Blog - Porter's Five Forces

Porter’s Five Forces Analysis of Intuit Key Facts Name Intuit Industry Computer Software – IT Founded 1984 Headquarters California, US CEOs Sasan Goordazi Revenues US $ 9.63billion,July 31st 2021 US $ 12.72 billion, July 31st 2022 Profit US$ 2.062 billion, July 31st 2021 US$ 2.066 billion, July 31st 2022 Competitors Sage, Xero Company Overview Headquartered in NewYork, United States reaching the 366th place in the Fortune 500 List and 505th by Forbes Global 2000 Year 2022, is leading Financial Software provider. The Company is operating through 4 reportable segments which are Small Business & Self-Employed, Consumer, Credit Karma and Proconnect. The Company was founded by 1983 by Tom Proulx. The major and famous brands are QuickBooks, Credit Karma, TurboTax and Mailchimp. The Intuit Company has Net Assets of US$ 27.73 as of FY 2022. The Intuit Company is serving more than 100 million customers globally with a mission to make the financial transaction easy and speedy from payroll payment to tax filing. Today we are going over Porter’s Five Forces Analysis of Intuit: Porter’s Five Forces Analysis Porter’s Five Forces Analysis is used to determine the competition and profit margin in the Industry and guide the company’s to keep strategizing its operations in a better competitive position. It is invented by Professor Micheal E. Porter in 1979,at Harvard Business School. Intuit Rivalry among Existing Competitors Intuit Global Business Operations and Revenue Analysis FY 2022 – FY 2021 and FY 2020: The Company has operations with physical operations in 20 offices in 10 countries with 17,300 Employees globally as of July 31st FY 2022. Intuit Revenue Reporting Line Segments and Revenue Analysis FY 2022 to FY 2020: For reporting purposes the company has two major product lines Product and Product Line: The Product line operates through QuickBooks Desktop version and other licenses, generated revenue of US$ 1.74 Billion in FY 2022,US$ 1.69 Billion in FY 2021 and US$ 1.63 Billion in FY 2020. Service Line: The Serviceline operates through different online offerings including Credit Karma and payment processing facilities, generated revenues of US$ 10.97 billion in FY 2022,US$ 7.93 billion in FY 2021 and FY US$ 6.04 billion in FY 2020. The company gave a record revenue of US$ 12.72 billion, which is a raise of almost 33% compared to previous year, with net income of US$ 2.06 billion in FY 2022. While the revenue was US$ 9.63 billion, which is a raise of 26% compared to previous year, with a reported net income of 2.06 in FY 2021 and revenues were US$ 7.67 billion in FY 2020 with the net income of US$ 1.82 billion respectively. IntuitBusiness Segments and Financial Performance FY 2022: The Company has 4 major business divisions including the following : Small Business & Self Employed : This category is for serving small business and accountants for managing Accounting and Financial Information including QuickBooks and Mailchimp are the most famous offerings. This category also serves for payroll services and time tracking solutions etc. This segment gave a revenue of US$ 6.5 Billion in FY 2022, which is a raise of 38% compared to FY 2021. Consumer: This software is easy to use for individuals for self-tax filing and other financial tracking and management needs, the famous program in this category is TurboTax.This segment gave a revenue of US$ 6.5 Billion in FY 2021.This segment gave a revenue of US$ 3.9 Billion in FY 2022,which is a raise of 10% compared to FY 2021. Credit Karma: This segment help consumer with best recommendation for mainly credit card, home and auto loan and other financing solutions.This segment gave a revenue of US$ 1.8 Billion in FY 2022,which is a raise of 109% compared to FY 2021. ProConnect : It is Professional Accounting Software for the Accountants for Tax Preparation and filing the most famous Software in this category is Lacerte.This segment gave a revenue of US$ 546 Million in FY 2022,which is a raise of 6% compared to FY 2021. Xero:The Xero Company is one of the top listed IT and Software companies on the Australian Securities and Exchange Commission with a Market Cap of Australian Dollar 11.01 billion as of FY 2022.The company generated a record revenue of $1.1 Billion in FY 2022 which is a raise of 29% compared to previous year with 3.3 million subscribers and 4,784 employees globally. Sage:Sage Intact is also one of the leading Software and Business solutions provider specially Accounting, Inventory and ERP solutions and modules. Sage gave a revenue of £92 billion in FY 2022, which is an increase of 6% compared to previous FY with the Operating Profit of £ 0.38 billion ,which is also an increase of 8% compared to previous FY. Intuit Threat of New Entrants Research & Development Access – Industry Leadership Backing The threat from new entrant is observable in the changing AI times with Chat GPT Inventions but as Intuit is backed by Microsoft, in 1.5 billion, which was one of the biggest acquisition in Microsoft history minimizes the technological risk. Established Brand and Goodwill in the Market:The company holds the Assets of US$ 27.7 billion in FY 2022 while US$ 15.5 billion in FY 2021.Also the company holds the Goodwill of US$ 13.73 billion in FY 2022 while compared to US$ 5.61 billion in FY 2021,which shows a strong brand image of the company and reduce the chances of switch or try other software solutions. Intuit Bargaining Power of Suppliers Third Party Suppliers – Extending More Digital Mediums:The Company Intuit has majority of the vendors as third party with the reliance factor consideration for their retail desktop software products. Due to COVID 19 and Russia – Ukraine war the third party-suppliers are facing slowdown in the supply chain cycle which eventually affecting the company negatively. The company is increasing it’s digital supplier portal through Apple’s App Store and Google’s Play Store. Commitments and Guidelines for Suppliers: The total amount which comes under the Purchase Obligation of the Intuit Company for the next five years from 2023 to 2027 is almost US$ 2.3 billion. The company strictly provide guidelines to it’s vendors to follow to adhere their policies from ethical policies to Climate Change Intuit Bargaining Power of Buyers US and Canada as Established Market – Strong Niche and Penetration and Industry Mentor and Influencer: The company is also provides self-training and certifications which is also a revenue stream specially in the most famous line of QuickBooks Accounting category which cost US$ 500 almost per individual user.Especially Intuit is more established for USA and Canadian Market. Global Competition and Strong Customer BaseThe Company has a customer base of 100 million users globally which is a strong base and as most of the Intuit services required a user or subscription based services which shows a strong customer connectivity and reduce the chances of replace ability. Intuit Threat of Substitute Products or Services Global Economic Down Turn due to Geo-Political Crises and Global Warming: The world is recovering form COVID-19 crises with the current geo-political tension due to Ukraine and Russia war which further impacted the energy price hike and long trade routes definitely slow down the demand and supply.The Global growth is estimated to drop from 3% to 1.7% in Year 2023 by World Bank and declared in Global Economic Prospects. Chat GPT Affects the Business:Due to emergence of Chat GPT and exponential connectivity of AI with all IT related operations there are huge chances that professional tasks will be decreased and Chat GPT will take place of many easy and complex operations. In a 2013 Oxford Survey it was predicted that 47% of the Job in US will be eliminated by AI in upcoming 20 years. References Forbes, Intuit, Available at Forbes Fortune 500, Intuit .Available at Fortune 500 Intuit ,Annual Report 2022 Intuit, About Intuit Statista (January 3, 2023) Leading software and IT services companies listed on the Australian Securities Exchange (ASX) in Australia as of November 2022 (in billion Australian dollars) | Statista. [online] Availableat Statista Xero, Xero’s full year 2022 financial results .Available at Xero Forbes, Sage Sage FY 2022 Results .Available at Sage Insider, April 9,2023 ChatGPT may be coming for our jobs. Here are the 10 roles that AI is most likely to replace. Available at Insider The World Bank, Global Economic Prospects The NewYork Times (October 14,1994) .Available at Microsoft in 1.5 Billion Deal to Acquire Intuit Intuit ,(August 23,2022) Intuit Reports Strong Full Year Results and Sets Fiscal 2023 Guidance