Move to QuickBooks Online Continues

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Intuit logoIntuit's customers continued the move from desktop products to online during the year ended July 31. The number of subscribers for QuickBooks Online rose to 362,000, a 27.8-percent increase from 283,000 a year earlier. That came while that total number of QuickBooks customers, 1,575,000, was only 3,000 units higher than at the end of fiscal 2011.

That means that the number of desktop units sold declined. And that was despite strong growth in QuickBooks Enterprise Solutions, the company's midmarket edition of the accounting software package. There were 71,000 QBES subscribes at the end of the recently concluded year, up from 57,000 a year earlier.

In this week's earnings webcast, CEO Brad Smith pointed to strong growth in other online products. The number of online payroll subscribers rose by 19 percent while the payments customer base rose by 13 percent, driven by the company's mobile GoPayments application.

The company ended the year on a strong note. It had a $4 million GAAP net profit for the fourth quarter, compared to a loss of $57 million in last year's corresponding period. Intuit noted a year ago that its non-GAAP profit for the fourth quarter of 2011 was its first in years. The company usually loses month in the final period which is outside of tax season.

For 2012, Intuit reported $792 million in net income, a 25-percent increase from $634 million for fiscal 2011. Revenue for the most recently ended year was $4.15 million, up 10 percent from $3.77 million a year earlier. Intuit turned a $4 million net profit for the fourth quarter, compared to a loss of $57 million in last year's corresponding period.

Much of the earnings webcast focused on Intuit's consumer tax business. Smith said that the results for TurboTax were not up to expectations even though it grew by 11 percent over 2011. One change the company is making to focus on the tax product is to outsource its debit card business.

"We believe debit cards benefit our customers," Smith said. However, letting another business handle the debit card operations should improve profitability although it will reduce revenue for fiscal 2013. Intuit has not selected a partner, although the company appears close to a decision.

Intuit took a $15 million restructuring charge for staff realignments, which included the loss of 200 jobs. Most of those jobs and most of the cost was associated with the debit card decision, that included terminating agreements related to the money card.

The results reflected some important realignments in the business. The company recently announced the sale of its Intuit Websites business to Endurance International Group. That operation had produced about $72 million in annual revenue. Terms of the sale, expected to close this quarter, were not disclosed. In May, it purchased Demandforce for about $423.5 million. That company provides outsourced services, particularly marketing, to small businesses. And in the third quarter, it sold its corporate banking business to Bottomline Technologies.

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