Intuit tops estimates, sticks with 2001 targets

3 min read

Financial software developer Intuit topped analysts' profit estimates but came up a bit shy in total sales Tuesday when it posted a second-quarter profit of $104.2 million, or 48 cents a share, on sales of $457.6 million.

First Call consensus pegged Intuit for a profit of 45 cents a share on sales of $462.6 million.

Intuit (Nasdaq: INTU) shares closed off $2.13 to $32.69 ahead of the earnings report before rallying up to $35.50 in after-hours trading. The company develops financial software for individuals and small businesses and operates the popular Quicken.com portal. Officials said the company's goal is to make its Web and software products seamless.

The $457.6 million in sales marks an 8 percent improvement from the year-ago quarter when it earned $91.4 million, or 44 cents a share, on sales of $425.5 million.

"Intuit had another solid quarter," said Chief Executive Officer Steve Bennett. "We're off to a solid start with our tax season, both on the desktop and on the Web. Our high-growth service businesses, payroll and Quicken Loans are gaining momentum."

Sales of its Quicken Loans software jumped 27 percent from the year-ago quarter to $20 million. Payroll software sales rose 57 percent to $30.2 million, and its online payroll sales rose 150 percent from the year-ago period.

The company's Internet revenue for the quarter was $113.2 million with electronic distribution of software accounting for the bulk of that sum. Internet revenue by category was driven by the company's tax properties.

However, sales of its QuickBooks products were slower than expected.

Intuit executives said the long-forgotten Y2K panic actually contributed to sluggish QuickBooks sales as customers didn't upgrade to the latest version as often as the company had expected.

Between 20 percent and 30 percent of the its customer base upgrades within a year. More than half of its customers installed a new product last year because of Y2K, resulting in a slower upgrade cycle.

On a conference call with analysts, Bennett put concerns about QuickBooks sales in perspective. He said the management's main responsibility was to "deliver on profitability." The company accomplished that goal despite sluggish sales of QuickBooks, Bennett said.

He also noted that the QuickBooks problems weren't reflective of a market share loss. "We haven't seen any defection from our desktop users," Bennett said.

Intuit officials said the company will account for a lower QuickBooks upgrade cycle, but added that its diversified portfolio will help the company weather any problems.

Indeed, Intuit left its fiscal 2001 sales and earnings targets unchanged. For the third quarter, Intuit is projecting operating income of $165 million to $170 million on sales of $455 million to $470 million. Sales for the fiscal year are expected to total $1.32 billion to $1.34 billion. Those figures are in line with forecasts.

Last quarter, it beat the Street when it posted a loss of $21.4 million, or 10 cents a share, on sales of $187.5 million.

The stock is just as cyclical as its business. After surging to a 52-week high of $72.75 last February, the stock fell to a low of $25.75 in May.

Fourteen of the 16 analysts following the stock rate it either a "buy" or "strong buy."