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Intuit Blows Past Q4 Estimates, but Guidance Weak

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Financial software specialist Intuit (NASDAQ: INTU) finished its fiscal 2016 in style, delivering a fourth-quarter report on Tuesday that trounced estimates. However, stocks generally trade on forward expectations rather than historical results, and the company’s guidance for the current quarter didn’t impress the market.

The quarter, which ended July 20 saw Intuit post net revenue of $754 million, 8% higher than in the same period one year ago. Adjusted bottom line flipped to a profit of $20 million, or $0.08 per share, fromQ4 2015’s loss of $0.05 per share.

On average, analysts had projected a loss of $0.02 per share on revenue of $733 million.

Although the beats were encouraging, Intuit’s guidance for the current quarter was not. The company said its adjusted EPS should land in the $0.01 to $0.03 range, with a top line of $740 million to $760 million. Both estimates are well short of analyst projections, which average $0.13 and $773 million, respectively.

For the entirety of fiscal 2016, Intuit’s revenue amounted to just under $4.7 billion, which bettered the 2015 result by 12%. On the bottom line, net income was just above $1 billion, or $3.78 per share. The year-ago adjusted EPS was $2.59.

The company believes its fiscal 2017 revenue will land between $5.0 billion to $5.1 billion, with EPS coming in at $4.30 to $4.40. In contrast to the first-quarter guidance, those numbers are in line with the average analyst estimates of $5.08 billion for revenue, and EPS of $4.33.

Much of Intuit’s 2016 growth can be attributed to a sharp rise in the subscriber count for the e-version of the company’s popular accounting software package. The company said that QuickBooks Online grew this tally by 41% in fiscal 2016, to a total of more than 1.5 million subscribers.

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Intuit also saw a rise in sales for the other software solution it’s known for: TurboTax. Online unit sales rose 15%, while those for the offline version rose by 12%.

As an enterprise that still makes a great deal of its money from tax preparation software, Intuit tends to have an outsized fiscal third quarter, as that’s when the April 15 tax deadline lands. This is why other periods see much less revenue, and occasionally end up showing bottom-line losses.

This is similar to the business of H&R Block, the difference being that Intuit has done a better job staying profitable in the non-tax quarters than its rival. This has been noted by the market; since the beginning of the year, Intuit’s share price is up by nearly 15%, while H&R Block’s is 26% lower.

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Eric Volkman has no position in any stocks mentioned.

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