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Intuit (NASDAQ: INTU) reports fiscal first-quarter 2019 earnings on Nov. 19 after the close of trading. The tax and small business software giant will attempt to produce another set of vigorous numbers in a run of quarters that has pushed its stock up 33% year to date. Let's walk through the key metrics and themes investors should consider when evaluating the start of the new fiscal year.
First-quarter earnings targets
Intuit's fiscal fourth-quarter 2018 earnings report presented the company's outlook for the new quarter, which is traditionally a loss-generating quarter as it gears up for tax season. Management expects year-over-year revenue to improve between 5% and 7% to a range of $955 million to $975 million in the first quarter. If met, this target will generate a GAAP loss of $70 million to $80 million, and a diluted earnings-per-share (EPS) loss of $0.17 to $0.19.
Management noted in its outlook last quarter that the company has adopted a new accounting standard addressing revenue recognition, ASC 606. Thus, its first-quarter revenue guidance is $30 million less than it would have been under the old standard.
Impact on full-year guidance
Investors will want to evaluate Monday's report in the context of the company's full-year 2019 outlook. Intuit anticipates current-year revenue to improve 8% to 10%, which translates to a top line of between $6.5 billion and $6.6 billion. Operating income is expected to rise between 11% and 14%, or from $1.73 billion to $1.78 billion. Diluted EPS for the full year is pegged at $5.25 to $5.35, equating to a per-share growth rate of 3%-5%. Any significant deviation from first-quarter targets will affect the company's ability to hit these 12-month goals.
QBO subscription acquisition
Intuit is expecting full-year revenue growth of 9% to 11% in its "Small Business and Self-Employed Group," the business segment in which the company sells its QuickBooks Online (QBO) small business ecosystem software. This segment expanded at a year-over-year growth rate of 18% in fiscal 2018, largely because of the continued brisk pace of QBO subscription additions.
Intuit widened its QBO base by 43% last year, ending the period with 3.4 million subscribers. While this growth rate will inevitably slow over time, first-quarter 2019 results will provide an expectation into the full-year subscriber growth rate, which is likely to remain somewhere in the double-digit expansion range.
Shareholders should also observe the breakdown of U.S. QBO subscriber growth versus non-U.S. additions. In fiscal 2018, the U.S. subscriber base expanded by 38% to 2.6 million customers, while non-U.S. subs soared by 62% to 800,000. If international numbers scale up in similar fashion this year, they may absorb a less vigorous U.S. growth rate.