Updated from May 14Intuit's ( INTU) unexpectedly strong third quarter was being rewarded Thursday as investors pushed shares of the tax and accounting software developer up as much as 10%. The company was off the day's high in recent trading, but had still gained $2.69, or nearly 7%, to $41.67, following its Wednesday earnings announcement. Net income rose to $294 million, or $1.40 a diluted share, from 67 cents a share a year ago, according to generally accepted accounting principles. Pro forma earnings of $1.05 were an upside surprise, since the company had told analysts to expect pro forma income of $1.00 to $1.03. Revenue, boosted by a late surge in sales of tax-preparation software, jumped 29% year over year to $634.7 million. Best known for its tax and accounting products, including TurboTax, QuickBooks and Quicken, Intuit warned investors several times that the quarter would not be as good as originally expected. Although revenue was in line with guidance given in late April, it was still well below the initial target range of $685 million to $725 million set by the company. Similarly, pro forma earnings beat reduced expectations, but were below the original target of $1.06 to $1.09 a share. Intuit's problems this year started with slow sales of its flagship TurboTax software in the early part of the tax season. And various free-filing services are apparently hurting sales of Web TurboTax, which grew by a slower-than-expected 11% during the quarter, the company said. But today's announcement showed that sales of non-Web-based tax software spiked sharply late in the quarter. TurboTax revenue was $313.1 million, up 28% from the third quarter of last year.
The company also announced it was dropping antipiracy features that had angered some TurboTax customers. The announcement sent Macrovision ( MVSN), which provided the safeguards, down $1.40, or 7.5%, to $17.34 in recent trading. QuickBooks revenue was up 12%; Intuit's Vertical Business Management Solutions contributed $25.7 million, up 7%; and the company's small-business products and services revenue was up 41% to $114.7 million. Looking forward, the company expects fourth-quarter revenue to meet Wall Street's expectations of $240 million to $250 million. Net income will be written in red, the company said: Pro forma income will be a loss of 6 cents to 9 cents a share; GAAP income will be a loss of 10 cents to 13 cents. Analysts expected a pro forma loss of 9 cents.