Intuit’s focus is on growing profits, and we delivered, beating consensus estimates for pro forma earnings per share by two cents, said Steve Bennett, Intuit’s president and chief executive officer. Intuit grew pro forma operating income by 63 percent on revenue growth of 29 percent. We had several businesses that really stood out – our consumer and professional tax businesses, payroll and Quicken Loans.
Third-Quarter Results
Intuit reported revenue of $425.2 million for the third quarter of fiscal 2001, an increase of 29 percent over the $329.1 million for the year-ago quarter. Revenue growth resulted from both increased prices and higher volumes.
On a GAAP basis, Intuit reported a net loss for the quarter of $14.3 million, or $0.07 per share. Year-over-year GAAP comparisons are complicated due to two large, unrelated events that impacted the third quarters of both fiscal 2000 and 2001. Last year’s third-quarter GAAP results benefited from a $422.2 million pre-tax gain on the sale of certain marketable securities, which did not occur this year. In the year-ago quarter, Intuit reported net income of $297.1 million, or $1.39 per share. This year’s third quarter was impacted by a charge of approximately $77 million (which is included within acquisition-related costs) related to the accelerated write-off of goodwill related to acquisitions made in prior periods. Intuit’s policy is to regularly review goodwill and other longer-term assets to evaluate their current value.
On a pro forma basis (explained below), Intuit reported third-quarter net income of $118.4 million, or $0.55 per share, which was 53 percent better than the prior year quarter. Intuit had pro forma net income of $76.3 million, or $0.36 per share, for the third quarter of fiscal 2000. Pro forma operating income was $165.1 million in the third quarter, up 63 percent from the year-earlier quarter. The increase in pro forma operating income resulted from price increases across many business lines, strong volume growth and improved operational rigor efforts throughout the company.
Intuit continues to have a strong balance sheet, with nearly $1.6 billion in cash and short-term investments, or more than $7.00 per share.
Intuit’s financial results reflect the highly seasonal nature of its businesses, particularly its tax preparation business. Intuit typically produces more than 100 percent of its annual profits in its second and third quarters combined. Intuit typically reports a loss in its first and fourth quarters when revenues from tax software are minimal, but operating expenses to develop new products and services continue at relatively consistent levels.
Annual results may provide a more meaningful way to compare Intuit’s operating performance than quarter-over-quarter comparisons. The timing of product launches and promotions can vary from one year to the next, shifting revenue to different quarters within a year.
