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Cloud Stocks: Intuit’s QBO Scores Big

Posted on Tuesday, Nov 26th 2019

Intuit last week reported a strong first quarter that beat analyst estimates driven by 41% growth of QuickBooks Online (QBO) in its Small Business and Self-Employed Group segment.

Intuit’s Financials

Intuit’s first quarter revenues grew 15% over the year to $1.2 billion, beating analyst estimates of $1.12 billion. Adjusted EPS was $0.41, which was also better than analyst estimate of $0.26. A year ago, Intuit had reported revenues of $1.016 billion and earnings of $0.29 per share.

By segment, Small Business and Self-Employed Group revenues grew 15% to $1 billion. Within the segment, Online Ecosystem revenues grew 35% to $501 million driven by 41% growth of QBO to $306 million and Desktop Ecosystem grew 1.5% to $545 million. Revenue from the Consumer segment grew 11% to $100 million and Strategic Partner segment grew 5.5% to $19 million. Grew total international online revenue over 60 percent.

During the first quarter, the company repurchased $139 million of shares, with $2.5 billion remaining in its share repurchase authorization. It received Board approval for a quarterly dividend of $0.53 per share.

For the second quarter, Intuit forecast revenue growth of 11% to 13% or $1.665-$1.695 billion with adjusted EPS of $1.00-$1.03. Analysts expect Q2 revenues of $1.66 billion and EPS of $1.14.

Intuit reiterated its full year guidance for fiscal 2020. It expects to end the year with revenues of $7.44-$7.54 billion and an EPS of $7.50-$7.60. The Street was expecting revenues of $7.42 billion for the year with an EPS of $7.55.

Intuit’s Strategic Bets

Intuit is investing in five strategic areas: AI and machine learning for increased efficiency, platform to connect people and businesses to experts, tools to unlock smart money decisions, help in the growth of small businesses, and disrupt the small business mid-market with QBO Advanced.

To this end, it recently launched QuickBooks Live for connecting small businesses with live experts. This offering aims to increase its small business customers’ confidence, helping them get set up, close their books each month, and ensure their records are accurate and up to date.

Intuit recently introduced credit score goal setting and payment history tracking in Turbo app to help customers improve their credit score and their overall financial health.

It announced a cash flow planner to help its small business customers make better decisions as they grow. It is designed to automatically alert business owners when a negative cash flow situation is on the horizon and provide recommendations on how to navigate the situation. It also announced receipt capture in the mobile app and enhanced mileage tracking to enable its customers to automatically deduct expenses seamlessly. Over time, the company expects to transform omni-channel commerce and benefit customers who sell products through multiple channels.

Intuit also extended eligibility for QuickBooks Capital to desktop customers. QuickBooks Capital has funded $522 million in cumulative loans since being launched two years ago. At the end of the first quarter, the net loans receivable balance was $96 million.

For QBO Advanced, it recently introduced a revenue streams dashboard that allows customers to easily compare revenue across product, services, projects, customers and employees and other attributes to better understand their business performance.

Its stock is trading at $257.07 with a market cap of $66.92 billion. It had soared to a record high of $295.77 in September. It had fallen to a 52-week low of $182.61 in December last year.

This segment is a part in the series : Cloud Stocks


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