In the prior part of this series, we looked at Intuit’s (INTU) fiscal 1Q16 results. We also looked at the contribution of its operating segments to the company’s overall revenues.
In fiscal 4Q15, Intuit announced the divestiture of the following:
Intuit announced that the divestitures were part of its move from the desktop to the subscription-based business model. The divestitures will enable the company to focus on its online, subscription-based services, especially its flagship cloud software QBO (QuickBooks Online). A subscription-based business provides recurring revenues that are stable and predictable, which is why they are preferable.
The increased preference for cloud storage has disrupted the traditional, established IT (information technology) market. As a result, a majority of the legacy technology players such as Microsoft (MSFT), Oracle (ORCL), and IBM (IBM) have found themselves in transition. The shift from traditional software licenses and hardware sales to pay-as-you-go subscription revenues has forced these companies to alter their established business models.
According to Goldman Sachs and as the above graph shows, the cloud computing infrastructure market is expected to grow approximately three times its current size by 2018.
You can consider investing in the iShares SPDR S&P 500 ETF (SPY) to gain exposure to Intuit. SPY invests 0.15% of its holdings in Intuit.