Why is Intuit’s (INTU) down 7.6% since the last earnings report?
Intuit’s last earnings report (INTU) was just over a month ago. Shares have lost about 7.6% in that time frame, underperforming the S&P 500.
Are investors and analysts likely to continue the negative trend in Intuit’s next earnings report? Before we go into how analysts and investors have reacted to the recent earnings release, let’s look at the most current earnings report to get a better idea of the important catalysts.
Intuit’s Q1 Earnings and Sales Beat on Expectations
Intuit reported fiscal second-quarter 2023 non GAAP earnings of $1.66 per stock, surpassing the Zacks Consensus Estimate at $1.19 per stock. The bottom line surged 8% from the year-ago quarter’s earnings of $1.53 per share.
Revenues of $2.60Billion exceeded the consensus of $2.50Billion and increased 29% year over.
Quarter Details
Segment-wise, Small Business and Self-Employed Group revenues rose 38% to $2 Billion year-over-year. This was due to solid growth in QuickBooks Online customers, favorable mix-shifts and the addition Mailchimp.
The total online ecosystem revenues increased 60% year-over-year to $1.3 billion. QuickBooks Online Accounting revenues increased 29% year-over-year to $668million, primarily due to mix shift, higher pricing, and customer growth.
Online Services, which includes payroll, payments, capital and time tracking, saw a 109% increase in revenues year over year to $681 millions. Strong performances by QuickBooks Online payroll and QuickBooks Online payment solutions as well as revenues from Mailchimp were key factors in this increase.
Within QuickBooks Online payroll, a mix-shift to INTU’s full-service offering and the continued uptick in the customer base acted as tailwinds. In QuickBooks Online payments, a rise in the customer base and continued customer growth drove revenue. Mailchimp contributed $264 Million to the total Online Services.
The total international Online Ecosystem revenue increased by a staggering 172% year-over-year on a constant currency basis and 19% organically, excluding Mailchimp contributions.
The reported quarter saw total desktop ecosystem revenue rise 6.9% year-over-year to $639 millions
Revenues from Consumer Group rose to $150 million in the fiscal first quarter from $120 million a year earlier. This was primarily due to a strong peak in extension filers and new customers in October. ProConnect Group’s professional income from taxes rose to $34 million, up from $26 millions in the prior quarter.
The Credit Karma business contributed $425 million to Intuit’s first-quarter total revenues, up from $418 million in the year-ago quarter. Strong year-over-year growth is due to high monthly active users and revenue per month. This is due to credit card strength offset by headwinds in auto loans, personal loans, and home loans.
Intuit’s non-GAAP operating income climbed 19% to $662 million.
Cash Flow and Balance Sheet
As of Oct 31, 2022, Intuit’s cash and investments were $2.72 billion compared with $3.28 billion as of Jul 31, 2022.
The company exited the fiscal first-quarter with long-term debt of $6.49 billion, up from the previous quarter’s $6.42 billion.
Intuit generated $328 million in operating cash flows during the first quarter of fiscal 2023.
Intuit bought stocks for $519 million in the fiscal quarter and had a $3 billion share-repurchase authorization remaining at the end. INTU announced that its board had approved a quarterly cash dividend at 78c per share, payable Jan 18, 2023. This cash dividend is a 15% increase in year-overyear.
Outlook
Intuit predicts fiscal 2023 revenues of between $14.035 and $14.250 billion. This would indicate a 10-12% increase.
The company expects non-GAAP operating earnings between $5.258 billion to $5.363 billion. This would indicate an approximate annual growth rate of 17-19%.
Intuit’s fiscal 2023 non-GAAP earnings per share forecast stands between $13.59 and $13.89, suggesting year-over-year increase of 15-17%.
INTU expects revenue to increase between 8% – 9% over the year for its fiscal second quarter. For the quarter, adjusted earnings are expected to be between $1.41 and $1.45 per ounce.
What has the evolution of estimates been since then?
Investors have noticed a downward trend of estimates revisions over the past month.
These changes have caused the consensus estimate to shift by -65.66%
VGM Scores
Intuit currently boasts a good Growth Score of B. However, it is very far behind the Momentum Score which is D. On the value side, it was given a graded D, placing it in the bottom 40% of this investment strategy.
Overall, the stock has a VGM Score of C.
Outlook
The stock’s estimates have been trending down in general, and the extent of the revisions suggests a downward shift. Intuit holds a Zacks rank #3 (Hold). We anticipate an in-line profit from the stock over the next few weeks.
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