I was a little surprised and not very happy with the reaction to the earnings. I realize that the recent stock appreciation leaves little room for any miss, but I do not see as much negativity in the earnings / guidance as the market did.
I am a bit perplexed by the segment titled "Financial Services". I believe this is the result of the Digital Insight acquisition from 2007, but it might be a combination of that and other existing pieces of Intuit. Regardless, I am having difficulty understanding why the growth is so much weaker than the rest of Intuit. Also, based on the Q1 results, I see no path to meeting the FY guidance.
The segment is relatively small ($330M) and so it should be able to grow faster than other segments that are much larger and already have a much higher market share. I know some of the other segments have acquisitions pumping their growth rates, but the growth in Financial Services revenue is weak by any measure.
The other thing that is worrisome is that it has just had its first sequential decline in revenue. That is following a quarter with flat sequential revenue. Even if they can reverse that trend and start growing at the $2M Q/Q growth it has historically, I do not see any way to get within $10M of the bottom of the guidance range.
I see that their GM is moving on to be the CEO of another company and I wonder if it is a sign of the rats fleeing the ship. I do not see a strategic fit between this segment and the other pieces of Intuit. I think Intuit would be better served to divest this now and cut its loss. Their revenue growth rate would increase without the drag. I am pretty sure they would have take a write-off since they wildly overpaid ($1.5B) for this dog, but that may happen even if they do not divest it.
I did not own or follow the stock at the time of the acquisition. Does anyone more familiar with this segment and its history have some perspective they could offer?