10-QPeriod: Q2 FY2019

INTUIT INC. Quarterly Report for Q2 Ended Jan 31, 2019

Filed February 22, 2019For Securities:INTU

Summary

Intuit Inc. reported solid financial performance for the second quarter and first half of fiscal year 2019, demonstrating robust top-line growth driven by its Small Business & Self-Employed segment, particularly its Online Ecosystem offerings. Total net revenue increased by 12% year-over-year for both the quarter and the year-to-date period, reaching $1.5 billion and $2.5 billion, respectively. This growth was complemented by a notable increase in operating income, up 20% for the quarter and 40% year-to-date, reflecting effective cost management and operational efficiencies. Net income also saw positive movement, growing 3% for the quarter and 23% year-to-date, resulting in diluted earnings per share of $0.72 and $0.84 for the respective periods. The company's strategic focus on its One Intuit Ecosystem, emphasizing personalized experiences, a trusted open platform, and indispensable connections, appears to be resonating with customers and driving sustained growth across its key segments.

Financial Highlights

52 data points
Beta

Revenue

$1.50B

81.0% Gross Margin

Net Income

$189.00M

12.6% Net Margin

EPS (Diluted)

$0.72

Total Assets

$5.33B

Cash & Equivalents

$1.07B

Free Cash Flow

$296.00M

Financial Statements
Beta
Revenue$1.50B
Cost of Revenue$285.00M
Gross Profit$1.22B
R&D Expenses$295.00M
Operating Expenses$984.00M
Operating Income$233.00M
Interest Expense$4.00M
Net Income$189.00M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)260.00M
Shares Outstanding (Diluted)264.00M

Key Highlights

  • 1Total net revenue increased by 12% to $1.5 billion for the second quarter of fiscal 2019 and by 12% to $2.5 billion for the first six months, compared to the prior year periods.
  • 2Operating income grew significantly, up 20% year-over-year for the quarter to $233 million and 40% year-over-year for the six months to $223 million.
  • 3Net income rose by 3% to $189 million for the quarter and 23% to $223 million for the six months, demonstrating improved profitability.
  • 4Diluted earnings per share (EPS) improved to $0.72 for the quarter and $0.84 for the six months, up from $0.70 and $0.70 respectively in the prior year.
  • 5The Small Business & Self-Employed segment was a key growth driver, with total segment revenue increasing 17% for the quarter and 14% year-to-date, largely fueled by a 38% surge in Online Ecosystem revenue.
  • 6The company repurchased approximately 1.3 million shares for $278 million during the first six months of fiscal 2019, indicating a commitment to returning capital to shareholders.
  • 7Intuit's cash position remains strong, with cash, cash equivalents, and investments totaling $1.3 billion at the end of the period, supporting ongoing operations and strategic initiatives.

Frequently Asked Questions

Intuit's revenue growth was primarily driven by its Small Business & Self-Employed segment, particularly the Online Ecosystem, which saw a 38% increase in revenue. The Consumer segment also contributed positively due to a shift towards higher-end product offerings.

Intuit adopted Topic 606 effective August 1, 2018, restating prior periods. The adoption primarily impacted the timing and amount of revenue recognized for QuickBooks Desktop and consumer/professional tax desktop solutions, leading to a decrease in deferred revenue and changes in how certain revenues were recognized over time versus at delivery. The company noted a decrease in deferred revenue and long-term deferred income taxes upon adoption.

Intuit continued its stock repurchase program, with authorization for up to an additional $3.0 billion remaining at the end of the period. The company also continued to pay quarterly cash dividends, declaring $0.94 per share for the first six months of fiscal 2019. Management expects to continue these capital return activities, subject to Board approval and business needs.

Intuit has a $1.5 billion credit facility, including a $500 million unsecured term loan and a $1 billion unsecured revolving credit facility. As of January 31, 2019, $413 million was outstanding under the term loan, with no amounts outstanding on the revolving credit facility. The company was in compliance with its debt covenants and expects its existing liquidity to be sufficient for its needs over the next 12 months.