INTU... nice quarter
Intuit Announces 28 Percent Revenue Growth in Its Third Quarter of Fiscal 2002
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--May 15, 2002--Intuit Inc. (Nasdaq:INTU - News) today announced the results for its third quarter of fiscal 2002, which ended April 30, 2002.
"Intuit delivered another outstanding quarter," said Steve Bennett, Intuit's president and chief executive officer. "Once again, Intuit continued to execute our strategy to penetrate under-served markets and drive profitability from volume leverage and operational rigor."
Intuit had strong growth in the quarter:
Revenue of $545.2 million was up 28 percent over the same period last year.
Pro forma operating income of $233.6 million was up 42 percent.
Pro forma earnings per share were $0.75, up 36 percent over third-quarter 2001.
On a GAAP basis (see Table A), Intuit reported net income of $144.5 million, or $0.67 per share, up from a loss of $14.3 million or a $0.07 loss per share in the third quarter of fiscal 2001. Last year's GAAP results included approximately $85 million more in acquisition-related charges than this year's third quarter.
Intuit's pro forma information, shown in Tables B1 and B2, is presented using the same consistent standards from quarter-to-quarter and year-to-year. Pro forma information is presented for informational purposes only to provide an alternative method of assessing the results of Intuit's core operating businesses. Pro forma operating income excludes acquisition-related charges, such as amortization of goodwill and intangibles and impairment charges, and amortization of purchased software and purchased research and development. Pro forma net income and earnings per share exclude gains and losses on marketable securities, gains and losses on divestitures and the tax effects of these transactions. The notes to Tables B1 and B2 describe the specific items excluded from pro forma results and the impact of those exclusions. Because there are no industry standards for presenting pro forma results, the method Intuit uses may differ from the methods used by other companies.
Strong Revenue Growth
Excellent performance in Intuit's small business and tax divisions -- the company's two largest businesses -- drove the strong third-quarter revenue growth.
In small business, Intuit began to see the initial results of executing its "Right for My Business" strategy in the third quarter:
QuickBooks-related revenue grew 36 percent over third-quarter 2001, driven by the success of the QuickBooks 2002 products.
End user unit purchases of QuickBooks 2002 were up about 30 percent over the same period last year for QuickBooks 2001.
Intuit saw an exceptionally strong shift to its direct channel (phone, mail and Web sales) -- 40 percent of units sold versus 25 percent in the prior year period. This was due to more QuickBooks unit upgrades, which are typically sold through the direct channel. This drove stronger profitability in the quarter because the direct channel is more profitable for Intuit.
The company's payroll business continued to post strong results in the third quarter:
The two QuickBooks-branded payroll businesses -- QuickBooks Basic and QuickBooks Deluxe -- had combined revenue growth of 38 percent year over year. The two businesses added approximately 100,000 customers over third-quarter 2001 for a total of 683,000.
Intuit's total payroll business, which includes the Premier service, had revenue growth of 25 percent over the prior-year period.
Intuit completed another record consumer tax season:
Consumer tax revenue was up 43 percent in the third quarter, and up 28 percent for the season.
The strong season performance was due to very solid unit growth, with 20 percent combined desktop and Web federal unit growth, for a total of 7.7 million units.
Growth was particularly strong in Web-based tax preparation, with paid federal units up 85 percent over last year's season for a total of 2.2 million.
Other Businesses
Quicken Loans revenue increased 24 percent from last year's third quarter. Intuit continues to expect Quicken Loans revenue to grow between 45 percent and 55 percent for the entire fiscal 2002 due primarily to strong first-half growth relative to the prior year. The company also had strong performance in its Canada operations, with revenue up 57 percent year over year. Revenue from Canada operations is expected to be up about 30 percent for the full year.
While Intuit had strong performance from its larger businesses, three of its smaller businesses didn't perform as well.
Intuit has taken a number of steps to improve the performance of its Quicken-related businesses, which represents approximately 8 percent of annual revenue. The company has reduced expenses in this business to mitigate the impact of lower revenue. To drive growth in the future, Intuit has signed an alliance with Siebert Financial Corp. to offer online and phone-based brokerage services to Quicken and Quicken.com customers.
Quicken's share of retail units remains above 70 percent, according to NPD Intelect data, despite a 20 percent decline in third-quarter revenue from Intuit's Quicken-related businesses that resulted from lower personal finance software category sales and lower ad revenue on Quicken.com. Intuit expects Quicken-related revenue to be down 10 percent for the fiscal year.
Revenue from the Japan business declined 17 percent in the third quarter and is expected to be down about 10 percent for the fiscal year due to difficult economic conditions, declining accounting software category sales and the discontinuation of QuickBooks in that country.
Revenue from Premier payroll was roughly flat for the quarter and is expected to be flat for the fiscal year, reflecting a change in focus of the major distribution partner for that service. Because Intuit is a private-label back-end provider of the Premier service, the company does not control customer acquisition. The Japan and Premier payroll businesses combined represent about 6 percent of Intuit's total annual revenue, so their impact is relatively minor.
Research and Development
Intuit continued to apply strategic rigor throughout the company to optimize the return on its resource investments. Intuit increased R&D spending in its highest growth businesses -- small business, consumer tax and professional tax -- by approximately 10 percent over the prior-year period. At the same time, the company decreased or stopped spending in less strategic areas and discontinued businesses. The net result was that the $53 million in third-quarter research and development spending was flat year over year, while positioning the company to achieve a better return on its investment.
Pro Forma Operating Income and EPS Guidance
Due to its strong third-quarter performance, the low end of Intuit's guidance ranges for revenue and pro forma operating income are being raised for fiscal 2002, which will end on July 31, 2002. New fiscal 2002 guidance is:
Revenue growth of 19-20 percent.
Pro forma operating income growth of 47-48 percent.
Pro forma earnings per share growth of 27-28 percent.
"Intuit delivered strong performance in fiscal 2001 and we expect another strong year for fiscal 2002. Looking forward, we expect to continue this trend in fiscal 2003, which starts Aug. 1, 2002," said Bennett. Fiscal 2003 guidance is:
Revenue growth of 17-22 percent.
Pro forma operating income growth of 30-35 percent.
Pro forma earnings per share growth of 25-30 percent.
Intuit's policy is to not confirm, update or otherwise comment on its financial projections except in compliance with Regulation FD.
The accompanying fact sheet has more details about Intuit's historical performance and financial projections. The projections in the guidance provided above are forward-looking statements and are subject to a number of risks and uncertainties as described below under the heading "Cautions about Forward-Looking Statements."
Information About Intuit's Seasonality
Intuit's financial results reflect the highly seasonal nature of its businesses, particularly its tax preparation and small business products and services. Intuit typically produces more than 100 percent of its annual profits in its second and third quarters combined. Intuit typically reports a loss in its first and fourth quarters when revenue from seasonal businesses is relatively lower, but operating expenses to develop new products and services continue at relatively consistent levels.
Because of this seasonality, annual results may provide a more meaningful way to compare Intuit's operating performance than quarter-over-quarter comparisons. In addition, the timing of product launches and customer buying patterns can vary from one year to the next, shifting revenue to different quarters within a year.
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