Intuit Reports Lower-Than-Expected Q3 Results, Raises Guidance

Intuit Inc. (INTU) a leading tax software developer and maker of TurboTax, QuickBooks, Mint, and Credit Karma missed analysts’ expectations due to a shift in the IRS tax filing deadline to May 17. Shares rose 1.4% in the extended trading session on Tuesday.

Net revenue for the third quarter came in at $4.17 billion, up 39% from the year-ago period but failed to beat the Street’s estimates of $4.41 billion.

Earnings stood at $6.07 per share, up 35% from the same period last year. However, earnings missed the Street’s estimates of $6.47 per share. (See Intuit stock analysis on TipRanks)

Intuit’s segmental revenues increased significantly compared to the prior year period. Consumer group was up by 34%, Small business and Self-employed rose 20%, ProConnect group increased 22%, and Credit Karma (acquired in December 2020) reported revenue of $316 million.

Commenting on the results, Intuit’s CEO Sasan Goodarzi said, “We had a great tax season growing our share of total tax returns and executing our strategy of expanding our lead in the DIY category and transforming the assisted category. Small Business and Self-Employed Group delivered strong double-digit revenue growth and Credit Karma revenue reached an all-time high in the quarter.”

On May 11, the company stated that the third-quarter results would not meet the earlier guidance due to the shift in the IRS tax filing deadline to May 17. However, the company has raised its full-year 2021 guidance based on the strong third-quarter performance.

The company projects net revenue to be in the range of $9.36 billion to $9.40 billion and EPS in the range of $9.32 to $9.37. Consensus estimates for revenue and EPS are $9.06 billion and $8.49 per share respectively.

Following the results, Guggenheim analyst Kenneth Wong maintained a Buy rating on the stock and lifted the price target to $525 from $480. This implies 19.6% upside potential to current levels.

Wong told investors in a research note, “Management raised FY21 outlook ahead of investor expectations with Consumer (11-12% y/y) and Small Business (14%) both towards the upper ends of L-T targets (8-12% / 10-15% respectively). Credit Karma guide was increased meaningfully with an implied ARR run rate of $1.27B back above pre-pandemic projections of $1.2B. The increased growth was complemented by ~100bps of margin expansion and a $1.05 (+13%) EPS increase to $9.32-9.37. F3Q financial results were slightly ahead of seasonal revisions from early May.”

The Wall Street community has a Strong Buy consensus rating on the stock with 10 unanimous Buys. The average analyst price target of $482.90 implies 10% upside potential to current levels. Shares have gained 55.6% over the past year.

Intuit scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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