Last Thursday Intuit (NASDAQ: INTU) announced its 2017 second quarter results for the period ended January 31, 2017. Intuit reported revenue of $1.016 billion, a 10 percent increase over the same period last year. It also announced that QuickBooks subscribers grew by 49 percent in the second quarter to more than 1.87 million subscribers, including 61 percent growth in online subscriptions outside the U.S. including the U.K., Canada and Australia. QuickBooks Online now has approximately 370,000 subscribers internationally.

Other financial highlights include:

• Total Small Business segment revenue increased by 12 percent.
• Small Business online ecosystem revenue grew 30 percent, up from 26 percent in Q1 2017.
• QuickBooks Online now has 1,421 apps, including 453 available in the QuickBooks Apps Store.
• Consumer Tax revenue grew to $285 million in Q2.
• Intuit introduced TurboTax Self-Employed for the current tax season, which includes a 12-month subscription to the QuickBooks Self-Employed accounting solution.
• ProConnect revenue was $99 million in Q2.
• Turbo Tax e-filed returns declined 10 percent over the prior year.
• Net income (GAAP) of $13 million, compared to $24 million for the same period last year.
• The company repurchased 1.7 million shares for $198 million.
• The board approved a dividend of $0.34 per share to be paid on April 18.

“Our second fiscal quarter results reflect strong momentum across the business,” said Brad Smith, Intuit’s chairman and chief executive officer, in a press release.

“We continue to be pleased with how our long-term strategy in Small Business is playing out, driving momentum for the QuickBooks Online ecosystem. Our Small Business results are bolstered by product and platform innovation, improved product market fit outside of the U.S., and further expansion of our addressable market by targeting the self-employed segment,” Smith added.

“We are also in the midst of another highly competitive tax season. While the industry came out of the gates a bit slow, we are confident we have a strong and winning hand that combines innovation across the end-to-end experience, an effective marketing campaign, and great value for taxpayers,” said Smith.

“Experience tells us that every tax season is different, but there’s one thing we know for certain about the tax business: everyone needs to file by the April 18 deadline.”

Intuit offers the following financial guidance for the third quarter of 2017, which ends April 30, 2017:

• Revenue between $2.50 billion and $2.55 billion, a 9 to 11 percent increase
• GAAP operating income between $1.42 billion and $1.44 billion
• GAAP diluted earnings per share of $3.61 to $3.66
• QuickBooks Online subscribers will grow to 2.0 million.

“Our tax performance as compared to Internal Revenue Service data through February gives us the confidence to maintain our expectations for the business and for the company,” said Neil Williams, Intuit’s chief financial officer. “With small business product improvements and innovations coming to market we are on track to meet our QuickBooks Online subscriber growth expectations as well.”

Guidance for the full year 2017 is as follows:

• Revenue of $5 billion to $5.1 billion, representing growth of 7 percent to 9 percent
• GAAP operating income between $1.33 billion and $1.38 billion, representing growth of 7 to 11 percent
• GAAP diluted earnings per share of $3.47 to $3.57, compared to $3.69 in fiscal 2016
• QuickBooks Online subscribers will grow to 2.2 million.

Two weeks prior to the earnings report, Intuit issued a press release revising previous guidance, saying consumer tax revenue was expected to shift to the third fiscal quarter.

“Data points to the tax category forming slowly for all prep methods,” said Dan Wernikoff, executive vice president and general manager of Intuit’s TurboTax business, in a February 8 press release. “We believe we have a strong and winning hand that combines innovation across the end-to-end experience, an effective go-to-market campaign and great value for taxpayers. One thing we know about the tax business is that everyone needs to file by April 18. We are looking forward to a strong finish to the season.”

Investors reacted favorably to the news. At 4 PM on February 23, the day the results were announced, stock was $120.70 per share. Intuit stock closed on February 24 at $128.01 per share. This is a significant uptick from where stock was a year ago – $96.64 per share on February 29, 2016.

Insider Take:

Last year Intuit admitted to some strategic and pricing missteps as it attempted to transition QuickBooks users from licensed software users to the online subscription format. Since then, QuickBooks has been able to turn that around, growing subscribers at a steady pace over the last year. If Intuit continues with this pattern, it stands to create a nice nest egg of recurring revenue that will help it transition nicely to a successful subscription model.