Intuit (INTU) Q3 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Intuit (INTU) CEO Brad Smith said consumers are increasingly choosing to do their annual tax returns themselves

“The second driver is the percentage of those returns filed using do-it-yourself software. This season, the category grew nearly 6% versus the assisted category, which was up only slightly. This suggests that do-it-yourself software category gained more than a point of share again this year, driving more than 3 points of revenue growth for TuboTax.”

And they’re increasingly trying to complete their taxes on their mobile devices

“Our seamless cloud-based experience drove increased mobile discovery and usage. Our mobile app downloads were up 85% versus last season and the number of completed returns through the mobile app and through mobile browsers doubled. This year, customers snap 5 million photos of tax documents with mobile devices. That is up 4x greater than it was last year. This represented 25% of all the documents imported into TurboTax, which save time and reduce errors while delighting customers.”  \

Intuit (INTU) CEO Brad Smith feels customers still want to ultimately connect with a live person who has expertise in accounting

“We know QuickBooks Online retention is 11 points better when a Small Business works with an accountant. So, we are tapping into our accountant network to make these connections. Nearly 600,000 QuickBooks Online subscribers are now linked to an accountant. That is up 70% versus last year. This all nets out to a strategically important, highly profitable business.”

Growing internationally but are taking a country by country approach as opposed to using the same strategy in each market

“So in each country, we have the different set of strategic outcomes. We fundamentally believe that certain markets right now we have a real advantage and we have momentum and we are going to invest to win in that market. In other countries, we know that we are moving in and we are the second placed player. And so we want to be a challenger in that market and for every specific country, Neil and I have sat with the country managers and we have agreed upon an LTV to cap and it’s a multiyear target. So, we actually have where should we be a year from now, 2 years from now, 3 yeas from now.  In some cases, we pushed that number a little further out for strategic reasons. In other cases, we say we think we can get the profitability a little bit sooner. But it truly as a country by country formula and make no mistake, we see a lot of upside and the number one focus we have is expanding TAM and accelerating customer growth, because we know lifetime value will come over time. We just want to mature we are doing that prudently with the right cost to acquire.”

Intuit (INTU) CFO Neil Williams said customers in the US are paying significantly more for the software than their international counterparts

“On the average revenue per user, there is a pretty big gap right now. We talked about around $425 a year for the U.S. subscriber versus something around $125 a year for a subscriber outside the U.S.  We don’t see a QBO subscriber outside the U.S. getting to the same average revenue per user we see in the U.S. for a considerable time period.  And so we think that disparity is going to exist for a while.”

Using data to improve customer acquisition and effective marketing

“We can use machine learning and data science to look for more creative ways to expose them to these kinds of offers. And so I have to tell you, TurboTax has been leading the way and using data as a way to attach products and services. And we are now bringing that same level of rigor to the QuickBooks Online team and we are trying to use that as a way to improve the attach rates for payroll and payments as well.”