Intuit Inc. (INTU:US), a provider of tax and personal-finance software, forecast fiscal fourth-quarter sales that missed some estimates as new money-managing products may not attract as many small-business customers as expected.
Revenue in the quarter ending July 31 will rise 9 percent to 12 percent to $647 million to $662 million, the Mountain View, California-based maker of TurboTax and QuickBooks software said today in a statement. Analysts on average predicted sales of $653.7 million, according to data compiled by Bloomberg.
Chief Executive Officer Brad Smith seeks to reduce Intuit’s reliance on tax-preparation products by transforming the company into a provider of websites, services and programs to manage money, such as its Mint.com website and QuickBooks Online financial software. Sales of online tax software -- the company’s largest category -- also lagged behind this season as more customers defected to competitors such as H&R Block Inc. (HRB:US)
“The TurboTax online business was not as strong as hoped,” Raimo Lenschow, an analyst at Barclays Capital, said in a research note to clients. “We saw an ongoing deceleration of the business as the tax season progressed. This should trigger some questions -- a factor here could be the aggressive pricing from Intuit’s competitor, H&R Block.”
Excluding some items, Intuit said earnings will range from 5 cents to 7 cents a share, compared with the average prediction of 6 cents.
Profit Tops Estimates
Sales in the fiscal third quarter rose 5 percent to $1.95 billion, matching the average analyst estimate. Net income increased 6.7 percent to $734 million, or $2.42 a share, beating expectations.
Intuit was little changed in late trading after the results were released. The shares (INTU:US) fell 1.3 percent to $54.41 at the New York close and have risen 3.5 percent this year.
Unit sales of TurboTax Desktop, a packaged version of the tax-preparation software, declined 3 percent to 5.88 million in the tax season through April 18, Intuit said last month. The online version increased 11 percent to 17.5 million units.
Sales of TurboTax versions that users pay for increased 7 percent from a year earlier, a slowdown from the 8 percent that Intuit reported in March. While the company increased spending on the product in the third quarter -- adding free tax consultants, for example -- Smith said he wasn’t happy with the results.
“Many TurboTax customers weren’t aware of the offering,” he said, referring to the free agents. “I’m not pleased with the return on that investment. We did not deliver the best tax season we could.”
Intuit expects revenue for consumer tax products to grow about 11 percent for the year. Annual revenue will be in the range of $4.21 billion to $4.22 billion, the company said.
Revenue for QuickBooks Online and QuickBooks Enterprise financial software rose 29 percent from a year earlier. That growth may continue as Intuit relies on offerings other than its tax-preparation services, according to Peter Goldmacher, an analyst at Cowen & Co. in San Francisco.
Intuit is “like a diversified retailer that can effectively grow low-end and high-end businesses by manipulating products, accessories, prices, marketing campaigns and promotions en masse,” Goldmacher said in a research note to clients. “Intuit has the ability to capture extensive user behavior information that we believe will allow it to cost- effectively personalize these levers.”
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