10-QPeriod: Q3 FY2013

INTUIT INC. Quarterly Report for Q3 Ended Apr 30, 2013

Filed May 30, 2013For Securities:INTU

Summary

Intuit Inc. reported strong financial performance for the nine months ended April 30, 2013, with total net revenue increasing by 8% to $3.8 billion compared to the prior year period. This growth was primarily driven by the Small Business Group and the Consumer Tax segment. The Small Business Group saw a 17% revenue increase, bolstered by connected services and the acquisition of Demandforce. The Consumer Tax segment grew 5%, with a 4% increase in paid federal units. Operating income from continuing operations rose by 4% to $1.3 billion, despite higher operating expenses related to staffing, marketing, and a $46 million goodwill and intangible asset impairment charge in the Intuit Health business. Net income from continuing operations increased by 5% to $842 million, resulting in diluted earnings per share (EPS) from continuing operations of $2.78, a 7% increase year-over-year. The company ended the period with a robust cash position of $2.0 billion and maintained significant authorization for stock repurchases, underscoring a commitment to returning capital to shareholders.

Financial Highlights

54 data points
Beta

Revenue

$2.09B

93.1% Gross Margin

Net Income

$822.00M

39.3% Net Margin

EPS (Diluted)

$2.71

Total Assets

$5.81B

Cash & Equivalents

$1.41B

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$2.09B
Cost of Revenue$145.00M
Gross Profit$1.95B
R&D Expenses$166.00M
Operating Expenses$664.00M
Operating Income$1.28B
Interest Expense$8.00M
Net Income$822.00M
EPS (Basic)$2.77
EPS (Diluted)$2.71
Shares Outstanding (Basic)297.00M
Shares Outstanding (Diluted)304.00M

Key Highlights

  • 1Total net revenue for the first nine months of fiscal 2013 increased 8% to $3.8 billion, driven by growth in the Small Business Group (17%) and Consumer Tax (5%).
  • 2Operating income from continuing operations grew 4% to $1.3 billion, reflecting revenue increases partially offset by higher operating expenses, including a $46 million impairment charge for Intuit Health goodwill and intangibles.
  • 3Diluted earnings per share (EPS) from continuing operations increased 7% to $2.78 for the nine-month period.
  • 4The company ended the period with $2.0 billion in cash, cash equivalents, and investments, demonstrating strong liquidity.
  • 5Significant stock repurchase programs were active, with $292 million spent in the first nine months of fiscal 2013, and $1.4 billion authorized for future repurchases.
  • 6Connected services revenue continues to be a strategic focus, representing 64% of total revenue in fiscal 2012 and expected to grow as a percentage of total revenue.
  • 7Seasonality remains a key factor, with the third quarter ending April 30 contributing significantly to annual revenue, partly due to tax season acceleration.

Frequently Asked Questions

For the nine months ended April 30, 2013, Intuit reported an 8% increase in total net revenue, reaching $3.8 billion. Key drivers included strong performance in the Small Business Group, which grew 17% due to connected services and the Demandforce acquisition, and the Consumer Tax segment, which grew 5% driven by increased paid federal units.

Profitability showed improvement, with operating income from continuing operations increasing by 4% to $1.3 billion and net income from continuing operations rising by 5% to $842 million. Diluted EPS from continuing operations grew 7% to $2.78. These increases were achieved despite a 46% rise in operating expenses, which included investments in staffing, marketing, and a $46 million impairment charge related to the Intuit Health business. Lower interest expense also contributed positively.

Intuit maintained a strong liquidity position, ending the period with $2.0 billion in cash, cash equivalents, and investments. The company actively engaged in returning capital to shareholders through stock repurchases, spending $292 million in the nine-month period and retaining $1.4 billion in authorization for future buybacks. They also continued to pay quarterly cash dividends.

Intuit's main segments are Small Business Group, Tax, Financial Services, and Other Businesses. The Small Business Group saw significant growth (17%), driven by Financial Management Solutions and Employee Management Solutions. The Tax segment (Consumer Tax and Accounting Professionals) also performed well, with Consumer Tax revenue up 5%. Financial Services grew 5%, and Other Businesses revenue was flat. The company noted a strategic realignment to focus on small business and tax solutions.