In a move that caught analysts off-guard, Intuit’s shares plunged by 6% in after-hours trading following the release of its latest financial results. The prominent financial software company reported earnings that, while surpassing expectations for the quarter, painted a cautious picture for the upcoming period. The disparity primarily arose from unexpected delays in sales, impacting the company’s revenue forecasts. As market participants digested this mixed performance, concerns about future growth prospects began to loom large.
For the most recent quarter ending October 31, Intuit reported adjusted earnings per share of $2.50, exceeding the expected $2.35. Revenue for the period reached $3.28 billion, surpassing the anticipated $3.14 billion. These figures reflect a commendable 10% increase in revenue year-over-year. Despite outperforming in critical financial metrics, the company’s ominous revenue forecast for the next quarter raised flags among investors.
Intuit signaled its expectations of a single-digit decline in revenue from its consumer segment, attributed to changes in promotions related to its TurboTax desktop software. Although the company reassured stakeholders that this would not impact the overall financial results for the fiscal year 2025, it nevertheless led to skepticism about the durability of its business model in a fluctuating market.
Looking ahead to the second quarter, Intuit projected earnings between $2.55 and $2.61 per share, with revenue estimated at approximately $3.81 billion to $3.85 billion. This forecast fell short of analyst consensus, which estimated earnings at $3.20 per share and revenue at $3.87 billion. Additionally, for the full fiscal year, Intuit anticipated adjusted earnings per share ranging from $19.16 to $19.36, along with revenue predictions between $18.16 billion and $18.35 billion. Such an outlook suggests an expected revenue growth of only 12% to 13%, contrasting sharply with analysts’ hopes for $19.33 in earnings per share, leading to further uncertainty about future growth trajectories.
Diving deeper into segment performance, Intuit’s global business solutions group reported revenue of $2.5 billion in the first quarter, marking a 9% increase that aligned with forecasts. This segment includes various offerings like Mailchimp, QuickBooks, and small business financing solutions. However, the finance chief, Sandeep Aujla, pointed out the challenges of higher churn rates among smaller customers, despite significant progress with mid-market clients. Aujla emphasized the company’s initiatives to enhance product functionality and boost customer retention—a process he indicated may take several quarters to yield tangible results.
Additionally, Credit Karma performed well, generating $524 million in revenue, surpassing consensus expectations of $430 million. This positive performance, juxtaposed against the backdrop of cautious guidance, illustrates the mixed bag of results that Intuit is currently navigating.
The market’s initial response highlighted the importance of Intuit’s guidance, particularly given the broader economic landscape where rising interest rates and regulatory shifts could impact business operations. Observing the overall market sentiment, shares of Intuit had risen about 9% in 2024, while the S&P 500 posted a staggering increase of nearly 25% in the same timeframe. Additionally, external factors, such as proposals for a new “Department of Government Efficiency” by President-elect Donald Trump, further contributed to the uncertainty surrounding Intuit’s positioning and future.
On a brighter note, CEO Sasan Goodarzi expressed optimism about the economy’s direction, albeit cautiously asserting that this belief wasn’t factored into their financial guidance. The prospect of favorable changes in interest rates and job markets could help mitigate some of the burdens businesses face.
While Intuit demonstrated strong quarterly performance in several areas, the company’s conservative guidance and certain troubling indicators within its consumer segment raise valid concerns for investors and market analysts alike. As the company prepares to address challenges in its smaller customer segments and navigate a complex economic landscape, stakeholders will closely monitor its ability to convert current challenges into opportunities for sustainable growth.