Intuit: Earnings Preview

| About: Intuit Inc. (INTU)

While earnings season is drawing to a close, there are still some tech majors like Dell Inc. (NASDAQ:DELL) and Hewlett-Packard Company (NYSE:HPQ) that will report later this month. However a comparatively smaller company Intuit Inc. (NASDAQ:INTU) with a market capitalization of just $16.25 billion will be reporting its first quarter fiscal 2012 results on November 17.

Fourth Quarter Overview

The company had a bad fourth quarter, with adjusted loss of 11 cents per share, wider than the Zacks Consensus Estimate for a loss of 10 cents.

Intuit reported revenues of $593.0 million in the reported quarter, up 10.4% from $537.0 million in the prior-year quarter. Reported revenues surpassed management’s guidance range of $567.0 million to $587.0 million.

The GAAP operating loss was $61.0 million compared with $64.0 million in the year-ago quarter. Excluding special items, non-GAAP operating income was $25.0 million compared with a loss of $9.0 million in the year-ago quarter.


For the first quarter of fiscal 2012, the company expects revenues of $575.0 million to $585.0 million, up 8.0% to 10.0%. GAAP operating loss is expected in the range of $95.0 million to $105.0 million, compared with a loss of $104.0 million in the year-ago quarter. Non-GAAP operating loss is projected between $40.0 million and $50.0 million, compared with a loss of $53.0 million in the year-ago quarter.

GAAP net loss per share is estimated in the range of 24 cents to 26 cents, compared with a loss of 22 cents in the year-ago quarter. Non-GAAP net loss per share is expected in the range of 11 cent to 13 cent, compared with a loss of 12 cents in the year-ago quarter.

Agreement of Analysts

Out of the 8 analysts providing estimates for the first quarter, none revised estimates in the last 30 days. For the second quarter, only one analyst made a downward revision in the estimate. For fiscal year 2012 too, there have been no changes in analyst estimates. Again for fiscal year 2013, only one analyst has revised its estimate downward over the last 30 days.

Some analysts are of the opinion that with SMB indicators turning slightly positive, Intuit’s focus on the SBG (small business group) should work in the company’s favor.. The SMB segment remains essentially flat with July and the Small Business Employment Index improved sequentially by 1.0%.

Again, the release of QuickBooks 2012 during the quarter had a positive impact on the analyst estimate. As a result, some analysts are projecting Financial Management revenue of $169.0 million (projecting a growth of 10.0% on a year-over-year basis). This apart, the analysts are positive on the other segments, thereby projecting the Employee Management revenue of $119.0 million (growth of 11.0% on a year-over-year basis) and Payment Solutions at $89.0 million (growth of 11.0% on a year-over-year basis).

Magnitude of Estimate Revisions

For the past 30 days, there was no revision in first quarter estimates, while over a period of 60 days, the company increased its loss per share by 2 cents to 20 cents. However, the Zacks Consensus Estimate increased by 5 cents to $2.57 in the past 60 days.

Again, for the fiscal year 2013, the earnings improved by 6 cents to $2.94, over the last 90 days.


Management is confident about gaining market share in its Small Business Group and Consumer Tax business, and has provided decent first quarter guidance. Moreover, the improvements in SMB indicators may impact result in a positive way.

On the other hand, the analysts remain concerned about the challenges faced by the company in this recent economic turmoil. They expect slow recovery in business activity. However, we believe that the company’s effort to drive double-digit revenue growth by improving its core fundamentals will lead to decent first quarter results.

Currently, Intuit has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.

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