Intuit Posts Q1 Beat, Shares Tank On Disappointing Outlook: Analyst Says: 'Trends Beneath The Surface Were Mixed'

Intuit Inc INTU shares tanked in early trading on Friday, even after the company reported upbeat fiscal first-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Goldman Sachs analyst Kash Rangan maintained a Buy rating while raising the price target from $765 to $800.
• Stifel analyst Brad Reback reiterated a Buy rating while reducing the price target from $795 to $725.
• Oppenheimer analyst Scott Schneeberger reaffirmed an Outperform rating while raising the price target from $712 to $722.
• Piper Sandler analyst Arvind Ramnani maintained an Overweight rating while cutting the price target from $768 to $765.
• Scotiabank analyst Allan Verkhovski reiterated a Sector Perform rating and price target of $700.
• BMO Capital Markets analyst Daniel Jester reaffirmed an Outperform rating and price target of $760.
• RBC Capital Markets analyst Rishi Jaluria maintained an Outperform rating and price target of $760.

Check out other analyst stock ratings.

Goldman Sachs: Intuit reported better-than-expected results for its fiscal first quarter, with "early progress in Gen-AI," Rangan said in a note. The stock came under pressure on the company's fiscal second-quarter guidance coming in "a bit weaker" than expectations, he added.

The quarterly guidance shortfall is "primarily owing to non-Core Consumer Group desktop offering's promotional activities," pushing revenues from the second quarter to the second half of the year, the analyst stated. Management kept their full-year guidance "largely intact, suggesting that Consumer Group's desktop offering is likely to reaccelerate and has the potential for recapturing earnings leverage in 2H," he further wrote.

Stifel: Intuit generated "solid" quarterly results, highlighted by an acceleration of 360 basis points in QBO (QuickBooks Online) Accounting, Reback said.

The stock sell-off in Thursday's after-hours session was due to the second-quarter guidance, which was "impacted by an acceleration in near-term Tax marketing spending and the decision to push some Tax promotional activity to 3Q," he added.

Being a "clear beneficiary from stronger economic growth (rates and policy)" would allow Intuit to generate durable double-digit growth over coming years, "as up-market, Live and AI initiatives ramp," the analyst wrote.

Oppenheimer: Intuit's Global Business Solutions Group segment generated 9% year-on-year revenue growth, with SB Online Ecosystem growing revenue by 20%, Online Services by 19% and QuickBooks Online Accounting by 21%, Schneeberger said. Credit Karma recorded 29% year-on-year revenue growth, significantly higher than expected, he added.

"Intuit maintained FY25 segment growth guidance at a strong 16%–17% y/y," the analyst wrote. Management maintained full-year total revenue and earnings growth guidance at 12%-13% and 13%-14%, respectively, he further stated.

Piper Sandler: The company reported revenues of $3.28 billion, beating expectations by around $144 million, and earnings of $2.50 per share, 14 cents higher than estimates, Ramnani said. Growth was driven by growth at GBS Online Ecosystem accelerating to 20%, from 18% in the previous quarter, and at Credit Karma accelerating to 29%, versus 14% previously, he added.

Despite the revenue and margin beat, the company reiterated its full-year guidance, the analyst stated. "The company continues to make progress toward the "done for you experiences," which is powered by AI and automation," he further wrote.

Scotiabank: Intuit reported the strongest revenue beat since the first quarter of 2022, Verkhovski said in a note. He added that the company's earnings outperformance was "lower than what we are used to seeing."

The company's earnings were impacted by an earlier-than-usual start to its marketing campaigns for the tax season, the analyst stated. "We believe F2Q guidance coming in below consensus due to quarter-to-quarter shifts is just noise as INTU manages the business at an annual level," he further wrote.

BMO Capital Markets: Intuit generated 10% year-on-year revenue growth, reflecting 4.5% of upside against the mid-point of its guidance, Jester said. Revenues were driven by strong performances by QBO Ecosystem and Credit Karma, he added.

Although QBO ecosystem growth "topped our model by more than a point," some investors were hoping for a larger upside, given the magnitude of the pricing hikes in the business this year, the analyst stated.

Credit Karma's growth benefited from "both improved supply from lenders and innovation which is supporting newer verticals such as insurance," he further wrote.

RBC Capital Markets: Although Intuit reported "decent" results, some trends "beneath the surface were mixed," Jaluria said. While the company's total revenues came in significantly higher than consensus, this outperformance was led by "lower-quality Credit Karma revenue," he added.

Management guided to second-quarter earnings well below consensus, "primarily driven by the timing of hiring and marketing initiatives pulled forward," the analyst wrote. The company reiterated its full-year guidance across the board, he further stated.

Price Action: Shares of Intuit had declined by 4.62% to $647.33 at the time of publication on Friday.

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