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Intuit (INTU) Tops on Q2 Earnings; Reiterates FY17 Guidance
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Intuit Inc. (INTU - Free Report) reported modest second-quarter of fiscal 2017 results. The company reported adjusted income (including stock-based compensation but excluding amortization and other one-time items) from continuing operations of 7 cents per share, which surpassed the Zacks Consensus Estimate of 6 cents per share.
On a GAAP basis, earnings from continuing operations were 5 cents per share compared with the year-ago figure 11 cents per share.
Quarter in Detail
This tax-preparation related software maker reported revenues of $1.016 billion, which came below management’s guided range of $1.045 billion to $1.065 billion and were almost in line with the Zacks Consensus Estimate of $1.018 billion. On a year-over-year basis, however, revenues were up 10.1% mainly on the back of higher demand resulting from the U.S. tax season and better-than-expected growth in QuickBooks Online.
Services and Other revenues climbed nearly 8.8% to $717 million while product revenues were up 13.2% to $299 million.
Segment-wise, Small Business Group recorded 12% year-over-year growth driven mainly by strong customer acquisition, along with continuous subscriber growth for QuickBooks Online and QuickBooks Self-Employed.
The company recorded an increase of 49% in QuickBooks Online subscribers for the quarter, bringing the total global count to 370,000. QuickBooks Self-Employed subscribers totaled180,000 during the quarter. Revenues from the Small Business online ecosystem increased 30% on a year-over-year basis, primarily due to online customer acquisition.
Revenues from Consumer Tax during the quarter came in at $285 million. ProConnect professional tax revenues were roughly $99 million during the quarter.
Coming to operational metrics, Intuit reported adjusted gross profit of $813 million, up 11.4% year over year, mainly backed by higher revenues. Also, gross margin expanded 90 basis points (bps) to 80%.
The company reported a 15.7% year-over-year increase in adjusted operating expenses. Also, as a percentage of revenues, adjusted operating expenses expanded 380 bps to 77.5%, primarily due to higher cost of sales. This in turn impacted operating results.
The company posted adjusted operating income of $25 million compared with $49 million reported in the year-ago quarter.
Intuit posted adjusted net income from continuing operations of approximately $14.7 million compared with second-quarter fiscal 2017 income of $33.6 million.
Balance Sheet and Cash Flows
Intuit exited fiscal second quarter with cash and investments of $637 million compared with $605 million in the previous quarter. Long-term debt was $463 million at the quarter end.
Cash from operational activities during the six months ended Jan 31, 2017 was $87 million. During the quarter, the company repurchased 1.7 billion shares worth $198 million.
For the third quarter of fiscal 2017, the company received an authorization to pay a dividend of 34 cents per share.
Outlook
Intuit reaffirmed its fiscal 2017 guidance and issued outlook for the fiscal third quarter.
The company anticipates revenues of $5 billion to $5.1 billion in fiscal 2017, up 7% to 9% year over year. The Zacks Consensus Estimate is pegged at $5.064 billion.
Non-GAAP operating income is expected in a range of $1.675 billion to $1.725 billion, representing growth of 8%-11%. Non-GAAP earnings per share are projected between $4.30 and $4.40 (an increase of 14-16%). The Zacks Consensus Estimate currently stands at $3.42.
For the third quarter, the company anticipates revenues in a range of $2.50 billion to $2.55 billion. The Zacks Consensus Estimate is pegged at $2.447 billion.
It expects non-GAAP operating income to be in a range of $1.50 billion to $1.52 billion. The company expects to report non-GAAP earnings in a range of $3.85 per share to $3.90 per share in the third quarter. The Zacks Consensus Estimate stands at $3.63 per share.
Our Take
Intuit reported modest fiscal second-quarter 2016 results. However, its revenue performance improved on a year-over-year basis, primarily due to better-than-expected growth in QuickBooks Online. The company also issued an encouraging guidance for third quarter and fiscal 2017.
We are positive about Intuit’s growing SMB exposure and believe that its strategic acquisitions will boost the segment. Increased adoption of its cloud-based services and products is another positive.
Intuit has also restructured its business to focus on the QuickBooks services. It expects to continue investing in this portfolio, which is likely to hurt its near-term profitability.
Moreover, rising competition from payroll solution providers such as Paycom Software Inc. (PAYC - Free Report) and Automatic Data Processing (ADP - Free Report) is a concern, especially considering the seasonality of Intuit’s tax business and the ongoing economic uncertainty.
Intuit’s share price movement has not been much impressive. Over the last one year, its shares have gained just 20.62% compared with 24.38% increase recorded by the Zacks categorized Computer-Software industry.
Seagate has a long term expected earnings per share growth rate of 8.17%.
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Intuit (INTU) Tops on Q2 Earnings; Reiterates FY17 Guidance
Intuit Inc. (INTU - Free Report) reported modest second-quarter of fiscal 2017 results. The company reported adjusted income (including stock-based compensation but excluding amortization and other one-time items) from continuing operations of 7 cents per share, which surpassed the Zacks Consensus Estimate of 6 cents per share.
On a GAAP basis, earnings from continuing operations were 5 cents per share compared with the year-ago figure 11 cents per share.
Quarter in Detail
This tax-preparation related software maker reported revenues of $1.016 billion, which came below management’s guided range of $1.045 billion to $1.065 billion and were almost in line with the Zacks Consensus Estimate of $1.018 billion. On a year-over-year basis, however, revenues were up 10.1% mainly on the back of higher demand resulting from the U.S. tax season and better-than-expected growth in QuickBooks Online.
Services and Other revenues climbed nearly 8.8% to $717 million while product revenues were up 13.2% to $299 million.
Segment-wise, Small Business Group recorded 12% year-over-year growth driven mainly by strong customer acquisition, along with continuous subscriber growth for QuickBooks Online and QuickBooks Self-Employed.
The company recorded an increase of 49% in QuickBooks Online subscribers for the quarter, bringing the total global count to 370,000. QuickBooks Self-Employed subscribers totaled180,000 during the quarter. Revenues from the Small Business online ecosystem increased 30% on a year-over-year basis, primarily due to online customer acquisition.
Revenues from Consumer Tax during the quarter came in at $285 million. ProConnect professional tax revenues were roughly $99 million during the quarter.
Coming to operational metrics, Intuit reported adjusted gross profit of $813 million, up 11.4% year over year, mainly backed by higher revenues. Also, gross margin expanded 90 basis points (bps) to 80%.
The company reported a 15.7% year-over-year increase in adjusted operating expenses. Also, as a percentage of revenues, adjusted operating expenses expanded 380 bps to 77.5%, primarily due to higher cost of sales. This in turn impacted operating results.
The company posted adjusted operating income of $25 million compared with $49 million reported in the year-ago quarter.
Intuit posted adjusted net income from continuing operations of approximately $14.7 million compared with second-quarter fiscal 2017 income of $33.6 million.
Balance Sheet and Cash Flows
Intuit exited fiscal second quarter with cash and investments of $637 million compared with $605 million in the previous quarter. Long-term debt was $463 million at the quarter end.
Cash from operational activities during the six months ended Jan 31, 2017 was $87 million. During the quarter, the company repurchased 1.7 billion shares worth $198 million.
For the third quarter of fiscal 2017, the company received an authorization to pay a dividend of 34 cents per share.
Outlook
Intuit reaffirmed its fiscal 2017 guidance and issued outlook for the fiscal third quarter.
The company anticipates revenues of $5 billion to $5.1 billion in fiscal 2017, up 7% to 9% year over year. The Zacks Consensus Estimate is pegged at $5.064 billion.
Non-GAAP operating income is expected in a range of $1.675 billion to $1.725 billion, representing growth of 8%-11%. Non-GAAP earnings per share are projected between $4.30 and $4.40 (an increase of 14-16%). The Zacks Consensus Estimate currently stands at $3.42.
For the third quarter, the company anticipates revenues in a range of $2.50 billion to $2.55 billion. The Zacks Consensus Estimate is pegged at $2.447 billion.
It expects non-GAAP operating income to be in a range of $1.50 billion to $1.52 billion. The company expects to report non-GAAP earnings in a range of $3.85 per share to $3.90 per share in the third quarter. The Zacks Consensus Estimate stands at $3.63 per share.
Our Take
Intuit reported modest fiscal second-quarter 2016 results. However, its revenue performance improved on a year-over-year basis, primarily due to better-than-expected growth in QuickBooks Online. The company also issued an encouraging guidance for third quarter and fiscal 2017.
We are positive about Intuit’s growing SMB exposure and believe that its strategic acquisitions will boost the segment. Increased adoption of its cloud-based services and products is another positive.
Intuit has also restructured its business to focus on the QuickBooks services. It expects to continue investing in this portfolio, which is likely to hurt its near-term profitability.
Moreover, rising competition from payroll solution providers such as Paycom Software Inc. (PAYC - Free Report) and Automatic Data Processing (ADP - Free Report) is a concern, especially considering the seasonality of Intuit’s tax business and the ongoing economic uncertainty.
Intuit’s share price movement has not been much impressive. Over the last one year, its shares have gained just 20.62% compared with 24.38% increase recorded by the Zacks categorized Computer-Software industry.
Currently, Intuit has a Zacks Rank #2 (Buy). A better-ranked stock in the technology space is Seagate Technology plc (STX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Seagate has a long term expected earnings per share growth rate of 8.17%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>