEO: Blockchain is important in certain industries like financial services but isn't a major growth driver like AI. It's an enabling technology for specific solutions, and we focus on integrating it where it makes sense. Q: Can you discuss the impact of AI on your delivery and pricing models? A: Julie Sweet, CEO: Our guidance accounts for Gen AI's impact on delivery and commercial models. We focus on delivering value to clients, and AI is integrated across the entire lifecycle to enhance efficiency and pricing. Q: What is your outlook on consulting bookings and the impact of macroeconomic factors? A: Angie Park, CFO: Consulting bookings can be lumpy, but we focus on the trailing 12-month book-to-bill, which is strong at 1.1. We are pleased with our overall bookings and continue to see positive trends. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
