Intuit Swings to 4th-Quarter Profit; Raises Dividend 13%
08/21/2012| 06:01pm US/Eastern
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--Small business key focus of change
--Exploring several opportunities to serve small business
--Recurring revenue made up 64% of revenue in 4Q
By Steven D. Jones and Tess Stynes
Intuit Inc.(>> Intuit Inc.) posted a fiscal fourth-quarter profit on strong demand for its small-business services tempered by a number of changes to the business mix and a modest outlook for the coming year.
The maker of TurboTax and QuickBooks is spinning off some low-margin business services to focus on higher-margin online services such as managing customer relations.
Intuit raised its quarterly dividend 13% to 17 cents a share, but in after-hours trading the shares fell 0.9% to $58.40.
During the quarter, Mountain View, Calif.-based Intuit sold its corporate banking business to instead focus on delivering online services that help small businesses serve customers. Customer service is a pressing problem for small companies and Intuit sees profit in meeting that need.
"There are still a number of opportunities to help small businesses manage that front office experience," Chief Executive Brad Smith said on the earnings call. "You will continue to see us test things for use in the front office."
Intuit typically reports weaker fiscal fourth-quarter results during the off-season for tax filers, but sales of its online consumer products and small-business services are spreading the revenue out over more of the year.
Intuit's top line continues to benefit as more businesses and consumers adopt do-it-yourself tax filing, a trend that gained momentum during the recession. Revenue in the company's core consumer tax segment grew 16% in the quarter and 11% for fiscal 2012.
The company has begun delivering its small-business accounting and payroll products online rather than software packages installed on customers' computers. It also offers some services through a partnership with Salesforce.com Inc. (>> salesforce.com, inc.) that allows it to target small businesses with cloud-computing options--products all delivered over the Web.
Intuit's recurring revenue from software delivered as a service grew to 64% of total revenue in the past year. Mr. Smith said he expected that to grow to 75% of revenue by 2015.
For the year, the company projected per-share earnings of $3.32 to $3.38 on revenue of $4.55 billion to $4.65 billion. Analysts polled by Thomson Reuters recently expected $3.37 billion and $4.62 billion, respectively.
For the current quarter, the company forecast a loss of six to seven cents on revenue of $630 million to $640 million. Analysts polled by Thomson Reuters most recently expected a loss of eight cents a share on revenue of $653 million.
The company recently closed its $423.5 million acquisition of software company Demandforce. The company's email, mobile and social tools--which include online reviews--help small businesses automate marketing and customer communications.
For the quarter ended July 31, Intuit reported a profit of $4 million, or a penny a share, from a year-earlier loss of $57 million, or 19 cents a share. Excluding acquisition impacts, contributions from its websites business that it is in the process of selling, asset write-downs and other items, earnings from continuing operations rose to three cents from two cents.
Revenue increased 14% to $651 million.
Intuit in May projected per-share earnings of five cents to seven cents on revenue of $647 million to $662 million.
Revenue at its small-business segment, its largest business, improved 19%, led by growth of 31% in its payments segment. The payments business revenue growth was attributed to fee structure changes, higher total card-transaction volume and growth in merchants.
Revenue from the company's consumer-tax unit grew 16%.
Write to Steven D. Jones, Dow Jones Newswires, 360-834-1865, steve-d.jones@dowjones.com and Tess Stynes at tess.stynes@dowjones.com.
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