Updated from 4:36 p.m. EST
posted fiscal second-quarter results Thursday that surpassed analysts' estimates, but lowered earnings guidance for the third and fourth quarters to reflect higher spending on new growth efforts.
Under generally accepted accounting principles, Mountain View, Calif.-based Intuit reported net income of $147.3 million, or 77 cents a share, in the second quarter, which ended Jan. 31. That compared with net income of $149.1 million, or 73 cents a share, in the same period a year earlier.
Excluding charges, Intuit earned pro forma net income of $155.1 million, or 82 cents a share, in the second quarter, compared with pro forma net income of $156.0 million, or 77 cents a share, a year earlier. That handily beat the consensus estimate gathered by Thomson First Call, which pegged earnings at 76 cents.
Intuit's revenue rose 5% to $662.6 million from $633.4 million a year earlier. That exceeded the consensus estimate of analysts calling for $640.5 million in sales.
Analysts lowered their estimates for the third quarter after the company's guidance provided three months ago fell short of expectations. At that time, Intuit, the maker of TurboTax and Quicken accounting software, said it expected second-quarter revenue to range from $625 million and $645 million and pro forma earnings to range from 72 cents to 77 cents a share, when analysts were expecting revenue of $651.4 million and pro forma earnings of 85 cents a share.
With a bulk of the company's sales driven by tax season, Intuit typically posts a profit in its fiscal second and third quarters and losses in the first and fourth quarters.
Intuit reaffirmed revenue guidance for the third and fourth quarters and raised revenue guidance for the full year to reflect the strong second-quarter results, which were driven by consumer tax and QuickBooks sales. But the company lowered earnings guidance for the third and fourth quarters and left unchanged earnings guidance for the full year, which reflects additional investments in several growth initiatives.
The company did not offer concrete details on the kinds of investments it would make. "It's in a wide variety of things that are going to drive faster growth in the future," CEO Steve Bennett said in a telephone interview after the company posted its results.
On a postclose conference call, Bennett said the company's fiscal 2005 revenue growth "is not where I want to be longer term.
"We're driving hard for double-digit revenue growth in the future," he said. "Growth is my No. 1 priority and where I spend the vast majority of my time."
For the full year, the company said earnings should range from $1.93 to $2.01 a share on revenue ranging from $2 billion to $2.025 billion, up from a previous range of $1.966 billion to $2.022 billion. That represents annual revenue growth of 8% to 9%, compared with prior guidance calling for growth of 6% to 9%. Analysts estimated that Intuit would earn $1.96 a share on $2.01 billion in revenue in fiscal 2005.
Intuit now expects to earn pro forma EPS of $1.42 to $1.47, down from a prior range of $1.46 to $1.51, on revenue ranging from $780 million to $810 million in the third quarter. Analysts were expecting earnings of $1.49 a share on $802.1 million in sales in the third quarter.
Intuit expects to post a pro forma loss of 5 cents to 9 cents a share, down from a prior range of 4 cents to 8 cents, on sales of $285 million to $305 million in the fourth quarter. Analysts were forecasting a fourth-quarter loss of 6 cents a share on $296.8 million in sales in the fourth quarter.
Although sales of tax software for Intuit are increasingly shifting to the third quarter as consumers wait longer and file their taxes online, Intuit executives said they were pleased with the 9% jump in consumer tax revenue from a year ago, to $141.1 million, in the second quarter. TurboTax units sold in the quarter increased nearly 15% year-over-year to 4.7 million.
Bennett said the company is seeing less cannibalization from its participation in the Free File Alliance, a program with the IRS that allows users to file their federal taxes online for free but still generates revenue for Intuit if customers use it for state tax filings.
The other strong area during the quarter was QuickBooks, which enjoyed a 38% surge in unit growth and a 10% hike in revenue from a year ago to $222.3 million. Intuit raised its guidance for QuickBooks sales in fiscal 2005 to a range of 10% to 14%, up from a previous range of 5% to 10%.
Shares of Intuit recently fell 36 cents, or 0.9%, to $39.75 in after-hours trading. Shares ended the regular session up 6 cents to $40.11.