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Intuit (INTU) Beats Earnings and Revenue Estimates in Q2
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Intuit Inc. (INTU - Free Report) delivered impressive second-quarter fiscal 2018 results. The company reported non-GAAP income (excluding stock-based compensation, amortization and other one-time items) from continuing operations of 35 cents per share, surpassing the Zacks Consensus Estimate of 34 cents.
Quarter in Detail
This tax-preparation related software maker reported revenues of $1165 million, which was within the guided range of $1160-$1180 million but outpaced the Zacks Consensus Estimate of $1156 million.
On a year-over-year basis, revenues were up around 15% primarily owing to stellar performance of TurboTax and QuickBooks Online.
Services and Other revenues were up nearly 18.4% to $849 million while product revenues increased 5.7% to $316 million.
Segment-wise, Small Business and Self-Employed Group witnessed 19% year-over-year growth, primarily driven by 51% subscriber growth rate for Quickbooks Online, which brought the count to 2.8 million at the end of the just reported quarter. Online ecosystem revenues saw an increase of 39%. Self-Employed subscribers increased to around 490,000 from 425,000 in the previous quarter and 180,000 in the year-ago quarter.
Geographically, U.S. based subscribers grew 47% to 2.2 million and international subscribers soared 69% on a year-over-year basis to 630,000.
Management was particularly optimistic about positive responses to initiatives taken to increase subscriber base. The company is trying to address the funding needs of small businesses by providing them access to the required capital via their platform. Additionally, the incorporation of a virtual voice assistant in the platform is another tailwind.
The company completed three acquisitions during the second quarter, of which the most prominent one is “TSheets” that added a time tracking application to the platform. The enrichment of the employee base via these additions is also a positive. The company’s brand awareness related programs are proving to be beneficial as well, as quoted by management.
Notably, revenues from Consumer Group were up 12% year over year. Professional tax revenues within Strategic Partners Group were $95 million.
The company’s recent enhancements to products generating revenues for the Consumer Group are proving to be worthy. The inclusion of artificial intelligence and machine learning has enriched the platform by improving consumer experience.
The introduction of TurboTax Live has created growth opportunities for the company in the assisted market. The latest solution added to Turbo allows consumers to get an entire snapshot of their financial health. The application is available on Apple (AAPL - Free Report) App Store. These additions have made the solutions portfolio further lucrative.
Coming to operational metrics, Intuit reported non-GAAP gross profit (excluding stock-based compensation, amortization and other one-time items) of $935 million, up 14.7% year over year, backed by higher revenues. Gross margin for the quarter came in at 80.3%, almost flat year over year.
The company posted non-GAAP operating income of $120 million compared with $106 million in the year-ago quarter. Operating margin contracted 13 basis points to 10.3% during the quarter.
Intuit posted non-GAAP net income from continuing operations of approximately $91 million compared with second-quarter fiscal 2017 net income of $67 million.
Intuit exited fiscal second-quarter 2018 with cash and investments of $726 million compared with $777 million in the prior quarter. Long-term debt was $413 million at quarter end compared with $425 million reported in the previous quarter.
Cash provided by operational activities during the first half of fiscal 2018 was $174 million. During the quarter, the company repurchased $83 million shares, with $1.3 billion still remaining under the share repurchase authorization.
The company received an authorization to pay a dividend of 39 cents per share on Apr 18, 2018.
Outlook
For the fiscal third quarter, the company anticipates revenues in a range of $2.785-$2.835 billion. The Zacks Consensus Estimate is pegged at $2.75 billion.
Intuit expects fiscal third quarter non-GAAP operating income in the range of $1.635-$1.655 billion. The company anticipates reporting non-GAAP earnings in the band of $4.57–$4.62 per share. The Zacks Consensus Estimate is pegged at $4.65 cents per share.
For fiscal 2018, the company still anticipates revenues of $5.640-$5.740 billion, representing an increase of 9-11% year over year. The Zacks Consensus Estimate is pegged at $5.71 billion.
QuickBooks Online subscribers for fiscal 2018 are expected to be in the range of 3.275-3.375 million.
Non-GAAP operating income is now expected in the range of $1.885-$1.935 billion, representing growth of 9-12%. Non-GAAP earnings per share are projected between $5.30 and $5.40, up 20-22%. The Zacks Consensus Estimate is pegged at $5.32 per share.
The non-GAAP tax rate used for calculating the guidance is 27%.
To Conclude
Intuit reported better-than-expected fiscal second-quarter 2018 results, and also provided an encouraging third-quarter and fiscal 2018 view.
Management noted that due to the late start of the tax season by around a week’s time, part of the revenues that were expected to be recognized in the second quarter have shifted to the third. Nevertheless, the company is on track to reach the fiscal 2018 target.
Per the recent tax reforms, the company expects fiscal 2018 financials to be above the preliminary expectations and the guidance was updated accordingly.
We believe the company will continue to benefit from regular enhancements of the solutions portfolio via innovations and inorganic growth, which will eventually boost the top line.
However, stiff competition from payroll solution providers such as Paycom Software Inc. (PAYC - Free Report) and Automatic Data Processing (ADP - Free Report) is a concern.
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Intuit (INTU) Beats Earnings and Revenue Estimates in Q2
Intuit Inc. (INTU - Free Report) delivered impressive second-quarter fiscal 2018 results. The company reported non-GAAP income (excluding stock-based compensation, amortization and other one-time items) from continuing operations of 35 cents per share, surpassing the Zacks Consensus Estimate of 34 cents.
Quarter in Detail
This tax-preparation related software maker reported revenues of $1165 million, which was within the guided range of $1160-$1180 million but outpaced the Zacks Consensus Estimate of $1156 million.
On a year-over-year basis, revenues were up around 15% primarily owing to stellar performance of TurboTax and QuickBooks Online.
Services and Other revenues were up nearly 18.4% to $849 million while product revenues increased 5.7% to $316 million.
Segment-wise, Small Business and Self-Employed Group witnessed 19% year-over-year growth, primarily driven by 51% subscriber growth rate for Quickbooks Online, which brought the count to 2.8 million at the end of the just reported quarter. Online ecosystem revenues saw an increase of 39%. Self-Employed subscribers increased to around 490,000 from 425,000 in the previous quarter and 180,000 in the year-ago quarter.
Geographically, U.S. based subscribers grew 47% to 2.2 million and international subscribers soared 69% on a year-over-year basis to 630,000.
Management was particularly optimistic about positive responses to initiatives taken to increase subscriber base. The company is trying to address the funding needs of small businesses by providing them access to the required capital via their platform. Additionally, the incorporation of a virtual voice assistant in the platform is another tailwind.
The company completed three acquisitions during the second quarter, of which the most prominent one is “TSheets” that added a time tracking application to the platform. The enrichment of the employee base via these additions is also a positive. The company’s brand awareness related programs are proving to be beneficial as well, as quoted by management.
Notably, revenues from Consumer Group were up 12% year over year. Professional tax revenues within Strategic Partners Group were $95 million.
The company’s recent enhancements to products generating revenues for the Consumer Group are proving to be worthy. The inclusion of artificial intelligence and machine learning has enriched the platform by improving consumer experience.
The introduction of TurboTax Live has created growth opportunities for the company in the assisted market. The latest solution added to Turbo allows consumers to get an entire snapshot of their financial health. The application is available on Apple (AAPL - Free Report) App Store. These additions have made the solutions portfolio further lucrative.
Coming to operational metrics, Intuit reported non-GAAP gross profit (excluding stock-based compensation, amortization and other one-time items) of $935 million, up 14.7% year over year, backed by higher revenues. Gross margin for the quarter came in at 80.3%, almost flat year over year.
The company posted non-GAAP operating income of $120 million compared with $106 million in the year-ago quarter. Operating margin contracted 13 basis points to 10.3% during the quarter.
Intuit posted non-GAAP net income from continuing operations of approximately $91 million compared with second-quarter fiscal 2017 net income of $67 million.
Intuit Inc. Price, Consensus and EPS Surprise
Intuit Inc. Price, Consensus and EPS Surprise | Intuit Inc. Quote
Balance Sheet and Cash Flow
Intuit exited fiscal second-quarter 2018 with cash and investments of $726 million compared with $777 million in the prior quarter. Long-term debt was $413 million at quarter end compared with $425 million reported in the previous quarter.
Cash provided by operational activities during the first half of fiscal 2018 was $174 million. During the quarter, the company repurchased $83 million shares, with $1.3 billion still remaining under the share repurchase authorization.
The company received an authorization to pay a dividend of 39 cents per share on Apr 18, 2018.
Outlook
For the fiscal third quarter, the company anticipates revenues in a range of $2.785-$2.835 billion. The Zacks Consensus Estimate is pegged at $2.75 billion.
Intuit expects fiscal third quarter non-GAAP operating income in the range of $1.635-$1.655 billion. The company anticipates reporting non-GAAP earnings in the band of $4.57–$4.62 per share. The Zacks Consensus Estimate is pegged at $4.65 cents per share.
For fiscal 2018, the company still anticipates revenues of $5.640-$5.740 billion, representing an increase of 9-11% year over year. The Zacks Consensus Estimate is pegged at $5.71 billion.
QuickBooks Online subscribers for fiscal 2018 are expected to be in the range of 3.275-3.375 million.
Non-GAAP operating income is now expected in the range of $1.885-$1.935 billion, representing growth of 9-12%. Non-GAAP earnings per share are projected between $5.30 and $5.40, up 20-22%. The Zacks Consensus Estimate is pegged at $5.32 per share.
The non-GAAP tax rate used for calculating the guidance is 27%.
To Conclude
Intuit reported better-than-expected fiscal second-quarter 2018 results, and also provided an encouraging third-quarter and fiscal 2018 view.
Management noted that due to the late start of the tax season by around a week’s time, part of the revenues that were expected to be recognized in the second quarter have shifted to the third. Nevertheless, the company is on track to reach the fiscal 2018 target.
Per the recent tax reforms, the company expects fiscal 2018 financials to be above the preliminary expectations and the guidance was updated accordingly.
We believe the company will continue to benefit from regular enhancements of the solutions portfolio via innovations and inorganic growth, which will eventually boost the top line.
However, stiff competition from payroll solution providers such as Paycom Software Inc. (PAYC - Free Report) and Automatic Data Processing (ADP - Free Report) is a concern.
Zacks Rank
Intuit has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>