April 13 (Bloomberg) -- Intuit Inc. is boosting sales of its financial-management and tax-preparation programs with online and mobile versions, helping make up for a slowdown in desktop software, Chief Executive Officer Brad Smith said.
The Mountain View, California-based company is expanding its Mint.com website and QuickBooks Online financial software internationally, and a new iPhone tax-prep application has garnered more than half a million downloads, Smith said in an interview yesterday.
The U.S. tax-filing season that ends next week will punctuate the most profitable quarter of the year for Intuit. Smith has been transforming the company from a maker of financial software for personal computers to a provider of websites, services and software that let consumers and small businesses manage money more efficiently. Intuit shares have gained 52 percent in the past year.
“Intuit has the most innovation they’ve had in their portfolio in five years,” said Brent Thill, an analyst at UBS AG in San Francisco, citing Intuit’s ability to sell additional products, such as programs for creating websites, managing payrolls and processing payments, to small-business customers that already use its accounting and tax software. Thill has a “neutral” rating on the shares and doesn’t own them.
In addition to homegrown technology, Intuit may turn to acquisitions to spur growth, Smith said. The company’s last purchase was in May 2010.
On Jan. 14, the company introduced a smartphone application called SnapTax, which lets 1040EZ filers take a photo of their W-2 forms to automatically fill out paperwork and file their taxes for $20. And Intuit is developing a version of its GoPayment credit card-swiping technology for tablet computers, including Apple Inc.’s iPad and Motorola Mobility Holdings Inc.’s Xoom. The hardware and software also can work with smartphones such as Apple’s iPhone to let small businesses more easily process credit-card transactions.
Smith, 47, also has embraced the Internet trend toward social computing. Intuit has expanded community features in TurboTax that let filers seek help from other users. It’s also introduced functions that let QuickBooks users compare their companies’ expenses and revenue to those of their peers.
By the end of the fiscal year in July, Intuit plans to expand Mint.com, the personal-finance website it acquired for $170 million in 2009, into Australia, New Zealand and the U.K., following its debut in Canada in December. This fall, a new release of QuickBooks accounting program will contain easier-to-use setup features that resemble those in Mint, Smith said.
“They’re helping us change the DNA of the company,” he said, referring to Mint, though it constitutes “an insignificant piece of the company’s overall revenue.”
More than a quarter of Intuit’s 250,000 QuickBooks Online users have signed up for the company’s online payroll software, Smith said.
“The move to online software -- that’s where the growth is,” said Peter Goldmacher, an analyst at Cowen & Co. in San Francisco. Last year, Intuit rang up $1.1 billion in online software sales, almost a third of overall revenue.
Intuit shares have jumped 68 percent since the beginning of 2008, when Smith took over as CEO. They rose 36 cents to $53.14 at 4 p.m. New York time on the Nasdaq Stock Market.
Small businesses are slowly increasing spending and hiring after the economic recession, Smith said.
“It’s been a protracted, sluggish recovery,” he said. “It will take us four years to get back to 2007 levels at this rate.”
Analysts surveyed by Bloomberg on average expect Intuit’s revenue to increase 10 percent in each of the next three fiscal years, compared with average 15 percent growth in 2006 to 2008.
Intuit is winning market share in desktop tax-preparation software, and along with competitor H&R Block Inc. is taking share from smaller companies in the online business, Smith said.
“When two bears start wrestling in the woods, sometimes the rabbits and squirrels get stomped,” Smith said.
Intuit may use acquisitions to further expand, assuming the deal is right, Smith said. Intuit could absorb three or four acquisitions within a period of a year, he said.
“If we can find the right opportunity for the right entrepreneur, we absolutely will look into acquisitions,” he said in a televised interview with “Bloomberg West.”
The software maker said in a March 17 statement that it had sold 16.2 million copies of TurboTax this tax season through March 12, 7 percent more than a year earlier. About two-thirds of those copies were TurboTax Online editions.
The company will give a third and final tax-season update after this year’s April 18 filing deadline. The Internal Revenue Service extended its tax-filing deadline from April 15 this year because of a District of Columbia holiday.
Intuit will reap 92 percent of its annual earnings and almost half of sales this quarter, analysts estimate. The company may earn $2.28 a share in the fiscal third quarter, which ends April 30, according to the average estimate of analysts surveyed by Bloomberg. That would be more than 20 percent higher than a year earlier. Analysts predict sales will increase 13 percent to $1.82 billion.
The company’s sales will rise 10 percent this year to $3.82 billion, according to analysts’ average estimates.
To contact the reporters on this story: Aaron Ricadela in San Francisco at email@example.com
To contact the editor responsible for this story: Tom Giles at firstname.lastname@example.org