10-QPeriod: Q1 FY2023

INTUIT INC. Quarterly Report for Q1 Ended Oct 31, 2022

Filed November 29, 2022For Securities:INTU

Summary

Intuit Inc. (INTU) reported its first quarter fiscal year 2023 results, with total net revenue reaching $2.6 billion, a 29% increase year-over-year. This growth was primarily driven by the Small Business & Self-Employed segment, which saw a significant 38% increase in revenue, bolstered by the inclusion of Mailchimp's performance. Despite strong revenue growth, operating income and net income saw substantial declines, down 61% and 82% respectively, largely due to increased expenses related to staffing, share-based compensation, marketing, and amortization of acquired intangible assets, as well as higher interest expenses. The company's strategic focus remains on its AI-driven expert platform, aiming to solve customer problems through an open platform, AI application, and incorporation of experts. While the Small Business & Self-Employed segment demonstrated robust performance, the Consumer and ProTax segments experienced seasonally light revenue, as expected. The Credit Karma segment showed modest revenue growth. Investors should note the significant investment in operating expenses, which impacted profitability this quarter, alongside a continued commitment to returning capital to shareholders through dividends and share repurchases.

Financial Highlights

52 data points
Beta

Revenue

$2.60B

Net Income

$40.00M

1.5% Net Margin

EPS (Diluted)

$0.14

Total Assets

$27.09B

Cash & Equivalents

$2.13B

Free Cash Flow

$251.00M

Financial Statements
Beta
Revenue$2.60B
R&D Expenses$625.00M
Operating Expenses$2.52B
Operating Income$76.00M
Interest Expense$49.00M
Net Income$40.00M
EPS (Basic)$0.14
EPS (Diluted)$0.14
Shares Outstanding (Basic)281.00M
Shares Outstanding (Diluted)284.00M

Key Highlights

  • 1Total net revenue increased by 29% year-over-year to $2.6 billion.
  • 2Small Business & Self-Employed segment revenue grew by 38%, largely driven by Mailchimp acquisition and strong Online Ecosystem performance.
  • 3Operating income decreased by 61% to $76 million, and Net income decreased by 82% to $40 million.
  • 4Diluted earnings per share (EPS) significantly decreased to $0.14 from $0.82 in the prior year period.
  • 5Operating expenses increased by 32% to $1.845 billion, driven by higher staffing, marketing, share-based compensation, and amortization costs.
  • 6Intuit continues to repurchase shares, authorizing up to $3.0 billion for stock repurchases as of October 31, 2022.
  • 7The company declared a quarterly cash dividend of $0.78 per share, reflecting a continued commitment to shareholder returns.

Frequently Asked Questions

Total net revenue increased by 29% year-over-year to $2.6 billion, primarily driven by strong performance in the Small Business & Self-Employed segment, which saw its revenue jump by 38%. This segment's growth was significantly boosted by the inclusion of revenue from the Mailchimp acquisition and continued growth in the Online Ecosystem, particularly QuickBooks Online Accounting and Online Services.

Despite robust revenue growth, operating income decreased by 61% and net income by 82%. This decline was primarily due to a substantial increase in operating expenses, which rose by 32%. Key drivers for this increase included higher costs for staffing, marketing, share-based compensation, and amortization of acquired intangible assets (particularly related to Mailchimp). Additionally, interest expense rose significantly due to a $4.7 billion term loan taken out in the prior year to fund the Mailchimp acquisition.

Intuit is focusing on becoming an AI-driven expert platform. Their strategy involves creating an open platform that integrates with partners, leveraging artificial intelligence to automate, predict, and personalize customer experiences, and incorporating human experts to build customer confidence. Key strategic priorities include revolutionizing speed to benefit, connecting people to experts, unlocking smart money decisions, being the center of small business growth, and disrupting the small business mid-market.

The acquisition of Mailchimp, completed in November 2021, is integrated into the Small Business & Self-Employed segment. In the first quarter of fiscal year 2023, Mailchimp contributed $264 million in revenue, significantly boosting the segment's overall growth. However, the acquisition also contributed to the increase in amortization of acquired intangible assets, impacting overall profitability.