QuickBooks Leads Intuit’s FY19 Q1 As CEO Prepares To Step Down

The first quarter of fiscal year 2019 was a strong one for Intuit, which posted its earnings data Monday (Nov. 19).

The company beat analysts’ previous expectations with a 12 percent increase in revenue for the quarter ending Oct. 31, the company said. Driving the growth was its small business suite of solutions, particularly its QuickBooks suite of services, including QuickBooks Capital, QuickBooks Payments and QuickBooks Online Payroll, according to Chairman and Chief Executive Officer Brad Smith.

“We are off to a strong start this year, with overall revenue growth of 12 percent during the first quarter, with strength across each of our businesses,” he said. “[The] Small Business and Self-Employed Group [SBGSEG] delivered another strong quarter, and we expect momentum to continue as we place an increased emphasis on online services to deliver greater value to our customers.”

Total revenue increased to $1 billion during the quarter, and the firm cut its GAAP operating losses to $10 million, down from $35 million during the same period a year ago.

Intuit shares rose 6.4 percent immediately after earnings data was released.

Earlier this month, Intuit announced a range of new features for QuickBooks, including the incoming availability of next-day funding when they send invoices via QuickBooks Payments and are paid via ACH or credit card. Additional updates announced at the time included plans to launch same-day payroll for QuickBooks Payroll, and new ways to pay wages to on-demand and contractor employees.

During Q1 for FY19, Intuit saw a 41 percent increase in QuickBooks Online subscribers, which now total nearly 3.6 million. Self-employed subscribers to QuickBooks Online reached an estimated 745,000, up from about 425,000 a year prior.

Its small business financing operations, QuickBooks Capital, has now provided $200 million in loans since its launch last year.

The earnings reflect market confidence in the company despite the decision by CEO Smith to step down from the position, which he announced in August. Sasan Goodarzi, Intuit’s general manager of its Small Business and Self-Employed Group, will take up the position on Jan. 1, while Smith will transition to executive chairman.

“I have never felt better about Intuit’s future,” he said during the earnings call.

In that immediate future, Intuit will be focusing on its consumer-facing services, most notably TurboTax, with tax season only a few weeks away. Smith said during the earnings call that Intuit will introduce new features for its tax filing solution, with plans to add mobile support for the TurboTax platform.

But in the long run, Intuit CFO Michelle Clatterbuck, who took over for former CFO Neil Williams earlier this year, said that while mergers and acquisitions remains a key component of Intuit’s growth plan, the firm’s first priority is to reinvest its cash into itself to develop new services and features. While Smith said Intuit expects subscription growth for its QuickBooks Online ecosystem to moderate moving forward, he stressed that the firm expects new subscriptions to remain steady, though success will be measured in revenue for the overall ecosystem of QuickBooks Online solutions.

According to Smith, some of QuickBooks Online’s newest services, including same-day payroll and next-day funding for QuickBooks Payments users, are both bolstering subscriber retention and new subscriber growth, while a focus on user functionality and ease-of-use features like pre-populating data are all key.

“You can get payroll done on the same day – that’s a big acceleration from what you’re able to do with most other offerings,” Smith said during the call. “You can hold onto your money longer, and that’s a compelling value proposition for the small business owner. What we’re doing is improving execution with simpler design, easier to discover [tools], pre-populated data, [and] introducing breakthrough innovations that alternative [services] don’t have in the market.

“It’s the new innovations we think are really shifting the playing field more in our direction,” he added.

With non-U.S. QuickBooks Online subscriptions growing faster than in the U.S., Smith pointed to the strengths of the U.K., Canada and Australia markets, with Intuit placing greater attention on France, Brazil and India moving forward.

Looking ahead at the company before his departure, Smith said the “single biggest breakthrough” for the company in the next five years will be Intuit’s focus on machine learning and artificial intelligence, as data drives the development and growth of the firm and enables it to “do amazing things for customers they could have never thought possible.”