Intuit Sales, Profit Top Estimates Aided by Mobile Tools
Intuit Inc. (INTU), the largest seller of personal-finance software, reported fiscal third-quarter sales and profit that topped analysts’ estimates as more customers used Web tools for tax-preparation and other tasks.
Profit excluding some items for the period, which ended in April, was $2.97 a share on sales of $2.18 billion, Mountain View, California-based Intuit said in a statement yesterday. That compares with analysts’ average projection for earnings of $2.93 a share on revenue of $2.17 billion, according to data compiled by Bloomberg.
Intuit Chief Executive Officer Brad Smith is trying to boost adoption of new tax and small-business products for Apple Inc. (AAPL)’s iPad and other mobile devices as the company’s core tax-filing business stagnates. TurboTax revenue this fiscal year will grow just 4 percent, hurt by an inability to boost online share and fewer Americans filing tax returns, Intuit said.
“They’ve got to step on the gas here,” said Brent Thill, an analyst at UBS AG in San Francisco who recommends buying the stock. “They’ve got an engine out in tax, and it’s a big piece of the business. It puts even more pressure on these other businesses to kick in.”
Smith has been adding services aimed at smartphone and tablet users to help boost the number of repeat customers and bolster revenue as consumers and small businesses cut software spending. New products, including a tax-filing application for Apple’s iPhone, online-marketing software for small businesses, and a new online version of QuickBooks accounting software for global users are attracting customers, he said on a conference call yesterday.
“These are a lot of smaller efforts that represent big opportunities,” said Brad Zelnick, an analyst at Macquarie Capital USA Inc. He has a neutral rating on the shares.
Yet TurboTax, which accounts for about a third of annual sales, has been dogged by competition from H&R Block Inc. (HRB), an overly complex user interface, and a decline in the number of U.S. tax filers, he said.
“It was a challenging tax season in almost every dimension,” Smith said. “TurboTax has to be drop-dead simple.”
Intuit cut its third-quarter sales and profit forecasts last month, citing a decline in tax returns filed as of April 12. The IRS didn’t start accepting electronic returns until Jan. 30, about two weeks later than usual, Intuit said.
CEO Smith is reckoning with a second straight year of tax software sales missing the company’s goals, and Intuit said May 20 it’s reorganizing into six new units starting Aug. 1, and that the managers of its small business and global business groups would retire after the end of the fiscal year in July.
Net income in the third quarter rose 12 percent to $822 million from $734 million a year earlier.
Profit excluding some items for the fiscal fourth quarter will be 3 cents to 7 cents a share, on sales of $702 million to $727 million, Intuit said. Analysts on average had projected earnings of 10 cents a share on revenue of $726.1 million, according to data compiled by Bloomberg.
Intuit’s shares rose 1.2 percent to $58.59 at the close in New York, leaving them down 1.5 percent this year.
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