Intuit (INTU) reports fourth-quarter results after today's close. The company guided to double-digit revenue growth. Wall Street expects $4.27 billion in revenue and $3.59 in adjusted earnings per share, which would mean earnings growth of more than 30% from a year ago. QuickBooks, Credit Karma, and TurboTax Live are expected to be the main drivers. Investors want an update on the overall tax business after a weak season, and clarity on whether AI is a threat or a growth chance.
The stock and the setup
INTU is down more than 40% this year, hurt by fears of AI disruption and weakness in its tax unit. It sits 55% below the all-time high reached at the end of last July. It has bounced about 42% off lows from two months ago, when it traded near $252. Big post-earnings moves in either direction are normal for this stock, so expect volatility again.
Forward price-to-earnings is about 14 times, cheap versus its own history and cheap for a software stock.
The bull case
On the surface, AI, taxes, and bookkeeping fit well together. This is a healthy company using AI to do its work a bit better. Growth is there, the shares got much cheaper, and the balance sheet is fine. AI could help: drag-and-drop a PDF, load a W2, handle expenses faster. AI would make the whole job quicker for users.
The bear case
AI helps the product work, but it is likely taking market share too. Perplexity now has a tax unit. Chime Financial has a tax unit. That opens the door for business to be pulled away. INTU recently cut about 17% of its workforce in an AI-related restructuring. QuickBooks is still doing well, but tax unit sales are the main worry going forward. There is a reason the stock is down so far: AI will disrupt this space even while growth stays solid.
Trade 1 - bullish call calendar
The expected move for earnings is about $28. Big moves have topped the expected move often this earnings season, so this trade bets INTU moves more than priced in. With the stock near $390, buy a $400 call calendar: buy the September 4th $400 call (expires in 10 days), sell the August 28th $400 call (expires in 3 days). Cost is about a $2 debit, and it has traded closer to $1.85. The $200 per spread debit is the full risk. Profit peaks near $400, with a rough profit range of $360 to $440. A move toward $400 into expiration could return about six times the cost.
The $400 strike is about $40 out of the money, just outside the one-day $28 expected move. The short August 28th $400 call, though $40 out of the money, still holds about $3 of extrinsic premium because near-term implied volatility is high. The trade buys about 74% implied volatility in the September 4th $400 call and sells about 114% in the August 28th $400 call. That volatility gap lowers the entry price. There is assignment risk on the short option over the next three days and into expiration.
Trade 2 - long iron condor (either direction)
This trade wants a big move either way. In the August 28th weekly cycle (expires in 3 days), buy an out-of-the-money call vertical (buy the 385 call, sell the 390 call) and buy an out-of-the-money put vertical (buy the 335 put, sell the 330 put). The four-legged spread costs about a $2.40 debit. It needs the stock to break below $332.60 or above $387.40 to profit. The risk is INTU consolidating after earnings instead of moving.
Both trades cost about $200 and bet on a large move. The call calendar is bullish, targeting $400, past the expected move. The iron condor works in either direction, with its call side near $390, in line with the expected move.
