Intuit Inc. (NASDAQ:INTU)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values demonstrate an overall upward trend throughout the observed periods. From 2019 to 2022, NOPAT increased consistently, reaching a peak of 2300 million in 2022. However, a decline is observed in 2023, dropping to 2022 million, followed by a recovery in 2024, rising to the highest value recorded at 2668 million. This pattern indicates robust profitability with some fluctuations in the middle period.

Cost of Capital

The cost of capital percentage remains relatively stable over the years, fluctuating slightly between 15.89% and 16.62%. The lowest cost of capital was observed in 2022 at 15.89%, with minor increases and decreases in other years. The stability suggests consistent financing conditions or risk profile assessment over time.

Invested Capital

Invested capital shows a significant upward trend from 2019 through to 2024, nearly quintupling from 4546 million in 2019 to 24948 million in 2024. Notably, there is substantial growth between 2021 and 2022, where invested capital doubled from 12248 million to 24726 million. A slight decrease occurred in 2023 before rising again in 2024, reflecting aggressive capital deployment or substantial asset base expansion.

Economic Profit

The economic profit exhibits a declining trajectory throughout the periods. It starts positively at 822 million in 2019 but drops sharply to 388 million in 2020 and further declines to 134 million in 2021. From 2022 onwards, economic profit turns negative, reaching a low of -1819 million in 2023 and slightly improving to -1402 million in 2024. This pattern suggests that despite growing NOPAT and invested capital, the returns generated have not sufficiently exceeded the cost of capital in recent years, indicating deteriorating value creation.

Summary of Trends

There is a clear expansion of invested capital and an overall increase in operating profits, although recent years display challenges in economic profit, indicating that the growth in capital employed has not translated into superior economic returns. The stable cost of capital suggests external financing conditions have not significantly changed, but the decline in economic profit points toward inefficiencies or higher risk in capital deployment. The recovery in NOPAT in the latest period may be indicative of potential operational improvements that have yet to positively influence economic profit.

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

The economic profit exhibited a notable declining trend over the analyzed period. Beginning at a positive value of 822 million USD in 2019, it sharply decreased to 388 million USD in 2020 and further dropped to 134 million USD in 2021. From 2022 onward, economic profit turned negative, recording -1628 million USD in 2022, -1819 million USD in 2023, and slightly improving yet still negative at -1402 million USD in 2024. This progression indicates worsening profitability relative to the cost of capital over time.

Invested Capital

Invested capital demonstrated a consistent upward trend throughout the period. The capital increased from 4546 million USD in 2019 to 8690 million USD in 2020, showing almost a doubling within one year. It continued to grow steadily, reaching 12248 million USD in 2021 and more than doubling again to 24726 million USD in 2022. A slight decrease occurred in 2023 to 23712 million USD, followed by a rise back to 24948 million USD in 2024. This indicates significant expansion in the capital base, reflecting increased investments or asset accumulation over the years.

Economic Spread Ratio

The economic spread ratio, representing the return on invested capital above the cost of capital, mirrored the decline in economic profit. Starting at a strong positive rate of 18.09% in 2019, it fell to 4.47% in 2020 and dropped further to 1.09% by 2021. The ratio then turned negative from 2022 through 2024, with values of -6.59%, -7.67%, and -5.62% respectively, indicating returns below the cost of capital in the later years. The negative spread corresponds with the negative economic profits and highlights a reduction in value creation.

Economic Profit

The economic profit of the company shows a significant declining trend over the analyzed period. Starting from a positive value of 822 million US$ in 2019, it decreased sharply to 388 million US$ in 2020 and further dropped to 134 million US$ in 2021. From 2022 onwards, the company experienced negative economic profit values, reaching -1,628 million US$ in 2022, worsening to -1,819 million US$ in 2023, before slightly improving to -1,402 million US$ in 2024. This transition from positive to negative economic profit indicates increasing challenges in generating returns above the cost of capital.

Adjusted Net Revenue

The adjusted net revenue presents a consistent and strong upward trajectory. It rose steadily from 6,823 million US$ in 2019 to 7,721 million US$ in 2020, then increased considerably to 9,660 million US$ in 2021. The growth continued over the subsequent years with 12,848 million US$ in 2022, 14,480 million US$ in 2023, and reaching 16,235 million US$ in 2024. This demonstrates robust revenue expansion despite the decline in economic profit.

Economic Profit Margin

The economic profit margin follows a declining trend similar to that of economic profit. It decreased from 12.05% in 2019 to 5.03% in 2020, then reached a low of 1.39% in 2021. Corresponding to the negative economic profit values, the margin turned negative, with -12.67% in 2022 and -12.57% in 2023. There is a slight improvement in 2024, with the margin increasing to -8.64%, although it remains negative. This indicates diminishing efficiency or profitability in relation to revenue over the period.