QUOTE AND NEWS
Cloud Computing  Jul 11  Comment 
Intuit Inc. (Nasdaq: INTU) CEO Brad Smith will meet with President Barack Obama on Friday to discuss how big business and government can work together to support small business. Smith will join other leading executives at a...
Market Intelligence Center  Jul 11  Comment 
Intuit Inc (INTU) presents a trading opportunity that offers a 3.27% return in just 71 days. A covered call on Intuit at the $80.00 level expiring on Sep. '14 offers an assigned return rate of 3.27% or 16.79% annualized. This trade offers 3.67%...
Benzinga  Jul 10  Comment 
In a report published Thursday, Morgan Stanley analyst Jennifer Swanson Lowe reiterated an Underweight rating and $66.00 price target on Intuit (NASDAQ: INTU). In the report, Morgan Stanley noted, “The shift to subscriptions has been a key...
Market Intelligence Center  Jul 8  Comment 
A covered call identified by MarketIntelligececenter.com's patented algorithms on Intuit Inc (INTU) could yield about 2.54% (12.52% annualized, for comparison purposes only) in 74 days. Pair a long position in the stock with the Sep. '14 $80.00...
Forbes  Jul 7  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 7/8/14, AT&T (NYSE: T), Intuit (NASD: INTU), and NetApp (NASD: NTAP) will all trade ex-dividend for their respective upcoming dividends. AT&T Inc will pay its quarterly dividend of...
Market Intelligence Center  Jul 3  Comment 
Intuit Inc (INTU) presents a trading opportunity that offers a 2.70% return in just 107 days. A covered call on Intuit at the $80.00 level expiring on Oct. '14 offers an assigned return rate of 2.70% or 9.20% annualized. This trade offers 4.18%...
Market Intelligence Center  Jul 1  Comment 
After closing Monday at $80.53, Intuit Inc (INTU) presents an attractive opportunity to get a 3.45% return in just 109 days, which is an annualized return of 11.56% (for comparison purposes only). To enter this trade, sell one Oct. '14 $80.00 call...
Times Online  Jul 1  Comment 
Eugenie Bouchard While wowing tennis fans on court, Bouchard has also impressed with her ability to intuit the fashion zeitgeist...
The Economic Times  Jun 30  Comment 
This year, Intuit introduced bereavement leave, which allows employees five days of leave if there is a death of an immediate family member.
SeekingAlpha  Jun 25  Comment 
By Stan Higgins California-based financial management solution specialist Intuit is now enabling its merchant network to accept bitcoin through its new PayByBitcoin service. PayByBitcoin integrates Intuit's QuickBooks Online payment processing...




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Intuit Inc. (NASDAQ:INTU) develops financial software targeted at individuals and small businesses. Over 80% of its revenue comes from its three main products: TurboTax, a tax preparation software available in both online and in stores,Quicken, a personal finance tool, and Quickbooks, a small business accounting software. TurboTax and Quickbooks dominate their respective fields, with TurboTax owning 39% of the retail tax preparation software market, and Quickbooks holding 89% of the small business accounting software market.[1] The company earned $3.18 billion in revenue and $447 million in net income in 2009.[2]

Intuit's strategy has been to focus on customer satisfaction and simplifying the user experience. Despite the strong performance of its two major products, the company spends 80% of its R&D budget on the continued development of Quickbooks and TurboTax. The company has also positioned itself to be a major player in the growing online market, with TurboTax and Quickbooks both offering online editions. The recent acquisition of Digital Insight (a provider of online banking services) and pending launch of FinanceWorks plays into this strategy as well. However, the online market for tax preparation has become more competitive than the retail one, and recent server problems have damaged TurboTax's credibility, a concern for a company focused on user experience. To maintain growth, the company will have to continue satisfying current customers with new product cycles and add-in services, as well as fend off low-cost competition online.

Company Overview

Intuit has five business segments that it divides into four categories:[3]

  • Small Business Group - consists of Financial Management Solutions (formerly QuickBooks), Employee Management Solutions (formerly Payroll), and Payments Solutions.
  • Tax - consists of Consumer Tax and Accounting Professionals.
  • Financial Institutions - consists of outsourced online services for banks and credit union.
  • Other Business - consists of Quicken, Real Estate Solutions, and the company's businesses in Canada and the United Kingdom.

Products[4]

  • Financial Management Solutions - brings bookkeeping capabilities and business management tools to small and medium-sized business users in an easy-to-use design that does not require them to be familiar with debit and credit accounting. The company's desktop software products include QuickBooks Simple Start, which provides accounting functionality suitable for very small, less complex businesses and is offered in both free and paid versions.
  • Employee Management Solutions - QuickBooks Payroll is a family of products sold on a subscription basis to small businesses that use QuickBooks and prepare their own payroll or want some assistance with preparing their payroll. It is also sold to accountants who use QuickBooks and help their clients manage their payrolls.
  • Payment Solutions - the company offers merchant services, which include credit card, debit card, electronic benefits, and gift card process services, check verification, check guarantee, and electronic check conversion. This category also consists of QuickBooks point of sale solutions.
  • Consumer Tax - TurboTax products and services are designed to enable individuals and small business owners to prepare and file their own federal and state personal and small business income tax returns quickly and accurately. They are designed to be easy to use, yet sophisticated enough for complex tax returns.
  • Accounting Professionals - provides software and services for accountants and tax preparers in public practice. These include offerings that help professional accountants and tax preparers provide accounting, payroll, tax planning and tax compliance services to their individual and business clients, and that help them manage their own practices more effectively.
  • Financial Institutions - the company's Digital Insight business provides outsourced online banking offerings that are hosted in our data centers and delivered as on-demand services to small and medium-sized financial institutions.
  • Other Businesses - Quicken line of desktop software products helps users organize, understand and manage their personal finances. Quicken allows customers to reconcile bank accounts, pay bills, record credit card and other transactions, and track investments, mortgages and other assets and liabilities. Intuit Real Estate Solutions business offers software and related technical support, consulting and training services for residential, commercial and corporate property managers.

Business Growth

FY 2009 (ended July 31, 2010)[2]

  • Net revenue increased 13% to $3.46 billion.

Intuit said its small business division showed 16 percent growth, and gained customers through its QuickBooks and Intuit Websites products.

The company also said that personal finance management site Mint.com ended the quarter with more than 3 million users.

Trends and Forces

Seasonal Returns

Due to the nature of tax season and the annual product release cycle, the performance of Quickbooks and TurboTax is highly seasonal. Traditionally, Intuit has reported strong earnings in the second and third quarters of the fiscal year (1/31 through 7/31), while posting losses in Q1 and Q4.

The Internet

While retail still comprises the majority of TurboTax sales (5.5 million units, versus 5.2 million paid federal units online), TurboTax Online is growing much faster. The company's acquisition of Digital Insight and the pending release of their online banking software is another move towards capitalizing on the emerging online financial market, as consumers become more comfortable with conducting financial transactions online.

This new market has also provided new challenges. While the retail version of TurboTax has a sizable cost advantage over professional tax preparation firms, it faces considerable price competition online, where lower startup costs and fewer barriers to entry have allowed a number of low-cost competitors to enter the field. Online filing is also vulnerable to changing user filing habits, with more and more customers filing later in the season (a trend that has been noted industry-wide).

Competition

TurboTax faces a wide variety of competitors in a fragmented tax preparation market. With H&R Block's TaxCut software as its only direct competitor, TurboTax dominates the retail market with four copies sold for every copy of TaxCut, despite TaxCut's lower cost. TurboTax also has a retention rate of around 75%, and thus most competition with TaxCut is over new users.

Online, TurboTax is facing increasing pressure from TaxCut, as well as ad-supported TaxACT and other low-cost competitors. TurboTax also competes indirectly with traditional tax preparation services, such as H&R Block (HRB), Jackson-Hewitt, CPAs, and local mom-and-pop accounting services. Traditional services still account for the majority of tax returns filed, despite the cost advantage of TurboTax and other DIY methods.

Quickbooks is also dominant in its field, where its only real competition is Peachtree Software. Microsoft (MSFT) was expected to pose a threat, with its Small Business Accounting software bundled at no cost with versions of its popular Office suite.

Intuit is most focused on targeting non-consumers, i.e., tax filers and small businesses who still prefer to work with a pencil, paper, and spreadsheet. With its growth strategy focused beyond its immediate competitors to capturing customers from the larger market of imperfect substitutes, the company does not attempt to compete using price leverage. TurboTax carries a price premium over TaxCut, and the standalone version of Small Business Accounting is less than half the price of the cheapest Quickbooks offering.

References

  1. INTU 2009 10-K "General" pg. 3
  2. 2.0 2.1 INTU 2009 10-K "Five-Year Summary" pg. 31
  3. INTU 2009 10-K "Our Business Portfolio" pg. 4
  4. INTU 2009 10-K "Products and Services" pg. 5-8
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