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Intuit (INTU) Q2 Earnings Beat on Strength in Online Ecosystem

Intuit INTU delivered fiscal second-quarter 2024 non-GAAP earnings of $2.63 per share, beating the Zacks Consensus Estimate by 14.85%.  

Revenues of $3.38 billion beat the consensus mark by 0.05% and increased 11.3% year over year.

Intuit provides financial management and compliance products, such as its tax-preparation software TurboTax, personal finance portal Credit Karma and accounting software QuickBooks, to small businesses.

Small businesses can file their taxes with TurboTax and if a small business is a QuickBooks Online customer, it can file its taxes with an expert. Total online payment volume growth was 20% in the fiscal second quarter.

Small Business and Self-Employed Group revenues (66.3% of total revenues) jumped 18.4% year over year to $2.24 billion, driven by growth in total Online Ecosystem revenues that climbed 20% year over year to $1.68 billion.

Intuit continues to prioritize disrupting the small business mid-market through continued focus on both go-to-market and product innovations. While mid-market customers are a smaller subset of the total small business TAM, they drive a higher ARPC over time, given their more complex needs and higher usage of services across the platform.

QuickBooks Online Accounting revenues were up 19% year over year to $826 million, driven primarily by customer growth, higher effective prices and a mix-shift to INTU’s full-service offering.

Online Services revenues, which include payroll, payments, time tracking and capital, jumped 24% year over year to $862 million. This was driven by strong performances of Mailchimp, QuickBooks Online payroll and QuickBooks Online payments solutions.

Mailchimp revenue growth was driven by higher effective prices and a rise in customers. Within payroll, revenue growth in the quarter reflected an increase in customers adopting the payroll solutions, higher effective prices and a mix-shift toward higher-end offerings. Within payments, revenue growth in the quarter was driven by rising customers as more consumers adopted the company’s payment offerings to manage their cash flow, higher effective prices and an increase in total payment volume per customer.

The company continued to make progress globally by executing a refreshed international strategy, which includes leading with both QuickBooks Online and Mailchimp in established markets and leading with Mailchimp in all other markets. On a constant currency basis, total international online ecosystem revenues grew 16% in the fiscal second quarter.

Intuit Inc. Price, Consensus and EPS Surprise

Intuit Inc. Price, Consensus and EPS Surprise
Intuit Inc. Price, Consensus and EPS Surprise

Intuit Inc. price-consensus-eps-surprise-chart | Intuit Inc. Quote

Intuit Gains From Generative AI Features in Platform Architecture

The company's strategic focus on the tax segment, leveraging data and artificial intelligence (AI) to transform the assisted consumer and business tax categories, is aiding user growth. The integration of their products, such as TurboTax with Credit Karma and QuickBooks Online, is poised to streamline the tax filing process for users in the near term.

Intuit perceives Generative AI (GenAI) technology as a cost advantage, potentially leading to improved margins in the near term. INTU has incorporated GenAI costs into its current fiscal-year guidance, with expectations of increased efficiency and no drag on margins.

Intuit Assist, an AI-powered financial assistant, is driving customer engagement and efficiency. Intuit Assist is powered by the company’s GenAI Operating System, which is built on OpenAI’s large language model. It leverages INTU's ecosystem and database to offer personalized recommendations to both B2C and B2B customers.

Intuit Assist will help small businesses using QuickBooks see cash flow hot spots, identify top-selling products and detect spending anomalies.

Zacks Rank & Key Picks

Intuit carries a Zacks Rank #4 (Sell) at present. Shares of INTU have gained 28.1% in the year-to-date period.

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Some better-ranked stocks from the broader Computer and Technology sector are Agilent Technologies A, ACM Research ACMR and Bandwidth BAND, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Agilent Technologies have lost 2.7% year to date. A is scheduled to release first-quarter 2024 results on Feb 27.

Shares of ACM Research have lost 2.1% year to date. ACMR is set to report its fourth-quarter 2023 results on Feb 28.

Shares of Bandwidth have lost 8.2% year to date. BAND is set to report its fourth-quarter 2023 results on Feb 28.

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