Intuit Shrugs Off Tough Tax Season With More Subscribers

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Intuit Inc. shrugged off setbacks for its TurboTax software, including a rise in fraudulent state filings, to generate sales that exceeded analysts’ estimates for its most important quarter.

The Mountain View, California-based company reported revenue of $2.19 billion in the fiscal third quarter, topping the $2.15 billion average of analysts’ estimates compiled by Bloomberg. Intuit also raised its annual sales forecast to $4.4 billion to $4.42 billion, the company said Thursday in a statement.

Typically, the quarter ended April 30, buoyed by sales from tax season, generates about the same amount of revenue for Intuit as the other three quarters combined. This year, the company faced challenges after alienating some customers by changing the pricing of some of its widely used products and temporarily halting state tax processing after its service was used to file a large number of fraudulent returns.

Investor worries about the impact of these events were calmed after Intuit showed an increase in online subscribers in the most recent quarter, and in April the company said it anticipated a growth in subscribers for its tax software above guidance range.

“The business is doing well,” said Gil Luria, an analyst at Wedbush Securities Inc., who has a neutral rating on the stock. “They made big changes to pricing this year.”

The company reported third-quarter profit excluding some items of $2.85 cents a share. Analysts had predicted $2.75.

Shares Rise

Intuit shares rose as much as 3.7 percent in extended trading after closing at $104.16 in New York. The stock has gained 13 percent this year, compared with a 3.5 percent increase in the Standard & Poor’s 500 Index.

“We delivered a strong quarter, exceeding our company financial revenue target amid another strong tax season and accelerating growth in our small business online ecosystem,” said Brad Smith, Intuit’s president and chief executive officer.

The company in February moved to restore consumer trust after states saw a rise in the number of fraudulent returns being filed with TurboTax software, causing Intuit to temporarily suspend filings.

The number of customers for Turbotax’s desktop software declined 7 percent in the second quarter after the company increased the prices for some features.

Intuit reported subscriptions to its Turbotax software rose 9 percent in the third quarter. Subscriptions for its Quickbooks Online accounting software rose 55 percent compared with 36 percent growth in the period a year earlier.

“In their small business unit and the rest of the business it’s a matter of how many people they can sign up for Quickbooks Online,” Luria said.

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