Intuit Aims to Add $1.7 Billion in Sales of Simpler Software
Intuit Inc. (INTU), the 30-year-old maker of tax and accounting software, is embarking on a customer- acquisition blitz to add $1.7 billion in sales in three years.
The company is simplifying questionnaires on tax- preparation software so that it demands less data up front, Chief Executive Officer Brad Smith said yesterday in an interview. It’s using plainer language to keep potential customers from dropping off before they file their returns and pay Intuit, he said.
Smith wants to increase the percentage of repeat users of products such as TurboTax or the Quicken personal-finance tool. The aim is to boost the return rate to 8 percent from 2 percent on the low end, add as many as 5 million customers and boost annual revenue by $1.7 billion over three years, Smith said.
“People coming in and filing their taxes want to first test-drive it and see that it’s easy,” Smith said. “We used to ask for things that were almost like asking for a pre-nup during the first date at a bar.”
Sales in the year that begins Aug. 1 may increase 10 percent to $4.63 billion, according to analysts’ predictions compiled by Bloomberg.
Aaron Patzer, the founder of Mint.com, which Intuit bought for $170 million in 2009, is coaching other managers on making their online software more user-friendly as well, Smith said.
Smith is keen to improve the company’s financial performance. Intuit’s fourth-quarter forecast missed analysts’ estimates.
Revenue of $1.95 billion in the fiscal third quarter, typically the company’s largest for sales and profit, came in at the low end of its forecasts. Revenue in the current fiscal year will rise 9.4 percent to $4.21 billion, analysts predict.
“I love working for a company that is seriously dissatisfied with revenue growth in the 9 to 10 percent range,” Chief Financial Officer Neil Williams said in a separate interview. “Most people are disappointed with where the year ended up.”
Intuit isn’t taking sufficient advantage of its ability to sell tax and accounting software customers other products from its broad lineup, said Peter Goldmacher, an analyst at Cowen & Co. in San Francisco.
Smith is also using acquisitions to move the Mountain View, California-based company beyond its roots in financial management and tax software, which account for about 70 percent of revenue. It’s bought seven companies in the past three years to diversify into mobile apps, Web banking and other areas.
Intuit spent $20 million in April for AisleBuyer LLC, a Boston-based software developer whose iPhone app lets shoppers scan bar codes on store shelves, then pay without waiting at the register. A month later it paid $423.5 million for Demandforce, an e-mail marketing company that lets dental offices, auto shops and spas book appointments and talk with customers through Facebook Inc. (FB) and Twitter Inc.
The company is also using acquisitions like Mint to enliven older franchises. This year, Intuit plans to introduce a redesigned version of Quicken that includes technology from Mint for tapping into the personal finance software from mobile devices.
“The world has shifted to the palm of our hand, or a tablet,” Smith said. “We hadn’t been investing in Quicken that way.” Intuit is also testing a version of Mint for small- business accounting and considering a version for banks that the software company could charge for, Smith said.
The company, founded in 1983 to harness emergent personal computers as a replacement for checkbook ledgers, grew largely through acquisitions. Its TurboTax business, which accounts for about a third of sales, resulted from a 1993 purchase of tax- prep software maker Chipsoft. Five years later Intuit bought Lacerte Software, a maker of tax programs for accountants.
“There’s a DNA part of Intuit over the years that grows through acquisitions,” said Williams. “It’s part of who we are.”
Not every deal has worked out. The company took a writedown on Medfusion, a maker of medical-office software bought for $91 million in 2010, after misreading the regulatory and competitive landscape, Smith said.
“That’s been a disappointment,” he said.
Smith has overseen a period of rising market value since taking the reins at the beginning of 2008. Shares of Intuit have climbed 57 percent in the past two years through yesterday. The stock 1.3 percent to $57.74 at 10:16 a.m. in New York.
To keep investors satisfied and eclipse Wall Street’s expectations for 9 percent to 10 percent growth in coming years, Intuit will need to turn more people who peruse its websites into paying customers and avoid acquisition missteps.
“At the end of the day, we have higher aspirations for how far up the double-digit chain we can go than what’s in the Street model,” said Smith. “But we have to deliver.”
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