Tailwinds for Intuit’s desktop ecosystem
Intuit’s (INTU) desktop ecosystem has continued to see soft growth in the past few quarters. The success of the business is highly dependent on QuickBooks Desktop Accounting revenue, which has grown strongly. However, changing customer tastes have affected the desktop business, with clients preferring QuickBooks cloud-based software over desktop software.
The graph above shows Intuit’s desktop revenue over the last five quarters. It has followed an uptrend due to increased demand for QuickBooks Desktop Accounting.
In the last five quarters, QuickBooks Desktop Accounting revenue has grown at a compound annual rate of 6%. During the same period, desktop services and supplies revenue, which contributes more than 60% of Intuit’s desktop ecosystem business, has grown at a compound annual rate of 0.3%.
Performance in the past few quarters
Customers who prefer desktop are mainly driven by its feature-rich functionality, which includes both payroll and payment options. In fiscal 1H18, total desktop ecosystem unit revenue came in at ~$892 million, marking a 9% increase YoY (year-over-year). In fiscal 2Q18, revenue from the division grew 9% YoY to $456 million.
Revenue from the QuickBooks Desktop Accounting business grew 27% YoY to $164 million in fiscal 2Q18, and desktop service and supply revenue grew 1% YoY to $292 million. With the launch of innovative products such as TurboTax Live and new acquisitions, Intuit may not only offset softness in its desktop business but also compete with products from Global Payments (GPN) and H&R Block (HRB).