Growth Strategy
This tax season, the company’s main focus has been on the assisted segment, for both consumers and small businesses. Within the core small-business and self-employed customer group, its three-pronged growth strategy is to grow the core, connect the ecosystem, and expand globally. Buoyed by the positive response to the integration of TurboTax and Credit Karma – software packages for tax preparation and credit management respectively — the company sees double-digit growth in TurboTax Live revenues and customer base this year.
On a per-share basis, Intuit’s earnings rose to $9.88 per share in the April quarter from $8.92 per share in the corresponding period of 2023. Earnings also exceeded expectations, as they did in each of the trailing eight quarters. Net income, including special items, was $2.39 billion or $8.42 per share in Q3, vs. $2.09 billion or $7.38 per share in the prior-year quarter.
Results Beat
The bottom line benefitted from a 12% year-over-year increase in revenues to $6.74 billion in Q3. Revenues exceeded Wall Street’s estimates, marking the fourth beat in a row. With 18% growth, the Small Business and Self-employed segment was the primary growth driver. The Consumer business, which accounts for about 55% of total revenues, registered a 9% revenue growth.
“This season, we made good progress against our multiyear strategy to transform the assisted experience for customers. TurboTax Live, our assisted offering, including our do-it-with-me and full-service tax offerings for both consumers and businesses, is the largest durable growth opportunity. We expect TurboTax Live customers to grow 12% and revenue to grow 17% in fiscal year 2024. TurboTax Live revenue is expected to be $1.4 billion, representing approximately 30% of total consumer group revenue growing at a significant scale,” Intuit’s CEO Sasan Goodarzi said during his post-earnings interaction with analysts.
Guidance
Anticipating the positive momentum to continue in the year’s final months, Intuit forecasts a 13-14% revenue growth for the fourth quarter, broadly in line with the market’s projection. Meanwhile, the $1.80-1.85/share earnings estimate for Q4 fell short of expectations. The management raised its full-year guidance, hoping to leverage its continued investments in generative AI and data. FY24 revenue is currently expected to grow about 13% from last year. Adjusted profit for the year is expected to be between $16.79 per share and $16.84 per share.
Intuit’s stock has been under pressure after it issued weak Q4 guidance. Though the company raised its full-year forecast, it failed to impress investors. INTU traded down 8% on Friday afternoon, after opening the session at $620.