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Intuit Performs Despite SMB Woes

Posted on Thursday, Sep 1st 2011

Small and medium-sized businesses in the U.S. are rather pessimistic about the current economic conditions. In a recent survey of 1,719 CEOs of SMBs, 31% of the respondents surveyed expect the performance of the country’s economy to improve over the course of the year. A quarter ago, that number stood at nearly 50%. Most CEOs are worried about the lack of consumer demand, which is leading them to delay investment in plants, equipment, and people. Fifty-two percent of those surveyed confirmed plans of holding back on permanent hires and compared with 48% a quarter ago, and 42% of those surveyed said they planned to invest in new plants and equipment. Despite the dim outlook, accounting and tax software solutions provider Intuit (Nasdaq:INTU) continued to deliver strong business results driven by their continuous expansion into the SMB sector.

Intuit’s Financials
Intuit’s Q4 revenues grew 10% over the year to $0.59 billion, ahead of the Street’s target of $0.58 billion. They reported their first-ever profitable quarter this year with earnings of $0.02 per share compared with a net loss of $0.05 suffered a year ago. The company ended the year with revenues rising 11% over the year to $3.85 billion, while earnings grew 19% over the year to $2.51.

Despite the recession, Intuit’s Small Business segment has been reporting consecutive growth. Over the past five years, SMB revenues have grown 9% annually with a 12% growth rate reported for last year and a 10% rate reported for the last quarter. Within Small Business, Financial Management Solutions revenues grew 12% for the quarter driven by growth in QuickBooks Online and Enterprise Solutions. Employee Management Solutions for the SMBs grew 5% for the quarter, while Payroll customers grew 2% for the year.

During the quarter, Intuit bought back $250 million of stock and announced that their board had approved a $2 billion stock repurchase program valid through August 2014. This was the first quarter ever that Intuit declared a dividend. The company announced a payout of $0.15 per share for the quarter.

Intuit expects the current quarter revenues to be $0.58 billion-$59 billion, with a non-GAAP loss of $0.11-$0.13 per share. The Street was looking for revenues of $0.58 billion with a loss of $0.11 per share. The company projected the current fiscal revenues to be in the range of $4.19 billion-$4.29 billion with non-GAAP profits of $2.85-$2.94 a share. The market was looking for revenues of $4.20 billion for the year with earnings of $2.84 a share.

Intuit’s Mobile Expansion
Intuit continued to expand their mobile reach and recently announced the acquisition of Mobile Money Ventures. San Mateo–based Mobile Money Ventures was founded in 2008 and provides customers with access to mobile platform for an online banking solution. Through the acquisition, Intuit hopes to expand innovation to the financial institution customers at a faster pace as they will be able to directly manage customer support and will have full control over the design of its mobile Web banking solutions.

Intuit has seen good traction within the mobile segment in the recent quarters. The Intuit Financial Services subscribers using mobile banking solutions reportedly tripled over the past year, and they claim that more than 50% of their Canada-based Mint users now access the service through a mobile device.

Intuit’s stock is trading at $48.73 with a market capitalization of $14.72 billion. It touched a 52-week high of $56.46 in May of this year.

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