Intuit knows that good accounting takes more than a pocket calculator. The company is a leading developer of software used for small business accounting (QuickBooks), and consumer tax preparation (TurboTax). It also helps manage personal finances and budgeting with its online Mint service. Customers include individual consumers, accountants, and small businesses; Intuit claims more than 45 million users for its products and services. Other offerings include payroll and payment software for small businesses, financial supplies (paper checks, invoices, deposit slips), and online marketing and communications products. It generates most of its sales in the US.
It generates half its sales from small business clients, with consumers representing another 43%. Professional accountants -- who use the company's Lacerte, ProSeries, and Intuit Tax Online products -- account for the remainder of revenue.
California-based Intuit has offices in the US, Australia, Canada, India, Singapore, and the UK. The company's software and services are available in the US, Canada, the UK, Australia, India, and Singapore. International sales account for about 5% of Intuit's total sales.
Sales and Marketing
The company reported advertising expenses of about $229 million in 2015 (ended July) from $175 million in 2014 and $186 million in 2013. The company relies on Web marketing and targeted advertising, such as search engine optimization and purchasing key words from major search engine companies; placing its mobile application in proprietary online stores (including Google's Play Store and Apple's App Store), direct-response mail and email campaigns, telephone solicitations, TV, radio, and print advertisements, social media, and coordinated promotional offers with major retailers. Its TurboTax tax preparation software is displayed prominently in stores such as Office Depot, Best Buy, and Sam's Club through April 15 each year.
Intuit reported 2015 (ended July) sales of $4.2 billion, down 7% versus the prior year. Net income slid 60%, to $365 million, over the same period. The company expected a dip in revenue as its transitions from desktop products to those available as cloud-based products sold by subscription.
Revenue from Intuit's Small Business segment decreased 2% due to lower sales of QuickBooks desktop offerings, which countered growth in revenue from QuickBooks Online. Weaker desktop software sales also affected the Professional Tax segment in which revenue tumbled 33% in 2015 from 2014. The Consumer Tax segment brightened Intuit's revenue stream in 2015 with an 8% increase from 2014.
Lower revenue wasn't the only reason that Intuit's net income plummeted in 2015 from 2014. The company also recorded goodwill and intangible asset impairment charges of $148 million for its Consumer Ecosystem reporting unit for the year. The impairment resulted from a change in which the company recognizes revenue over time from subscriptions.
Cash flow from operations increase to $1.5 billion in 2015 from $1.45 billion in 2014.
Intuit put its Demandforce, QuickBase, and Quicken business up for sales in the 2015 fourth quarter. The company is removing them from its portfolio to concentrate resources on its small business and tax strategy. It went as far as classifying them as discontinued operations and has separated their operations from its financial statements and balance sheets.
Intuit has declared it intends to double its small business customer base by 2019 and it wants to make sure that its products are accessible online and can be accessed via desktops, laptops, and mobile devices. It also wants accessibility through social websites such as online forums and social media sites. The company generated 73% ($3 billion) of its revenue from connected services in 2015,up from 50% seven years ago.
The company stumbled with TurboTax in early 2015 when consumers learned that the versions they used in previous years no longer contained some of the forms they needed. Intuit had offered more versions targeted to more specific audiences for the 2014 tax season (filed in 2015). After a consumer outcry, TurboTax offered a $25 rebate. The episode provided an opening for competitors H&R Block and TaxAct to court TurboTax users.
Mergers and Acquisitions
Intuit also makes acquisitions to expand into software-as-a-service (SaaS) products for small and midsized businesses to address demand among many companies for cloud-based software delivery. In mid-2014 it paid $360 million for mobile bill payment service Check Inc., which offers an app used by about 10 million people. In late 2013 it bought privately held Prestwick Services, which allows workers' compensation insurance premiums to be calculated in real time, based on actual payroll, via its TRUPAY platform.