Intuit Shares Surge As Earnings Beat Wall Street’s Expectations



Shares of Intuit (NASDAQ:INTU), a provider of accounting, tax, and other financial software, posted an uptick after the company beat expectations for its second-quarter earnings for the period ended July 31.

Investors had been uneasy about the company, which provides services to many small and medium-sized businesses, due to the prevailing weak macroeconomic conditions, which could negatively impact the business. However, Intuit proved skeptics wrong by posting solid results and offering guidance for the July 2023 fiscal year that was far better than Wall Street had expected.

During the fourth quarter of the fiscal year, the company booked $2.4 billion in revenue, a 6% decline from the year-ago period, mainly highlighting an earlier deadline for filing returns with the internal revenue service compared to 2021 but still surpassing both wall street’s and the company’s own expectations. In an earlier forecast, management had stated that they expected an 8% to 9% decline while the consensus on Wall Street was for $2.34 billion in revenue. 

Non-GAAP profits came in at $1.10 per share, also above both the management’s forecast of around 94 cents to $1 per share and Wall Street’s consensus estimate of 98 cents. The company reported a loss of 20 cents per share on a GAAP basis.

According to CEO Sasan Goodrazi, the company had a robust fourth quarter and ended the year with plenty of momentum. Management was even more confident than ever in its long-term business strategy as the company continued to power the world. 

In a recent interview, Goodrazi reiterated that there was no doubt that the prevailing macroeconomic environment had an impact on the company’s customers with increasing costs for wages, energy, food, and supplies. He, however, explained that Intuit’s software, in most cases, is mission critical. Essentially, customers depend on the software to run their businesses. The customers use Intuit to get new business, access capital, and get payments, and at the same time, it helps them drive growth and manage their cash position.

Intuit stock popped 5.4% during late trading to about $474 per share.

Earnings Highlights and Guidance

The company reported $12.7 billion in revenue for the full year, an increase of 32% compared to the prior year, and non-GAAP profits of $11.85 per share. According to the company, these results included a $141 million one-time charge for the settlement of a lawsuit filed by a group of state attorneys general.

The company’s Small Business and Self-Employed group brought in $1.8 billion in revenue for the quarter, a 41% increase compared to the same period last year. The Credit Karma unit had $475 million in revenue, reflecting a 17% increase. Revenue from the Consumer Group unit declined from $852 million to $145 million, illustrating the impact of the earlier tax deadline for the current year.

Going forward, Intuit projects revenue of $14.485 billion to $14.7 billion for the fiscal year 2023, an increase of 14% to 16%, and $13.59 to $13.89 in non-GAAP profits. The consensus on Wall Street is for $14.47 billion in revenue and $13.81 per share in profits.

The Small Business and Self-Employed units are expected to post growth of about 19% to 20%, while the company expects the Consumer Group to grow by 9% to 10%. Furthermore, the company forecasts that the Credit Karma business will grow by 10% to 15%, while the ProConnect group will grow by 3%.

Intuit expects revenue to increase 23% to 25% for the October quarter compared to the same period last year, considering the company’s recent acquisition of MailChimp. Non-GAAP profit is expected to come in between $1.14 to $1.20 per share, well below the Street’s estimate of $1.86 per share. 

Featured Image:  Megapixl @Michaelvi

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