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Intuit’s Key Earnings Drivers

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Apr. 9 2018, Published 12:49 p.m. ET

What’s driving Intuit’s earnings growth?

Intuit (INTU) has continued to witness stable bottom-line growth in the last five quarters, buoyed by increased TurboTax e-filed returns and a growing online QuickBooks subscriber base. Upselling has led to higher average revenue per return, boosting the company’s EPS (earnings per share). US tax reform may further drive the company’s EPS.

The graph above shows Intuit’s EPS growth over the last five quarters. During the period, its bottom line has increased at a compound annual rate of 8%.

Intuit’s EPS in fiscal 2Q18 stood at $0.35, against $0.26 in 2Q17. According to The Wall Street Journal, in 2Q18, the company outpaced analysts’ estimate of $0.34 per share. In the last five quarters, the company has easily surpassed estimates.

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Company outlook

The company expects non-GAAP (generally accepted accounting principles) EPS of $4.57–$4.62 in fiscal 3Q18 and $5.30–$5.40 in fiscal 2018, representing 20%–22% growth from fiscal 2017.

Despite strong revenue growth, rising operating expenses for new product launches and aggressive marketing strategies may continue to act as headwinds for the company. To compare, software giants Microsoft (MSFT) and IBM (IBM) saw fiscal 2Q18 EPS of $0.96 and fiscal 4Q17 EPS of $5.18, respectively.

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