Intuit Swings to 4th-Quarter Profit; Raises Dividend 13%
08/21/2012| 08:01pm US/Eastern
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--Online services key focus of change
--Exploring several opportunities to serve small business
--Recurring revenue made up 64% of revenue in 4Q
(Adds comments from interview with CEO.)
By Steven D. Jones and Tess Stynes
Software maker Intuit Inc. (>> Intuit Inc.) swung to a profit in its fiscal fourth quarter as strong demand for its small-business services was tempered by changes to the company's business mix and a modest outlook for the coming year.
Intuit's top line benefited as more businesses and consumers adopt do-it-yourself accounting and 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, and revenue in its small business group grew 19% for the quarter and 14% for the year.
Still, the maker of TurboTax and QuickBooks is changing its mix of services, spinning off some low-margin business services to focus on higher-margin online services such as managing customer relations. Businesses slated for sale contributed 12 cents to per-share earnings in the quarter. Without them, Intuit's continuing operations would have lost 11 cents a share.
Intuit raised its quarterly dividend 13% to 17 cents a share, but in after-hours trading shares fell 2.4% to $57.52.
In an interview, Chief Executive Brad Smith said Mountain View, Calif.-based Intuit was pushing more aggressively into foreign markets and delivering services, like QuickBooks, online, which it now offers in 70 countries. The global edition allows customers to open a subscription in the language of their choice using a translation service from Google Inc. (>> Google Inc). It also partners with developers in countries around the world to tailor the product to regional needs.
"Accounting is 70% global and 30% local," Mr. Smith said. "Fundamentally, we believe that the best way to expand globally is to develop a platform as a service that can be customized to the market."
To help investors gauge its global progress, Intuit will start sharing global customer counts as part of quarterly earnings, he said.
For the quarter ended July 31, Intuit reported a profit of $4 million, or a penny a share, compared with a loss of $57 million, or 19 cents a share, a year earlier. Revenue increased 14% to $651 million.
Excluding items, earnings from continuing operations rose to three cents from two cents. In May, Intuit projected per-share earnings before items of five cents to seven cents on revenue of $647 million to $662 million.
As Intuit expands globally, the company is developing online tools to give QuickBooks customers social media tools to manage relationships and increase repeat business. The company recently acquired Demandforce for $423.5 million to provide email, mobile and social tools to help small businesses automate marketing and customer communications.
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.
"There are still a number of opportunities to help small businesses manage that front-office experience," Mr. Smith said on the earnings call. "You will continue to see us test things for use in the front office."
During the current quarter, the company is combining its Mint personal finance Web site with its Intuit Financial Services business, which is designed to help small business owners analyze and manage assets. In the coming year, Intuit expects revenue for the financial services group to climb 6% to 9% even after sale of the banking business.
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 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.
Write to Steven D. Jones at steve-d.jones@dowjones.com and Tess Stynes at tess.stynes@dowjones.com
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