Intuit 2016 Earnings Up 12%, QuickBooks Online Subs Grow 41% with Prediction of 2 – 2.2 Million by 2017

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Intuit reported earnings August 23, 2016. Earnings were up 12% yet the guidance on future growth seemed to disappoint.

While these numbers top estimates, Intuit’s tepid revenue guidance for the current quarter sent its shares trending downward after hours.

Intuit said it expects Q1 EPS ranging from a penny a share to 3 cents a share, which falls well below analyst estimates for 13 cents a share. Revenue is expected to range from $740 to $760 million, which would also miss estimates of $772.96 million. – ZDNET

Financial Highlights

For fiscal 2016 Intuit:

  • Reported revenue of $4.7 billion, up 12 percent.
  • Increased total QuickBooks Online subscribers 41 percent, to finish the year with 1,513,000 paid subscribers.
  • Grew Consumer Tax revenue 10 percent, with TurboTax Online units growing 15 percent and total TurboTax units growing 12 percent.
  • Reported GAAP earnings per share of $3.69, versus $1.28 in fiscal 2015.
  • Reported non-GAAP earnings per share of $3.78, up 46 percent.
  • Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period, and the business metrics and associated growth rates refer to worldwide business metrics.

Business Segment Results

Small Business

  • Total Small Business segment revenue increased 10 percent for the quarter and 9 percent for the year.
  • Small business online ecosystem revenue grew 25 percent for the year, driven by online customer acquisition.
  • QuickBooks Self-Employed subscribers ended the year at 85,000, versus 25,000 a year ago.
  • Outside the U.S., QuickBooks Online grew to 287,000 paying subscribers, up 45 percent.
  • Online payroll customers grew 17 percent for the year.
  • Online active payments customers increased 6 percent, and online payments charge volume increased 15 percent.

Some forecast highlights:

The company expects the following segment revenue results for fiscal year 2017:

  • Small Business: growth of 9 to 11 percent.
  • Consumer Tax: growth of 6 to 8 percent.
  • ProConnect: decline of 1 to 3 percent.

Intuit also announced guidance for full fiscal year 2017. The company expects:

  • Revenue of $5 billion to $5.1 billion, growth of 7 to 9 percent.
  • GAAP operating income of $1.33 billion to $1.38 billion, growth of 7 to 11 percent.
  • Non-GAAP operating income of $1.675 billion to $1.725 billion, growth of 8 to 11 percent.
  • GAAP diluted earnings per share of $3.35 to $3.45, versus $3.69 in fiscal 2016. Fiscal 2016 earnings per share includes $0.65 net income per share from discontinued operations.
  • Non-GAAP diluted earnings per share of $4.30 to $4.40, growth of 14 to 16 percent.
  • QuickBooks Online subscribers of 2.0 million to 2.2 million

A transcript of the conference call  (PDF) can be downloaded from here.

Source: Intuit press release

Wayne Schulz is a consultant who writes about the ERP industry and technology related news.

What All Analysts Are Missing About Sage’s Earnings Report

Sage recently reported mid-year earnings. You can read about the results here on their investor page.  Most analysts don’t really seem to have picked up on two new things which are increasingly appearing in every Sage earnings report.

Continue reading “What All Analysts Are Missing About Sage’s Earnings Report”

Wayne Schulz is a consultant who writes about the ERP industry and technology related news.

Netsuite 2012 Q2 2012 Earnings Call: 329 New Customers and Average Selling Price Up 29% to $50,000

Our average selling price on new deals increased 29% over that for Q2 last year to over $50,000. The ASP for OneWorld was up 13%, while across all other products, it increased by 15% and an increase in the OneWorld portion of the mix drove the rest of the increase.

Interesting progression up-stream in terms of average deal size. I don’t know if average deals size provided by the company includes the Netsuite component only or if they also count  professional services they (or a partner) provide.

And we finished the second quarter with great customer momentum. During the quarter, we added 329 new customers. Average business selling price jumped almost 30% year-over-year to well over $50,000 in first year contract value.

The number of customer wins, 329, was essentially flat with the prior year, began at a much healthier average selling price.

Read the Netsuite earnings call transcript.

Transition v Non-Core


Please explain how Apple was able to discuss future product plans on their recent earnings call – using the vague term ‘transition’ with few additional details –  to describe products which may be nearing end-of-life or due to be refreshed – yet Sage during their Investors Day appeared to openly call out under performing non-core products businesses for competitors, prospects, the channel and employees to see.

Sage doesn’t call business segments or products “under-performing” – instead choosing the label core or non-core . And to be clear – Sage denies that non-core implies that those products will definitely be sold.

Forget for a minute the  post meeting explanation of core vs non core and how it really doesn’t mean what you think (why use such descriptive phrases then?) – and how everyone should  attend a conference to learn the context and details of what core v non-core really mean (what was Investor Day for?)… and Sage doesn’t intend to comment further.

Sage’s explanation?  Non-core business doesn’t mean a product will be sold – only that non-core products “do not share common characteristics such as customers, technology, partners and costs across rest of the Sage portfolio”.

Well that’s comforting.

What does it mean?  Could it mean less R&D? Less attention being paid to an upgrade path? Less efforts to sell more licenses? Fewer new features?  Sage’s announcement seems to hint at that but there’s no way to tell for sure and quite a bit is left to individual interpretations.

According to Sage –  “non core” businesses are best served with a singular focus rather than folding them into a broader “core” structure and encumbering them with commonalities that may not exist.

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Sage Interim Management Statement Reveals No Big Surprises

Sage issued an interim management statement on Monday July 16, 2012.

Interim Management Statements give performance data and portfolio information as at the end of the first and third quarters of a company’s financial year.

The statement doesn’t go into specifics on financial performance but instead serves as an opportunity to provide advanced indications of change from expectations.

According to the release -North America is showing sequential quarter to quarter improvement.

The growth in Europe seems to be a bit below expectations as described in the statement as:

Overall performance in Europe has been flat and the anticipated improvement in growth over the first half has not yet materialised.

Guy Berruyer, Sage Chief Executive, summarized:

The main trends we highlighted at our interim results in May continue to be a feature of our trading performance. Whilst we remain cautious on the outlook for Europe, and watchful of this region’s economic climate, the strong fundamentals of our business model remain and we continue to make good progress in executing against our business priorities. We look forward to tomorrow’s investor day where we will be sharing our plans for the future growth of the business.

Sage

Sage Earnings 2011 Reveal Strengths and Weaknesses In A Challenged Market

Sage reported earnings today. From what I can see the overall activity was impressive — especially compared to a market where companies like Microsoft are out selling ERP software at an 85% discount.

The recurring bright spots in the US appear to be payments where Sage is reporting 15% growth (over 40% growth in cross selling payments into existing customers).

Selling software and related services is the low spot for North America– 3% contraction.

After touting the opportunities for Healthcare in their 2010 annual report ( well positioned to take advantage of stimulus) – Sage announces “Sage Healthcare business in North America is no longer core to our strategy”. Of course Sage Healthcare sale was completed in November 2011.

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Sage H1 2010 Earnings: North America Subscriptions Decline 2% Against Growth Elsewhere

Sage UK just reported H1 2010 earnings for the period ended March 2010.

There seems to be some improvement overall, and earnings exceeded analyst expectations, but the company fell short of predicting a return to revenue growth in North America (which now is second to Mainland Europe as Sage’s top revenue provider).

North America appeared to suffered as the region with what appeared to be the only decline in subscription revenue (see the full Sage slide deck below for details).

Maintenance is the ever important recurring revenue item that customers pay for ongoing support, new releases and upgrades of their existing software.

In a perfect world maintenance would continue to grow (Sage North America reported an addition of 17,000 support contracts) as new subscribers are added and continue to renew their contracts.

Here’s what Sage reported for subscription growth (see chart below for details):

North America: – 2%
UK: +5%
Mainland Europe:  +2%
Rest of World: +13%

I’ve long said that maintenance (subscription) renewals and growth are what I gauge to be the key indicators of customer happiness. Within the past year Sage North America has modified subscription margins for many of their business partners (raising sales performance requirements as well as outright margin change).  It’s tough to say what the results would have been without those modifications.

Full earnings slide deck after the jump

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