Summary
Intuit opened fiscal 2022 with a sharp revenue increase and thinner margins. Revenue for the first quarter, which ended Oct. 31, 2021, was $2.01 billion, up from $1.32 billion a year earlier, a gain of 51.7 percent that includes Credit Karma, acquired in the second quarter of fiscal 2021. Operating income moved the other way and fell 6.7 percent to $195 million from $209 million. Operating margin dropped to 9.7% from 15.8%. Net income rose 15.2 percent to $228 million from $198 million, helped by $39 million of net gains on other long-term investments. Diluted earnings per share were $0.82, up from $0.75.
The Small Business & Self-Employed segment carried the quarter, with revenue up 22 percent. Online Ecosystem revenue within it rose 36 percent. QuickBooks Online Accounting revenue grew 32 percent on customer growth, higher effective prices and a mix shift, while Online Services revenue grew 42 percent on payroll and payments. Desktop Ecosystem revenue rose 7 percent even as Intuit discontinued its QuickBooks Desktop packaged software products late in the quarter and moved to subscriptions. Credit Karma posted a quarterly record, driven by personal loans and credit cards. Consumer and ProConnect revenue were seasonally light, and the Consumer segment swung to an operating loss from operating income a year earlier.
Costs climbed faster than sales. Total operating expenses rose 63 percent, and included $217 million tied to Credit Karma. Share-based compensation expense reached $280 million, compared with $111 million a year earlier. Amortization of other acquired intangible assets jumped to $53 million from $2 million. Operating cash flow was $145 million, up from $45 million. Capital expenditures were $42 million, up from $38 million. The current portion of deferred revenue rose 4.5 percent to $600 million from $574 million. Cash, cash equivalents and investments totaled about $3.3 billion at Oct. 31, down $620 million from July 31, 2021.
Mailchimp closed on Nov. 1, 2021, after the quarter ended, for total consideration of $12 billion, including $5.7 billion in cash and 10.1 million Intuit shares valued at about $6.3 billion. Intuit borrowed $4.7 billion under a new term loan to fund part of the deal. Management raised full fiscal year 2022 revenue guidance to growth of about 26 to 28 percent. Excluding Mailchimp, full year growth is expected at 18 to 20 percent, up from prior guidance of 15 to 16 percent. Full year GAAP operating income guidance points to a decline of about 2 percent to flat, down from prior guidance for growth of 4 to 7 percent. Full year GAAP diluted earnings per share guidance is a decline of about 7 to 5 percent. For the second quarter of fiscal 2022, the company guided to revenue growth of about 73 to 74 percent.
Capital returns continued. The board approved a quarterly dividend of $0.68 per share, a 15 percent increase, and the company repurchased $339 million of stock, leaving $3.0 billion on its repurchase authorization. Risks are the familiar ones: competition, cybersecurity incidents including those at third parties, reliance on third-party business relationships, credit and counterparty risk from lending to small businesses, and the debt taken on for Mailchimp. Seasonality is another factor. Consumer and ProConnect revenue is concentrated from November through April, so the first quarter says little about the tax season. Intuit also committed $555 million through July 31, 2044 for naming rights to Intuit Dome and amended a cloud services agreement with a total minimum commitment of $1.2 billion over five years. Non-cash charges remain a wide gap between the two sets of numbers: non-GAAP operating income was $555 million in the quarter, compared with $334 million a year earlier.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.01B | $2.56B | -21.6% | $1.32B | +51.7% |
| Research & development | $530.0M | $521.0M | +1.7% | $325.0M | +63.1% |
| Sales & marketing | $550.0M | $845.0M | -34.9% | $362.0M | +51.9% |
| General & administrative | $262.0M | $274.0M | -4.4% | $169.0M | +55.0% |
| Total operating expenses | $1.81B | $2.16B | -16.1% | $1.11B | +62.7% |
| Operating income (loss) | $195.0M | $402.0M | -51.5% | $209.0M | -6.7% |
| Operating margin | 9.7% | 15.7% | -6.0 pp | 15.8% | -6.1 pp |
| Net income (loss) | $228.0M | $380.0M | -40.0% | $198.0M | +15.2% |
| Net margin | 11.4% | 14.8% | -3.5 pp | 15.0% | -3.6 pp |
| Diluted EPS | $0.82 | $1.39 | -$0.57 | $0.75 | +$0.07 |
Risks
Intuit had $2.0 billion of senior unsecured notes outstanding at October 31, 2021 and borrowed $4.7 billion under new credit facilities on November 1, 2021 to fund a portion of the $12 billion Mailchimp acquisition, increasing leverage, interest expense, and covenant risk.
The $12 billion Mailchimp acquisition closed November 1, 2021 and carries integration risks, including retaining key employees and customers, realizing expected synergies, and dilution from the 10.1 million Intuit shares issued as consideration.
At October 31, 2021 Intuit had $5.6 billion of goodwill and $3.2 billion of net acquired intangible assets, and future impairment or amortization charges, including from Mailchimp, could significantly fluctuate net income.
Intuit no longer participates in the IRS Free File Program, whose current agreement expires in October 2022, increasing the likelihood the program is terminated or not extended and raising the risk that federal or state authorities become publicly funded direct competitors in tax preparation.
Intuit faces intense competition from large platforms, emerging start-ups, and free offerings in tax, accounting, payments, and personal finance, and MD&A says AI is transforming financial technology and creating a more dynamic and highly competitive environment.
Intuit hosts large amounts of sensitive customer data, has experienced and expects increasingly frequent cyberattacks, and its single identity ecosystem could expose more customer data in a breach; Credit Karma is also subject to a 2014 FTC order requiring biannual independent security assessments for 20 years.
Online tax, payroll, payments, lending, and personal finance businesses face increasing and sophisticated third-party fraud, heightened by work-from-home arrangements, and failure to combat it could lead tax authorities to refuse electronic filing or cause substantial losses.
Competition for skilled personnel in software, mobile, data science, data security, and SaaS is intense, especially in California and India, and evolving post-pandemic expectations may make it difficult to attract and retain key employees.
Evolving U.S. and international privacy laws, including GDPR, CCPA, CPRA, and the Virginia Consumer Data Protection Act effective January 2023, plus invalidation of the EU-U.S. Privacy Shield, create compliance uncertainty and could require product changes or significant penalties.
Adverse global economic conditions could reduce consumer and small business spending, lower tax returns filed, reduce Credit Karma partner activity, and increase credit risk in small business lending and PPP programs.
Intuit's tax businesses are highly seasonal, with revenue concentrated from November through April, and past IRS deadline extensions to May 17, 2021 and July 15, 2020 caused significant quarterly fluctuations.
Credit Karma contributed $418 million of revenue in Q1 FY22, or 21% of total revenue, and its cost-per-action model depends on financial institution partners that may reduce or suspend activity during adverse economic conditions.
Tax products have rigid development timetables and must incorporate late tax law changes, so errors or launch delays could lead to customer loss, refunds, accuracy guarantee payments, and reputational harm, including for TurboTax Live experts.
Intuit relies on third-party partners, financial institutions, cloud providers, and app stores, and failure or adverse changes by these parties could disrupt services, reduce Credit Karma revenue, or increase costs.
Intuit provides capital to qualified small businesses and is a PPP lender and servicer, exposing it to borrower default, SBA guarantee disputes, and litigation, with COVID-19 increasing the likelihood borrowers cannot repay loans.
SaaS KPIs
All quarters →Total Customers
Online Ecosystem revenue
Online Services revenue
Non-GAAP operating income
QuickBooks Online Accounting revenue
Credit Karma revenue
Small Business & Self-Employed Revenue
Summary, forecast, risks and KPIs are extracted from INTUIT INC.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.