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A month has gone by since the last earnings report for Intuit (INTU). Shares have lost about 2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intuit due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Intuit's Q3 Earnings and Revenues Beat Estimates
Intuit reported fiscal third-quarter non-GAAP earnings of $7.65 per share, beating the Zacks Consensus Estimate of $7.60. The bottom line increased 26% from the year-ago quarter’s earnings of $6.07 per share.
Revenues of $5.63 billion surpassed the consensus mark of $5.52 billion and improved 35% year over year.
The year-over-year surge in the top and bottom lines reflect strong growth in the do-it-yourself category and solid revenues from the Credit Karma business. The solid contribution from TurboTax Live was an upside. Solid customer growth also contributed to the top line.
Quarter in Detail
Segment-wise, Small Business and Self-Employed Group revenues grew 42% year over year to $1.7 billion. This rise was driven by the solid growth in customers for QuickBooks Online and a favorable mix-shift.
Total Online Ecosystem revenues surged 67% year over year to $1.2 billion. QuickBooks Online Accounting revenues were up 32% year over year to $578 million, mainly driven by the mix-shift, higher pricing and customer growth.
Online Services revenues, which include payroll, payments, time tracking and capital, soared 121% year over year to $614 million. This was driven by strong performances at the QuickBooks Online payroll and QuickBooks Online payments solutions, along with revenues from the newly acquired Mailchimp business.
Within the QuickBooks Online payroll, a mix-shift to INTU’s full-service offering and the continued uptick in the customer base acted as tailwinds. Within the payments, an increase in the charge volume per customer and ongoing customer growth drove revenues. Mailchimp contributed $257 million to total Online Services.
Total International online revenues increased a whopping 221% year over year on a constant-currency basis and 29% on an organic basis, excluding contributions from Mailchimp.
Total Desktop ecosystem revenues grew 2.81% year over year during the reported quarter to $475 million.
In the fiscal third quarter, revenues from Consumer Group increased to $3.24 billion from $2.45 billion, mainly driven by the earlier Internal Revenue Service (IRS) deadline this year. IRS income tax returns filing deadline was Apr 18, 2022.
ProConnect Group's professional tax revenues increased to $258 million from $235 million in the year-ago quarter. The increase was mainly driven by the earlier IRS opening.
The Credit Karma business contributed $468 million to Intuit’s third-quarter total revenues, up from $316 million in the year-ago quarter. The robust year-over-year growth reflects high levels of monthly active users and revenues per monthly active user. It reflects strength in credit cards and personal loans.
Intuit’s non-GAAP operating income increased 32% to $2.90 billion.
Balance Sheet and Cash Flow
As of Apr 30, 2022, Intuit’s cash and investments were $3.90 billion compared with $1.4 billion as of Jan 31, 2022.
The company exited the third quarter with long-term debt of $6.85 billion.
During the first nine months of fiscal 2022, Intuit generated cash flow worth $3.55 billion.
Intuit repurchased stocks worth $489 million during the reported quarter. At the end of the quarter, it had a remaining share-repurchase authorization of $2 billion. Additionally, INTU announced that its board approved a quarterly cash dividend of 68 cents per share payable on Jul 18, 2022. The newly approved cash dividend represents a year-over-year increase of 15%.
Reiterated Fiscal 2022 Outlook
Intuit reaffirmed its fiscal 2022 guidance. The company now projects revenues in the band of $12.633-$12.674 billion, compared to the earlier range of $12.165-$12.30 billion. The new guidance range calls for year-over-year growth of 31-32%, up from previously estimated growth of 26-28%. Excluding Mailchimp, Intuit expects revenue growth of 23-24%, up from prior guidance of 18-20%.
The company now anticipates non-GAAP operating income between $4.451 billion and $4.471 billion, indicating approximate year-over-year growth of 28%. Previously, Intuit had anticipated non-GAAP operating income between $4.37 billion and $4.43 billion, which indicated year-over-year growth of 25-27%.
Intuit’s updated fiscal 2022 non-GAAP earnings per share forecast stands between $11.68 and $11.74, suggesting a year-over-year increase of 20-21%. This was higher than the prior projection of $11.48-$11.64, suggesting year-over-year increase of 18-20%.
For the fiscal fourth quarter, INTU expects revenues to decrease between 8% and 9% on a year-over-year basis. Adjusted earnings for the quarter are estimated in the range of 94 cents to $1.00 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 240.63% due to these changes.
Currently, Intuit has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Intuit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Intuit is part of the Zacks Computer - Software industry. Over the past month, Synopsys (SNPS), a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended April 2022 more than a month ago.
Synopsys reported revenues of $1.28 billion in the last reported quarter, representing a year-over-year change of +24.9%. EPS of $2.50 for the same period compares with $1.70 a year ago.
Synopsys is expected to post earnings of $1.93 per share for the current quarter, representing a year-over-year change of +6.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -16.5%.
Synopsys has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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