Software: What Options Markets are Saying About Intuit (INTU) Earnings

Financial software giant Intuit (INTU) is headed into its earnings report post-market today as one of the hardest-hit names during the “SaaSpocalypse.”

In this heavy week for software earnings, Intuit is one of the earliest software names to report. Analysts are looking for earnings-per-share of $3.59 against $2.75 one year ago (+30.6%) and for revenue of $4.27 billion vs. $3.83 billion from the same period (+11.5%).

Investors have reassessed the sector in light of severe potential disruption from AI, and Intuit shares are down about -47% from highs of 705.08 on Sept. 22 as of Monday’s close, even after a roughly 46% rally off the lows of 252.84 on Jun. 22.

Here are three things to consider as Intuit heads into earnings today.

Why is AI such a potential problem? Intuit makes software focused on finance and accounting, including TurboTax, QuickBooks, Credit Karma, and Mailchimp. The concern for investors with this type of product offering is that they could become obsolete in favor of increasingly powerful AI tools. For example, AI could handle many low-end tasks for a small business, such as sorting receipts, categorizing expenses, drafting invoices, and other things QuickBooks does. While AI obviously would not be a realistic substitute for an actual skilled human accountant or tax professional, the rapid advancement is enough to spark serious questions among investors about the long-term shakeout for this type of company.

Intuit’s Technicals and Options: Intuit traders find themselves at a notable inflection point as price is right on the verge of filling the downside gap that was formed after last quarter’s May 20 earnings. This now stands out as a potential breakout point to watch, which would then open the door to retesting a series of old highs near $417 heading into last quarter’s earnings. Meanwhile, the relative lows near $332 from Aug. 17 stand out as a similar downside breakout point. Examining the options market, this Friday’s Aug. 28 weekly expiration shows a potential expected move of +/-28.8 (7.9%). This projects a possible upper range near a small downside gap between about 390 to 398, which is around where price was headed into the prior earnings event; meanwhile, the lower boundary is roughly near the Aug. 17 lows. Another notable piece of information is that the Oct. 16 monthly expiration shows a potential range of +/-60.8 (16.7%), which suggests little upside beyond a repeated ceiling from late April to early May near 420-425.

Heavy Software Earnings This Week: While Nvidia (NVDA), which reports results after Wednesday’s close, is unquestionably the biggest name on the earnings docket this week, investors shouldn’t ignore the other major software players this week including Salesforce (CRM), CrowdStrike (CRWD), Workday (WDAY), Synopsys (SNPS), Zoom Communications (ZM), Veeva Systems (VEEV), Okta (OKTA), Autodesk (ADSK), and SentinelOne (S). Earnings weeks with many similar companies reporting could result in sympathy moves or advance insight into the similar opportunities or challenges these various companies face. Traders could observe the sector using tickers such as the iShares Software Sector ETF (IGV) for a look at companies like these during a week with many potential catalysts.

For this week’s earnings and economic calendars, see Week Ahead: Jackson Hole Puts Fed in Focus, Nvidia (NVDA) Earnings

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