Early tax filers helped Intuit (INTU) boost second-quarter revenues to $827 million, up 8% over a year ago. That topped its own estimates by $20 million and gave management enough confidence to raise its outlook for 2010 on Thursday. That sent the stock up $2.40 on Friday, closing at $32.72, nearly 8% higher on the day.The maker of tax, small business and personal finance software saw growth across all business units, but particularly in its consumer tax unit, where TurboTax online led a revenue increase of 15%. "We believe that the 15% revenue and unit growth (excluding the free tax-filing version) suggest that the company continues to gain market share at the expense of its competitors," wrote Morningstar equity analyst Raphael Garcia in a note.
Intuit's payment unit saw revenues increase 14%, the employee management group had 12% higher revenues, the financial institutions unit was up 10% and small-business revenues increased by 5%. The company's accounting professionals unit was off 7%, and the financial management unit was 3% lower.
"We continue to see great success growing our core businesses, with a strong quarter in tax and good results in our small-business division," said Inuit president and CEO Brad Smith in a statement.
Pulling in Customers With Free Software
Intuit now expects revenue for fiscal year 2010 to grow 6% to 9%, higher than earlier guidance of 4% to 8% growth. Earnings per share are now projected between $1.97 and $2.04, up from $1.89 to $1.96. The company also said operating margins would likely be 30% or more.
Investors were impressed that with tax season just beginning, Intuit's TurboTax federal units were up 11% through Feb. 13. TurboTax federal is offered free online, and consumers then have the option to download state versions for a fee. TurboTax Vice President Bob Meighan estimates the online growth of TurboTax is up 23% over last year.
"Our strategy of getting people in with the free product is working because they are ultimately buying other services," Meighan said.
Meighan noted that with the economy potentially ready to rebound, Intuit's small-business unit, which features the company's QuickBooks software, would have a great opportunity to see strong growth for the rest of the year. He added: "We still have the April tax season coming, which is our biggest. If we can keep the momentum going, we are optimistic about Q3."
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