Open Platform Strategy Stands Intuit In Good Stead

It is tax season and initial reports suggest that there may be a slowdown in the e-filings. According to the IRS data through February 8th, the total e-filed returns fell 7.1% and assisted e-files fell 12.5% over the year. The new tax legislation and the extended partial government shutdown is expected to have impacted consumer behavior. But the slowdown has not stopped Intuit’s (NASDAQ: INTU) stock from soaring to a record high post its second-quarter results announcement.

Intuit’s Financials

Intuit’s second-quarter revenues grew 12% over the year to $1.5 billion, better than the market expectations of $1.48 billion. It recorded a net income of $189 million, or $0.72 a share compared with an income of $183 million recorded a year ago. Adjusted EPS grew 19% over the year to $1 and outpaced the Street’s forecast of $0.68.

During the quarter, Services and Other revenues grew 20% to $969 million and product revenues increased 0.8% to $533 million.

By segment, Small Business and Self-Employed Group revenues grew 17% over the year driven by 38% growth in subscribers for Quickbooks Online. Intuit ended the quarter with more than 3.9 million subscribers to the service. For the quarter, Self-Employed subscribers increased to 845,000 from 489,000. Online ecosystem revenues grew 38% over the year with US-based subscribers of QuickBooks Online growing 32% to 2.9 million. International subscribers grew 56% to more than 980,000.

For the current quarter, Intuit forecast an adjusted EPS of $5.35-$5.40 on revenues of $3.21-$3.26 billion. The market was looking for earnings of $5.39 per share on sales of $3.18 billion. Intuit expects to end the current year with revenues of $6.53-$6.63 billion with an EPS of $6.40-$6.50. The midpoints were short of the market’s forecast of revenues of $6.63 billion and an EPS of $6.51.

Intuit’s Product Expansion

Intuit continued to focus on the development of its platform for both consumers and small businesses. For the consumers, it is focusing on transforming the assisted tax preparation category and expanding beyond tax to build a consumer platform. Within do-it-yourself, it has added capabilities that allow customers who file simple returns to see year-over-year data for no extra charge. In the assisted tax category, it is improving the customer experience with TurboTax Live that has a range of price points to offer customers mobile access to an expert. It has also improved the onboarding experience and tools for the 2,000 professionals that are accessible to consumers on its platform. Beyond tax, its consumer platform is helping customers make ends meet. Based on an agreement with the customer, Turbo provides them with a view of their overall financial health by combining a credit score, verified income data, and debt to income ratio so that the customers can connect with the financial products that meet their financial goals.

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