Tax and accounting software provider, Intuit (NASDAQ:INTU) reported results ahead of analysts' expectations in Q1 FY2024, with revenue up 14.7% year on year to $2.98 billion. On the other hand, the company's full-year revenue guidance of $16 billion at the midpoint came in slightly below analysts' estimates. It made a non-GAAP profit of $2.47 per share, improving from its profit of $1.66 per share in the same quarter last year.
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Intuit (INTU) Q1 FY2024 Highlights:
- Revenue: $2.98 billion vs analyst estimates of $2.88 billion (3.3% beat)
- EPS (non-GAAP): $2.47 vs analyst estimates of $1.98 (24.8% beat)
- The company reconfirmed its revenue guidance for the full year of $16 billion at the midpoint
- Free Cash Flow was -$181 million, down from $852 million in the previous quarter
- Gross Margin (GAAP): 75.8%, in line with the same quarter last year
“We had a very strong first quarter, starting our fiscal year with momentum,” 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 solid over the last two years, growing from $2.01 billion in Q1 FY2022 to $2.98 billion this quarter.
This quarter, Intuit's quarterly revenue was once again up 14.7% year on year. On top of that, its revenue increased $266 million quarter on quarter, a strong improvement from the $3.31 billion decrease in Q4 2023. This is a sign of acceleration of growth and very nice to see indeed.
Looking ahead, analysts covering the company were expecting sales to grow 11.3% over the next 12 months before the earnings results announcement.
While most things went back to how they were before the pandemic, a few consumer habits fundamentally changed. One founder-led company is benefiting massively from this shift and is set to beat the market for years to come. The business has grown astonishingly fast, with 40%+ free cash flow margins, and its fundamentals are undoubtedly best-in-class. Still, its total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.
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 burned through $181 million of cash in Q1 despite being cash flow positive last year.
Intuit has generated $4.40 billion in free cash flow over the last 12 months, an impressive 22.8% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.
Key Takeaways from Intuit's Q1 Results
With a market capitalization of $158.3 billion, a $2.27 billion cash balance, and positive free cash flow over the last 12 months, we're confident that Intuit has the resources needed to pursue a high-growth business strategy.
It was good to see Intuit beat analysts' revenue expectations this quarter, driven by outperformance in its consumer division. That was thanks to a strong finish to the tax extension season and stood out as a positive. Intuit also blew past analysts' EPS and free cash flow estimates. On the other hand, its full-year revenue guidance slightly missed expectations. Zooming out, this was still a decent, albeit mixed, quarter, showing that the company is staying on track.
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.
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