The 2nd quarter results were discussed in a call on February 21, 2019. The earnings call is for the period ending January 31, 2019. The Motley Fool has transcribed that call and I have used that to share some highlights from the call. Continue reading for a breakdown of the Intuit earnings conference call for Q2 of 2019.
Note: Intuit has 3 main groups they report on (1) Consumer, (2) Small business and self-employed, and (3) Strategic Partner
Intuit’s #1 Consumer Group – Basically Turbo Tax, Mint & Turbo
2nd Qtr Revenue – $461 million, with the expectation to grow 9% to 10% in fiscal 2019
The strategy for this group is to expand its lead in the DIY tax category. Transform the assisted tax preparation category (TurboTax Live). They also want to build beyond tax to build a consumer “platform”. Mint is also part of this category so it will be interesting to see how they combine this all. Remember, Intuit sold of Quicken several years ago, so that is not part of this.
One interesting note is that TurboTax self-employed is now coming with a 12-month subscription to QuickBooks Self-Employed, which will help Intuit connect the consumer group to the self-employed and small business side of the business.
Back to this platform concept. Apparently, Turbo gives customers an overall view of their financial position. It includes:
- a credit score
- verified income data
- debt-to-income ratio
#2 Small Business & Self-Employed
2nd Qtr Revenue – $833 Million, with the expectation to grow 9% to 11% in fiscal 2019
Intuit expects “total subscriber growth to moderate as we place a greater focus on additional services in penetrating a broader range of customers.”
Intuit’s focus is still online and the cloud – and I don’t see it moving backward from there. That doesn’t mean they are dumping any desktop programs, but note that it is a strategy to push online products. In fact, the desktop revenue was up 3% in the 2nd quarter. The strategy focuses, for Intuit, here are:
- Getting Intuit’s customers paid faster
- Manage capital
- Help businesses pay employees
Last fall, Intuit launched next business payments – which is helping their customers get paid faster. According to the QB Payments page, a business would benefit from using QB Payments by getting paid 2x faster.
Intuit has launched next-day and same-day direct deposit to customers. The goal is to help customers handle their cash longer. They say they “have already seen over one-third of our Online Payroll customers benefit from this feature.” I’m assuming that means their customers are using it – but not sure if you can prove a “benefit” over that one third.
QuickBooks Capital has funded $277 million in loans since launching over a year ago. Intuit is leveraging the date within a QuickBooks Online subscription to help vet out these loans and they say they have provided loans to small businesses, where “nearly 60% of which not qualified for loans elsewhere.”
QuickBooks Online Advanced
Remember, this is Intuit pushing the mid-market businesses towards the cloud. They consider mid-market businesses to be 10 to 100 employees. They are continuing to roll out new features here and say they are encouraged by initial results, but there isn’t much data behind that one.
Sasan Goodarzi, CEO of Intuit, said “We are focused on disrupting the mid-market with QBO Advanced. Our AI-driven expert platform will help provide what mid-market customers need at a disruptive price.”
#3 Strategic Partner
2nd Qtr Revenue – $208 Million, with the expectation to grow 2% to 4% in fiscal 2019
What’s interesting is when Intuit talks about the strategic partner group, there is an emphasis on the tax side. Intuit’s professional tax revenue was down 1% year over year. And, they “continue to focus on multiservice accounting firms that do both books and taxes, enabling us to drive our accountant success while growing our small business ecosystem.”
Strategy to Boost Intuit Earnings
There was talk about AI and they used the term “AI-driven expert platform.” They are “significantly accelerating our application of artificial intelligence.” An example of this is TurboTax Live where users have access to live support from EAs and CPAs. Now consider this next quote, “Imagine the opportunity we have to expand live expertise across the platform to serve consumers, self-employed, and small business.” I think this is probably where QB Live comes to play and maybe even more initiatives.