Intuit Inc. (NASDAQ:INTU)

Goodwill

Goodwill exhibited a substantial increase starting from 2019 through 2022, rising sharply from approximately $1.7 billion to over $13.7 billion. From 2022 onwards, goodwill remained relatively stable with marginal increases, reaching about $13.8 billion by 2024.

Customer lists/User relationships

This intangible asset category saw steady growth, initially stable at $256 million in 2019 and 2020, then sharply increasing to over $3 billion in 2021, followed by a near doubling to around $6.2 billion in 2022. Values remained stable through 2023 and 2024.

Purchased technology

Purchased technology assets displayed consistent growth over the period. Starting from $422 million in 2019, they increased gradually to approximately $1.6 billion in 2022, with slight increments continuing through 2024, reaching $1.65 billion.

Trade names and logos

Trade names and logos showed significant growth between 2019 and 2021, rising from $25 million to $400 million. This was followed by moderate growth to $680 million in 2022, after which the value remained stable through 2024.

Covenants not to compete or sue

Values for covenants not to compete or sue remained relatively constant around $39-$42 million from 2019 through 2023, with data for 2024 missing.

Acquired intangible assets, cost

The cost of acquired intangible assets saw a marked increase beginning in 2021, from under $1 billion in 2020 to over $4 billion in 2021. This upward trend continued aggressively through 2022, reaching over $8.5 billion, followed by stabilization through 2024.

Accumulated amortization

Accumulated amortization increased steadily over the years, indicating ongoing amortization expense recognition. Starting at approximately -$688 million in 2019, it deepened to -$2.7 billion by 2024, reflecting the amortization of acquired intangible assets.

Acquired intangible assets, net

Net acquired intangible assets (cost less accumulated amortization) rose significantly from minimal values (~$54 million) in 2019 and 2020, to a peak of $7 billion in 2022. Post-2022, this value declined gradually to $5.8 billion by 2024, primarily due to amortization exceeding new acquisitions.

Goodwill and acquired intangible assets combined

The combined amount experienced substantial growth, rising from $1.7 billion in 2019 to over $20.7 billion in 2022. After peaking in 2022, the total slightly decreased to approximately $19.7 billion by 2024, driven by a decrease in net acquired intangible assets despite stable goodwill.

The financial data reveals a significant expansion in reported total assets over the analyzed periods, increasing from 6,283 million US dollars in 2019 to 32,132 million US dollars in 2024. This growth trajectory demonstrates a more than fivefold increase within five years, with especially sharp rises observed between 2020 and 2022. The adjusted total assets also increased but at a more moderate pace, starting at 4,628 million US dollars in 2019 and reaching 18,288 million US dollars in 2024. This adjustment indicates the presence of substantial goodwill or intangible asset components within the reported assets, as reflected by the gap between reported and adjusted figures.

Stockholders’ equity on a reported basis showed robust growth, climbing from 3,749 million US dollars in 2019 to 18,436 million US dollars in 2024. The equity almost quintupled over the period, signifying strong retained earnings or capital infusions. In contrast, adjusted stockholders’ equity figures remained significantly lower, beginning at 2,094 million US dollars in 2019 and increasing to only 4,592 million US dollars by 2024. Notably, adjusted equity experienced a decline between 2021 and 2022 before recovering thereafter, suggesting possible impairment or write-down events impacting goodwill or other intangible assets that have been excluded from the adjusted figure.

The divergence between reported and adjusted figures in both total assets and stockholders’ equity highlights the impact of non-physical or intangible assets on the company's balance sheet. The widening gap over time suggests that goodwill and intangibles have become increasingly material in the company's capital structure. The adjustments provide a more conservative view of the company's net asset value, discounting these less tangible components.

Overall, the data indicates a period of significant growth in asset scale and equity base from 2019 through 2024, tempered by adjustments that reflect the underlying composition and quality of these assets. The temporary dip in adjusted equity around 2022 may warrant further review to understand the specific causes and implications. The sustained increase in both reported and adjusted figures by 2024 points to a strengthening financial position, albeit with a notable reliance on goodwill or intangible assets when viewed from the reported perspective.

The financial data reveals several important trends in operational efficiency, leverage, and profitability over the analyzed periods.

Total Asset Turnover

The reported total asset turnover ratio shows a declining trend from 1.08 in 2019 to a low of 0.46 in 2022, with a slight recovery afterward to 0.51 in 2024. In contrast, the goodwill adjusted total asset turnover demonstrates less volatility and higher values overall, decreasing from 1.47 in 2019 to 0.83 in 2020, then improving gradually to reach 1.03 in 2023 before slightly declining to 0.89 in 2024. This suggests that when goodwill is removed, asset utilization appears more consistent and relatively stronger over time compared to the reported figures.

Financial Leverage

The reported financial leverage has fluctuated somewhat but remained within a narrow range, peaking at 2.14 in 2020, decreasing to 1.57 in 2021, and increasing again to 1.74 in 2024. The adjusted financial leverage, however, shows a more pronounced increase, rising from 2.21 in 2019 to a significant peak of 5.17 in 2022, before declining to approximately 3.98 in 2024. The elevated adjusted leverage values indicate a substantially higher level of debt or financial gearing once goodwill is accounted for, especially notable in 2022.

Return on Equity (ROE)

Reported ROE declined sharply from 41.53% in 2019 to 12.57% in 2022, followed by a modest recovery to 16.07% in 2024. Adjusted ROE figures are considerably higher throughout, starting at 74.36% in 2019, dipping to 48.45% in 2021, then reaching a peak of 76.38% in 2022 before easing to 64.53% in 2024. This contrast indicates that excluding goodwill significantly enhances the perceived equity return, suggesting that intangible asset adjustments impact profitability metrics materially.

Return on Assets (ROA)

The reported ROA shows a consistent downward trend over the period, declining from 24.78% in 2019 to 7.45% in 2022, with a slight rebound to 9.22% by 2024. The adjusted ROA also declines initially but displays more fluctuation, with values decreasing from 33.64% in 2019 to 14.76% in 2022, then increasing to 17.03% in 2023 before settling at 16.2% in 2024. Similar to other return ratios, adjusted ROA figures are higher, reflecting the influence of goodwill exclusion on asset-based profitability.

Overall, the adjusted ratios consistently demonstrate higher profitability and asset utilization measures relative to reported figures, signifying the significant effect of goodwill on the financial metrics. The peak in adjusted financial leverage in 2022 suggests a period of increased financing activity or capital structure change. Meanwhile, the declining trends in reported ROE and ROA point to weakening profitability on a reported basis during the same timeframe, partially offset by improvements after 2022. The total asset turnover ratios reveal challenges in asset efficiency post-2019 with gradual stabilization in recent years, more pronounced when adjusted for goodwill.

The analysis of the financial data reveals notable trends in both reported and goodwill-adjusted figures over the six-year period.

Total Assets

Reported total assets exhibited a strong upward trajectory, growing from US$ 6,283 million in 2019 to US$ 32,132 million in 2024. This represents more than a fivefold increase, highlighting significant asset base expansion. The adjusted total assets, which exclude goodwill, also showed a consistent increase but at a slower pace, rising from US$ 4,628 million to US$ 18,288 million during the same period. The divergence between reported and adjusted assets indicates a substantial increase in goodwill and possibly other intangible assets over time.

Total Asset Turnover (Reported)

The reported total asset turnover ratio declined from 1.08 in 2019 to a low of 0.46 in 2022, followed by a slight recovery to approximately 0.51 by 2024. This downward trend suggests that the efficiency of asset utilization to generate revenues diminished considerably as the asset base expanded, particularly between 2019 and 2022. The modest improvement after 2022 indicates some recovery in operational efficiency but remains below the earlier levels.

Total Asset Turnover (Adjusted)

The adjusted total asset turnover ratio followed a different pattern. Starting at 1.47 in 2019, it sharply declined to 0.83 in 2020 but then stabilized and even improved slightly, reaching 1.03 in 2023 before a minor decline to 0.89 in 2024. This relatively stable and higher adjusted turnover ratio compared to the reported ratio suggests better asset utilization when goodwill is excluded, underlining that intangible assets have had an impact on the reported figures.

In summary, while the company has significantly increased its asset base, the efficiency of asset utilization as per reported metrics has declined, mainly due to the inclusion of goodwill. When adjusted for goodwill, asset turnover ratios indicate more consistent and relatively efficient use of the asset base, although with a slight decline in the latest period. The divergence between reported and adjusted figures underscores the importance of excluding intangible assets like goodwill to gain clearer insights into operational performance.

Total Assets

The reported total assets show a consistent and significant upward trend over the period, increasing from $6,283 million in 2019 to $32,132 million in 2024. This indicates substantial growth in the company's asset base. The adjusted total assets, which exclude goodwill, also increase over time but at a slower pace, rising from $4,628 million in 2019 to $18,288 million in 2024. The divergence between reported and adjusted figures suggests a growing proportion of goodwill on the balance sheet.

Stockholders’ Equity

Reported stockholders' equity exhibits strong growth, nearly quintupling from $3,749 million in 2019 to $18,436 million in 2024. Conversely, the adjusted stockholders’ equity shows a different pattern; it rises from $2,094 million in 2019 to a peak of $4,256 million in 2021 but then decreases notably to $2,705 million in 2022 before rebounding to $4,592 million in 2024. This variation indicates the impact of goodwill adjustments, reflecting fluctuations in the underlying net assets excluding intangible assets.

Financial Leverage

The reported financial leverage ratio remains relatively stable across the years, fluctuating slightly between 1.57 and 2.14, settling at 1.74 in 2024. This suggests a moderate and consistent use of financial leverage when including goodwill. In contrast, the adjusted financial leverage ratio, which excludes goodwill, is higher and more volatile. It increases from 2.21 in 2019 to a peak of 5.17 in 2022, then declines to 3.98 in 2024. The higher adjusted leverage ratios indicate that, when goodwill is excluded, the company operates with more debt relative to tangible equity, especially around 2022.

Overall Insights

The data reveals that the company’s growth in reported assets and equity has been substantial, driven partly by goodwill additions. Adjusted figures highlight that tangible asset and equity growth is more moderate and subject to volatility. The sharp rise and subsequent reduction in adjusted financial leverage around 2022 suggest changes in capital structure or asset quality during this period. The sustained higher adjusted leverage ratios imply a greater reliance on debt financing excluding intangible assets, which may warrant attention regarding financial risk management.

The analysis of the equity and return on equity (ROE) metrics over the six-year period reveals distinct trends between reported figures and goodwill-adjusted figures.

Stockholders’ Equity Trends

Reported stockholders’ equity shows a consistent and significant increase each year, rising from US$3,749 million in 2019 to US$18,436 million in 2024. This indicates a robust growth in the equity base over the period.

In contrast, adjusted stockholders’ equity, which removes the effect of goodwill, exhibits a less steady trend. It increases from US$2,094 million in 2019 to a peak of US$4,256 million in 2021, then sharply drops to US$2,705 million in 2022. Thereafter, it resumes growth, reaching US$4,592 million by 2024. This volatility suggests fluctuations in intangible asset valuations or impairment effects influencing adjusted equity.

Return on Equity (ROE) Analysis

The reported ROE declines markedly from 41.53% in 2019 to a low of 12.57% in 2022, before showing moderate recovery to 16.07% in 2024. This trend reflects decreasing net income relative to reported equity, possibly due to increased equity base or changing profitability.

Adjusted ROE presents a different profile, remaining significantly higher throughout the period. It starts at 74.36% in 2019, then decreases overall to 64.53% in 2024, with a notable peak at 76.38% in 2022. The elevated levels of adjusted ROE compared to reported ROE indicate that after excluding goodwill, the company’s earnings relative to tangible equity are substantially more efficient. The peak in 2022 may highlight a period of particularly strong operating performance or reduced intangible asset impact on equity.

Comparative Insights

The persistent gap between reported and adjusted equity suggests a substantial portion of the reported equity is comprised of goodwill or other intangible assets. This impacts the capital base and profitability ratios when these are excluded.

The divergence in trends—steady growth in reported equity versus fluctuating adjusted equity—signals the importance of analyzing both metrics for a comprehensive understanding of financial health and operational efficiency.

The data indicates a significant growth in reported total assets over the six-year period, increasing from 6,283 million US dollars in 2019 to 32,132 million US dollars by 2024. Adjusted total assets, which exclude goodwill, also followed an upward trajectory, rising from 4,628 million US dollars in 2019 to 18,288 million US dollars in 2024. Notably, the growth rate of reported total assets was more pronounced between 2021 and 2022, suggesting substantial acquisitions or asset revaluations contributing to the recorded goodwill.

Return on assets (ROA) figures reveal a declining trend when considering reported data, dropping from 24.78% in 2019 to a low of 7.45% in 2022, followed by a modest recovery to 9.22% in 2024. This decline suggests that the company’s efficiency in generating profit from its assets diminished during this period, potentially due to the rapid asset base expansion outpacing net income growth.

In contrast, adjusted ROA, which excludes the impact of goodwill, exhibits a different pattern. It demonstrates a generally higher and more stable profitability level relative to total assets net of goodwill. Adjusted ROA decreased from 33.64% in 2019 to 14.76% in 2022 but subsequently improved to 16.20% in 2024. This indicates that core asset profitability remained more resilient, and the inclusion of goodwill in total assets likely diluted the apparent returns as goodwill increased.

The divergence between reported and adjusted asset bases and corresponding ROA percentages emphasizes the impact of goodwill on financial metrics. The presence of significant goodwill likely reflects strategic acquisitions, which increased the asset base substantially but initially contributed less to immediate earnings, thus affecting reported ROA negatively.

Overall, the trends suggest the company expanded its asset base extensively, mainly driven by goodwill, leading to a decline in reported ROA. However, the underlying operational asset profitability, as indicated by adjusted ROA, though lower than peak levels in 2019, showed resilience with signs of recovery post-2022. This dynamic highlights the importance of analyzing adjusted metrics for a clearer view of operational efficiency and asset utilization.

Total Assets Growth

Reported total assets increased approximately fivefold from 2019 to 2024, whereas adjusted total assets nearly quadrupled in the same period.

Return on Assets (ROA)

Both reported and adjusted ROA follow a downward trend till 2022, with adjusted ROA maintaining higher values, followed by partial recovery in the subsequent years.

Goodwill Impact

The growing disparity between reported and adjusted assets and ROA indicates increasing goodwill, which diluted reported profitability measures.

Financial Efficiency

Adjusted ROA suggests steady core asset profitability despite asset base expansion, implying efficient management of tangible and intangible asset utilization.