What Happened:
Shares of tax and accounting software provider, Intuit (NASDAQ:INTU) fell 5.45% in the pre-market session after the company reported third-quarter sales that fell short of analysts' estimates, reflecting challenges in the Consumer group attributed to a decline in total IRS returns and a decrease in the DIY category share. Furthermore, the Credit Karma group faced headwinds in loans, contributing to the overall weakness in the topline growth. However, the Small Business and Self-Employed segment delivered a strong performance, fueled by a 25% growth in QuickBooks Online Accounting revenue. While gross margin improved, it was still below expectations. Additionally, free cash flow missed. The company raised the full year guidance for revenue, non-GAAP operating profit, and EPS, but the market seemed to dismiss this to focus more on the challenges cited prior.
What is the market telling us:
Intuit's shares are quite volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was nine days ago, when the company dropped 5.24% on the news the Biden administration was weighing a plan to launch a public tax filing portal that would compete with private tax preparers. The portal could pose a threat to Intuit's TurboTax business, which handled a third of all IRS tax returns in 2020.
Intuit is up 6.13% since the beginning of the year, but at $415.60 per share it is still trading 15.1% below its 52-week high of $489.23 from August 2022. Investors who bought $1,000 worth of Intuit's shares 5 years ago would now be looking at an investment worth $2,100.
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