Strong Performance Powered by 41% Online
Ecosystem Revenue Growth and Share Gains in TurboTax
Intuit Inc. (Nasdaq: INTU) announced financial results for the
third quarter of fiscal 2018, which ended April 30.
“We achieved very strong results this quarter, with overall
revenue growth of 15 percent, and double-digit growth in both the
Consumer Group and the Small Business and Self-Employed Group,"
said Brad Smith, Intuit’s chairman and chief executive officer. "We
are pleased with our momentum across the Online Ecosystem and we
are encouraged by our strong performance through the tax season,
including the successful debut of TurboTax Live, which we'll
continue to scale next season."
Financial Highlights
For the third quarter, Intuit:
- Grew revenue to $2.925 billion, up 15
percent.
- Increased Consumer Group revenue 15
percent in the quarter and 14 percent year-to-date, exceeding the
annual guidance of 7 to 9 percent provided at the beginning of the
fiscal year.
- Grew TurboTax units 4 percent this
season, including 6 percent growth from TurboTax Online.
- Increased total Small Business and
Self-Employed Group revenue 16 percent.
- Finished the quarter with over 3.2
million QuickBooks Online subscribers, up 45 percent.
- Grew to 683,000 Self-Employed
subscribers within QuickBooks Online, up from 360,000 one year
ago.
- Raised its full-year revenue guidance
to $5.915 billion to $5.935 billion, growth of 14 to 15
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.
Snapshot of Third-quarter Results
GAAP Non-GAAP Q3
Q3 Q3 Q3
FY18 FY17 Change
FY18 FY17 Change Revenue
$2,925 $2,541 15% $2,925 $2,541
15%
Operating Income $1,615 $1,444
12% $1,714 $1,519 13%
Earnings Per
Share $4.59 $3.70 24% $4.82
$3.90 24%
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). Earnings per share for the
fiscal 2018 periods reflects the impact of the Tax Cuts and Jobs
Act.
Business Segment Results
Small Business & Self-Employed
Group
- Online Ecosystem revenue grew 41
percent.
- U.S. subscribers grew 40 percent to
approximately 2.5 million, and international subscribers increased
66 percent to about 720,000.
- TurboTax was a significant channel for
QuickBooks Self-Employed. Approximately 330,000 of the QuickBooks
Self-Employed subscribers are from the TurboTax Self-Employed
offering.
Consumer and Strategic Partner
Groups
- Consumer Group revenue is up by 15
percent.
- Delivered an innovative experience with
TurboTax Live, a video-based assisted tax preparation experience.
TurboTax Live performed well in its first full season, utilizing a
platform leveraging nearly 2,000 public accountants, enrolled
agents and tax attorneys to serve customers.
- Nearly 5 million TurboTax customers
registered for Turbo this year providing customers with a full view
of their overall financial health by combining a credit score,
verified income data and a debt-to-income ratio to show customers
where they truly stand beyond the tax season.
- In the Strategic Partner Group,
professional tax revenue was in-line with expectations for the
quarter, with revenue up 4 percent year-to-date.
Capital Allocation Summary
In the third quarter the company:
- Repurchased $19 million of shares, with
$1.2 billion remaining on the authorization.
- Received board approval for a $0.39 per
share dividend for the fiscal fourth quarter, payable on
July 18, 2018.
Forward-looking Guidance
Intuit announced guidance for the fourth quarter of fiscal year
2018, which ends July 31. The company expects:
- Revenue of $940 million to $960
million, growth of 12 to 14 percent.
- GAAP operating loss of $20 million to
$30 million.
- Non-GAAP operating income of $75
million to $85 million.
- GAAP diluted earnings per share of
$0.04 to $0.06.
- Non-GAAP diluted earnings per share of
$0.22 to $0.24.
Intuit raised guidance for full fiscal year 2018. The company
now expects:
- Revenue of $5.915 billion to $5.935
billion, growth of 14 to 15 percent.
- GAAP operating income of $1.545 billion
to $1.555 billion, growth of 11 percent.
- Non-GAAP operating income of $1.950
billion to $1.960 billion, growth of 12 to 13 percent.
- GAAP diluted earnings per share of
$4.50 to $4.52, growth of 21 to 22 percent.
- Non-GAAP diluted earnings per share of
$5.51 to $5.53, growth of 25 percent.
- QuickBooks Online subscribers of 3.350
million to 3.375 million.
This guidance is based on a full year GAAP tax rate of 24
percent and a non-GAAP tax rate of 26.3 percent.
"We’re raising our guidance for fiscal year 2018 on the strength
of our performance across the businesses this quarter," said
Michelle Clatterbuck, Intuit's chief financial officer. "These
results demonstrate that our One Intuit strategy is also gaining
traction, and we expect it to continue to gain momentum through the
rest of this fiscal year and beyond."
Consumer Group Management Succession Plan
Dan Wernikoff, general manager of the Consumer Group, will step
down from the role at the end of Intuit’s fiscal 2018. Greg
Johnson, senior vice president of marketing, will succeed Wernikoff
as general manager of the Consumer Group.
“I couldn’t be more confident in the state of the business and
in Greg’s ability to lead us into the next chapter of our growth,”
Smith said. “At the same time, I couldn’t be more proud of the
foundation Dan has built. When he took this role in 2016, we agreed
this would be a two or three-year assignment. In those two years,
under Dan’s leadership, we’ve extended our lead in the
do-it-yourself tax prep category, advanced our efforts to disrupt
the assisted tax prep category and expanded our business beyond
tax.”
Johnson, a 20-year veteran in consumer-based businesses, has
spent the last five years as an integral member of the senior
leadership team, leading Intuit’s go-to-market initiatives,
commercial innovation, analytics and marketing capabilities that
have accelerated the growth of Intuit’s Tax business.
“Greg is a seasoned executive who has been a driving force in
the reinvention of our consumer business model. He spearheaded the
introduction of Absolute Zero, helped bring TurboTax Self Employed
and QuickBooks Self Employed together in the One Intuit Ecosystem
and was a key member of the team that brought TurboTax Live and
Turbo to market.
“As we pass the baton to Greg, I want to thank Dan for an
outstanding 2017 tax season and for positioning the business for
continued growth for years to come,” said Smith.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call at 1:30 p.m. Pacific time on May 22. 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 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 5878617.
The audio webcast will remain available on Intuit’s website for
one week after the conference call.
About Intuit
Intuit’s mission is to Power Prosperity Around
the World. Our global products and platforms, including
TurboTax, QuickBooks, Mint and Turbo, are
designed to empower consumers, self-employed, and small
businesses to improve their financial lives, finding them more
money with the least amount of work, while giving them complete
confidence in their actions and decisions. Our innovative
ecosystem of financial management solutions serves 46 million
customers worldwide, unleashing the power of many for the
prosperity of one. Please visit us for the latest news and
in-depth information about Intuit and its brands and find us on
Facebook.
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 2018 and beyond; 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 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 Intuit's corporate tax rate;
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; changes in the total
number of tax filings that are submitted to government agencies due
to economic conditions or otherwise; 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 and global trends; our ability to adequately
protect our intellectual property rights; our ability to develop
and maintain brand awareness and our reputation; disruptions,
expenses and risks associated with our acquisitions and
divestitures; we may issue additional shares in an acquisition
causing our number of outstanding shares to grow; any failure to
properly use and protect personal customer or employee information
and data; a security breach could result in third-party access to
confidential customer, employee and business information; privacy
and cybersecurity concerns relating to our offerings, or online
offerings in general; 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;
availability of our products and services could be impacted by
business interruption or failure of our information technology and
communication systems; our ability to develop, manage and maintain
critical third-party business relationships; our ability to
attract, retain and develop highly skilled employees; any
significant product accuracy or quality problems or delays; any
problems with implementing upgrades to our customer facing
applications and supporting information technology infrastructure;
increased risks associated with international operations; increases
in or changes to government regulation of our businesses; the cost
of, and potential adverse results in, litigation involving
intellectual property, antitrust, shareholder and other matters;
the seasonal and unpredictable nature of our revenue; unanticipated
changes in our income tax rates; adverse global economic
conditions; amortization of acquired intangible assets and
impairment charges; our use of significant amounts of debt to
finance acquisitions or other activities; any lost revenue
opportunities or cannibalization of our traditional paid franchise
due to our participation in the Free File Alliance; and changes in
the amounts or frequency of share repurchases or dividends. More
details about the risks that may impact our business are included
in our Form 10-K for fiscal 2017 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 22, 2018, and we do not undertake any duty
to update any forward-looking statement or other information in
these materials.
TABLE A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended Nine Months
Ended April 30, 2018 April 30,
2017 April 30, 2018 April 30,
2017 Net revenue: Product $ 505 $ 467 $ 1,140 $ 1,063
Service and other 2,420 2,074 3,836 3,272
Total net revenue 2,925 2,541 4,976
4,335 Costs and expenses: Cost of revenue: Cost of product
revenue 27 29 87 95 Cost of service and other revenue 272 205 649
522 Amortization of acquired technology 5 3 10 9 Selling and
marketing 549 467 1,326 1,155 Research and development 296 246 875
735 General and administrative 159 146 447 412 Amortization of
other acquired intangible assets 2 1 4 2
Total costs and expenses [A] 1,310 1,097 3,398
2,930 Operating income 1,615 1,444 1,578 1,405
Interest expense (5 ) (8 ) (16 ) (28 ) Interest and other income
(expense), net 7 3 15 — Income before
income taxes 1,617 1,439 1,577 1,377 Income tax provision [B] 417
475 415 430 Net income $ 1,200 $
964 $ 1,162 $ 947 Basic net income per
share $ 4.68 $ 3.76 $ 4.54 $ 3.68
Shares used in basic per share calculations 257 256
256 257 Diluted net income per share $ 4.59
$ 3.70 $ 4.47 $ 3.63 Shares used in
diluted per share calculations 262 260 260 261
Cash dividends declared per common share $ 0.39
$ 0.34 $ 1.17 $ 1.02
See accompanying Notes.
INTUIT INC.NOTES TO TABLE A
[A] The following table summarizes the total share-based
compensation expense that we recorded in operating income for the
periods shown.
Three Months Ended
Nine Months Ended (in millions)
April 30,2018
April 30,2017
April 30,2018
April 30,2017
Cost of revenue $ 14 $ 2 $ 30 $ 6 Selling and marketing 25 19 75 66
Research and development 30 24 99 89 General and administrative 23
26 79 80 Total share-based compensation
expense $ 92 $ 71 $ 283 $ 241
[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.
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22,
2017 and reduces the U.S. statutory federal corporate tax rate from
35% to 21%. The effective date of the tax rate change was January
1, 2018. With our fiscal year ending July 31, the change will
result in a blended lower U.S. statutory federal rate of 26.9% for
fiscal year 2018. As a result, we adjusted our annual effective tax
rate for the three and nine months ended April 30, 2018, as
well as adjusted our U.S. net deferred tax asset balance at the
lower rates.
As of April 30, 2018, we have not completed our accounting for
the tax effects of enactment of the Tax Act; however, we have made
a reasonable estimate of the effects on our existing deferred tax
balances. We recorded a provisional charge of $39 million in the
second quarter of fiscal 2018 related to the re-measurement of
certain deferred tax balances. During the three months ended April
30, 2018, we recorded an additional provisional charge of $5
million related to the re-measurement of deferred tax balances,
resulting in a total tax expense of $44 million for the nine months
ended April 30, 2018.
Current quarter and year to date income
tax and effective tax rates
For the three and nine months ended April 30, 2018, we
recognized excess tax benefits on share-based compensation of $8
million and $41 million in our provision for income taxes. For the
three and nine months ended April 30, 2017, we recognized
excess tax benefits on share-based compensation of $12 million and
$38 million in our provision for income taxes.
Our effective tax rate for the three and nine months ended
April 30, 2018 was approximately 26% and did not differ
significantly from the federal statutory rate of 26.9%.
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, our effective tax rate for both periods was 34% and
did not differ significantly from the federal statutory rate of
35%.
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 2018 Q1 Q2
Q3 Q4 Year to Date GAAP
operating income (loss) $ (57 ) $ 20 $ 1,615 $ — $ 1,578
Amortization of acquired technology 2 3 5 — 10 Amortization of
other acquired intangible assets 1 1 2 — 4 Professional fees for
business combinations — 2 — — 2 Share-based compensation expense 97
94 92 — 283
Non-GAAP
operating income (loss) $ 43 $ 120 $ 1,714
$ — $ 1,877
GAAP net income (loss) $
(17 ) $ (21 ) $ 1,200 $ — $ 1,162 Amortization of acquired
technology 2 3 5 — 10 Amortization of other acquired intangible
assets 1 1 2 — 4 Professional fees for business combinations — 2 —
— 2 Share-based compensation expense 97 94 92 — 283 Net (gain) loss
on debt securities and other investments 2 2 — — 4 Other income
from divested businesses [A] — — (8 ) — (8 ) Tax Act [B] — 39 5 —
44 Other income tax effects and adjustments [B] (56 ) (29 ) (36 ) —
(121 )
Non-GAAP net income (loss) $ 29 $ 91
$ 1,260 $ — $ 1,380
GAAP
diluted net income (loss) per share $ (0.07 ) $ (0.08 ) $ 4.59
$ — $ 4.47 Amortization of acquired technology 0.01 0.01 0.02 —
0.04 Amortization of other acquired intangible assets — — 0.01 —
0.01 Professional fees for business combinations — 0.01 — — 0.01
Share-based compensation expense 0.38 0.36 0.35 — 1.09 Net (gain)
loss on debt securities and other investments 0.01 0.01 — — 0.02
Other income from divested businesses [A] — — (0.03 ) — (0.03 ) Tax
Act [B] — 0.15 0.02 — 0.17 Other income tax effects and adjustments
[B] (0.22 ) (0.11 ) (0.14 ) — (0.48 )
Non-GAAP diluted
net income (loss) per share $ 0.11 $ 0.35 $ 4.82
$ — $ 5.30
Shares used in GAAP
diluted per share calculation 256 256 262
— 260
Shares used in non-GAAP diluted per
share calculation 259 260 262 — 260
[A] During the three months ended April 30, 2018, we
received payments from contingent earn out provisions related to
businesses we previously divested. [B] The Tax Act
adjustments relate to the provisional tax expense for the
re-measurement of deferred tax balances at the enacted lower tax
rates. [C] As discussed in “About Non-GAAP Financial
Measures - Income Tax Effects and Adjustments” following Table E,
our non-GAAP tax rate eliminates the effects of non-recurring and
period specific items. Other income tax adjustments consist
primarily of tax adjustments for the non-GAAP pre-tax adjustments
and the excess tax benefits on share-based compensation.
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 2017 Q1 Q2
Q3 Q4 Full Year GAAP
operating income (loss) $ (61 ) $ 22 $ 1,444 $ (10 ) $ 1,395
Amortization of acquired technology 3 3 3 3 12 Amortization of
other acquired intangible assets 1 — 1 — 2 Share-based compensation
expense 89 81 71 85 326
Non-GAAP operating income (loss) $ 32 $ 106 $
1,519 $ 78 $ 1,735
GAAP net income
(loss) $ (30 ) $ 13 $ 964 $ 24 $ 971 Amortization of acquired
technology 3 3 3 3 12 Amortization of other acquired intangible
assets 1 — 1 — 2 Share-based compensation expense 89 81 71 85 326
Net (gain) loss on debt securities and other investments 1 6 1 1 9
Income tax effects and adjustments [A] (49 ) (36 ) (25 ) (60 ) (170
)
Non-GAAP net income (loss) $ 15 $ 67 $ 1,015
$ 53 $ 1,150
GAAP diluted net income
(loss) per share $ (0.12 ) $ 0.05 $ 3.70 $ 0.09 $ 3.72
Amortization of acquired technology 0.01 0.01 0.01 0.01 0.05
Amortization of other acquired intangible assets 0.01 — 0.01 — 0.01
Share-based compensation expense 0.34 0.31 0.27 0.33 1.25 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
) (0.23 ) (0.65 )
Non-GAAP diluted net income (loss) per
share $ 0.06 $ 0.26 $ 3.90 $ 0.20 $
4.41
Shares used in GAAP diluted per share
calculation 258 260 260 261 261
Shares used in non-GAAP diluted per share
calculation 261 260 260 261 261
[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 excess tax benefits
related to share-based compensation. 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, 2018
July 31, 2017 ASSETS Current assets: Cash and
cash equivalents $ 1,614 $ 529 Investments 322 248 Accounts
receivable, net 309 103 Income taxes receivable 2 63 Prepaid
expenses and other current assets 179 100 Current assets
before funds held for customers 2,426 1,043
Funds held for customers
419 372 Total current assets 2,845 1,415 Long-term
investments 28 31 Property and equipment, net 950 1,030 Goodwill
1,613 1,295 Acquired intangible assets, net 68 22 Long-term
deferred income taxes 128 132 Other assets 155 143 Total
assets $ 5,787 $ 4,068 LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Short-term debt $ 50 $ 50 Accounts
payable 325 157 Accrued compensation and related liabilities 286
300 Deferred revenue 1,040 887 Income taxes payable 356 5 Other
current liabilities 227 173 Current liabilities before
customer fund deposits 2,284 1,572 Customer fund deposits 419
372 Total current liabilities 2,703 1,944 Long-term
debt 400 438 Long-term deferred revenue 173 202 Other long-term
obligations 147 130 Total liabilities 3,423 2,714
Stockholders’ equity 2,364 1,354 Total liabilities
and stockholders’ equity $ 5,787 $ 4,068
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Nine Months Ended
April 30,2018
April 30,2017
Cash flows from operating activities: Net income $ 1,162 $
947 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 173 156 Amortization of acquired
intangible assets 18 18 Share-based compensation expense 283 241
Deferred income taxes 24 (36 ) Other (1 ) 9 Total
adjustments 497 388 Changes in operating assets and
liabilities: Accounts receivable (206 ) (138 ) Income taxes
receivable 62 19 Prepaid expenses and other assets (37 ) 5 Accounts
payable 160 104 Accrued compensation and related liabilities (8 )
(47 ) Deferred revenue 120 130 Income taxes payable 351 431 Other
liabilities 48 50 Total changes in operating assets
and liabilities 490 554
Net cash provided by
operating activities 2,149 1,889
Cash flows from investing activities: Purchases of corporate
and customer fund investments (303 ) (286 ) Sales of corporate and
customer fund investments 87 332 Maturities of corporate and
customer fund investments 137 150 Net change in cash and cash
equivalents held to satisfy customer fund obligations (47 ) (18 )
Net change in customer fund deposits 47 18 Purchases of property
and equipment (97 ) (178 ) Acquisitions of businesses, net of cash
acquired (363 ) — Other (49 ) (40 )
Net cash used in investing
activities (588 ) (22 ) Cash
flows from financing activities: Proceeds from borrowings under
revolving credit facility 800 150 Repayments on borrowings under
revolving credit facility (800 ) (150 ) Repayment of debt (38 )
(500 ) Proceeds from issuance of stock under employee stock plans
205 150 Payments for employee taxes withheld upon vesting of
restricted stock units (58 ) (61 ) Cash paid for purchases of
treasury stock (272 ) (473 )
Dividends and dividend rights paid
(305 ) (265 ) Other (1 ) —
Net cash used in financing
activities (469 ) (1,149 ) Effect
of exchange rates on cash and cash equivalents (7 ) (6 )
Net
increase in cash and cash equivalents 1,085 712
Cash and cash equivalents at beginning of period 529 638
Cash and cash equivalents at end of period $
1,614 $ 1,350
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME, AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance
GAAPRange of Estimate
Non-GAAPRange of
Estimate
From To Adjmts From
To Three Months Ending July 31, 2018 Revenue $ 940 $
960 $ — $ 940 $ 960 Operating income (loss) $ (30 ) $ (20 ) $ 105
[a] $ 75 $ 85 Diluted earnings per share $ 0.04 $ 0.06 $ 0.18 [b] $
0.22 $ 0.24
Twelve Months Ending July 31, 2018
Revenue $ 5,915 $ 5,935 $ — $ 5,915 $ 5,935 Operating income $
1,545 $ 1,555 $ 405 [c] $ 1,950 $ 1,960 Diluted earnings per share
$ 4.50 $ 4.52 $ 1.01 [d] $ 5.51 $ 5.53
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 $99 million; amortization of
acquired technology of approximately $5 million; and amortization
of other acquired intangible assets of approximately $1 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 non-GAAP tax rate. [c] Reflects
estimated adjustments for share-based compensation expense of
approximately $383 million; amortization of acquired technology of
approximately $15 million; amortization of other acquired
intangible assets of approximately $5 million; and professional
fees for business combinations 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 non-GAAP tax rate. Includes provisional tax
charge related to the Tax Act and other income from divested
businesses.
INTUIT INC.ABOUT NON-GAAP FINANCIAL
MEASURES
The accompanying press release dated May 22, 2018 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
- Gains and losses on disposals of
businesses and long-lived assets
- 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.
Gains and losses on disposals of businesses and long-lived
assets. We exclude from our non-GAAP financial measures gains and
losses on disposals of businesses and long-lived assets because
they are unrelated to our ongoing business operating results.
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. In our fiscal 2017 and the
first quarter of our fiscal 2018 we used 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 excluded the income tax effects of the non-GAAP pre-tax
adjustments described above, and eliminates the effects of
non-recurring and period specific items which can vary in size and
frequency. Based on our long-term projections at that time we used
a long-term non-GAAP tax rate of 33%. This rate was consistent with
the average of our normalized fiscal year tax rate over a four year
period that included the past three fiscal years plus the current
fiscal year forecast.
In the second quarter of our fiscal 2018, we revised our
estimated annual effective non-GAAP tax rate to reflect a change in
the U.S. federal statutory rate, as a result of the 2017 Tax Cuts
and Jobs Act (the “Tax Act”). The federal statutory rate change, to
21%, is effective January 1, 2018, and therefore, the change will
result in a blended U.S. federal statutory rate of 26.9% for our
fiscal year 2018. Effective in the third quarter of fiscal 2018, we
adjusted our effective non-GAAP tax rate from 27% to 26.3%, based
on continued analysis of the impacts from the Tax Act, as well as
updates to the estimated full year impacts of our tax rate drivers
such as the research and experimentation credit and the domestic
production activities deduction. We have applied this tax rate to
year to date pre-tax income, after the elimination of the effects
of the non-GAAP adjustments to our operating results described
above. Because of the transitional impact of the Tax Act
provisions, the fiscal 2018 non-GAAP tax rate is based on our
current year forecast only, without reference to long-term
forecasts. This non-GAAP tax rate excludes the income tax effects
of the non-GAAP pre-tax adjustments described above, and eliminates
the effects of non-recurring and period specific items.
We will fully benefit from the U.S. federal statutory rate
change in our fiscal year 2019. We expect to use the long-term
non-GAAP tax rate for fiscal 2019, once the Tax Act’s provisions
are in full effect and consistent for the periods included in the
long-term forecast.
We evaluate the non-GAAP tax rate on an annual basis and
whenever any significant events occur which may materially affect
this rate. This 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, sales of
available-for-sale debt securities and other investments, and
disposals of businesses and long-lived assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180522006273/en/
Intuit Inc.InvestorsKim Watkins,
650-944-3324kim_watkins@intuit.comMediaDiane Carlini,
650-944-6251diane_carlini@intuit.com
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