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Intuit Needs An Emerging Market Strategy

Posted on Thursday, May 26th 2011

Earlier this year, Credit Suisse reported that the total digital units for H&R Block for year-to-date figures for the tax season 2011 grew 7% over the year, while Intuit reported a much smaller 1% gain in total digital units. More recent data showed that H&R Block’s online units grew 27% compared with 6% for Intuit. Statistics show that Intuit lost market share to H&R Block, but the company still managed to surpass analyst expectations for the quarter.

Intuit’s Financials
Intuit’s (NASDAQ:AMZN) Q3 revenues 15% over the year to $1.85 billion. By segment, product revenues grew 7% over the year to $0.60 billion and Services and Other revenues grew 20% over the year to $1.25 billion. The Street was projecting revenues of $1.82 billion. EPS of $2.33 also beat the market’s expectations of $2.27. They repurchased $250 million worth of stock during the quarter.

Intuit projected revenues of $0.57 billion to $0.59 billion with a loss of $0.02 per share to earnings of $0.02 per share. Analysts were expecting revenues of $0.59 billion and a loss of a cent per share. It expects to end the year with revenues of $3.83 billion to $3.85 billion and loss per share to be $2.45 to $2.50.

Intuit’s Mobile Expansion
Intuit claims to be establishing a leadership position within the mobile computing space in its segment. Within the financial services segment, the number of its active mobile banking users doubled over the past year to over 700,000. Their mobile banking solutions include Text Message Banking and Consumer Mobile Web Banking with features that let users access balances, history, transfers and pay bills. Intuit has continued to build on its position and recently launched a SnapTax app for smartphones and a TurboTax app for iPad. SnapTax allows taxpayers who use 1040-EZ forms to file taxes via their iPhone or Android-based mobile devices.

For small businesses, Intuit recently unveiled a GoPayment app, a technology that uses near-field communication and lets small businesses process customer credit cards through a tap of two smartphones. Additionally, it released an Intuit Online Payroll Mobile app that lets employers and professionals run payroll on the move. It is also working on developing a version of their GoPayment card reader for tablets, including the iPad and Motorola’s Xoom.

Intuit’s International Expansion
As part of its growth plan, Intuit is working on expanding its geographical footprint. During the quarter, it launched QuickBooks Online outside the United States, in the U.K. and Singapore. For QuickBooks Desktop, it became the best-selling small business financial software at retail in the U.K. and Canada. The company also launched its online money managing solution, Mint.com, in Canada and claims to be seeing good traction with it.

Intuit Ties up with Salesforce.com
To continue its growth in the SMB segment, Intuit tied up with Salesforce.com to offer CRM and financial management solutions on a single platform. Through the agreement, Salesforce.com will integrate QuickBooks Online accounting applications into its CRM Software-as-a-Service offering and the product will be resold through Intuit’s online App Center.

Intuit’s stock is trading at $53.07 with a market capitalization of $16 billion. It touched a five-year high of $56.46 earlier this month. With the global SME sector surging, especially in the emerging markets, Intuit could do well with a focused international strategy. However, I don’t think its emerging market strategy is quite in place yet.

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