Intuit knows that good accounting takes more than a pocket calculator. The company is a leading provider of personal finance (Quicken), small business accounting (QuickBooks), and consumer tax preparation (TurboTax) software for consumers, accountants, and small businesses; Intuit claims more than 50 million users for its products and services. Other software offerings include industry-specific accounting and management applications for construction, health care, and retail organizations. Intuit also provides payroll services, financial supplies, and software for professional tax preparation, as well as products and services geared toward financial institutions.
Intuit believes the ease of use of its products give it a competitive edge over rivals, especially for its consumer-oriented offerings, such as TurboTax and QuickBooks, which account for the majority of sales. The ubiquity of its products in prominent retail locations also gives the company an edge in the consumer space that competitors such as H&R Block, Sage, and Microsoft struggle to match.
The company's internal product strategy revolves around what it calls its "Connected Services strategy." Unveiled in 2008, the plan involves ensuring that Intuit products and services are all accessible online and can be accessed via desktops, laptops, and handheld devices, as well as through social communities such as online forums and social media sites. Research and development toward improving existing products and developing new ones represented 16% of Intuit's total net revenue for fiscal 2011. The company claims more than 60% of its revenue in fiscal 2011 came from what it identifies as connected services.
The 2011 acquisition of the mobile Web banking technology assets of Mobile Money Ventures (MMV) also furthers the connected services strategy. MMV's technology is used by more than 400,000 consumers for banking services on all major mobile handsets and screen sizes. The acquisition highlights a more specific goal of bringing more mobile services to customers.
Intuit relies on acquisitions to further a strategy that has been focused on expanding its product lines and services beyond the consumer finance and accounting markets, adding offerings for small and midsized businesses and industry-specific accounting and management applications. Acquisitions to further that strategy include its 2009 purchase of PayCycle (online payroll services) for $170 million, as well as the 2008 purchase of Electronic Clearing House (ECHO), a provider of transaction processing services, for about $131 million. Also in 2009 Intuit acquired Mint.com for about $170 million; the deal boosted Intuit's Web-based personal finance offerings and added a well-known consumer brand to its product catalog.
The company has also used purchases to expand into the health care industry, where it feels it can extend its core strength and expertise in software products for individuals and small and midsized businesses. In May 2010 Intuit purchased Medfusion for $91 million in cash. Medfusion provides software tools and services that improve communication between patients and health care providers, including applications for patients to schedule appointments, access patient information online, and to settle and track health care expenses. Shortly after buying Medfusion the company formed a new division, Intuit Health, that combines Medfusion and Quicken Health Group.
Intuit also divests product lines from time to time to focus on its core offerings. In 2010 it sold Intuit Real Estate Solutions (IRES) (formerly called Management Reports International, acquired by Intuit in 2002) to Vista Equity Partners for about $128 million in cash. Although the business had more than 1,700 customers, Intuit stated that it was no longer a strategic, long-term fit for the company as part of the Connected Services strategy. IRES was renamed MRI Software LLC.
Due to the nature of Intuit's tax preparation products, the company's financial results are very seasonal. Its net revenue is usually highest in the company's second quarter ending January 31 and third quarter ending April 30, with losses typically reported in its first quarter ending October 31 and fourth quarter ending July 31. These seasonal sales, however, don't affect the company's bottom line. Intuit is a financially sound and stable company.
Revenue rose 11% in fiscal 2011 compared with 2010 thanks mainly to strong sales in the company's Small Business Group and Consumer Tax segment, especially of TurboTax Online federal units.