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Intuit Earnings Highlight Massive Momentum

By Daniel Sparks – Nov 19, 2021 at 7:05AM

Key Points

  • Intuit has made several big acquisitions recently, including, Credit Karma, and Mailchimp.
  • The company's bold acquisition strategy is helping drive earnings-per-share growth.
  • Intuit's organic business momentum is impressive, too.

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The financial-software company's big bets are paying off.

Intuit (INTU -6.28%) earnings are out -- and they look great. Not only did the financial-software company's top and bottom lines both beat analysts' expectations, but the company also raised its full-year revenue guidance due to a combination of strong business momentum and its recent acquisition of Mailchimp.

It's safe to say that expectations were high going into the earnings report. Shares of Intuit have risen 66% year to date, crushing the S&P 500's 25% gain. But based on the tech stock's near 9% gain in after-hours trading on Thursday, Intuit still managed to impress, despite investors' elevated view.

Here's a closer look at the company's stellar fiscal first-quarter results.

A small business owner using QuickBooks Online on a laptop.

QuickBooks. Image source: Intuit.

Intuit's big bets are paying off

Intuit has made some bold acquisitions recently. Last summer, the company acquired personal-finance specialist Then, the company closed an acquisition of credit-score tracking company Credit Karma in December. Finally, Intuit closed on its acquisition of Mailchimp on Nov. 1. 

Based on the company's better-than-expected fiscal first-quarter financial results and management's optimism about Intuit's business, these big bets are paying off nicely. Helped by its recent acquisition of Credit Karma, Intuit's first-quarter revenue increased 52% year over year to more than $2 billion. Non-GAAP (adjusted) earnings per share increased 63% year over year to $1.53. Analysts, on average, were expecting revenue of $1.81 billion and adjusted earnings per share of $0.99.

While much of this growth was fueled by acquisitions, organic growth in the company's QuickBooks product was impressive, too. QuickBooks Online Accounting revenue increased 32% year over year, management said. Further, the company's Credit Karma business is doing very well, reporting quarterly revenue of $418 million, up from quarterly revenue of $405 million just three months earlier.

"Credit Karma saw record revenue in the quarter driven by strength in personal loans and credit cards combined," management said in the company's third-quarter earnings release.

A rosy outlook

Management's updated outlook was just as exciting as Intuit's fiscal first-quarter results. The company said that it now expects fiscal 2022 revenue to increase 26% to 28% year over year. Excluding Intuit's recent acquisition of Mailchimp, this represents 18% to 20% growth -- up from the 15% to 16% growth management was guiding for previously.

"We are off to a strong start in fiscal year 2022, delivering on our strategy of becoming an AI-driven expert platform powering the prosperity of consumers and small businesses," said Intuit CEO Sasan Goodarzi in the earnings report.

Importantly, management expects non-GAAP earnings per share to grow 18% to 20%, even as Intuit reinvests heavily into growth opportunities. This is higher than management's previous view for earnings per share to increase 13% to 16%.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Intuit. The Motley Fool has a disclosure policy.

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