) reported second-quarter 2013 adjusted earnings per share (EPS)
of 23 cents, missing the Zacks Consensus Estimate of 28 cents.
Intuit reported revenues of $968.0 million in the second quarter,
down 3.1% from $999.0 million in the prior-year quarter. Reported
revenues were in line with management's revised guidance range.
The revenue decline was mainly due to shift in tax revenues from
the second to the third fiscal quarter due to late legislation
and Internal Revenue Service delays.
Product revenues decreased 4.1% year over year to $402.0 million,
while Services and Other revenues dropped 2.4% from the
prior-year quarter to $566.0 million.
Segment-wise, Small Business Group posted 16.0% year-over-year
growth based on the strength of the group's sub-segments and the
synergies from the acquisition of Demandforce on May 12.
Financial Management Solutions revenues increased 17.0%, driven
by higher subscription for QuickBooks Online, QuickBooks
Enterprise and contribution from Demandforce. Employee Management
Solutions revenues were up 13.0%, led by growth in Intuit Online
Payroll subscribers. Payment Solutions revenues increased 18.0%,
aided by customer growth for Intuit's GoPayment mobile payment
The Consumer Tax segment posted 12.2% revenue decline due to
shift in revenues (roughly $140.0 million). Financial Services
revenues were up 1.0% from the year-ago quarter, led by higher
revenues in online and mobile banking, and addition of the Mint
business. This was partially offset by the sale of corporate
banking business in Mar 2012. Accounting Professionals segment
revenues decreased 7.0%. Other Businesses revenues declined 10.0%
due to the shift of Mint business, partially offset by growth in
Reported gross margin decreased 100 basis points (bps) from the
year-ago quarter to 78.5%. Operating margin in the quarter was
9.6% versus 19.5% in the year-ago quarter. Total operating
expenses increased 11.4% year over year.
GAAP net income from continuing operations was $71.0 million or
23 cents per share, compared with $121.0 million or 40 cents per
share delivered in the year-ago quarter. The quarter's result was
lower than the company's guided range. Excluding one-time
expenses but including stock-based compensation expenses,
adjusted net income in the quarter was $71.2 million or 23 cents
per share versus $129.6 million or 42 cents in the year-ago
Balance Sheet & Cash Flow
Intuit ended the quarter with cash, equivalents and investments
of $678.0 million, up from $558.0 million in the previous
quarter. Accounts receivables were $541.0 million compared with
$184.0 million in the previous quarter. Long-term debt remained
flat sequentially at $499.0 million.
Intuit used $256.0 million of operating cash in the second
quarter, as against $145.0 million cash used in the prior
quarter. Capital expenditure was $45.0 million. During the
quarter, Intuit repurchased shares worth $100.0 million. The
company paid a quarterly cash dividend of 17 cents per share
amounting to $51.0 million.
For the third quarter of fiscal 2013, the company expects
revenues in the range of $2.215 billion to $2.275 billion. GAAP
operating income is expected in the range of $1.290 billion to
$1.315 billion. Non-GAAP operating income is estimated in the
$1.350 billion to $1.375 billion range. GAAP EPS is projected in
the range of $2.83 to $2.88. The company also expects non-GAAP
EPS in the $2.99 to $3.04 range.
For fiscal 2013, the company expects revenues in the $4.55
billion to $4.65 billion range, representing growth of 10.0% to
12.0%. GAAP operating income is estimated between $1.315 billion
and $1.345 billion, reflecting growth of 12.0% to 14.0%. Non-GAAP
operating income is projected in a range of $1.57-$1.60 billion,
representing growth of 12.0% to 14.0%. GAAP diluted EPS is
expected to grow in the range of 14.0-16.0% to $2.96-$3.022.
Non-GAAP EPS is expected between $3.40 and $3.46, indicating
growth of 14.0% to 16.0%.
Intuit is also likely to expand globally with the help of its
connected services that are gaining traction. The increasing
preference toward digital solutions is reflected by the growing
popularity of its software-based TurboTax, SnapTax, QuickBooks
small-business accounting solutions. The company looks forward to
add more recurring revenues within its Consumer Tax and Small
Business segments, capitalizing on the ongoing shift toward
Intuit is a leading provider of business and financial management
solutions to small and medium-sized businesses, consumers,
accounting professionals and financial institutions. The company
delivered a lower-than-expected second quarter driven by tax
revenue shift to the third quarter. But we are encouraged by the
third quarter guidance and we believe that the main driver would
be the Consumer Tax business.
We are positive on Intuit's growing SMB (small & medium
business) exposure and believe that the closure of the
Demandforce acquisition will provide further support to the
segment. But stiff competition from the leading payroll solution
) in the SMB arena, seasonality of Intuit's tax business and the
ongoing uncertainty in the economy concerns us.
Currently, Intuit has a Zacks Rank #4 (Sell). However, not all
software stocks are performing as badly as Intuit. Investors can
have a look at
), which have a Zacks Rank #1 (Strong Buy) and are worth
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