Intuit Inc. (NASDAQ:INTU)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a generally increasing trend over the period analyzed. Starting at $1,578 million in 2019, it rose to $2,668 million by 2024, representing significant growth. Notable increases occurred from 2019 to 2022, with a slight dip in 2023, followed by a recovery in 2024 to the highest recorded value.

Cost of Capital

The cost of capital remained relatively stable throughout the years, fluctuating slightly between 15.68% and 16.4%. The cost decreased gradually after 2019, reaching its lowest point in 2022 at 15.68%, then experienced a slight upward trend through 2024.

Invested Capital

Invested capital showed a substantial increase from 2019 through 2022, rising from $4,546 million to $24,726 million. After peaking in 2022, the invested capital decreased marginally in 2023 to $23,712 million but rose again in 2024 to $24,948 million. This reflects a major expansion in the invested capital base over the period.

Economic Profit

Economic profit displayed a significant downward trend. Initially strong at $832 million in 2019, it sharply declined to $407 million in 2020 and further down to $161 million in 2021. From 2022 onwards, economic profit turned negative, reaching a low of -$1,769 million in 2023 and slightly improving to -$1,348 million in 2024. This trend indicates increasing challenges in generating returns above the cost of capital despite growth in net operating profit and invested capital.

Overall Insights

Although net operating profit after taxes increased substantially, the economic profit deteriorated, turning negative after 2021. This suggests that the growth in invested capital has outpaced the returns generated, leading to a failure to cover the cost of capital effectively. The stable cost of capital, combined with rapidly expanding invested capital and diminishing economic profit, points to potential issues in capital efficiency or profitability relative to the scale of investment. The slight improvement in economic profit in 2024 may indicate initial signs of addressing these concerns.

The financial data indicates a positive trend in net income and net operating profit after taxes (NOPAT) over the analyzed periods, demonstrating overall growth and fluctuations in performance.

Net Income:

Net income showed a consistent upward trajectory from 2019 to 2024. Beginning at $1,557 million in 2019, it increased each year with the exception of a modest plateau between 2021 and 2022, where the figure remained almost stable (from $2,062 million to $2,066 million). Following this, net income resumed its growth, reaching $2,963 million in 2024. The most significant increases appeared between 2022 and 2024, reflecting an accelerated improvement in profitability.

Net Operating Profit After Taxes (NOPAT):

NOPAT also exhibited growth over the years, starting at $1,578 million in 2019 and climbing to a peak of $2,300 million in 2022. Unlike net income, NOPAT experienced a decline in 2023, decreasing to $2,022 million. However, this was followed by a notable recovery in 2024, rising to $2,668 million. The dip in 2023 suggests a temporary reduction in operating efficiency or possible impacts from operational costs or tax changes during that year.

Comparative Insights:

While both net income and NOPAT generally trended upward, net income maintained a steadier progression without the decline observed in NOPAT for 2023. This could imply factors such as non-operating income or tax benefits influencing net income positively. The recovery of NOPAT in 2024 suggests improving core operating performance and tax management strategies.

The financial data reveals trends in the provisions for income taxes as well as the cash taxes paid over the fiscal years ending in July from 2019 to 2024.

Provision for Income Taxes

There is a consistent upward trend in the provision for income taxes from 2019 through 2021, increasing from $324 million in 2019 to $494 million in 2021. This suggests an increasing tax expense recognized during these years. However, the provision fluctuates subsequently, showing a slight decrease to $476 million in 2022, followed by an increase to $605 million in 2023, and a minor decline to $587 million in 2024. Overall, this implies some volatility or variability in reported income tax provisions despite the prior upward trend.

Cash Operating Taxes

Cash operating taxes exhibit greater volatility and a steeper increase over the period. The values rose significantly from $355 million in 2019 to $477 million in 2020 and then to $545 million in 2021. The year 2022 saw a marked decrease to $398 million, but this was followed by a dramatic increase to $1,320 million in 2023, nearly tripling the prior year’s amount. In 2024, cash operating taxes remain elevated at $1,276 million, indicating sustained high cash tax payments.

Comparative Insights

While both provisions for income taxes and cash operating taxes increase over the full period, cash taxes exhibit much more pronounced fluctuations and a notably large surge in the last two years. This divergence suggests differences in timing or recognition between tax provisions and actual cash tax payments. The significant increase in cash operating taxes in 2023 and 2024 could indicate changes in tax rates, adjustments of prior liabilities, or differences in tax planning strategies impacting cash flow. The provision, being somewhat steadier, likely reflects accounting estimates that do not capture all cash tax payment dynamics.

Total reported debt & leases

There was a significant increase in total reported debt and leases from 2019 to 2020, rising from $788 million to $3,636 million. This was followed by a decrease to $2,480 million in 2021. However, in 2022 the debt increased sharply to $7,540 million, before declining slightly in the subsequent years to $6,689 million in 2023 and further to $6,567 million in 2024. Overall, the debt shows a pattern of volatility with a major increase in 2022 and a gradual reduction thereafter.

Stockholders’ equity

Stockholders’ equity demonstrated a consistent upward trend throughout the periods analyzed. It increased steadily from $3,749 million in 2019 to $5,106 million in 2020, then more than doubled to $9,869 million in 2021. This growth continued robustly, reaching $16,441 million in 2022, $17,269 million in 2023, and $18,436 million in 2024. The data suggests strong equity growth and an improving financial position over time.

Invested capital

Invested capital also showed a general upward trajectory with fluctuations corresponding to changes in debt and equity. Starting at $4,546 million in 2019, the capital nearly doubled by 2020 to $8,690 million and continued to rise to $12,248 million in 2021. A sharp increase occurred in 2022, moving to $24,726 million, followed by a slight decrease to $23,712 million in 2023 and a rise back to $24,948 million in 2024. The trend mirrors that of debt and equity, indicating expanding investment in the company’s operations over this period.

Economic Profit

There is a clear downward trend in economic profit over the analyzed periods. Starting at a strong positive value of 832 million US dollars in July 2019, the economic profit decreased notably in the following years, reaching 407 million in July 2020 and further declining to 161 million by July 2021. From July 2022 onward, the economic profit turns negative, with losses intensifying to -1576 million, -1769 million, and slightly reducing to -1348 million in July 2024. This indicates increasing challenges in generating economic profit in recent years.

Invested Capital

Invested capital shows a sustained upward trajectory throughout the periods. Beginning at 4546 million US dollars in July 2019, it almost doubled by July 2020 to 8690 million and increased further to 12,248 million in July 2021. A significant rise is observed in July 2022, almost doubling the capital to 24,726 million. Capital levels remain relatively stable afterward, with slight fluctuations leading to 23,712 million in July 2023 and increasing again to 24,948 million in July 2024. This continuous growth suggests substantial investments or asset accumulation during this timeframe.

Economic Spread Ratio

The economic spread ratio mirrors the decline seen in economic profit. It starts at a high positive rate of 18.31% in July 2019 and drops sharply to 4.68% by July 2020. The downward trend continues to 1.31% in July 2021, indicating decreasing returns relative to invested capital. From July 2022 onwards, the ratio becomes negative, reaching -6.37%, -7.46%, and slightly improving to -5.41% by July 2024. This change confirms worsening economic efficiency and suggests that the returns on capital invested are insufficient to cover the cost of capital during these periods.

Adjusted Net Revenue

The adjusted net revenue shows a continuous growth trend over the six-year period. Starting at $6,823 million in 2019, it increased steadily each year, reaching $16,235 million in 2024. This represents more than a twofold increase, signaling strong top-line growth.

Economic Profit

Economic profit displays a declining trend over the same period. Beginning with a positive $832 million in 2019, it subsequently decreased to $407 million in 2020 and further fell to $161 million in 2021. From 2022 onwards, economic profit turned negative, with a loss of $1,576 million followed by deeper losses of $1,769 million in 2023, and $1,348 million in 2024. This shift from positive to negative economic profit indicates increasing costs or capital charges outweighing profits despite revenue growth.

Economic Profit Margin

The economic profit margin parallels the trend observed in economic profit. It started at a positive 12.2% in 2019 and declined sharply to 5.27% in 2020 and 1.66% in 2021. From 2022 onward, the margin turned negative, stabilizing around -12% in 2022 and 2023, then improving slightly to -8.31% in 2024. This negative margin indicates diminishing returns on the company’s capital despite increases in adjusted net revenue.

Summary

Overall, the data reflects strong revenue growth coupled with declining economic profitability. This suggests that the company is generating higher gross revenues but is facing increasing costs, capital charges, or inefficiencies that reduce overall economic value. The persistent negative economic profit and margin in recent years call for a detailed examination of cost structures and investment returns to understand the root causes and to enhance economic performance.