Portfolio Holding Focus: Intuit (INTU‐US)
Intuit Inc provides financial management software directly to business consumers and accountants.
Predominantly, its products are focused on servicing the SME business and consumer tax segments in the United States.
INTU‐US is the clear leader in the SME business and consumer tax segments in the United States. The company holds a strong brand position and economies of scale in R&D and marketing, which has created a high barrier to market entry and allowed for continual improvement in existing products as well as the expansion of its product suite.
In addition, its market position is further strengthened by the high cost and product inertia associated with switching to a competitor’s software. The addressable market for INTU‐US is very large globally. The company currently has only small market shares in offshore markets and the movement towards cloud-based software will make it easier for INTU-US to increase its footprint. Importantly, penetration levels are very low, even in the United States, representing further growth upside for its products. INTU-US has a high quality, subscription based recurring revenue stream with significant long-term growth potential. Tailwinds from cloud technology adoption will benefit earnings and allow the company to aggressively take market share globally.