Intuit (NASDAQ:INTU) just released its earnings, and after an admittedly difficult tax season, investors should still be happy with the numbers. Intuit managed to grow its online TurboTax subscribers, while adding growth to its Demandforce and QuickBooks offerings as well.
A quick look at the numbers
Intuit's financial Q3 saw revenue grow by 13% and operating profit increase by 12% year over year. The increases came despite a difficult tax season, according to CEO Brad Smith.
In an earnings statement, Smith said, "While it was a challenging tax season overall, we made progress in several key areas, growing new customers including first-time filers and former tax store customers, and significantly increasing mobile adoption."
One of the company's key software offerings, TurboTax, increased federal tax unit sales by 4%, while overall desktop units were down 1% and online units were up 6%. But it wasn't just TurboTax software that saw an increase -- its QuickBooks online paying customers increased by 26% during the quarter as well. The jump in Quickbooks and TurboTax customers helped the company's quarterly profit increase to $822 million, up from $734 million a year ago.
Going forward, the company is still in a great position in the software tax market. Rival H&R Block (NYSE:HRB) has its own tax software, but experienced a major glitch with the program back in March, leading to delays for thousands of tax returns. The company said as many as 600,000 tax returns could be affected.
H&R doesn't release its quarterly earnings report until next month, so we'll know then how the company's software faired compared to Intuit. But we do know that H&R's online returns grew by more than 10% this past tax season, while its overall U.S. tax filings were flat compared to last year. With the recent software glitch, though, H&R may lose tax software customers next year -- leaving a big opportunity for Intuit.
Overall, Intuit grew its small business division software revenue by 17% which includes TurboTax, QuickBooks, and DemandForce software. Part of the gains came from Intuit's launch of an online QuickBooks version specifically for the iPad, and a new mobile payments system for U.K. small businesses. DemandForce, the company's online marketing software, also saw a 65% increase in subscribers this quarter.
Intuit repurchased 92 million shares of common stock in Q3, bringing the total repurchased stock to $292 million in the first nine months of the fiscal year. The company expects revenue to come in around $702 million to $727 million in Q4, down from this past quarter, but expects overall revenue for fiscal year 2013 to be up 7% to 8%.
Investors should continue to watch the company's software subscriber growth, particularly as more free online tax services become available. The company's low price points help bring in new customers each year, but there's a growing number of small business and financial mobile apps available to consumers. Many of them have much of the same functionality that Intuit's offerings have and the company will need to stay ahead of these apps to maintain its relevance. So far it hasn't been a problem for Intuit, but as more users begin to trust mobile financial software, it could be an issue for the company.