Tax software provider Intuit (NASDAQ: INTU) recently announced its fourth-quarter earnings that surpassed market expectations. The company is continuing to build on its products internally and through acquisitions to drive growth.
Revenues for the fourth quarter increased 83.1% to $1.82 billion, surpassing the market’s expectations by 15.6%. On an adjusted basis, EPS was $1.81 compared with the market’s forecast of $1.21 for the quarter.
By segment, Small Business and Self-Employed Group revenue grew 16% to $1 billion. Small Business Online Ecosystem revenue grew 29% and Consumer Group revenue fell 61% to $710 million.
For the full year, Intuit’s revenue increased 13% to $7.7 billion. EPS grew 17% to $6.92.
Intuit did not provide any guidance for the quarter or the current year.
Intuit’s Product Growth
Intuit is focusing on five key areas to drive growth. It is helping customers connect to experts on its platform with TurboTax Live and QuickBooks Live. These tools allow customers to reach out to experts, grow in confidence, and above all help Intuit deepen its customer engagement. During the quarter, the number of TurboTax Live customers grew 70%. As more customers continue to adopt virtual solutions in the pandemic, that number is expected to keep rising.
As part of its second big focus area, Intuit is helping customers make smart money decisions by connecting them with partners providing relevant financial offerings. In the third season since the release of the service, Intuit saw monthly active users double and customer retention rates grow from 14 million to 22 million.
Third, Intuit is helping Small Businesses deliver growth by improving their working capital. Customers are getting paid fast and are able to manage cash flow better. It recently launched QuickBooks Cash, a Small Business bank account that provides visibility into current and future financial picture of the business. QuickBooks cash has been integrated with QuickBooks Payment and Payroll, thus allowing businesses to move money instantly to pay off liabilities as soon as they receive funds from their debtors and customers.
Fourth, Intuit is improving QuickBooks Online Advanced by adding features that allow customers to customize the offerings to their needs. Customers can use capabilities such as workflow automation, build their own dashboards, manage expense transactions, and process batch invoicing and payments.
But Intuit’s biggest focus remains its AI drive. During the quarter, it accelerated the use of AI and increased the number of models deployed across its platform by more than 50% this year. Its AI-based interactive solution is helping small business customers hold on to their money longer by using its money movement capabilities to pay employees next day, thus reducing the time between running payroll and paying employees by nearly 30%.
During the quarter, Intuit announced the acquisition of Singapore-based inventory and order management system TradeGecko for an estimated $80 million. TradeGecko was set up in 2012 by New Zealand brothers Cameron and Bradley Priest. It catered to several thousands of small businesses globally, helping them process more than $5 billion in gross merchandise value.
During the current conditions, there is a significant increase in demand in businesses moving their inventory and order management capabilities to a digital platform. TradeGecko provides access to sales channels and can manage multiple locations and currencies to allow businesses to process orders and transactions from a single platform.
Intuit plans to integrate TradeGecko’s services with QuickBooks Online to allow its customers to launch and manage products across both online and offline sales channels and manage inventory and order fulfillment across several locations. Prior to the acquisition, TradeGecko had raised $17.7 million from investors including Openspace Ventures, Jungle Ventures, Wavemaker Partners, Blibros AB, 500 Startups, Golden Gate, and JFDI.Asia.
Intuit’s PaaS Strategy: Platform or API
Intuit had embarked upon its open platform strategy a few years ago. It had realized early on that businesses needed a lot more apps than the few apps that it had the capability of delivering. To cater to these needs, it attracted outside developers by opening its platform to let them build apps that could work with their basic Intuit products. Some of its early adopters included companies like American Express that integrated with Intuit to allow small businesses to transfer their credit card transactions directly to QuickBooks online.
Intuit has been expanding on its PaaS strategy since then. Last year, it launched QuickBooks Online Accountant that allows accounting professionals to manage all of their clients – even those that did not use QuickBooks – within the product.
Intuit’s PaaS Strategy: Developer Community
Intuit does not disclose the number of developers that are working on its apps. Besides third party developers, it has expanded its developer community through acquisitions. A few years ago, it had acquired Applatix, a Sunnyvale-based startup known for building scalable production systems with containers and Kubernetes in both public and private clouds. Intuit has been leveraging the acquisition to improve its development process by adopting DevOps tools and practices to help build new capabilities to its services-based platform.
Intuit’s PaaS Strategy:Marketplace and Metrics
Intuit has a marketplace of apps that its developers produce. Its Apps store has several hundreds of apps that are specific to meet the tax, payroll, inventory and accounting requirements. It does not, however, share financial metrics on the usage of the apps or revenues earned by its developers through these apps.