A surge in online tax preparation accounted for big gains in
fiscal third-quarter earnings and revenue. The company, which reported strong sales of its QuickBooks small-business software, also raised its targets for 2002.
According to generally accepted accounting principles, the company reported net income of $144.5 million, or 67 cents a share, up from a loss of $14.3 million or 7 cents a share in the third quarter of fiscal 2001. Revenue rose 28% to $545.2 million. Last year's GAAP results included approximately $85 million more in acquisition-related charges than this year's third quarter, the company said.
On a pro forma basis, operating income totaled $233.6 million, or 75 cents a share, up 36% vs. the year-ago quarter. Analysts were expecting Intuit to record pro forma earnings for the quarter of 72 cents a share, on revenue of $541 million, after the company raised its targets in mid-April. After a strong tax season, the company raised its financial guidance for pro forma operating revenue in the third fiscal quarter by $15 million, or 5 cents a share.
Pro forma operating income excludes acquisition-related charges, gains and losses on marketable securities, gains and losses on divestitures, and the tax effects of these transactions.
Intuit's QuickBooks segment saw revenue jump 36% vs. the year-ago quarter, driven by the success of the QuickBooks 2002 products, the company wrote in a statement. Unit purchases of QuickBooks 2002 rose 30% over the same period last year for QuickBooks 2001. A shift to sales over the phone, mail and Internet -- 40% this quarter vs. 25% in the year-ago quarter -- also gave a boost to earnings, as these sales avenues are more profitable for the company.
Intuit said consumer tax revenue grew 43% in the third quarter and 28% for the tax-filing season, with a 20% increase in units to 7.7 million desktop and online units overall. Online filings powered the increase, with 80% growth in Web-based TurboTax preparation and filings to 2.2 million for the season.
The company's payroll service, which is sold for monthly subscription fees, also posted strong revenue, up 38% vs. the year-ago quarter. Quicken Loans, its online mortgage-management program, recorded a 24% increase in revenue vs. the year-ago quarter.
Some of the company's smaller business segments did less well in the quarter. Revenue from its Quicken consumer accounting software, which represents around 8% of revenue, fell 20% in the third quarter vs. last year. To get this business back on track, the company recently formed an alliance with discount brokerage Siebert to offer its Quicken clients online and phone-based brokerage services later this year, Intuit said.
The company expects Quicken-related revenue to be down 10% for the fiscal year. Meanwhile, revenue from Intuit's Japanese business fell 17% in the third quarter and is expected to be down 10% for the fiscal year.
As a result of the quarter's strength, the company raised its guidance for fiscal 2002. Intuit now expects revenue growth of 19%-20% for the year ended July, pro forma operating income growth of 47%-48%, and pro forma earnings per share growth of 27%-28%. For 2003, Intuit forecast 17%-22% revenue growth, pro forma operating income of 30%-35% and pro forma earnings per share growth of 25%-30%.
In its last quarterly report, Intuit projected that online tax preparation and filings should account for 10%-15% of its tax revenue for fiscal 2002. To take advantage of the boom in online tax filings, the company has been busy making alliances.
Since last tax season, Intuit has been busy, partnering with more than 400 financial institutions, electronics retailers and other Web sites, including
AOL Time Warner
The company continues to bulk up its software distribution, and recently began selling its software through Safeway and Vons grocery stores nationwide. This summer, Intuit plans to roll out software named Hercules for businesses with 20 to 250 employees. The company also is starting to build software packages aimed at specific small-business sectors, such as accounting.