As Washington and Beijing continue to circle each other like two boxers sizing each other up, the sweet science of trade war is taking its toll on the markets. Investors are looking to service-oriented businesses that are situated close to home to strengthen their portfolios in these uncertain times and tech companies are filling that need for those who want solid options.
Intuit (NASDAQ: INTU) has become a household name – thanks to their range of self-serve financial products that cater to self-employed, small to medium-sized businesses (SMB) and enterprise clients – and their recently released 4th quarter 2019 results lifted some of those China-US tariff blues. Investors responded positively to Intuit’s performance with stocks bobbing up 5.2 percent in after-hours trading near $290 on Thursday but ped slightly and closed at $275.71 on Friday.
Typically, a slow-earning quarter for the California-based tech company, analysts anticipated that Intuit would lose 14 cents a share on $961 million in sales. The Q4 results surpassed Wall Street targets with a 9-cent loss on $994 million in revenue. Revenue was up a solid 15 percent year-over-year with earnings largely being bolstered by their small business and self-employed group.
“Our business continued its strong momentum in the fourth quarter, resulting in full year revenue growth of 13 percent, exceeding our original guidance of 8 to 10 percent growth,” said Sasan Goodarzi, Intuit’s chief executive officer. “These results were fueled by 15 percent growth in the small business and self-employed group and 11 percent growth in the consumer group.”
Their flagship products are Quickbooks, an accounting software package TurboTax, a self-service tax program and Mint, an online money management platform. Their online services jumped up 35 percent with international subscribers increasing by an impressive 58 percent this last year. Their online payments processing services are flourishing with Quickbooks online attracting an additional 39.4 percent year over year.
Their foray into the lending sector with their Quickbooks Capital service launched in 2017 is providing positive results, including funding $441 million in cumulative loans in less than two years. The end of fourth quarter showing a net loans receivable balance with $95 million.
“By focusing on delivering more value to our customers – and addressing their biggest pain points – we’ve achieved strong online ecosystem revenue growth and posted a second consecutive year of double-digit revenue growth in our consumer business. This reflects significant improvements to the customer experience across both the DIY and assisted tax preparation categories,” said Goodarzi.
“Our strategy to become an AI-driven expert platform has already delivered strong results and we think we’re well-positioned for durable growth in the future.”
As for the future, there is evidence to support strong growth for their Quickbooks Online solutions. According to analysts, market penetration for this service sits at only 2 percent within the US and hovers at 1 percent internationally. There is also potential for the company’s payroll services as only 27 percent of Quickbook’s users make use of this product. Additionally, only 10 percent have subscribed to their payments processing services.
On the other hand, Intuit’s flagship products are well-established which could impact growth in the future. They have expanded into other markets with initiatives like their business lending program but that may not be happening fast enough to counteract a potential sale slow-down with their mature products.
Sources:
https://investors.intuit.com/Press-Releases/Press-Release-Details/2019/Intuit-Fourth-Quarter-Revenue-Up-15-Percent-Full-Year-Up-13-Percent/default.aspx
https://www.investors.com/news/technology/intuit-earnings-q4-2019-intuit-stock/
https://www.crunchbase.com/organization/intuit#section-overview
https://simplywall.st/stocks/us/software/nasdaq-intu/intuit
https://www.msn.com/en-us/finance/topstocks/intuit-intu-q4-earnings-and-revenues-surpass-estimates/ar-AAGefbI
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
