Intuit Inc. INTU reported first-quarter fiscal 2020 non-GAAP earnings of 41 cents per share, beating than the Zacks Consensus Estimate of 26 cents. Moreover, the figure was much higher than management’s guided range of 23-25 cents per share. The bottom line also improved 41% on a year-over-year basis.
Further, this tax preparation-related software maker’s revenues grossed $1.17 billion, up 15% from the year-ago quarter’s adjusted revenues. The top line also outpaced the consensus estimate of $1.12 billion. Strong momentum in Online ecosystem revenues and growth in the Consumer business drove revenues.
Intuit Inc. Price, Consensus and EPS Surprise
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Quarter in Detail
Segment wise, Small Business and Self-Employed Group revenues jumped 15% year over year to $1 billion. This rise was primarily driven by solid growth in customers for QuickBooks Online, which led to a 41% year-over-year surge in accounting revenues.
Online ecosystem revenues rose 35% to $501 million. Robust growth in U.K. subscribers enabled the company to hold the top position in terms of countrywide cloud accounting subscribers.
Within QuickBooks Online payroll, a mix-shift to Intuit’s full-service offering, which is priced 75% higher than self-service, was a tailwind. Moreover, within QuickBooks Online payments, continued uptick in customer base and an increase in charge volume per customer aided revenue growth in this area. Online Services revenues grew 27%.
The company recently launched a revenue streams dashboard to help customers easily compare revenues across products and services to better understand their business performance.
A sturdy traction from the company’s lending product QuickBooks Capital was a positive as well. Additionally, the company’s QuickBooks Online Advanced solution, which is targeting the midmarket, seems promising.
Desktop ecosystem revenues inched up 1% year over year to $545 million during the quarter. QuickBooks enterprise customers within Desktop ecosystem consistently grew at double-digit pace.
In the fiscal first quarter, revenues from Consumer Group improved 11% year over year to $100 million while the same from Strategic Partners Group grew 15% to $19 million, boosted by a 6% rise in professional tax revenues.
TurboTax Live is likely to be accretive to the company’s Consumer business going ahead.
The company posted non-GAAP operating income of $29 million, up 26% year over year. Operating margin expanded 100 basis points year over year to 11%.
Balance Sheet and Cash Flow
Intuit exited the quarter with cash and cash equivalents of $1.63 billion compared with $2.12 billion sequentially. Long-term debt was $373 million compared with $386 million in the prior quarter.
Cash used in operational activities was $127 million as of Oct 31, 2019.
The company reiterated its guidance for fiscal 2020. Revenues are projected in the range of $7.44-$7.54 billion. Non-GAAP earnings per share are anticipated between $7.5 and $7.6.
Non-GAAP operating income for the full fiscal is expected in the band of $2.52-$2.57 billion.
For the full fiscal, Small Business and Self-Employed group is expected to grow 12-14% year over year whereas the Consumer Group is anticipated to increase 9-10%. Also, Strategic Partner Group is predicted to rise 1-2%.
For the second quarter of fiscal 2020, the company envisions revenue growth of 11-13% within $1.67-$1.69 billion.
It expects non-GAAP earnings in the $1-$1.03 per share bracket. This estimate accounts for a shift of marketing investments in Consumer Group into the fiscal second quarter.
Intuit expects Online Ecosystem revenues to soar more than 30% in the forthcoming quarters.
Zacks Rank and Stocks to Consider
Intuit currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Alteryx, Inc. AYX, Cirrus Logic, Inc. CRUS and Fortinet, Inc. FTNT, all flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Alteryx, Cirrus Logic and Fortinet is currently pegged at 39.85%, 15% and 14%, respectively.
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