Intuit Inc. (INTU), a provider of tax and personal-finance software, fell the most in eight months after it said fiscal third-quarter revenue will be “at or slightly below the low end” of its previous forecast.
The Mountain View, California-maker of TurboTax and QuickBooks software made the disclosure today in a statement. Intuit had previously projected sales of $1.95 billion to $1.99 billion. Analysts, on average, were predicting sales of $1.97 billion, according to data compiled by Bloomberg.
Intuit said sales of online tax-prep software -- its largest category -- didn’t grow as fast as expected this season. The performance was the result of competition from H&R Block Inc. (HRB) and other providers, Brad Zelnick, an analyst at Macquarie Capital USA in New York, wrote in a research note. H&R Block has increased advertising spending and offered free tax-preparation services to win back business lost to Intuit.
“Intuit may have lost share in the digital category this year,” wrote Zelnick, who has a neutral rating on Intuit. “While we are unsure of exactly which competitor(s) benefited from Intuit’s share loss, we note H&R Block digital return growth outpaced Intuit” as of the end of February.
Unit sales of TurboTax Desktop, a packaged version of the tax-preparation software, declined 3 percent to 5.88 million in the tax season through April 18, Intuit said. The online version increased 11 percent to 17.5 million units.
Online tax-preparation software “grew at the lower end” of expectations, Intuit said. Still, the company said, “we believe we gained about one point of share online and are well positioned for long-term growth.”
The shares fell 6 percent to $57.25 at at the close in New York for the biggest decline since Aug. 10. The stock has climbed 8.9 percent this year.
Sales of versions of TurboTax that users pay for increased 7 percent from this time last year, a slowdown from the 8 percent Intuit reported in March.
The “modest” revenue reduction and Intuit’s controls on expenses should still let the company grow in double digits, Brent Thill, an analyst at UBS AG in San Francisco, said in a research note. Thill recommends buying the shares.
Intuit reaffirmed its full-year revenue and earnings forecast for fiscal 2012. Intuit also said it expects consumer tax revenue growth of about 11 percent for the year. Full-year revenue will be in the range of $4.19 billion to $4.29 billion, the company projected. Intuit is scheduled to report third- quarter earnings on May 18.
Peter Goldmacher, an analyst at Cowen & Co. in San Francisco, said in a research note that Intuit’s tax software business can grow over time as the company takes advantage of consumers’ shift to software from using retail tax-prep stores.
“We don’t think these numbers should have investors questioning the long term viability of the consumer tax business,” he said.
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