It has been about a month since the last earnings report for Intuit (INTU). Shares have lost about 12.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intuit due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Intuit’s Earnings and Revenues Surpass Estimates in Q4
Intuit reported fiscal fourth-quarter non-GAAP earnings of $1.10 per share, beating the Zacks Consensus Estimate of 98 cents per share. The bottom line plunged 44% from the year-ago quarter’s earnings of $1.97 per share.
Revenues of $2.41 billion surpassed the consensus mark of $2.35 billion but dropped 6% year over year.
Quarter in Detail
Segment-wise, Small Business and Self-Employed Group revenues grew 41% year over year to $1.77 billion. This rise was driven by the solid growth in customers for QuickBooks Online and a favorable mix-shift.
Total Online Ecosystem revenues surged 66% year over year to $1.28 billion. QuickBooks Online Accounting revenues were up 34% year over year to $623 million, mainly driven by the mix-shift, higher pricing and customer growth.
Online Services revenues, which include payroll, payments, time tracking and capital, soared 116% year over year to $657 million. This was driven by strong performances of the QuickBooks Online payroll and QuickBooks Online payments solutions, along with revenues from the new Mailchimp business.
Within the QuickBooks Online payroll, a mix-shift to INTU’s full-service offering and the continued uptick in the customer base acted as tailwinds. Within the payments, an increase in the charge volume per customer and ongoing customer growth drove revenues. Mailchimp contributed $265 million to total Online Services.
Total International online revenues increased a whopping 193% year over year on a constant-currency basis and 23% on an organic basis, excluding contributions from Mailchimp.
Total Desktop ecosystem revenues grew 1.5% year over year during the reported quarter to $489 million.
In the fiscal fourth quarter, revenues from Consumer Group decreased to $145 million from $852 billion reported a year ago, mainly driven by the earlier Internal Revenue Service (IRS) deadline this year. IRS income tax returns filing deadline was Apr 18, 2022.
ProConnect Group's professional tax revenues decreased to $25 million from $52 million in the year-ago quarter. The decrease reflected the earlier IRS opening this year.
The Credit Karma business contributed $475 million to Intuit’s fourth-quarter total revenues, up from $405 million in the year-ago quarter. The robust year-over-year growth reflects high levels of monthly active users and revenues per monthly active user. It reflects strength in credit cards and personal loans.
Intuit’s non-GAAP operating income decreased 39% to $433 million.
Fiscal 2022 Highlights
Intuit’s fiscal 2022 revenues grew 32% year over year to $12.73 billion and surpassed the Zacks Consensus Estimate of $12.66 billion. Excluding Mailchimp, INTU revenues went up 24%.
The company reported non-GAAP earnings of $11.85 per share, which outpaced the Zacks Consensus Estimate of $11.72 per share and grew 22% from the year-ago quarter.
In fiscal 2022, INTU’s non-GAAP operating income rose 29% to $4.50 billion.
Balance Sheet and Cash Flow
As of Jul 31, 2022, Intuit’s cash and investments were $3.28 billion compared with $3.90 billion as of Apr 30, 2022.
The company exited the fourth quarter with long-term debt of $6.42 billion, down from the previous quarter’s $6.85 billion.
During fiscal 2022, Intuit generated operating cash flow worth $3.89 billion.
Intuit repurchased stocks worth $508 million during the reported quarter and $1.9 billion during the fiscal year. At the end of the quarter, it had a remaining share-repurchase authorization of $3.5 billion. Additionally, INTU announced that its board approved a quarterly cash dividend of 78 cents per share payable on Oct 18, 2022. The newly approved cash dividend represents a year-over-year increase of 15%.
Intuit projects fiscal 2023 revenues in the band of $14.485-$14.700 billion, indicating 14-16% growth.
The company anticipates non-GAAP operating income between $5.258 billion and $5.363 billion, indicating approximate year-over-year growth of 17-19%.
Intuit’s fiscal 2023 non-GAAP earnings per share forecast stands between $13.59 and $13.89, suggesting a year-over-year increase of 15-17%.
For the fiscal first quarter, INTU expects revenues to grow between 23% and 25% on a year-over-year basis. Adjusted earnings for the quarter are estimated in the range of $1.14-$1.20 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -92.89% due to these changes.
Currently, Intuit has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Intuit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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