QBO subscriptions posted double-digit growth
In the previous part of this series, we looked at Intuit’s (INTU) fiscal 1Q6 results as well as its decision to divest three offerings: Quicken, Demandforce, and QuickBase. But Intuit said it will continue to support, maintain, and develop the products until the company finds a buyer. The company confirmed this with its recent launch of Quicken 2016, which includes a separate edition for Microsoft (MSFT) Windows and Apple (AAPL) OS X.
Let’s see how QBO (QuickBooks Online) performed in fiscal 1Q16. The growth of QBO is important for Intuit as it overhauls its entire business. QBO subscriptions rose by 87,000 to 1.2 million QoQ (quarter-over-quarter). On a YoY (year-over-year) basis, this growth was >57%.
Looking at QBO’s growth and increased traction, the company expects subscriptions to total 1.2 million in fiscal 2Q16. About 80% of QBO’s customers in fiscal 1Q16 were new to the company’s franchise.
Intuit’s small business online ecosystem revenue growth was offset by the fall in consumer ecosystem revenues
QuickBooks Online subscriptions outside the United States increased by two times on a YoY basis to reach 215,000 in fiscal 1Q16. QuickBooks Self-Employed subscription increased to 35,000 compared to 25,000 in 1Q15. Online payroll and payments customers rose 17% and 4%, respectively, on a YoY basis.
Within the payroll solutions space, Intuit faces competition from Paycom Software (PAYC) and Automatic Data Processing (ADP). In the Small Business operating segment, the Consumer Ecosystem Group’s revenues fell 5% to $16 million. This dampened the Small Business segment’s growth to a small extent.
Owing to strong customer acquisition as shown by the increase in subscriptions, the small business online ecosystem posted a revenue growth of 28% in fiscal 1Q16, which counterbalanced to an extent the fall in the consumer ecosystem group’s revenues.
The iShares US Technology ETF (IYW) has an exposure of 0.27% to Intuit. Microsoft, another leading technology player, accounts for 12.1% of IYW.