Again, extending the tax season tweaks Intuit‘s
business flow. But the most important question facing the financial software provider is who needs help – and how much.
The Revenue Service said Wednesday that the filing date for individuals’ taxes has been extended to May 17. That’s a month longer than usual and is likely to push a huge chunk of income. input from TurboTax and other tax-related services into the fourth-quarter fiscal ending in July. An even longer extension last year of the Seed Date to July 15 resulted in 24% of Intuit’s full-fiscal revenue in the last quarter, compared to an average of about 15% over the previous six years.
Time shift does not mean loss of business. Intuit raised its 2021 fiscal forecast in its most recent earnings report on Feb. 23, when profitability was already hovering around another seed-date extension. Intuit stock – which initially slipped on news about the IRS expansion – has rebounded and is now up nearly 77% for the past 12 months. That has put the shares at a historically high level of around 41 hours of earnings.
That means investors still have high expectations of Intuit, no matter when taxes fall due. The company expected full-year revenue to grow in the range of 15% to 17% – an acceleration compared to the 13% growth posted for the previous two years. But much of that acceleration seems to be due to Karma Credit, which Intuit acquired in December. Intuit expects Credit Karma to generate between $ 545 million and $ 580 million in revenue this year. Without that, the company’s growth for the year would be in the range of 8% to 10%, the slowest rate since fiscal 2015.
The Karma Credit contract was more than six times Intuit’s next biggest buyout and was driven by the company’s desire to expand its financial service offerings to customers. It also included a competitor that provided free tax preparation services. Free remains a competitive threat to Intuit – especially if the federal government gets into the business of allowing taxpayers to prepare and file directly without the use of intermediary software .
But the big question near term is whether Intuit is able to expand its nontax business while also growing TurboTax beyond the do-it-yourself crowd. A new “full service” version of the TurboTax Live service was launched in December that allows users to connect online with a tax professional to help with their films. The explosion of retail investment could give it a dramatic boost; Keith Stanley of Morgan Stanley says the creation of 8 million new bankruptcy trading accounts in 2020 should boost Intuit revenue “as filers with investment records push for a higher price [products]. “Someone has to put all these capital gains up on GameStop.
Write to Dan Gallagher at [email protected]
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