Financial software company Intuit (NASDAQ: INTU) continued its strong momentum in its fiscal third quarter, posting better-than-expected revenue and non-GAAP earnings per share. Revenue rose 12% year over year to $3.27 billion, and non-GAAP EPS jumped 16% to $5.55. Analysts, on average, were expecting revenue and non-GAAP EPS of $3.23 billion and $5.41, respectively.
The quarter was once again fueled by a 38% year-over-year increase in small business online ecosystem revenue, or revenue from online small-business and self-employed group products and services. Looking beyond these key numbers from Intuit's fiscal third-quarter earnings release, here are some key takeaways from management's earnings call with analysts on Thursday.
Continue Reading Below
Intuit's approach to price increases
In March, Intuit announced upcoming price increases to some QuickBooks products. To this end, one analyst asked how management thinks about price increases in general. Intuit's approach, management explained, entails raising prices as long as the company can deliver more value to customers without negatively affecting retention.
"We really love to continue to deliver the value for customers and we measure those very carefully," said Intuit CFO Michelle Clatterbuck, continuing:
Expect QuickBooks Online subscriber growth to decelerate
QuickBooks Online (QBO) subscribers increased 32% year over year in Intuit's fiscal third quarter. This was a meaningful deceleration from 38% growth in fiscal Q2. Looking ahead, investors should expect this growth rate to continue to come down.
"We continue to expect total subscriber growth to moderate as we place a greater focus on additional services and penetrating a broader range of customers [as opposed to new subscriber acquisition]," said Clatterbuck.
QuickBooks Online is still key
This doesn't mean investors should count QBO out as an important growth driver for Intuit. Not only is it a key platform for cross-selling additional services to existing customers, but its momentum is still impressive.
"Growth remains strong across multiple geographies, with U.S. subscribers growing 25% to over 3.1 million, and international subscribers growing 55% to over 1.1 million," said Clatterbuck. "Within QuickBooks Online, Self-Employed subscribers grew to approximately 970,000, up from roughly 680,000 one year ago."
With this backdrop in mind, though QBO subscriber growth may decelerate in the coming quarters, the deceleration will likely be gradual.
10 stocks we like better than IntuitWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Intuit wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019