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Earnings: 2 Hot Tech Stocks to Watch

By Daniel Sparks – May 14, 2019 at 4:45PM

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Can these software companies keep impressing investors?

Earnings season isn't over quite yet. Two interesting stocks reporting results over the next 10 days are website-building platform Wix.com (WIX 0.72%) and financial software company Intuit (INTU 0.91%).

When these fast-growing technology companies report earnings, investors will be watching closely. Shares of Wix and Intuit are up 54% and 24%, respectively, year to date. Can these stocks keep investors happy after such a sharp run-up in their share prices?

When these companies report earnings, here's what investors should watch.

QuickBooks Online on a tablet

Intuit's QuickBooks Online. Image source: Intuit.

Wix.com

Investors will be watching to see if Wix can keep up its strong growth.

When Wix reported its fourth quarter, revenue and non-GAAP (generally accepted accounting principles) earnings per share both came in above analysts' average estimates for the quarter. Revenue jumped 39% year over year to $164.2 million, notably exceeding management's guidance for revenue during the period to be between $161 million and $162 million. Non-GAAP earnings per share increased even faster, more than doubling from $0.16 in the year-ago quarter to $0.42.

The company's full-year revenue guidance, however, disappointed, sending shares lower. Intuit guided for full-year revenue between $755 million and $761 million -- a range that implies 25% to 26% year-over-year revenue growth. This is a substantial deceleration compared to the company's fourth-quarter revenue growth.

When Wix reports its first-quarter results, look for revenue to come in at or above the high end of management's guidance range for revenue between $172 million and $173 million. In addition, investors should look to see if management boosts its outlook for full-year revenue.

Wix reports its first-quarter results before market open on May 16.

Intuit

For a while now, the metric to watch at Intuit has been its online ecosystem revenue, or revenue from the company's online products and services within its small-business and self-employed group. This has been a consistent catalyst for Intuit's business, ultimately driving its double-digit growth rate for total revenue.

Online ecosystem revenue increased 38% year over year in Intuit's most recent quarter (its second quarter of fiscal 2019). This helped drive 17% year-over-year growth in Intuit's overall small business and self-employed group revenue, which accounted for 55% of total revenue during the quarter. Total revenue for the period was up 12%.

For its fiscal third quarter, management said it expects total revenue to increase 10% to 12% year over year.

During the fiscal second-quarter earnings call, Intuit CFO Michelle Clatterbuck said the company believes "the best measure of the health and success of our strategy going forward is online ecosystem revenue growth, which we continue to expect to grow better than 30%."

Intuit reports its fiscal third-quarter results after market close on May 23.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuit and Wix.com. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Intuit Inc. Stock Quote
Intuit Inc.
INTU
$397.57 (0.91%) $3.60
Wix.com Stock Quote
Wix.com
WIX
$73.19 (0.72%) $0.52

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