Shares of Intuit (NASDAQ:INTU), which provides software for tax, accounting and other financial functions, popped 5% Wednesday morning. Better yet, heading into the afternoon session, INTU stock added a bit more to the positive momentum. Buoying investors for its strong fiscal fourth-quarter earnings report, Intuit represents an economic barometer for small- and medium-sized businesses, its main base.
Heading into the fiscal Q4 disclosure, covering analysts anticipated that the company, which makes popular programs like TurboTax and QuickBooks, would post revenue of $2.34 billion. Instead, Intuit rang up $2.4 billion. While this tally represented a 6% decline from the year-ago period, the downgrade reflects an earlier tax deadline this year than in 2021. Interestingly, management forecasted a revenue dip of 8% to 9%, per Barron’s.
In terms of profitability, analysts targeted non-GAAP earnings of 98 cents a share. However, Intuit delivered $1.10 a share, which also beat management’s guidance for 94 cents to $1 a share. On a GAAP basis, the company lost 20 cents a share.
“We had a very strong fourth quarter, ending the year with momentum,” CEO Sasan Goodrazi remarked in a statement. “We’re more confident than ever in our long-term business strategy as we power prosperity around the world.”
INTU Stock Represents a Much-Needed Contrast
Prior to Intuit’s latest earnings report, negative sentiment clouded INTU stock. For instance, while Wednesday’s performance brought relief to many, on a trailing-week basis, shares currently trade a hair under breakeven. Because of Intuit’s focus toward relatively smaller enterprises, analysts expressed anxieties that it could suffer from broader economic weakness.
For instance, on Tuesday, department store icon Macy’s (NYSE:M) released its Q2 earnings report. While the company beat on both the top and bottom lines, management lowered its full-year guidance. In part, the retail industry suffers from excessive inventory, which in turn at least partially reflects weakening consumer spending. To be fair, consumers also pivoted to experience-based services, thus driving the revenge travel phenomenon.
Moving forward, Intuit announced guidance for full-year fiscal 2023. In particular, management anticipates revenue of $14.49 billion to $14.7 billion, representing growth of approximately 14% to 16%. As well, it forecasts GAAP operating income of $2.79 billion to $2.9 billion, translating to growth of about 9% to 13%.
Why It Matters
Pertinently, Intuit may play a significant role in the broader pivot to the gig economy. All other things being equal, tax returns for independent contractors present greater complexities than returns for employees. Mainly, these complexities stem from reporting (usually) various sources of income and associated deductions. Therefore, as the gig economy grows, INTU stock could swing higher thanks to its underlying software market niche dominance.
Notably, in terms of segment revenue forecast for FY 2023, Intuit anticipates its small business and self-employed group to command growth of 19% to 20%. Conspicuously, this range greatly exceeds projected growth for every other segment, adding more intrigue toward INTU stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.