Slow start to tax season hits Intuit’s earnings

Americans are dragging their feet filing this year

A sluggish start to tax season undermined TurboTax owner Intuit’s earnings, sending its stock lower Wednesday.

The online tax filing software company warned Wednesday morning that “tax season is forming more slowly than usual,” which will translate into a worsethan- expected performance for the fiscal second quarter ended Jan. 31.

Whether it’s unseasonably warm weather that’s encouraging people to get out of the house or a national hangover from a dread- fully polarizing election, the reasoning isn’t clear.

But the impact on Intuit is concrete: The company lowered its outlook for quarterly revenue, operating income and earnings.

“Data points to the tax category forming slowly for all prep methods,” said Dan Wernikoff, executive vice president and general manager of Intuit’s TurboTax business, in a statement. “We be- lieve we have a strong and winning hand that combines innovation across the end- to- end experience, an effective go- tomarket campaign and great value for taxpayers. One thing we know about the tax business is that everyone needs to file by April 18. We are looking forward to a strong finish to the season.”

Revenue is now expected to range from $ 1.01 billion to $ 1.02 billion, down from a previous projection of $ 1.05 billion to $ 1.07 billion. Operating income is projected at $ 15 million to $ 20 million, down from a previous prediction of $ 60 million to $ 70 million.

And the company is now expected to barely eek out a profit for the quarter, with earnings of 4 to 5 cents per share, down from an earlier expectation of 12 to 15 cents.

Intuit shares fell 2.9% to $ 114.14 shortly after the opening bell.

The good news for Intuit is it still expects to meet its goals for the full year, suggesting that customer spending is simply shifting to the next fiscal quarter.

The revision stems from the IRS reporting that total returns processed through Jan. 27 tumbled 33 percent, compared to a year earlier.

Intuit said it had processed 29% fewer consumer returns during that period.

TurboTax controlled 65% of the do- it- yourself market for tax software, according to UBS analysts, after three years of market share gains.

The company has gained momentum with a free option that “converts” into paid subscriptions over time, UBS analyst Brent Thill said in a recent analyst report.