Intuit Inc. (NASDAQ: $INTU) is an American multinational business software firm that specializes in financial software and powers prosperity for consumers, small businesses and the self-employed. The Mountain View, California-based company is renowned for its flagship products, including TurboTax, QuickBooks, Mint and Credit Karma, which empower individuals and businesses to manage their finances efficiently.
On Thursday, May 23, 2024, $INTU announced its third-quarter earnings for the fiscal year 2024 to a negative market reaction.
Key Financial Highlights
Intuit reported impressive financial results for the quarter ended April 2024, showcasing its resilience and ability to capitalize on the growing demand for AI-integrated financial solutions. The company’s revenue soared to $6.74 billion, representing a year-over-year increase of 12% and surpassing the Zacks Consensus Estimate of $6.63 billion.
Earnings per share (EPS) for the quarter stood at $9.88, marking a significant increase from $8.92 in the year-ago period. This figure also exceeded the consensus EPS estimate of $9.34, delivering an earnings surprise of 5.78%.
Tax Season Performance: TurboTax Shines As Users Decline
The third quarter, which includes the crucial tax season, is pivotal for Intuit’s performance. The company’s flagship product, TurboTax, continued to dominate the tax preparation software market, benefiting from the increased adoption of AI-powered features and expert assistance.
Free TurboTax users declined to 10 million from around 11 million the previous year. However, the company strategically focused on attracting customers with more complex tax situations willing to pay for higher-priced offerings. This strategy paid off, as the average TurboTax user spent 10% more on filing this year than the previous tax season.
Segment Performance
Intuit’s diverse portfolio of products contributed to its strong quarterly performance, with growth evident across all segments. Consumer Group segment, catering to individual customers, witnessed a 9% increase in revenue, reaching $3.65 billion, driven by the strong performance of TurboTax and the growing adoption of AI-powered features.
Revenue from the Small Business and Self-Employed Group segment, which includes the renowned QuickBooks accounting software, rose by an impressive 18% to $2.39 billion. The segment’s success was fueled by the rising cloud-based solutions demand and the integration of AI capabilities.
ProTax: Intuit’s professional tax offering saw a 3.3% year-over-year increase in revenue, reaching $254 million. The personal finance platform Credit Karma, acquired by Intuit in 2020, reported an 8.1% increase in revenue, contributing $443 million to the company’s top line.
Intuit Revises Guidance
Buoyed by the strong third-quarter performance and the positive market reception of its AI-powered solutions, Intuit raised its annual revenue and earnings guidance. It now expects full-year revenue to range between $16.16 billion and $16.20 billion, compared to its previous guidance of $15.89 billion to $16.11 billion.
Intuit forecasts revenue between $3.06 billion and $3.10 billion for the upcoming fourth quarter, exceeding analysts’ average estimate of $3.04 billion.
In other news, there are new strategic leadership changes. In a separate announcement, Intuit revealed that Credit Karma CEO Kenneth Lin plans to retire at the end of the year. Joe Kauffman, the unit’s president, will assume the role of CEO effective August 1, 2024.
Embracing AI for Financial Empowerment
Intuit’s impressive third-quarter results and optimistic outlook underscore the company’s strategic focus on leveraging artificial intelligence (AI) to enhance its product offerings and provide personalized recommendations to customers.
Sasan Goodarzi, Intuit’s CEO, highlighted the company’s commitment to integrating generative AI capabilities across its platforms, stating, “We’re going to be testing Gen-AI driven SKUs (stock keeping units) that do everything for you, and you would pay extra for it.”
By embracing AI and offering enhanced AI-powered financial solutions, Intuit aims to empower users to make informed financial decisions and streamline their accounting processes.
Intuit (INTU) Stock Performance
Despite Intuit’s robust Q3 earnings and raised annual guidance, the company’s shares plunged 8.40% to $606.66 as of 11:20 AM EDT on Friday, May 24. This decline was triggered by concerns over the one million decline in free TurboTax users amidst the company’s strategic focus on high-priced offerings.
Its 52-week range is a high of $676.62 and a low of $400.22. The stock is below its 50 DMA $634.96, and above its 200 DMA of $588.02. The day average trading volume is 2.2 million, significantly about its three-moth average of 1.2 million shares. it has a market cap of $170.845 billion.
Should You Buy Intuit (INTU) Shares in 2024?
Intuit’s strong Q3 performance, driven by strong demand for AI-powered financial solutions like TurboTax and QuickBooks and its raised annual guidance, presents a compelling case for investors. The company’s strategic focus on attracting higher-paying customers and integrating generative AI capabilities positions it well for future growth.
However, the decline in free TurboTax users and the recent share price drop after the earnings release warrant caution. Before making investment decisions, closely monitor Intuit’s execution and market response to its AI initiatives.
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