Intuit's (NASDAQ:INTU) Q1 Sales Beat Estimates, Next Quarter's Growth Looks Optimistic

Jabin Bastian /
2024/05/23 4:22 pm EDT

Tax and accounting software provider, Intuit (NASDAQ:INTU) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 11.9% year on year to $6.74 billion. Guidance for next quarter's revenue was also better than expected at $3.08 billion at the midpoint, 1.1% above analysts' estimates. It made a non-GAAP profit of $9.88 per share, improving from its profit of $8.92 per share in the same quarter last year.

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Intuit (INTU) Q1 CY2024 Highlights:

  • Revenue: $6.74 billion vs analyst estimates of $6.64 billion (1.4% beat)
  • EPS (non-GAAP): $9.88 vs analyst estimates of $9.38 (5.3% beat)
  • Revenue Guidance for Q2 CY2024 is $3.08 billion at the midpoint, above analyst estimates of $3.05 billion
  • Gross Margin (GAAP): 84.7%, in line with the same quarter last year
  • Free Cash Flow of $3.89 billion, up from $550 million in the previous quarter
  • Market Capitalization: $187.7 billion

“The era of AI is one of the most significant technology shifts in our lifetime and our strategy to be the global AI-driven expert platform is delivering significant benefits to our customers and strong results across the company,” said Sasan Goodarzi, Intuit's chief executive officer.

Created in 1983 when founder Scott Cook watched his wife struggle to reconcile the family's checkbook, Intuit provides tax and accounting software for small and medium-sized businesses.

Tax Software

The demand for easy to use, integrated cloud based finance software that integrates tax and accounting operations continues to rise in tandem with the difficulty workers find trying to use existing accounting tools like spreadsheets given the growing volume of finance data littered across a multitude of enterprise applications. A related demand driver is the secular increase of e-commerce and rising adoption of modern point of sales and payments platforms which easily integrate with backend financial software.

Sales Growth

As you can see below, Intuit's revenue growth has been strong over the last three years, growing from $4.17 billion in Q3 2021 to $6.74 billion this quarter.

Intuit Total Revenue

This quarter, Intuit's quarterly revenue was once again up 11.9% year on year. We can see that Intuit's revenue increased by $3.35 billion quarter on quarter, which is a solid improvement from the $408 million increase in Q4 CY2023. Shareholders should applaud the re-acceleration of growth.

Next quarter's guidance suggests that Intuit is expecting revenue to grow 13.6% year on year to $3.08 billion, improving on the 12.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 11.6% over the next 12 months before the earnings results announcement.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Intuit's free cash flow came in at $3.89 billion in Q1, up 11% year on year.

Intuit Free Cash Flow

Intuit has generated $5.06 billion in free cash flow over the last 12 months, an eye-popping 32% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.

Key Takeaways from Intuit's Q1 Results

We were impressed by Intuit's strong gross margin improvement this quarter. We were also glad its revenue and EPS beat analysts' expectations as nearly all its business segments outperformed. The company also lifted its quarterly revenue and EPS guidance, which came in higher than Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The market, however, was likely expecting more because competitor H&R Block (NYSE:HRB) reported a good quarter earlier this month, and the stock is down 4.6% after reporting. It currently trades at $632.05 per share.

So should you invest in Intuit right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.