Tax and accounting software provider Intuit (NASDAQ:INTU) reported third-quarter 2024 results that beat the market’s revenue expectations, with revenue up 10.2% year over year to $3.28 billion. On the other hand, next quarter’s revenue forecast of $3.83 billion was less impressive, falling 1.3% below analyst estimates. Non-GAAP earnings of $2.50 per share were 6% above analyst consensus estimates.
Is Now the Time to Buy Intuit? Find out in our full research report.
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Gain: $3.28 billion vs. analyst estimates of $3.14 billion (10.2% YoY growth, 4.6% better)
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Custom EPS: $2.50 vs. analyst estimates of $2.36 (6% better)
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Adjusted operating result: $953 million vs. analyst estimates of $899.2 million (29% margin, 6% profit)
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The company reaffirmed its full-year revenue expectations of $18.25 billion at the center
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Management reiterated its expectations for full-year adjusted earnings per share from $19.26 at the center
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Operating margin: 8.3%, compared to 10.3% in the same quarter last year
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Free cash flow margin: 10%, compared to 11.8% in the previous quarter
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Invoices: $3.30 billion at the end of the quarter, up 17.1% year over year
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Market capitalization: $182.4 billion
“We had a strong start to the year as we demonstrated the power of Intuit’s AI-driven expert platform strategy. By delivering done-for-you experiences powered by AI with access to AI-powered human experts, we continue to drive consumer and business success,” said Sasan Goodarzi, CEO of Intuit.
Intuit was founded in 1983 when founder Scott Cook saw his wife struggling to balance the family checkbook. It provides tax and accounting software for small and medium businesses.
The demand for easy-to-use, integrated cloud-based financial software that integrates tax and accounting operations continues to rise, along with the challenges employees face when using existing accounting tools such as spreadsheets, given the growing amount of financial data spread across a large number of business applications. . A related demand driver is the continued rise in e-commerce and the increasing adoption of modern point-of-sale and payment platforms that easily integrate with backend financial software.
A company’s long-term sales performance can be an indication of its overall quality. Any company can perform well for a quarter or two, but many sustainable companies grow for years. Over the past three years, Intuit has grown its revenue at an annual rate of 17.2%. While this growth is solid on an absolute basis, it lagged slightly behind our software sector benchmark. Luckily, there are other things to love about Intuit.
This quarter, Intuit reported 10.2% year-over-year revenue growth, and revenue of $3.28 billion exceeded Wall Street estimates by 4.6%. The company’s management is currently targeting a 13.1% year-over-year revenue increase in the next quarter.
Looking further ahead, sell-side analysts expect revenue to grow by 12.8% over the next twelve months, a slowdown from the past three years. We still think the growth trajectory is satisfactory and implies market success for its products and services. Some reduction/delay is logical given the size of the revenue base.
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In addition to revenue, billings are a non-GAAP metric that sheds additional light on Intuit’s business quality. Billings is often called “cash revenue” because it shows how much money the company has collected from customers in a given period. This differs from revenue, which must be recognized in parts over the term of a contract.
Intuit’s billings last quarter were $3.30 billion, and over the past four quarters, growth slightly outpaced the industry, averaging 13.3% year-over-year increase. This performance was in line with overall revenue growth and demonstrates that the company is successfully converting revenue into cash. The growth also improves liquidity and provides a solid foundation for future investments.
Customer acquisition cost payback period (CAC) measures the months it takes a company to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a company can break even on its sales and marketing investments.
Intuit is extremely efficient at acquiring new customers and its CAC payback period was 12.7 months this quarter. The company’s performance shows that it has a highly differentiated product offering and a strong brand reputation that comes from scale. This dynamic gives Intuit the freedom to invest in new product initiatives while retaining optional capabilities.
We were impressed with how well Intuit exceeded analyst expectations and earnings per share this quarter. On the other hand, revenue expectations for the next quarter fell short of Wall Street estimates and earnings expectations were missed even further. Overall, this was a softer quarter. The stock fell 6.2% to $637 immediately after the report.
Intuit’s latest earnings report disappointed. One quarter doesn’t define the quality of a company, so let’s find out if the stock is a bargain at its current price. When making that decision, it is important to take into account the valuation, the business qualities and what happened in the last quarter. We cover that in our useful full research report which you can read here. It’s free.
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