Intuit Continues Diversification Path (INTU)

It used to be that Intuit Inc. (NASDAQ: INTU) was a company whose life revolved around tax season as Joe Public went to buy new versions of TurboTax® software, and the offset to the seasonality was for sales of QuickBooks® and Quicken®.  While the company may never get entirely away from some of that seasonality, it has made small acquisitions where it could to drive more complimentary financial service and financial information data services that have sales and revenues throughout the year.  To continue in its diversification the company announced a $170 million acquisition of privately-held Mint.com.

Mint.com is a provider of online personal finance services to offer consumers with an easy and intelligent way to manage their money in checking and savings accounts, credit cards, investment accounts, and more.  Intuit noted that it intends to keep both the Mint.com and Quicken Online offerings. Mint will become the primary online personal finance management service that is offered directly to consumers by Intuit, and Quicken Online will connect Quicken customers to deliver access and the deal is meant to accelerate its ability to create products and services that make managing money easier for all Intuit customers.

As a part of the terms of the $170 million, Intuit expects to reduce its fiscal year 2010 non-GAAP EPS by $0.02 and by $0.03 EPS off of GAAP EPS.  The company said that it does not expect this deal to have a material effect on fiscal year 2011 earnings.

We wanted to dig a little deeper to see what Intuit would really be adding to its network here.  According to the company, over 1 million people already use Mint.com’s online money management and budgeting software today.  It is tracking $175 billion in transactions, $47 billion in assets and has identified more than $300 million in potential savings for its users.

To show how dominant the company’s revenue quarters are, Intuit had annual revenue of $3.2 billion in its fiscal year 2009 and over $1.43 billion of that revenue came in the April-30 quarter.  To show how the rest came in during the year, over $790.9 million came in the quarter-end for January 31, 2009.  This deal alone will not completely smooth out the one-quarter to two-quarter dominance, but it just keeps adding to a smoothing factor that the company is seeking.

There is no backlash against Intuit today for it spending $170 million.  Shares are up 0.35% at $27.94 and the 52-week trading range is $20.18 to $32.00.  If we take the $1.94 EPS target from Thomson Reuters and deduct the $0.02 figure, then Intuit now trades at about 14.5-times earnings.

JON C. OGG
SEPTEMBER 14, 2009