Intuit (INTU, Financial) has been one of the leading providers of financial and accounting software for small and mid-size businesses. The company’s product portfolio includes well-known Turbo Tax and QuickBooks Online. The company has been quite focused on the cloud market that has been catalytic to its growth.
Impressive Quarter
The company recently released its second quarter results and was quite impressive. The revenue grew 3% year over year, to record $808 million as compared to $782 million in the same terms last year. The revenue also surpassed the consensus estimate of $786.6 million. The increase in the revenue was leveraged by the strong demand for its cloud based applications. In the current quarter, the company added 100,000 online subscribers that leveraged the revenue growth. The total number of global subscribers is now recorded to be 841,000. Furthermore, the Turbo Tax unit grew 11% as compared to the same quarter last year.
Tailwinds
The recent acquisition made by the company will increase its footprints globally. Intuit's acquisition of UK-based Acrede has added more weight to its cloud deployed payroll software that Intuit has been focusing lately. Acrede has a strong customer base in Europe and Asian countries. Acrede is an established name for providing cloud-based technology that processes payroll for employees in around 30 countries spreading across Europe and Asia, this will add to Intuit list of customers and revenue in upcoming quarters. Moreover, as the economy is rebounding in European countries, the prospect is quite high for Intuit.
Furthermore, to have a stronger grip in South America, Intuit acquired ZeroPaper a Brazil based software company. ZeroPaper offers accounting service to small business houses. As per resources, ZeroPaper has around 450,000 customers of its cloud enabled business account software and looking ahead these customer can be migrated to QuickBooks.
The company has also unwrapped QuickBooks for freelancers and self employed individuals, this will provide growth of top and bottom line of the company’s balance sheet in future
Journey Ahead
For the fiscal 2015, the company anticipates consolidated revenue to be in the range of $4.275 billion to $4.375 billion. The non-GAAP operating income is anticipated to be in the high-low range of $1.110 billion to $1.140 billion. The non-GAAP diluted EPS is expected to be in the range of $2.45 to $2.50. The company also expects the count of Quickbooks online subscription should be between 975,000 to 1 million.
Next year consensus of analysts anticipate that the company should grow by 51.20%, which is higher than the industry and the sector growth that is 22.70% and 25.6%, respectively. While for next five years the company is expected to grow 12.52% every year.
Payback
The company safeguards its investors with its share repurchase programs and this also has a positive impact on the EPS value of the shares. In second quarter, the company spent $555 million under its share repurchase program. Furthermore, the board declared a dividend of $0.25 for the next quarter. This is 32% year over year growth in dividend as compared to same term last year.
Conclusion
The cash position of the company is constantly improving, this is exemplified as the company declared an impressive dividend and also implemented the share repurchase programs. The number of subscribers for cloud enabled service is also increasing for the company that influences more recurring and predictable revenue for the company.
The acquisition of companies like Acrede in UK and ZeroPaper in Brazil will be catalytic for QuickBooks online ecosystem and will influence global growth for the company.
I feel this company can have good returns in the long term.
