Intuit INTU reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.81 per share, which beat the Zacks Consensus Estimate by 49.59%. The company had reported loss of 9 cents per share in the year-ago quarter.
Moreover, revenues of $1.82 billion outpaced the consensus mark by 15.6%. The figure surged 83% year over year.
Intuit reported impressive quarterly results compared with its nearest peers including Automatic Data Processing ADP and Paychex PAYX.
Markedly, ADP’s fourth-quarter earnings remained flat year over year as total revenues declined 3%. Paychex’s earnings and revenues declined 3.2% and 7% on a year-over-year basis, respectively.
Intuit Inc. Price, Consensus and EPS Surprise
Intuit Inc. price-consensus-eps-surprise-chart | Intuit Inc. Quote
Moreover, Intuit witnessed expansion of Do-It-Yourself (“DIY”) category in the reported quarter. The company estimates that excluding stimulus filings of approximately 7 to 8 million, the DIY category share grew over 2 points this tax-filing season.
Further, this Zacks Rank #2 (Buy) company grew its share of total returns and posted 11% customer growth, the strongest in four years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, Intuit’s closest tax preparation service-provider H&R Block HRB also witnessed significant growth in DIY filings. The company is set to report first-quarter fiscal 2021 results on Sep 1.
Markedly Intuit has outperformed ADP, Paychex and H&R Block year to date.
Quarter in Detail
Small Business and Self-Employed Group revenues increased 16% year over year to $1.05 billion. This rise was primarily driven by solid growth in customers for QuickBooks Online. Excluding nonrecurring Paycheck Protection Program (“PPP”) revenues, it grew 13%.
Moreover, revenues from Consumer Group were $710 million compared with $74 million reported in the year-ago quarter.
Strategic Partner Group revenues of $57 million surged 280% year over year.
Both TurboTax Online and total TurboTax units increased 11% year over year. Excluding stimulus-only filings, estimated TurboTax share of total tax returns grew more than 1.5 points and TurboTax share ofthe DIY category was unchanged.
Moreover, TurboTax Live customers grew approximately 70%.
Total Online Ecosystem revenues rose 28.8% year over year to $591 million. Excluding non-recurring PPP revenues, it grew 25%.
QuickBooks Online Accounting revenues were up 34.2% year over year to $365 million. Online services revenues, including payroll, payments, time tracking and capital, grew 21% year over year to $226 million. Online Services revenues excluding PPP revenues grew 12% year over year.
Sturdy momentum in the company’s lending product QuickBooks Capital was a positive as well. At the end of the quarter, net loans receivable balance was $40 million.
As of Jul 31, 2020, Intuit and its bank partners helped make available more than $1.2 billion of approved small-business loans to customers from the PPP through QuickBooks Capital. This resulted in approximately $30 million in non-recurring revenues in the quarter under review, with nearly $16 million included in online services revenues and $14 million included in desktop services revenues.
At the end of the fourth quarter, Intuit held $98 million net loans receivable for PPP which the company intends to sell.
Total Desktop-ecosystem revenues climbed 2.2% year over year to $458 million. Within the Desktop ecosystem, revenues from QuickBooks Desktop Accounting inched up 5.3% to $178 million. Desktop Services and Supplies revenues increased 1.1% year over year to $280 million.
Intuit’s non-GAAP operating income was $616 million against operating loss of $47 million in the year-ago quarter.
Balance Sheet and Cash Flow
As of Jul 31, 2020, Intuit’s cash and cash equivalents were $6.44 billion compared with $3.37 billion as of Apr 30, 2020.
In June, Intuit issued $2 billion in senior notes to fund a portion of the Credit Karma acquisition and for other general corporate purposes.
The company did not repurchase any stock during the reported quarter. Intuit has approximately $2.4 billion remaining on its authorization.
Fiscal 2021 Outlook
Intuit offered three scenarios related to Small Business and Self-Employed Group. In the first scenario, where the pace of economic recovery continues at current pace, revenues are expected to grow high single-digits.
In the second scenario that assumes a more gradual opening of the economy and a W-shaped recovery, Small Business and Self-Employed Group revenues are expected to grow mid single-digits.
The third scenario assumes a choppy economic recovery (a double W-shaped recovery). Small Business and Self-Employed Group revenues are expected to be flat and low single-digits.
Intuit expects slower Small Business and Self-Employed revenue growth in the first half as compared to the second half of fiscal 2021.
Over the long term, Intuit expects revenue growth of 8-12% for the Consumer Group and 10-15% for the Small Business and Self-Employed Group. The company continues to expect Online Ecosystem revenue growth of more than 30%.
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