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Intuit Inc. : Intuit 2nd-Quarter Profit Down 40% as U.S. Tax Season Delayed

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02/22/2013 | 12:10am CEST

--Delay to U.S. tax-filing season drives revenue down 3%

--Online and mobile services attracting business customers

--DemandForce acquisition performing well

   By Steven D. Jones and Mia Lamar 

Intuit Inc.'s (INTU) fiscal second-quarter profit dipped 40% as the delay in the beginning of the U.S. tax season reduced revenue for its core tax-preparation business partly offset by strong adoption of its online financial services.

A two-week delay in the beginning of the tax-filing season was costly for the Mountain View, Calif., company. If not for the delay, Chief Executive Brad Smith said revenue in the quarter would have climbed 10% instead of falling 3%. In a typical year, the Internal Revenue Service begins accepting returns by mid-January. This year the IRS didn't begin accepting any returns until Jan. 30, just two days before the end of Intuit's second fiscal quarter.

The company said Thursday that sales of its TurboTax federal tax software were down 7% through Feb. 16 compared with the prior year, though sales of its online software have picked up through February.

Intuit is "performing well across our businesses and benefiting from the tailwind of the shift to online and mobile services," Mr. Smith told analysts on the earnings call.

Despite the late start to the tax season, the competition for business from an expected 140 million filers is unfolding as expected.

"It's a dog-eat-dog competitive environment as it has always been, but we continue to sharpen our game plan and feel good about where we are now," he said.

Intuit, the maker of TurboTax do-it-yourself tax software and QuickBooks small-business accounting software, has expanded beyond desktop software into delivering online services. It now offers 50 apps for tasks from tax preparation for households to small-business payroll processing, which is attracting customers.

The number of filers who have downloaded and filed taxes with Intuit SnapTax for smartphones is three times larger than last year, said Mr. Smith. Changes this year allow filers to begin preparation of a return on a smartphone, save it online and complete the filing on a PC, which is further increasing the appeal of SnapTax, he said.

"I think you will see mobile become an important part of the mix" of services customers use to file taxes, said Mr. Smith.

The company expects the shift online will trim sales of QuickBooks for desktop computing to decline 5% in unit sales and about 1% in revenue. That will be offset by mid-single digit percentage growth of online subscribers and a 10% increase in revenue.

A year ago the company purchased Demandforce for $423 million and its tools to automate marketing and customer communications for small businesses. Mr. Smith said Demandforce subscriptions were up 57% over the year and the company was in the "early days of our ability to cross sell" its services to QuickBooks customers.

The company raised its full-year earnings forecast, predicting a per-share profit of $3.40 to $3.46, above the $3.32 to $3.38 previously expected.

For the current quarter, it predicted earnings of $2.99 to $3.04 a share on revenue of $2.22 billion to $2.28 billion. Analysts surveyed by Thomson Reuters currently expect earnings of $2.94 a share on $2.25 billion in revenue.

Intuit has been reshaping its business, spinning off some low-margin business services to focus on higher-margin online services such as managing customer relations.

For the quarter ended Jan. 31, Intuit reported a profit of $71 million, or 23 cents a share, down from a year-earlier profit of $118 million, or 39 cents a share.

Operating profit fell 39% to $153 million, coming in just ahead of the company's lowered target of $145 million to $150 million.

Revenue fell 3.1%, to $968 million. Intuit this month cut its revenue view to $960 million to $965 million, citing the delayed tax season. It estimated Thursday that revenue growth would have been 10% without the delays.

Shares closed Thursday at $61.30 and were last up eight cents after hours at $61.38. The stock is up 3.1% so far this year.

Write to Steve Jones at steve-d.jones@dowjones.com and Mia Lamar at mia.lamar@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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Financials ($)
Sales 2017 5 049 M
EBIT 2017 1 712 M
Net income 2017 880 M
Finance 2017 257 M
Yield 2017 1,24%
P/E ratio 2017 31,52
P/E ratio 2018 27,01
EV / Sales 2017 5,46x
EV / Sales 2018 4,98x
Capitalization 27 811 M
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Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 115 $
Spread / Average Target 6,5%
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Brad D. Smith Chairman, President & Chief Executive Officer
R. Neil Williams Chief Financial Officer & Executive Vice President
Henry Tayloe Stansbury Chief Technology Officer & Executive VP
Scott D. Cook Director
Dennis D. Powell Independent Non-Employee Director
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