Intuit Earnings: Tax Normalization Moderates Revenue, but Healthy Guide Ahead

Wide-moat Intuit posted a mixed quarter, coming in under management’s top line expectations, while beating their earnings guide. The culprit for weaker sales was an unusual tax season, with fewer returns filed. Intuit believes this stemmed from a normalization in tax returns, after an uptick in returns during the pandemic from those who filed for stimulus purposes only. Yet, in a vote of confidence, Intuit upped its revenue and EPS guidance for the full year. All in all, we're confident in our estimates and are maintaining our fair value estimate of $503 per share. Shares are down 6% upon results, implying an attractive discount to our fair value. As a reminder, we believe Intuit is a master at keeping competition at bay and innovating from within as well as making smart, synergistic acquisitions. While, for some, it may be concerning that Intuit expects total tax filings to fall by about 2% this fiscal year, we remind investors that Intuit is increasing their share of total returns filed and heavily increasing revenue per file. We see these both as ample counterbalances to a headwind that we believe is only a result of a temporary adjustment.