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Intuit's Revenue Growth Accelerates

By Daniel Sparks – Aug 23, 2019 at 9:05AM

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The quarter was fueled by a 35% year-over-year increase in online ecosystem revenue.

In its fiscal fourth quarter, financial software company Intuit (INTU 1.26%) impressed investors with better-than-expected top and bottom lines. The strong quarter benefited from double-digit growth in sales from both its consumer group and its 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 CEO Sasan Goodarzi in the company's fiscal fourth-quarter earnings release. 

A small business owner using QuickBooks Online on a laptop

Image source: Intuit.

Crushing estimates

Intuit's fiscal fourth-quarter revenue jumped 15% year over year to $994 million, easily beating management's guidance for revenue during the period to increase 10% to 12%. This was also far ahead of analysts' average forecast for revenue of $962 million. Highlighting the company's momentum, its revenue growth rate during the period was an acceleration from 12% growth in fiscal Q3. 

Intuit lost money during the quarter, which is typically one of the company's seasonally weakest periods. But the financial software company's non-GAAP (adjusted) loss per share of $0.09 was much narrower than the $0.14 to $0.16 loss management had guided for. In addition, it was better than analysts' average forecast for a loss of $0.14.

Understanding Intuit's growth drivers

Speaking about the key drivers behind Intuit's fiscal fourth-quarter growth, Goodarzi said, "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."

More specifically, playing a central role in the company's revenue growth acceleration was a 35% year-over-year increase in Intuit's online ecosystem revenue -- a revenue categorization that lumps together its fast-growing online small-business and self-employed products and services.

Revenue in Intuit's small-business and self-employed group increased 16% year over year. Key to this segment's performance was continued rapid growth in the company's QuickBooks Online (QBO) subscribers. It finished the year with 4.5 million QBO subscribers, up 33% from the year-ago quarter. This is an acceleration from 32% year-over-year growth in fiscal Q3. In addition, the company said QuickBooks Capital has now funded $441 million in cumulative loans -- up from $360 million at the end of fiscal Q3.

Intuit also noted it wrapped up fiscal 2019 with an 11% year-over-year increase in consumer group revenue -- above management's initial full-year outlook for 9% to 10% growth in consumer group revenue.

With broad-based business growth and continued strong performance in the tech company's important online ecosystem revenue, Intuit is going into fiscal 2020 firing on all cylinders.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuit. The Motley Fool has a disclosure policy.

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