[May 23, 2017] |
|
Intuit Reports Third-quarter Revenue Up 10 Percent; QuickBooks Online Subscribers Increase 59 Percent
Intuit Inc. (Nasdaq:INTU) announced
financial results for the third quarter of fiscal 2017, which ended
April 30.
"This was another strong quarter for Intuit, with a hard-fought tax
season delivering the revenue we promised along with continued momentum
in our QuickBooks franchise," said Brad Smith, Intuit's chairman and
chief executive officer.
"Overall, we successfully delivered strong financial results. We entered
the tax season with a clear plan to extend our lead in the
do-it-yourself category and begin transforming the assisted category as
well, embracing the power of the Intuit ecosystem. In small business,
QuickBooks subscriber growth continued, driven by improvements across
our platform for self-employed, small business and accountants," Smith
said.
Financial Highlights
For the third quarter, Intuit:
-
Grew revenue to $2.541 billion, up 10 percent.
-
Increased GAAP operating income to $1.444 billion, up 12 percent.
-
Increased total QuickBooks Online subscribers 59 percent, up from 49
percent growth in the second quarter, to over 2.2 million subscribers.
-
Doubled the base of QuickBooks Self-Employed users to roughly 360,000
of total QuickBooks Online subscribers, up from 180,000 last quarter.
-
Raised expectations to end fiscal 2017 with 2.3 million QuickBooks
Online subscribers.
-
Raised full-year revenue guidance and narrowed operating income and
earnings per share guidance. Intuit now expects full-year revenue
growth of 9 to 10 percent.
Unless otherwise noted, all growth rates refer to the current period
versus the comparable prior-year period, and the business metrics and
associated growth rates refer to worldwide business metrics.
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Snapshot of Third-quarter Results
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|
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GAAP
|
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Non-GAAP
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|
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Q3 FY 17
|
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Q3 FY 16
|
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Change
|
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Q3 FY 17
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Q3 FY 16
|
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Change
|
Revenue
|
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$ 2,541
|
|
$2,304
|
|
10%
|
|
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$ 2,541
|
|
$2,304
|
|
10%
|
Operating Income
|
|
$1,444
|
|
$1,285
|
|
12%
|
|
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$1,519
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$1,359
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12%
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Earnings Per Share
|
|
$3.70
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$3.94
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(6)%
|
|
|
$3.90
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$3.43
|
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14%
|
Dollars are in millions, except earnings per share. See "About Non-GAAP
Financial Measures" below for more information regarding financial
measures not prepared in accordance with Generally Accepted Accounting
Principles (GAAP). Q3 FY16 GAAP earnings per share included $0.68 per
share for the sale of discontinued operations.
Business Segment Results
Small Business
-
Grew total Small Business segment revenue by 16 percent.
-
Grew Small Business online ecosystem revenue by 30 percent.
-
Added approximately 350,000 QuickBooks Online subscribers in the
quarter, reaching 2,220,000 subscribers worldwide.
-
Grew QuickBooks Online international subscribers by 70 percent, to
approximately 433,000.
-
Made QuickBooks Self-Employed available in Singapore, adding another
geography to the company's lineup, with Hong Kong and South Africa
soon to follow.
-
There are now 1,545 apps on the QuickBooks Online platform; 472 are
published in the QuickBooks Apps Store.
Consumer Tax and ProConnect
-
Grew Consumer Tax revenue by 9 percent fiscal year-to-date.
-
Provided broad availability of SmartLook technology to reach more tax
filers this season.
-
Provided more than 1.3 million free credit scores to TurboTax
customers using the credit score functionality in Mint.
-
Grew ProConnect fiscal year-to-date revenue by 2 percent.
"Putting it all together, we are seeing positive results from One Intuit
Ecosystem experiments, as we create more and more connections between
customers and products," Smith said. "We're seeing proof points
including: Consumer Tax driving QuickBooks Self-Employed subscribers.
ProConnect customers serving Consumer Tax customers through SmartLook.
And Mint providing credit scores to TurboTax customers. There's more to
come on this front, as these investments in innovations have put us in a
strong position going forward."
Capital Allocation Summary
In the third quarter the company:
-
Repurchased $88 million of shares, with $1.9 billion remaining on the
authorization.
-
Received board approval for a $0.34 per share dividend payable on July
18, 2017.
Forward-looking Guidance
Intuit announced guidance for the fourth quarter of fiscal year 2017,
which ends July 31. The company expects:
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Revenue of $795 million to $815 million, growth of 5 to 8 percent.
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GAAP operating loss of $25 million to $45 million.
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Non-GAAP operating income of $50 million to $70 million.
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GAAP loss per share of $0.01 to $0.03.
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Non-GAAP diluted earnings per share of $0.16 to $0.18.
Intuit raised guidance for full fiscal-year revenue in 2017. The company
now expects:
-
Revenue of $5.13 billion to $5.15 billion, growth of 9 to 10 percent.
-
GAAP operating income of $1.36 billion to $1.38 billion, growth of 10
to 11 percent.
-
Non-GAAP operating income of $1.705 billion to $1.725 billion, growth
of 10 to 11 percent.
-
GAAP diluted earnings per share of $3.55 to $3.57, versus $3.69 in
fiscal 2016. Fiscal 2016 earnings per share includes $0.65 net income
per share from discontinued operations.
-
Non-GAAP diluted earnings per share of $4.38 to $4.40, growth of 16
percent.
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QuickBooks Online subscribers of 2.3 million.
Conference Call Details
Intuit executives will discuss the financial results on a conference
call today at 1:30 p.m. Pacific time. To hear the call, dial
844-246-4601 in the United States or 703-639-1172 from international
locations. No reservation or access code is needed. The conference call
can also be heard live at http://investors.intuit.com/events/default.aspx.
Prepared remarks for the call will be available on Intuit's Investor
Relations website after the call ends.
Replay Information
A replay of the conference call will be available for one week by
calling 855-859-2056, or 404-537-3406 from international locations. The
access code for this call is 14708133.
The audio webcast will remain available on Intuit's website for one week
after the conference call.
About Intuit
Intuit Inc. is committed to powering
prosperity around the world for consumers, small businesses and the
self-employed through its ecosystem of innovative financial management
solutions.
Its flagship products and services include QuickBooks® and TurboTax®,
which make it easier to manage small
businesses and tax
preparation and filing. QuickBooks
Self-Employed provides freelancers and independent contractors with
an easy and affordable way to manage their finances and save money at
tax time, while Mint delivers
financial tools and insights to help people make smart choices about
their money.
Intuit's ProConnect brand
portfolio includes ProConnect
Tax Online, ProSeries®
and Lacerte®,
the company's leading tax preparation offerings for professional
accountants.
Founded in 1983, Intuit serves 42 million customers in North America,
Europe, Australia and Brazil, with revenue of $4.7 billion in its fiscal
year 2016. The company has approximately 7,900 employees with major
offices in the United States, Canada,
the United Kingdom, India, Australia and
other locations. More information can be found at www.intuit.com.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles, please see the section of the
accompanying tables titled "About Non-GAAP Financial Measures" as well
as the related Table B1, Table B2, and Table E. A copy of the press
release issued by Intuit today can be found on the investor relations
page of Intuit's website.
Cautions About Forward-looking Statements
This press release contains forward-looking statements, including
forecasts of expected growth and future financial results of Intuit and
its reporting segments; Intuit's prospects for the business in fiscal
2017 and beyond; expectations regarding Intuit's growth outside the US;
expectations regarding timing and growth of revenue for each of Intuit's
reportable segments and from current or future products and services;
expectations regarding customer growth; expectations regarding the
impact of the One Intuit Ecosystem strategy on Intuit's business;
expectations regarding changes to our products and their impact on
Intuit's business; expectations regarding the amount and timing of any
future dividends or share repurchases; expectations regarding
availability of our offerings; expectations regarding the impact of our
strategic decisions on Intuit's business; and all of the statements
under the heading "Forward-looking Guidance".
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our actual
results to differ materially from the expectations expressed in the
forward-looking statements. These factors include, without limitation,
the following: inherent difficulty in predicting consumer behavior;
difficulties in receiving, processing, or filing customer tax
submissions; consumers may not respond as we expected to our advertising
and promotional activities; the competitive environment; governmental
encroachment in our tax businesses or other governmental activities or
public policy affecting the preparation and filing of tax returns; our
ability to innovate and adapt to technological change; availability of
our products and services could be impacted by business interruption or
failure of our information technology and communication systems; any
problems with implementing upgrades to our customer facing applications
and supporting information technology infrastructure; any failure to
properly use and protect personal customer information and data; our
ability to develop, manage and maintain critical third-party business
relationships; increases in or changes to government regulation of our
businesses; any failure to process transactions effectively or to
adequately protect against potential fraudulent activities; any loss of
confidence in using our software as a result of publicity regarding such
fraudulent activity; any significant product accuracy or quality
problems or delays; any lost revenue opportunities or cannibalization of
our traditional paid franchise due to our participation in the Free File
Alliance; the global economic environment may impact consumer and small
business spending, financial institutions and tax filings; changes in
the total number of tax filings that are submitted to government
agencies due to economic conditions or otherwise; the seasonal and
unpredictable nature of our revenue; our ability to attract, retain and
develop highly skilled employees; increased risks associated with
international operations; unanticipated changes in our income tax rates;
changes in the amounts or frequency of share repurchases or dividends;
we may issue additional shares in an acquisition causing our number of
outstanding shares to grow; our inability to adequately protect our
intellectual property rights may weaken our competitive position;
disruptions, expenses and risks associated with our acquisitions and
divestitures; amortization of acquired intangible assets and impairment
charges; our use of significant amounts of debt to finance acquisitions
or other activities; and the cost of, and potential adverse results in,
litigation involving intellectual property, antitrust, shareholder and
other matters. More details about the risks that may impact our business
are included in our Form 10-K for fiscal 2016 and in our other SEC
filings. You can locate these reports through our website at http://investors.intuit.com.
Forward-looking statements are based on information as of May 23, 2017,
and we do not undertake any duty to update any forward-looking statement
or other information in these materials.
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TABLE A
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INTUIT INC.
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GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
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(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
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|
|
|
|
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Three Months Ended
|
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Nine Months Ended
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|
|
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April 30,
|
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April 30,
|
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|
April 30,
|
|
|
April 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
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2016
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
$
|
467
|
|
|
|
$
|
459
|
|
|
|
$
|
1,063
|
|
|
|
$
|
994
|
|
Service and other
|
|
|
|
2,074
|
|
|
|
1,845
|
|
|
|
3,272
|
|
|
|
2,946
|
|
Total net revenue
|
|
|
|
2,541
|
|
|
|
2,304
|
|
|
|
4,335
|
|
|
|
3,940
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenue
|
|
|
|
29
|
|
|
|
30
|
|
|
|
95
|
|
|
|
99
|
|
Cost of service and other revenue
|
|
|
|
205
|
|
|
|
181
|
|
|
|
522
|
|
|
|
465
|
|
Amortization of acquired technology
|
|
|
|
3
|
|
|
|
5
|
|
|
|
9
|
|
|
|
17
|
|
Selling and marketing
|
|
|
|
467
|
|
|
|
423
|
|
|
|
1,155
|
|
|
|
1,023
|
|
Research and development
|
|
|
|
246
|
|
|
|
228
|
|
|
|
735
|
|
|
|
646
|
|
General and administrative
|
|
|
|
146
|
|
|
|
149
|
|
|
|
412
|
|
|
|
386
|
|
Amortization of other acquired intangible assets
|
|
|
|
1
|
|
|
|
3
|
|
|
|
2
|
|
|
|
6
|
|
Total costs and expenses [A]
|
|
|
|
1,097
|
|
|
|
1,019
|
|
|
|
2,930
|
|
|
|
2,642
|
|
Operating income from continuing operations
|
|
|
|
1,444
|
|
|
|
1,285
|
|
|
|
1,405
|
|
|
|
1,298
|
|
Interest expense
|
|
|
|
(8
|
)
|
|
|
(10
|
)
|
|
|
(28
|
)
|
|
|
(26
|
)
|
Interest and other income (expense), net
|
|
|
|
3
|
|
|
|
2
|
|
|
|
-
|
|
|
|
(7
|
)
|
Income before income taxes
|
|
|
|
1,439
|
|
|
|
1,277
|
|
|
|
1,377
|
|
|
|
1,265
|
|
Income tax provision [B]
|
|
|
|
475
|
|
|
|
429
|
|
|
|
430
|
|
|
|
419
|
|
Net income from continuing operations
|
|
|
|
964
|
|
|
|
848
|
|
|
|
947
|
|
|
|
846
|
|
Net income from discontinued operations [C]
|
|
|
|
-
|
|
|
|
178
|
|
|
|
-
|
|
|
|
173
|
|
Net income
|
|
|
|
$
|
964
|
|
|
|
$
|
1,026
|
|
|
|
$
|
947
|
|
|
|
$
|
1,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share from continuing operations
|
|
|
|
$
|
3.76
|
|
|
|
$
|
3.30
|
|
|
|
$
|
3.68
|
|
|
|
$
|
3.21
|
|
Basic net income per share from discontinued operations
|
|
|
|
-
|
|
|
|
0.70
|
|
|
|
-
|
|
|
|
0.65
|
|
Basic net income per share
|
|
|
|
$
|
3.76
|
|
|
|
$
|
4.00
|
|
|
|
$
|
3.68
|
|
|
|
$
|
3.86
|
|
Shares used in basic per share calculations
|
|
|
|
256
|
|
|
|
257
|
|
|
|
257
|
|
|
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share from continuing operations
|
|
|
|
$
|
3.70
|
|
|
|
$
|
3.26
|
|
|
|
$
|
3.63
|
|
|
|
$
|
3.17
|
|
Diluted net income per share from discontinued operations
|
|
|
|
-
|
|
|
|
0.68
|
|
|
|
-
|
|
|
|
0.64
|
|
Diluted net income per share
|
|
|
|
$
|
3.70
|
|
|
|
$
|
3.94
|
|
|
|
$
|
3.63
|
|
|
|
$
|
3.81
|
|
Shares used in diluted per share calculations
|
|
|
|
260
|
|
|
|
260
|
|
|
|
261
|
|
|
|
267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
|
|
$
|
0.34
|
|
|
|
$
|
0.30
|
|
|
|
$
|
1.02
|
|
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See accompanying Notes.
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INTUIT INC.
NOTES TO TABLE A
[A]
|
|
The following table summarizes the total share-based compensation
expense that we recorded in operating income from continuing
operations for the periods shown.
|
|
|
|
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|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
April 30,
|
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|
April 30,
|
|
|
April 30,
|
|
|
April 30,
|
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|
(in millions)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Cost of revenue
|
|
|
$
|
2
|
|
|
|
$
|
2
|
|
|
|
$
|
6
|
|
|
|
$
|
6
|
|
|
|
Selling and marketing
|
|
|
19
|
|
|
|
18
|
|
|
|
66
|
|
|
|
55
|
|
|
|
Research and development
|
|
|
24
|
|
|
|
21
|
|
|
|
89
|
|
|
|
63
|
|
|
|
General and administrative
|
|
|
26
|
|
|
|
24
|
|
|
|
80
|
|
|
|
73
|
|
|
|
Total share-based compensation expense
|
|
|
$
|
71
|
|
|
|
$
|
65
|
|
|
|
$
|
241
|
|
|
|
$
|
197
|
[B]
|
|
We compute our provision for or benefit from income taxes by
applying the estimated annual effective tax rate to income or loss
from recurring operations and adding the effects of any discrete
income tax items specific to the period.
|
|
|
|
|
|
In December 2015 the Consolidated Appropriations Act, 2016 was
signed into law. The Act includes a permanent reinstatement of the
federal research and experimentation credit that was retroactive to
January 1, 2015. We recorded a discrete tax benefit of approximately
$12 million for the retroactive effect during the second quarter of
fiscal 2016.
|
|
|
|
|
|
During the first quarter of fiscal 2017, we elected to early adopt
ASU 2016-09, "Compensation-Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting." As
required by ASU 2016-09, starting in fiscal 2017 we reflect excess
tax benefits recognized on stock-based compensation expense in the
condensed consolidated statements of operations as a component of
the provision for income taxes on a prospective basis.
|
|
|
|
|
|
Our effective tax rates for the three and nine months ended April
30, 2017 were approximately 33% and 31%. Excluding discrete tax
items primarily related to share-based compensation tax benefits
resulting from the adoption of ASU 2016-09, our effective tax rate
for both periods were 34% and did not differ significantly from the
federal statutory rate of 35%.
|
|
|
|
|
|
Our effective tax rates for the three and nine months ended April
30, 2016 were approximately 34% and 33% and did not differ
significantly from the federal statutory rate of 35%.
|
|
|
|
[C]
|
|
In the third quarter of fiscal 2016 we completed the sales of our
Demandforce, QuickBase, and Quicken businesses for $463 million in
cash. We recorded a pre-tax gain of $354 million and a net gain of
$173 million on the disposal of these three businesses in fiscal
2016.
|
|
|
|
|
|
We classified our Demandforce, QuickBase, and Quicken businesses
as discontinued operations and have therefore segregated their
operating results from continuing operations in our statements of
operations for all periods presented. Net revenue from
discontinued operations was $22 million and $137 million for the
three and nine months ended April 30, 2016. Net income from the
operations of these discontinued operations was not significant
for the three or nine months ended April 30, 2016. Because the
cash flows of these businesses were not material for any period
presented, we have not segregated them on our statements of cash
flows.
|
|
|
|
|
TABLE B1
|
INTUIT INC.
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year to Date
|
GAAP operating income (loss) from continuing operations
|
|
|
$
|
(61
|
)
|
|
|
$
|
22
|
|
|
|
$
|
1,444
|
|
|
|
$
|
-
|
|
|
|
$
|
1,405
|
|
Amortization of acquired technology
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
-
|
|
|
|
9
|
|
Amortization of other acquired intangible assets
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
Share-based compensation expense
|
|
|
89
|
|
|
|
81
|
|
|
|
71
|
|
|
|
-
|
|
|
|
241
|
|
Non-GAAP operating income (loss) from continuing operations
|
|
|
$
|
32
|
|
|
|
$
|
106
|
|
|
|
$
|
1,519
|
|
|
|
$
|
-
|
|
|
|
$
|
1,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
|
$
|
(30
|
)
|
|
|
$
|
13
|
|
|
|
$
|
964
|
|
|
|
$
|
-
|
|
|
|
$
|
947
|
|
Amortization of acquired technology
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
-
|
|
|
|
9
|
|
Amortization of other acquired intangible assets
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
Share-based compensation expense
|
|
|
89
|
|
|
|
81
|
|
|
|
71
|
|
|
|
-
|
|
|
|
241
|
|
Net (gain) loss on debt securities and other investments
|
|
|
1
|
|
|
|
6
|
|
|
|
1
|
|
|
|
-
|
|
|
|
8
|
|
Income tax effects and adjustments [A]
|
|
|
(49
|
)
|
|
|
(36
|
)
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
(110
|
)
|
Non-GAAP net income (loss)
|
|
|
$
|
15
|
|
|
|
$
|
67
|
|
|
|
$
|
1,015
|
|
|
|
$
|
-
|
|
|
|
$
|
1,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
0.05
|
|
|
|
$
|
3.70
|
|
|
|
$
|
-
|
|
|
|
$
|
3.63
|
|
Amortization of acquired technology
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.04
|
|
Amortization of other acquired intangible assets
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.01
|
|
Share-based compensation expense
|
|
|
0.34
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
-
|
|
|
|
0.92
|
|
Net (gain) loss on debt securities and other investments
|
|
|
0.01
|
|
|
|
0.03
|
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.03
|
|
Income tax effects and adjustments [A]
|
|
|
(0.19
|
)
|
|
|
(0.14
|
)
|
|
|
(0.10
|
)
|
|
|
-
|
|
|
|
(0.42
|
)
|
Non-GAAP diluted net income (loss) per share
|
|
|
$
|
0.06
|
|
|
|
$
|
0.26
|
|
|
|
$
|
3.90
|
|
|
|
$
|
-
|
|
|
|
$
|
4.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in GAAP diluted per share calculation
|
|
|
258
|
|
|
|
260
|
|
|
|
260
|
|
|
|
-
|
|
|
|
261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP diluted per share calculation
|
|
|
261
|
|
|
|
260
|
|
|
|
260
|
|
|
|
-
|
|
|
|
261
|
|
[A]
|
|
|
As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table E, our long-term non-GAAP
tax rate eliminates the effects of non-recurring and period specific
items. Consequently, our non-GAAP results have been adjusted to
exclude the discrete GAAP tax benefits that we recorded related to
the adoption of ASU 2016-09. See note B to Table A for more
information.
|
|
See "About Non-GAAP Financial Measures" immediately following Table
E for information on these measures, the items excluded from the
most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure and
excludes the specified amounts in arriving at each non-GAAP
financial measure.
|
|
|
TABLE B2
|
INTUIT INC.
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
Fiscal 2016
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Full Year
|
GAAP operating income (loss) from continuing operations
|
|
|
$
|
(29
|
)
|
|
|
$
|
42
|
|
|
|
$
|
1,285
|
|
|
|
$
|
(56
|
)
|
|
|
$
|
1,242
|
|
Amortization of acquired technology
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
|
|
5
|
|
|
|
22
|
|
Amortization of other acquired intangible assets
|
|
|
2
|
|
|
|
1
|
|
|
|
3
|
|
|
|
6
|
|
|
|
12
|
|
(Gain) loss on sale of long-lived assets
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Share-based compensation expense
|
|
|
67
|
|
|
|
65
|
|
|
|
65
|
|
|
|
81
|
|
|
|
278
|
|
Non-GAAP operating income (loss) from continuing operations
|
|
|
$
|
46
|
|
|
|
$
|
114
|
|
|
|
$
|
1,359
|
|
|
|
$
|
36
|
|
|
|
$
|
1,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
|
$
|
(31
|
)
|
|
|
$
|
24
|
|
|
|
$
|
1,026
|
|
|
|
$
|
(40
|
)
|
|
|
$
|
979
|
|
Amortization of acquired technology
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
|
|
5
|
|
|
|
22
|
|
Amortization of other acquired intangible assets
|
|
|
2
|
|
|
|
1
|
|
|
|
3
|
|
|
|
6
|
|
|
|
12
|
|
(Gain) loss on sale of long-lived assets
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Share-based compensation expense
|
|
|
67
|
|
|
|
65
|
|
|
|
65
|
|
|
|
81
|
|
|
|
278
|
|
Net (gain) loss on debt securities and other investments
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
|
|
5
|
|
Income tax effects and adjustments [A]
|
|
|
(21
|
)
|
|
|
(35
|
)
|
|
|
(31
|
)
|
|
|
(33
|
)
|
|
|
(120
|
)
|
Net (income) loss from discontinued operations
|
|
|
-
|
|
|
|
5
|
|
|
|
(178
|
)
|
|
|
-
|
|
|
|
(173
|
)
|
Non-GAAP net income (loss)
|
|
|
$
|
24
|
|
|
|
$
|
67
|
|
|
|
$
|
893
|
|
|
|
$
|
20
|
|
|
|
$
|
1,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
0.09
|
|
|
|
$
|
3.94
|
|
|
|
$
|
(0.16
|
)
|
|
|
$
|
3.69
|
|
Amortization of acquired technology
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
0.08
|
|
Amortization of other acquired intangible assets
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
0.04
|
|
(Gain) loss on sale of long-lived assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based compensation expense
|
|
|
0.25
|
|
|
|
0.25
|
|
|
|
0.25
|
|
|
|
0.32
|
|
|
|
1.05
|
|
Net (gain) loss on debt securities and other investments
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.02
|
|
Income tax effects and adjustments [A]
|
|
|
(0.08
|
)
|
|
|
(0.13
|
)
|
|
|
(0.12
|
)
|
|
|
(0.12
|
)
|
|
|
(0.45
|
)
|
Net (income) loss from discontinued operations
|
|
|
-
|
|
|
|
0.02
|
|
|
|
(0.68
|
)
|
|
|
-
|
|
|
|
(0.65
|
)
|
Non-GAAP diluted net income (loss) per share
|
|
|
$
|
0.09
|
|
|
|
$
|
0.25
|
|
|
|
$
|
3.43
|
|
|
|
$
|
0.08
|
|
|
|
$
|
3.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in GAAP diluted per share calculation
|
|
|
272
|
|
|
|
266
|
|
|
|
260
|
|
|
|
257
|
|
|
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP diluted per share calculation
|
|
|
275
|
|
|
|
266
|
|
|
|
260
|
|
|
|
260
|
|
|
|
265
|
|
[A]
|
|
|
As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table E, our long-term non-GAAP
tax rate assumes the federal research and experimentation credit is
continuously in effect and eliminates the effects of non-recurring
and period specific items. Consequently, our non-GAAP results for
the second quarter of fiscal 2016 have been adjusted to exclude the
$12 million discrete GAAP tax benefit that we recorded for the
retroactive reinstatement of the research and experimentation
credit. See note B to Table A for more information.
|
|
See "About Non-GAAP Financial Measures" immediately following Table
E for information on these measures, the items excluded from the
most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure and
excludes the specified amounts in arriving at each non-GAAP
financial measure.
|
|
|
|
|
|
|
|
|
TABLE C
|
INTUIT INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
July 31,
|
|
|
|
2017
|
|
|
2016
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,350
|
|
|
|
$
|
638
|
Investments
|
|
|
243
|
|
|
|
442
|
Accounts receivable, net
|
|
|
245
|
|
|
|
108
|
Income taxes receivable
|
|
|
-
|
|
|
|
20
|
Prepaid expenses and other current assets
|
|
|
94
|
|
|
|
102
|
Current assets before funds held for customers
|
|
|
1,932
|
|
|
|
1,310
|
Funds held for customers
|
|
|
323
|
|
|
|
304
|
Total current assets
|
|
|
2,255
|
|
|
|
1,614
|
|
|
|
|
|
|
|
Long-term investments
|
|
|
28
|
|
|
|
28
|
Property and equipment, net
|
|
|
1,041
|
|
|
|
1,031
|
Goodwill
|
|
|
1,294
|
|
|
|
1,282
|
Acquired intangible assets, net
|
|
|
27
|
|
|
|
44
|
Long-term deferred income taxes
|
|
|
183
|
|
|
|
139
|
Other assets
|
|
|
141
|
|
|
|
112
|
Total assets
|
|
|
$
|
4,969
|
|
|
|
$
|
4,250
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term debt
|
|
|
$
|
50
|
|
|
|
$
|
512
|
Accounts payable
|
|
|
269
|
|
|
|
184
|
Accrued compensation and related liabilities
|
|
|
240
|
|
|
|
289
|
Deferred revenue
|
|
|
955
|
|
|
|
801
|
Income taxes payable
|
|
|
435
|
|
|
|
4
|
Other current liabilities
|
|
|
222
|
|
|
|
157
|
Current liabilities before customer fund deposits
|
|
|
2,171
|
|
|
|
1,947
|
Customer fund deposits
|
|
|
323
|
|
|
|
304
|
Total current liabilities
|
|
|
2,494
|
|
|
|
2,251
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
450
|
|
|
|
488
|
Long-term deferred revenue
|
|
|
178
|
|
|
|
204
|
Other long-term obligations
|
|
|
150
|
|
|
|
146
|
Total liabilities
|
|
|
3,272
|
|
|
|
3,089
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
1,697
|
|
|
|
1,161
|
Total liabilities and stockholders' equity
|
|
|
$
|
4,969
|
|
|
|
$
|
4,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE D
|
INTUIT INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2017
|
|
|
2016
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
947
|
|
|
|
$
|
1,019
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
156
|
|
|
|
145
|
|
Amortization of acquired intangible assets
|
|
|
18
|
|
|
|
30
|
|
Share-based compensation expense
|
|
|
241
|
|
|
|
200
|
|
Pre-tax gain on sale of discontinued operations
|
|
|
-
|
|
|
|
(354
|
)
|
Deferred income taxes
|
|
|
(36
|
)
|
|
|
40
|
|
Tax benefit from share-based compensation plans
|
|
|
-
|
|
|
|
30
|
|
Other
|
|
|
9
|
|
|
|
11
|
|
Total adjustments
|
|
|
388
|
|
|
|
102
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(138
|
)
|
|
|
(125
|
)
|
Income taxes receivable
|
|
|
19
|
|
|
|
79
|
|
Prepaid expenses and other assets
|
|
|
5
|
|
|
|
(15
|
)
|
Accounts payable
|
|
|
104
|
|
|
|
77
|
|
Accrued compensation and related liabilities
|
|
|
(47
|
)
|
|
|
(69
|
)
|
Deferred revenue
|
|
|
130
|
|
|
|
213
|
|
Income taxes payable
|
|
|
431
|
|
|
|
435
|
|
Other liabilities
|
|
|
50
|
|
|
|
25
|
|
Total changes in operating assets and liabilities
|
|
|
554
|
|
|
|
620
|
|
Net cash provided by operating activities
|
|
|
1,889
|
|
|
|
1,741
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of corporate and customer fund investments
|
|
|
(286
|
)
|
|
|
(589
|
)
|
Sales of corporate and customer fund investments
|
|
|
332
|
|
|
|
990
|
|
Maturities of corporate and customer fund investments
|
|
|
150
|
|
|
|
160
|
|
Net change in cash and cash equivalents held to satisfy customer
fund obligations
|
|
|
(18
|
)
|
|
|
(35
|
)
|
Net change in customer fund deposits
|
|
|
18
|
|
|
|
35
|
|
Purchases of property and equipment
|
|
|
(178
|
)
|
|
|
(449
|
)
|
Proceeds from divestiture of businesses
|
|
|
-
|
|
|
|
463
|
|
Other
|
|
|
(40
|
)
|
|
|
3
|
|
Net cash provided by (used in) investing activities
|
|
|
(22
|
)
|
|
|
578
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from borrowings under revolving credit facilities
|
|
|
150
|
|
|
|
995
|
|
Repayments on borrowings under revolving credit facilities
|
|
|
(150
|
)
|
|
|
(995
|
)
|
Proceeds from long-term debt
|
|
|
-
|
|
|
|
500
|
|
Repayment of debt
|
|
|
(500
|
)
|
|
|
-
|
|
Proceeds from issuance of stock under employee stock plans
|
|
|
150
|
|
|
|
125
|
|
Payments for employee taxes withheld upon vesting of restricted
stock units
|
|
|
(61
|
)
|
|
|
(36
|
)
|
Cash paid for purchases of treasury stock
|
|
|
(473
|
)
|
|
|
(2,190
|
)
|
Dividends and dividend rights paid
|
|
|
(265
|
)
|
|
|
(238
|
)
|
Other
|
|
|
-
|
|
|
|
(5
|
)
|
Net cash used in financing activities
|
|
|
(1,149
|
)
|
|
|
(1,844
|
)
|
Effect of exchange rates on cash and cash equivalents
|
|
|
(6
|
)
|
|
|
6
|
|
Net increase in cash and cash equivalents
|
|
|
712
|
|
|
|
481
|
|
Cash and cash equivalents at beginning of period
|
|
|
638
|
|
|
|
808
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
1,350
|
|
|
|
$
|
1,289
|
|
During the first quarter of fiscal 2017, we elected to early adopt
ASU 2016-09, "Compensation-Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting." As
required by ASU 2016-09, starting in fiscal 2017 we reflect excess
tax benefits recognized on stock-based compensation expense in the
condensed consolidated statements of operations as a component of
the provision for income taxes on a prospective basis. Excess tax
benefits are classified as an operating activity in our condensed
consolidated statements of cash flows and we have applied this
provision on a retrospective basis.
|
|
|
TABLE E
|
INTUIT INC.
|
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL
MEASURES
|
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
Forward-Looking Guidance
|
|
|
|
GAAP
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
Range of Estimate
|
|
|
|
|
|
|
|
|
Range of Estimate
|
|
|
|
From
|
|
|
To
|
|
|
Adjmts
|
|
|
|
|
|
From
|
|
|
To
|
Three Months Ending July 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
795
|
|
|
|
$
|
815
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
795
|
|
|
|
$
|
815
|
Operating income (loss)
|
|
|
$
|
(45
|
)
|
|
|
$
|
(25
|
)
|
|
|
$
|
95
|
|
|
|
[a]
|
|
|
$
|
50
|
|
|
|
$
|
70
|
Diluted earnings (loss) per share
|
|
|
$
|
(0.03
|
)
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
0.19
|
|
|
|
[b]
|
|
|
$
|
0.16
|
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ending July 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
5,130
|
|
|
|
$
|
5,150
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
5,130
|
|
|
|
$
|
5,150
|
Operating income
|
|
|
$
|
1,360
|
|
|
|
$
|
1,380
|
|
|
|
$
|
345
|
|
|
|
[c]
|
|
|
$
|
1,705
|
|
|
|
$
|
1,725
|
Diluted earnings per share
|
|
|
$
|
3.55
|
|
|
|
$
|
3.57
|
|
|
|
$
|
0.83
|
|
|
|
[d]
|
|
|
$
|
4.38
|
|
|
|
$
|
4.40
|
See "About Non-GAAP Financial Measures" immediately following this
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure and
excludes the specified amounts in arriving at each non-GAAP
financial measure.
|
[a]
|
|
|
Reflects estimated adjustments for share-based compensation expense
of approximately $92 million and amortization of acquired technology
of approximately $3 million.
|
|
|
|
|
[b]
|
|
|
Reflects the estimated adjustments in item [a], income taxes related
to these adjustments, and other income tax effects related to the
use of the long-term non-GAAP tax rate.
|
|
|
|
|
[c]
|
|
|
Reflects estimated adjustments for share-based compensation expense
of approximately $331 million; amortization of acquired technology
of approximately $12 million; and amortization of other acquired
intangible assets of approximately $2 million.
|
|
|
|
|
[d]
|
|
|
Reflects the estimated adjustments in item [c], income taxes related
to these adjustments, and other income tax effects related to the
use of the long-term non-GAAP tax rate.
|
|
|
|
|
INTUIT INC. ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated May 23, 2017 contains non-GAAP
financial measures. Table B1, Table B2 and Table E reconcile the
non-GAAP financial measures in that press release to the most directly
comparable financial measures prepared in accordance with Generally
Accepted Accounting Principles (GAAP). These non-GAAP financial measures
include non-GAAP operating income (loss), non-GAAP net income (loss) and
non-GAAP net income (loss) per share.
Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP. These non-GAAP financial measures do not reflect a
comprehensive system of accounting, differ from GAAP measures with the
same names, and may differ from non-GAAP financial measures with the
same or similar names that are used by other companies.
We compute non-GAAP financial measures using the same consistent method
from quarter to quarter and year to year. We may consider whether other
significant items that arise in the future should be excluded from our
non-GAAP financial measures.
We exclude the following items from all of our non-GAAP financial
measures:
-
Share-based compensation expense
-
Amortization of acquired technology
-
Amortization of other acquired intangible assets
-
Goodwill and intangible asset impairment charges
-
Professional fees for business combinations
We also exclude the following items from non-GAAP net income (loss) and
diluted net income (loss) per share:
-
Gains and losses on debt and equity securities and other investments
-
Income tax effects and adjustments
-
Discontinued operations
We believe that these non-GAAP financial measures provide meaningful
supplemental information regarding Intuit's operating results primarily
because they exclude amounts that we do not consider part of ongoing
operating results when planning and forecasting and when assessing the
performance of the organization, our individual operating segments, or
our senior management. Segment managers are not held accountable for
share-based compensation expense, amortization, or the other excluded
items and, accordingly, we exclude these amounts from our measures of
segment performance. We believe that our non-GAAP financial measures
also facilitate the comparison by management and investors of results
for current periods and guidance for future periods with results for
past periods.
The following are descriptions of the items we exclude from our non-GAAP
financial measures.
Share-based compensation expenses. These consist of non-cash
expenses for stock options, restricted stock units, and our Employee
Stock Purchase Plan. When considering the impact of equity awards, we
place greater emphasis on overall shareholder dilution rather than the
accounting charges associated with those awards.
Amortization of acquired technology and amortization of other
acquired intangible assets. When we acquire an entity, we are
required by GAAP to record the fair values of the intangible assets of
the entity and amortize them over their useful lives. Amortization of
acquired technology in cost of revenue includes amortization of software
and other technology assets of acquired entities. Amortization of other
acquired intangible assets in operating expenses includes amortization
of assets such as customer lists, covenants not to compete, and trade
names.
Goodwill and intangible asset impairment charges. We exclude from
our non-GAAP financial measures non-cash charges to adjust the carrying
value of goodwill and other acquired intangible assets to their
estimated fair values.
Professional fees for business combinations. We exclude from our
non-GAAP financial measures the professional fees we incur to complete
business combinations. These include investment banking, legal, and
accounting fees.
Gains and losses on debt and equity securities and other investments.
We exclude from our non-GAAP financial measures gains and losses that we
record when we sell or impair available-for-sale debt and equity
securities and other investments.
Income tax effects and adjustments. We use a long-term non-GAAP
tax rate for evaluating operating results and for planning, forecasting,
and analyzing future periods. This long-term non-GAAP tax rate excludes
the income tax effects of the non-GAAP pre-tax adjustments described
above, assumes the federal research and experimentation credit is
continuously in effect, and eliminates the effects of non-recurring and
period specific items which can vary in size and frequency. Based on our
current long-term projections, we are using a long-term non-GAAP tax
rate of 34% for fiscal 2016 and 33% for fiscal 2017. These rates are
consistent with the average of our normalized fiscal year tax rate over
a four year period that includes the past three fiscal years plus the
current fiscal year forecast. We will evaluate this long-term non-GAAP
tax rate on an annual basis and whenever any significant events occur
which may materially affect this long-term rate. This long-term non-GAAP
tax rate could be subject to change for various reasons including
significant changes in our geographic earnings mix or fundamental tax
law changes in major jurisdictions in which we operate.
Operating results and gains and losses on the sale of discontinued
operations. From time to time, we sell or otherwise dispose of
selected operations as we adjust our portfolio of businesses to meet our
strategic goals. In accordance with GAAP, we segregate the operating
results of discontinued operations as well as gains and losses on the
sale of these discontinued operations from continuing operations on our
GAAP statements of operations but continue to include them in GAAP net
income or loss and net income or loss per share. We exclude these
amounts from our non-GAAP financial measures.
The reconciliations of the forward-looking non-GAAP financial measures
to the most directly comparable GAAP financial measures in Table E
include all information reasonably available to Intuit at the date of
this press release. These tables include adjustments that we can
reasonably predict. Events that could cause the reconciliation to change
include acquisitions and divestitures of businesses, goodwill and other
asset impairments, and sales of available-for-sale debt securities and
other investments.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170523006274/en/
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