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With small businesses and consumers feeling the heat, the expectations for Intuit's (NASDAQ: INTU) second quarter results were certainly tempered. But the company was able to pull off a nice performance, with earnings of $85 million, or $0.26 per share. Revenues fell by 5.3% to $791 million.
Intuit is preparing for a protracted slowdown. On the earnings conference call, CEO Brad Smith said the current environment is the "new normal."
The fact is that Intuit has a diversified revenue base, so some of its units showed nice gains. There was a spike in revenues from the online TurboTax franchise. There was also strength in the payroll segment. Still, there was noticeable weakness in products like QuickBooks, Real Estate Solutions, and Quicken.
As a result, Intuit is focused on reducing costs and streamlining its product line. At the same time, the company is trying to find ways to provide free product offerings, which will ultimately lead to paid services. So far, it looks like the strategy is gaining traction.
So, with $802 million in the bank and continued strong free cash flows, Intuit is in an enviable position. The company can continue to make incremental investments in its product line as well as buy out ailing competitors. Thus, while economic slowdowns can definitely be painful – they also have silver linings.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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