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Intuit (INTU) to Report Q1 Earnings: What's in the Cards?

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Intuit Inc. (INTU - Free Report) is scheduled to report first-quarter fiscal 2019 results on Nov 19.

Notably, the company’s earnings beat estimates in each of the trailing four quarters, the average positive surprise being 41.32%.

In the last reported quarter, the company’s non-GAAP earnings came in at 32 cents per share, surpassing the Zacks Consensus Estimate of 23 cents and also soared 60% on a year-over-year basis.

The company’s revenues grossed $988 million, up 17.3% from the year-ago period. The top line was better than the guided range of $940-$960 million and also outpaced the Zacks Consensus Estimate of $953 million.

What to Expect in Q1

Intuit adopted new revenue recognition standards, ASC 606, beginning the first quarter of fiscal 2019.

Under ASC 606, the company expects revenues within $955-$975 million. The Zacks Consensus Estimate for the metric is pegged at $969.2 million, which is 9.39% higher than the figure reported in the prior-year quarter.

The company anticipates non-GAAP earnings in the band of 9-11 cents per share. The Zacks Consensus Estimate for the same stands at 11 cents, flat with the year-earlier quarter’s number.

Let's see how things are shaping up for the upcoming announcement.

Factors at Play

Intuit is benefiting from solid growth in subscriber base of QuickBooks Online, which is driving its Small Business & Self-Employed segment, the major revenue contributor.

Notably, about 29 million small businesses in the United States depend on third-party companies to deal with respective financial and accounting related preparation. Banking on its rich product portfolio, Intuit has capitalized well on this opportunity, which is clearly reflected in its previous quarterly results and is likely to sustain in this to-be-reported quarter as well. Moreover, the company with its QuickBooks Online Advanced solution is now targeting the midmarket. 

The Zacks Consensus Estimate for Quickbook’s Online subscriber base during the fiscal first quarter is projected at 3.558 million, marking a 40% year-over-year improvement. The year-over-year increase in online subscriber base will continue to drive revenues for the stock.

The Zacks Consensus Estimate for Small Business & Self-Employed segment in the fiscal first quarter is expected at $858 million, which is 24% higher than the figure recorded in the comparable quarter last year.

Moreover, the company’s Consumer Tax segment revenues have been benefiting from a strong adoption of its Turbo Tax products. Intuit’s steady focus on bringing in innovative and easy-to-use TurboTax products for different users has helped it win customers.

However, the company anticipates its desktop ecosystem revenues to decline in single digits for the fiscal first quarter. This is because of a shift in QuickBooks enterprise subscription offering from a perpetual to a term license.

Stiff competition from payroll solution providers such as Paycom Software (PAYC - Free Report) and Automatic Data Processing (ADP - Free Report) remains a headwind.

Intuit Inc. Price and EPS Surprise

Intuit Inc. Price and EPS Surprise | Intuit Inc. Quote

What Our Model Says

Our proven Zacks model clearly indicates that a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has high chances of beating estimates if it also has a positive Earnings ESP. While Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Intuit currently carries a Zacks Rank #3 but has an Earnings ESP of 0.00%, which makes surprise prediction difficult.

A Key Pick

Here is a stock, which you may consider as our model shows that it has the right combination of elements to beat on earnings in its upcoming release:

Adobe Systems Incorporated (ADBE - Free Report) has an Earnings ESP of +0.19% and a Zacks Rank #2.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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