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Intuit's (INTU) Q3 Earnings Beat Expectations, Sales Miss

Intuit INTU reported fiscal third-quarter 2023 non-GAAP earnings of $8.92 per share, beating the Zacks Consensus Estimate of $8.45 per share. The bottom line surged 17% from the year-ago quarter’s earnings of $7.65 per share.

Revenues of $6.02 billion missed the consensus mark of $6.09 billion but increased 7% year over year.

Quarter Details

Segment-wise, Small Business and Self-Employed Group revenues grew 21% year over year to $2.02 billion. This rise was driven by the solid growth in customers for QuickBooks Online, a favorable mix-shift and the addition of Mailchimp.

Total Online Ecosystem revenues grew 23% year over year to $1.47 billion. QuickBooks Online Accounting revenues were up 25% year over year to $723 million, mainly driven by the mix-shift, higher pricing and customer growth.

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

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Online Services revenues which include payroll, payments, time tracking and capital, grew 21% year over year to $745 million. This was driven by strong performances of Mailchimp, QuickBooks Online payroll and QuickBooks Online payments solutions.

Within QuickBooks Online payroll, a mix-shift to INTU’s full-service offering and the continued uptick in the customer base acted as tailwinds. Within QuickBooks Online payments, an increase in the charge volume per customer and ongoing customer growth drove revenues.

Total international online revenues increased 12% year over year on a constant-currency basis.

Total Desktop ecosystem revenues grew 16.4% year over year during the reported quarter to $553 million.

In the fiscal third quarter, revenues from Consumer Group increased to $3.34 billion from $3.24 billion reported a year ago, mainly driven by a strong peak in new customers and extension filers. Further, ProTax Group's professional tax revenues decreased by 5% to $246 million from $258 million in the year-ago quarter.

The Credit Karma business contributed $410 million to Intuit’s third-quarter total revenues, down from $468 million in the year-ago quarter. The drastic year-over-year fall reflects headwinds in personal loans, home loans, auto insurance and auto loans, partially offset by strength in credit cards and Credit Karma Money.

Intuit’s non-GAAP operating income climbed 16% to $3.36 billion.

Balance Sheet and Cash Flow

As of Apr 30, 2023, Intuit’s cash and investments were $4.3 billion compared with $2.07 billion as of Jan 31, 2023.

The company exited the fiscal third quarter with long-term debt of $6.6 billion, up from the previous quarter’s $6.58 billion.

During the first nine months of fiscal 2023, the company generated $4.20 billion worth cash from operating activities.

Intuit repurchased stocks worth $483 million during the fiscal third quarter and had a remaining share-repurchase authorization of $2 billion at the end of the quarter. INTU announced that its board approved a quarterly cash dividend of 78 cents per share payable on Jul 18, 2023. The newly approved cash dividend represents a year-over-year increase of 15%.

Outlook

Intuit projects fiscal 2023 revenues in the band of $14.279-$14.317 billion, indicating 12-13% growth.

The company anticipates non-GAAP operating income between $5.441 billion and $5.461 billion, indicating approximate year-over-year growth of 21%.

Intuit’s fiscal 2023 non-GAAP earnings per share forecast stands between $14.20 and $14.25, suggesting year-over-year increase of 20%.

For the fiscal fourth quarter, INTU expects revenues to grow between 9% and 10% on a year-over-year basis. Adjusted earnings for the quarter are estimated in the range of $1.43-$1.48 per share.

Zacks Rank & Key Picks

Intuit carries a Zacks Rank #3 (Hold). Shares of INTU have gained 25.3% over the past year.

Some top-ranked stocks from the broader Computer and Technology sector are Meta Platforms META, Momo MOMO and ServiceNow NOW, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 14% upward to $2.79 per share over the past 30 days. For 2023, earnings estimates have moved north by 12.1% to $11.76 in the past 30 days.

META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have climbed 36.1% in the past year.

The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 30 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 30 days.

MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have jumped 93.4% in the past year.

The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 11 cents to $2.04 per share over the past 30 days. For 2023, earnings estimates have moved up by 39 cents to $9.54 in the past 30 days.

NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 19.1% in the past year.

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