The problems Intuit Inc. had with TurboTax seems not to have affected its online subscription purchases as the number of sign-ups has actually increased for both the tax filing software and for the popular QuickBooks.
Second quarter accounting software purchases went up by a full 50 percent in the company’s second fiscal quarter, an increase of 7 percent over the previous quarter. Purchases of TurboTax went up by 19 percent even though Intuit recorded a loss for that same period of time. This loss surprised market analysts who had thought the stock would be be down by 13 cents a share rather than the 6 cents a share loss that actually played out. Sales were higher the estimate of $786.9 million.
Gil Luria of Wedbush Securities Inc. said performance of Intuit, its products, and subsequently the stock, was “strong.” Intuit, he elaborated, did not have to cut prices or expend a lot of money on advertising to get this kind of growth.
Intuit stock went up in trading after its $9.11 closing price. In New York, the stock dropped 1.2 percent while going up 1.9 percent in Standard & Poor’s 500 Index. For the second quarter, the software company showed a net loss of $66 million, a much larger loss than last year’s $37 million.
Intuit has had significant problems to compensate for related to its super popular TurboTax and TurboTax Free Edition. The trouble centered around many fraudulent income tax returns filed using the Intuit software program. People were also disgruntled over a price increase for some parts of TurboTax.
All in all, Intuit had to scramble to get back in the public’s good graces, said CEO Brad Smith. Desktop buyers of TurboTax decreased 7 percent after the news of the problems came out. Smith said Intuit really hurt its own image by changing the price structure.
However, the consumer tax division of the company still had a big jump is sales over last year–a full 54 percent. This year’s tax season began a bit earlier this year, too.
In the third quarter, sales went from $2.075 billion to $2.15 billion. Analysts had thought that sales would be $2.22 billion and profits, $2.87 per share, not the $2.70 to $2.75 originally estimated by Bloomberg.
Intuit Doing Well Despite TurboTax Problems