INTU Stock: Will Q3 Earnings Turbocharge Intuit’s Share Price?

Intuit outperformed in the three months to the end of January, ahead of US tax season and the firm’s most important part of the year. It expects its new artificial intelligence (AI) assistant, designed to make it easier to file tax returns, to further drive demand for its products and potentially boost INTU stock.

Since Intuit [INTU] started rolling out generative AI features across its TurboTax products and services in November last year, it has been increasing its areas of engagement with customers to include major purchases, home buying and savings.

“It’s changing our relationship with customers as we move from being a transactional workflow platform to a trusted assistant that customers can rely on daily to power their prosperity,” Intuit CEO Sasan Goodarzi said on the Q2 earnings call in February.

Three ‘super investors’ bought $111.5m worth of Intuit shares in the first three months of 2024, while nine super investors sold $77.9m worth, according to Stockcircle.

Ken Fisher, Founder, Executive Chairman and Co-chief Investment Officer of Fisher Investments, was one of the buyers, increasing his holding by 4.7% and adding approximately 146,000 shares. Sellers included ARK Invest Founder Cathie Wood, who pared down her stake by 21%, shedding approximately 13,600 shares.

Strong Performance Ahead of Tax Season

In the three months to 31 January, Intuit, which also owns Credit Karma, Mailchimp and Quickbooks, reported that revenue climbed 11% year-over-year to $3.4bn. Its small and self-employed business segment reported revenue growth of 16% to $2.2bn, while sales of ProTax — its tax software for accountants — was up 8% to $274m and revenue from Credit Karma was flat. Non-GAAP earnings per share (EPS) were $2.63, up 20% from $2.20 in Q2 2023.

"We overperformed heading into what is typically our biggest quarter of the year,” Goodarzi told Dow Jones following the earnings release.

The company reiterated its previous full-year guidance, including a growth rate of 16–17% for its small and self-employed business, and a 3–4% decline in sales from ProTax. Revenue from Credit Karma could be anywhere between a 3% decline to growth of 3%, it said.

Q3 Guidance Reiterated Amid Demand for AI

Intuit maintained its guidance for Q3, forecasting revenue growth of 10–11% and non-GAAP EPS of $9.31–9.38.

Investors will likely be interested in hearing more about the impact its generative AI assistant — Intuit Assist, launched at the end of last year — had on customers ahead of the US tax deadline of 15 April.

Goodarzi said on the Q2 earnings call that the company is “leveraging the power of data and AI … to revolutionise speed to benefit” and make it easier for people to connect with experts and get the answers they need to their financial or accounting issues.

Intuit is hoping the generative AI assistant will drive customer growth and lead to higher engagement and monetisation across its products and services over the long term, Goodarzi added.

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Intuit Share Price Up

Demand for AI has helped the Intuit share price rally 48.6% in the past year through 20 May. Though the stock is only up 6.1% year-to-date, its most recent close of $661.18 is just below its 52-week high of $671.01 set on 4 March.

In addition to buying Intuit shares outright, another way to gain exposure to the stock is through thematic ETFs.

The Global X Fintech ETF [FINX] has Intuit as its fourth-biggest holding, with a weighting of 6.2% as of 17 May. The fund is up 25.7% in the past year and up 2.1% year-to-date.

The Roundhill Generative AI & Technology ETF [CHAT] has allocated Intuit 1.1% of its portfolio. The fund is up 36.9% since its launch on 18 May 2023 and up 14.8% year-to-date.

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