10-QPeriod: Q3 FY2019

INTUIT INC. Quarterly Report for Q3 Ended Apr 30, 2019

Filed May 23, 2019For Securities:INTU

Summary

Intuit Inc. reported solid financial performance for the third quarter and the first nine months of fiscal year 2019, with total net revenue growing 12% year-over-year for both periods. This growth was driven by strong performance in the Small Business & Self-Employed segment, particularly its Online Ecosystem, and continued strength in the Consumer segment, benefiting from a favorable product mix and increased TurboTax unit volume. The company demonstrated effective cost management, leading to an 11% increase in operating income for the quarter and a 14% increase year-to-date. Diluted earnings per share also saw significant increases of 15% for both periods, supported by revenue growth and a favorable effective tax rate, partly due to the Tax Cuts and Jobs Act. Financially, Intuit maintained a strong liquidity position with $3.3 billion in cash, cash equivalents, and investments as of April 30, 2019. The company continued to return value to shareholders through significant stock repurchases and dividends. Management's strategic focus on personalized experiences, a trusted open platform, and indispensable connections within its 'One Intuit Ecosystem' appears to be resonating with customers and driving growth across its key segments. Investors can look forward to continued investment in innovation and customer-centric solutions as Intuit navigates a dynamic technology landscape.

Financial Highlights

53 data points
Beta

Revenue

$3.27B

89.2% Gross Margin

Net Income

$1.38B

42.1% Net Margin

EPS (Diluted)

$5.22

Total Assets

$6.92B

Cash & Equivalents

$2.95B

Free Cash Flow

$2.20B

Financial Statements
Beta
Revenue$3.27B
Cost of Revenue$354.00M
Gross Profit$2.92B
R&D Expenses$311.00M
Operating Expenses$1.13B
Operating Income$1.78B
Interest Expense$4.00M
Net Income$1.38B
EPS (Basic)$5.30
EPS (Diluted)$5.22
Shares Outstanding (Basic)260.00M
Shares Outstanding (Diluted)264.00M

Key Highlights

  • 1Total net revenue increased 12% year-over-year for both the three and nine months ended April 30, 2019.
  • 2Small Business & Self-Employed segment revenue grew significantly, driven by the Online Ecosystem, with QuickBooks Online subscribers up 32%.
  • 3Consumer segment revenue saw an 11% increase year-over-year for the nine months, supported by a favorable product mix and increased TurboTax units.
  • 4Diluted net income per share rose 15% for both the quarter and the nine-month period, reflecting strong operational performance and effective tax rate management.
  • 5The company maintained a healthy liquidity position with $3.3 billion in cash, cash equivalents, and investments as of April 30, 2019.
  • 6Intuit continued its commitment to shareholder returns with substantial stock repurchases and consistent dividend payments.
  • 7Effective tax rate improved, partly due to the Tax Cuts and Jobs Act, contributing to net income growth.

Frequently Asked Questions

Revenue growth was primarily driven by the Small Business & Self-Employed segment, particularly its Online Ecosystem, which saw a 38% increase in the third quarter due to subscriber growth in QuickBooks Online and other online services. The Consumer segment also contributed with an 11% increase, attributed to a shift towards higher-end product offerings, growth in TurboTax federal units, and an improved average revenue per customer.

While total operating expenses increased by 13% in the third quarter, they grew at a slightly slower pace than revenue (12%). This controlled expense growth, along with higher revenue, led to an 11% increase in operating income for the quarter. The effective tax rate also decreased, partly due to the Tax Cuts and Jobs Act, which further boosted net income growth. Diluted net income per share increased by 15% year-over-year for the quarter.

Intuit ended the period with a strong liquidity position, reporting $3.3 billion in cash, cash equivalents, and investments as of April 30, 2019. The company generated significant cash flow from operations and has access to credit facilities. Management expects these resources to be sufficient to meet operating needs, capital expenditures, and debt obligations for at least the next 12 months, while continuing to return capital to shareholders through repurchases and dividends.

Intuit's Consumer and Strategic Partner segments experience significant seasonality, with revenue heavily concentrated between November and April due to tax preparation products. The company's financial results naturally reflect this pattern, with higher revenues expected in the second and third quarters. While the seasonality remains a factor, the company's diversification across segments, especially the growth in its Small Business & Self-Employed segment which is less seasonal, helps to mitigate the overall impact.