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Intuit Inc.'s Strong Third Quarter, in 8 Metrics

By Daniel Sparks - May 29, 2018 at 6:36PM

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The financial software company's results spotlight 45% growth in QuickBooks Online subscribers, revised revenue guidance, and more.

With its fiscal third-quarter earnings report behind it, it's clear that Intuit's (INTU -2.90%) momentum has persisted. Not only did the financial software company report double-digit revenue growth in its consumer group and its small-business and self-employed group, but management also raised its outlook for fiscal 2018 revenue, operating income, and earnings per share. Fueled by a well-executed tax season, Intuit benefited from strength in its do-it-yourself returns and higher average revenue per return. 

As investors consider the quarter's implications, here are eight of the most insightful metrics from Intuit's Q3 update.

A small business owner using QuickBooks Online on a laptop

QuickBooks Online. Image source: Intuit.

1. Revenue increased 15%

Intuit's Q3 revenue increased 15% year over year to $2.93 billion, handily beating both its own guidance and the consensus analyst estimate for the period. On average, analysts expected Q3 revenue of $2.85 billion.

Intuit's consolidated revenue was driven by a 15% year-over-year increase in consumer group revenue and a 16% increase in small-business and self-employed revenue.

2. Year-to-date consumer group revenue is up 14%

This crushes management's guidance at the beginning of the year for 7% to 9% growth in its consumer group.

3. TurboTax units increased 4%

This included a 6% year-over-year increase from TurboTax Online units. This growth in TurboTax units was driven by "faster growth in both our paid and free offerings," CFO Michelle Clatterbuck said during Intuit's earnings call. 

4. Operating income increased 12%

Intuit remains highly profitable, with operating income rising 12% -- or 13% on a non-GAAP basis. This puts Intuit's Q3 operating income at an impressive $1.62 billion.

5. QuickBooks Online subscribers soared 45%

The primary growth driver for Intuit's small-business and self-employed group was a 45% year-over-year increase in QuickBooks Online (QBO) subscribers, bringing QBO subscribers to 3.2 million.

Growth was particularly strong abroad, where QBO subscribers increased 66% year over year to about 720,000. But growth was still strong in Intuit's important domestic market, with U.S. subscribers increasing 40% year over year to about 2.5 million. 

6. Intuit spent $19 million on share repurchases

This leaves about $1.2 billion on the company's share repurchase authorization.

The $19 million spent on share repurchases during the quarter was a notable slowdown from the $83 million Intuit used to buy back shares in Q2. The more moderate level of repurchases likely reflects Intuit's run-up in its share price recently. The stock is up 26% in the past six months and 16% in the past three months.

7. Management expects fourth-quarter revenue to increase 12% to 14%

Revenue growth at this rate would mark a deceleration compared to Intuit's 15% growth in Q3. But management's guidance typically proves to be conservative.

8. Management guided for 14% to 15% fiscal 2018 revenue growth

This marks a significant increase over management's previous guidance range for the full year. When Intuit reported its Q2 results, management said it expected full-year revenue to increase 9% to 11%. 

In addition, for its full-year non-GAAP operating income and EPS, management expects growth of 12% to 13%, and 25%, respectively. This is up from previous expectations for growth of 9% to 12%, and 20% to 22%, respectively. The increased outlook for the full year reflects Intuit's strong Q3 and "continued momentum across the company," CEO Brad Smith said during the earnings call.

As Intuit aims to finish fiscal 2018 hitting higher targets, investors will want to continue watching these key metrics. For Intuit to live up to its higher valuation after its stock's sharp gain recently, the company will need to continue delivering strong growth.

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