10-QPeriod: Q1 FY2014

INTUIT INC. Quarterly Report for Q1 Ended Oct 31, 2013

Filed November 22, 2013For Securities:INTU

Summary

Intuit Inc. reported a net loss of $11 million ($0.04 per share) for the three months ended October 31, 2013, compared to a net loss of $19 million ($0.06 per share) in the prior year period. This improved net loss was driven by an increase in net revenue to $622 million from $562 million in the prior year quarter, primarily due to strong performance in the Small Business segment. The company also completed the sale of its Intuit Financial Services (IFS) and Intuit Health businesses during this period, reclassifying them as discontinued operations, which contributed positively to the net income from discontinued operations. Despite a year-over-year increase in operating loss from continuing operations to $77 million from $73 million, the company's strategic focus on core offerings and ongoing investments in product development are evident. Key financial activities during the quarter included a significant acceleration in stock repurchases, with $1.4 billion spent on treasury stock purchases, alongside continued dividend payments. The company maintains a solid liquidity position with $1.1 billion in cash, cash equivalents, and investments at the end of the quarter. Investors should note the ongoing seasonal nature of Intuit's business, with the first quarter typically being a loss-generating period, and the continued strategic shift towards connected services, which now represent 64% of total revenue.

Financial Highlights

53 data points
Beta

Revenue

$565.00M

76.5% Gross Margin

Net Income

-$11.00M

-1.9% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$4.07B

Cash & Equivalents

$417.00M

Free Cash Flow

-$237.00M

Financial Statements
Beta
Revenue$565.00M
Cost of Revenue$133.00M
Gross Profit$432.00M
R&D Expenses$176.00M
Operating Expenses$509.00M
Operating Income-$77.00M
Interest Expense$8.00M
Net Income-$11.00M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)288.00M
Shares Outstanding (Diluted)288.00M

Key Highlights

  • 1Total net revenue increased by 11% to $622 million year-over-year, driven by 11% growth in the Small Business segment.
  • 2The company reported a net loss of $11 million, an improvement from a net loss of $19 million in the prior year period.
  • 3Completed the sale of Intuit Financial Services (IFS) and Intuit Health businesses, classifying them as discontinued operations.
  • 4Significant stock repurchase activity, with $1.4 billion spent on treasury stock purchases during the quarter.
  • 5Operating loss from continuing operations widened slightly to $77 million from $73 million, attributed to accelerated spending in customer data strategy and small business marketing.
  • 6Cash, cash equivalents, and investments stood at $1.1 billion at the end of the quarter, though this represented a decrease from the prior quarter due to cash used in stock repurchases and divestiture proceeds.
  • 7Connected services revenue accounted for 64% of total revenue, highlighting the company's strategic shift.

Frequently Asked Questions

Intuit reported an improved net loss of $11 million for the three months ended October 31, 2013, compared to a net loss of $19 million in the same period last year. This improvement was supported by an 11% increase in total net revenue to $622 million, primarily driven by the Small Business segment. However, the company experienced an increased operating loss from continuing operations, which rose to $77 million from $73 million, due to accelerated spending on marketing and data strategy.

The most significant change was the completion of the sale of Intuit Financial Services (IFS) and Intuit Health businesses, which have been reclassified as discontinued operations. This strategic divestiture reflects Intuit's focus on its core offerings for small businesses, consumers, and accounting professionals. The company also continued its strategic shift, with connected services now making up 64% of total revenue.

Intuit actively managed its capital through significant stock repurchase programs, spending $1.4 billion on treasury stock purchases. The company also continued to pay quarterly cash dividends. Despite these outflows, Intuit maintained a strong liquidity position with $1.1 billion in cash, cash equivalents, and investments at the end of the quarter, although this amount decreased from the prior quarter due to the cash used in these activities.

Intuit's business is highly seasonal, particularly its tax-related products. The first quarter (ending October 31) is typically a period of lower revenue and operating losses, as the tax season's revenue is concentrated in later quarters. The company's financial performance in this quarter should be viewed in the context of this seasonality, with more meaningful trends often observed on a year-to-date basis for its seasonal businesses.