Intuit earnings: Blame the IRS for revenue shortfall

Intuit said today that second quarter revenue, while up 5 percent year-over-year, fell short of expectations - and the company placed some of the blame on the IRS, which was not accepting certain e-filed tax returns until mid-February.For the quarter ending Jan.

Intuit said today that second quarter revenue, while up 5 percent year-over-year, fell short of expectations - and the company placed some of the blame on the IRS, which was not accepting certain e-filed tax returns until mid-February.

For the quarter ending Jan. 31, the maker of Quicken and TurboTax financial software, reported non-GAAP earnings of 32 cents on revenue of $878 million. Wall Street analysts had been expecting earnings of 34 cents on revenue of $884 million. (Statement)

In a statement, company president and CEO Brad Smith said the trend in do-it-yourself tax preparation is continuing and that Intuit is "competing effectively" for market share and has a solid plan for the remainder of the tax season. He said:

Small Business continues to perform well, with growth accelerating from last quarter. Our core business is growing, and our connected services are driving customer acquisition and revenue growth. We are capitalizing on secular tailwinds as customer preferences move toward more digital, connected services in the small business sector. We believe that later acceptance of tax returns will simply mean a shorter tax season as filers are getting started later. This is supported by the unit growth acceleration we've seen in TurboTax Online in February.

Looking ahead, the company said it expects third-quarter revenue to grow between 10-14 percent to $1.76 billion to $1.83 billion and expects non-GAAAP earnings of $2.22 to $2.30 per share, an increase of 17-22 percent.

The company also reiterated its full-year guidance of revenue growth between 8-11 percent to $3.74 billion to $3.84 billion and non-GAAP EPS of $2.41 to $2.48 per share, a jump of 14 percent to 18 percent.

CFO Neil Williams said:

We're executing against the right strategic plan, and that's evident in the numbers. We continue to manage the company for long-term, double-digit organic revenue growth. We're focused on allocating capital in the most effective ways, using the cash we generate to grow the business and return value to shareholders.

By the numbers:

  • Total TurboTax federal units grew by 1 percent for the season but jump to 11 percent growth since Feb. 1, compared to the previous year.
  • Small Business Group revenue was up 15 percent from a year ago.
  • Financial Management Solutions revenue increased 21 percent over last year.
  • QuickBooks Online subscribers grew 52 percent year over year.
  • Employee Management Solutions revenue grew 11 percent from last year.
  • Payments Solutions revenue was up 7 percent from the year-ago quarter while merchants grew 14 percent and transaction volume per merchant was up 1 percent.

Shares of Intuit were up slightly in regular trading, closing at $50.44, and were on the upswing in after-hours trading.

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