Company Reiterates Full Year
Guidance
Intuit Inc. (Nasdaq: INTU) announced financial results for the
second quarter of fiscal 2019, which ended Jan. 31.
"We are halfway through our fiscal year and continue to see good
momentum," said Sasan Goodarzi, Intuit's chief executive officer.
"I'm pleased to see our products continuing to deliver for our
customers."
"With the tax season well underway, our focus is to deliver the
best experiences to grow the Do-It-Yourself (DIY) category,
transform the assisted category and go beyond taxes to find ways to
put more money in the pocket of our customers. I'm proud of the
work our teams have done to drive an experience with TurboTax Live
that gives customers confidence to file on their own. We like what
we're seeing at this stage.
"Small Business and Self-Employed Group delivered another strong
quarter led by our Online Ecosystem. We are solving top customer
problems with offerings that deliver better money outcomes,
smarter decisions and enhanced connections for those leveraging the
QuickBooks platform," said Goodarzi.
Financial Highlights
For the second quarter, Intuit:
- Grew total revenue to $1.5 billion, up
12 percent.
- Increased Small Business Online
Ecosystem revenue by 38 percent.
- Grew Small Business and Self-Employed
Group revenue 17 percent to $833 million.
- Grew Consumer Group revenue by 11
percent to $461 million.
- Reported GAAP operating income of $233
million, versus $194 million last year, a 20 percent increase.
- Reported non-GAAP operating income of
$339 million, versus $294 million last year, a 15 percent
increase.
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. Fiscal 2018 amounts have been restated for the adoption of
the new accounting standard on revenue accounting, ASC606.
Snapshot of Second-quarter Results
GAAP
Non-GAAP
Q2FY19
Q2FY18 Change
Q2FY19
Q2FY18 Change
Revenue
$1,502 $1,339 12%
$1,502 $1,339 12%
Operating Income
$233 $194 20%
$339 $294 15%
Earnings Per Share
$0.72 $0.70 3%
$1.00 $0.84 19%
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).
Business Segment Results
Small Business and Self-Employed
Group
- Within payments, customers using the
next business-day feature are able to receive their funds much
faster than previously experienced. This is contributing to higher
product recommendation scores.
- In payroll, next-day and same-day
direct deposit is growing in adoption. This capability is enabling
customers to hold onto their money longer and better manage their
cash flow.
- QuickBooks Capital has funded $277
million in cumulative loans since launching a little over a year
ago. Approximately $88 million in loans are outstanding as of the
end of the fiscal second quarter.
- Increased functionality in QuickBooks
Online Advanced is now available to those mid-market businesses
with 10 to 100 employees.
- QuickBooks Online subscribers grew 38
percent, ending the quarter with nearly 3.9 million
subscribers.
- Growth remains strong across multiple
geographies, with U.S. subscribers growing 32 percent to
approximately 2.9 million and international subscribers growing 56
percent to over 980,000.
- Within QuickBooks Online, Self-Employed
subscribers grew to approximately 845,000, up from roughly 489,000
one year ago.
Consumer and Strategic Partner
Groups
- Customers with returns from simple to
complex can now access an expert through TurboTax Live.
- New this season, the company debuted
mobile access to an expert on demand through TurboTax Live.
- Within the Strategic Partner Group,
reported $208 million of professional tax revenue for the second
quarter, in line with expectations.
Capital Allocation Summary
In the second quarter the company:
- Repurchased $177 million of shares,
with $3.0 billion remaining on the company's authorization.
- Received Board approval for a quarterly
dividend of $0.47 per share, payable April 18, 2019. This
represents a 21 percent increase compared to last year.
"We are pleased with the continued momentum of our Small
Business and Self-Employed Group and the team remains laser focused
on executing as we head toward the tax filing deadline. Moving into
the second half of the year, we are optimistic about our future,"
said Goodarzi.
Forward-looking Guidance
Intuit announced guidance for the third quarter of fiscal year
2019, which ends April 30. The company expects:
- Revenue growth of 10 to 12
percent,
- GAAP diluted earnings per share of
$5.03 to $5.08, and
- Non-GAAP diluted earnings per share of
$5.35 to $5.40.
Intuit reiterated guidance for full fiscal year 2019. The
company expects:
- Revenue of $6.530 billion to $6.630
billion, growth of 8 to 10 percent.
- GAAP operating income of $1.725 billion
to $1.775 billion, growth of 11 to 14 percent.
- Non-GAAP operating income of $2.165
billion to $2.215 billion, growth of 6 to 8 percent.
- GAAP diluted earnings per share of
$5.25 to $5.35, growth of 3 to 5 percent.
- Non-GAAP diluted earnings per share of
$6.40 to $6.50, growth of 11 to 12 percent.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call at 1:30 p.m. Pacific time on Feb. 21. 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 2627056.
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 approximately 50 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 social.
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 2019 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: our ability to compete successfully; our
participation in the Free File Alliance; governmental encroachment
in our tax businesses, our ability to adapt to technological
change; our ability to predict consumer behavior; our ability to
protect our intellectual property rights; our reliance on third
party intellectual property; any harm to our reputation; risks
associated with acquisitions and divestitures; issue of additional
shares as consideration or incurring debt to fund an acquisition;
our cybersecurity incidents (including those affecting the third
parties we rely on); customer concerns about privacy and
cybersecurity incidents; fraudulent activities by third parties
using our offerings; failure to process transactions effectively;
interruption or failure of our information technology; ability to
maintain critical third party business relationships; our ability
to attract and retain talent; deficiency in quality, accuracy or
timely launch of products; difficulties in processing or filing
customer tax submissions; risks associated with international
operations; changes to public policy, laws or regulations affecting
our businesses; litigation in which we are involved; seasonal
nature of our tax business; changes in tax rates and tax reform
legislation; global economic changes; exposure to credit risk of
the businesses we provide capital to; amortization of acquired
intangible assets and impairment charges; our ability to repay
outstanding debt; our ability to repurchase shares or distribute
dividends; volatility of our stock price; and our ability to
successfully market our offerings. More details about these and
other risks that may impact our business are included in our Form
10-K for fiscal 2018 and in our other SEC filings. You can locate
these reports through our website at http://investors.intuit.com.
Fiscal 2019 guidance speaks only as of the date it was publicly
issued by Intuit. Other forward-looking statements represent the
judgment of the management of Intuit as of the date of this
release. We do not undertake any duty to update any forward-looking
statement or other information in this presentation.
TABLE A
INTUIT INC. GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (In
millions, except per share amounts) (Unaudited)
Three
Months Ended Six Months Ended January 31,
2019 January 31, 2018 January
31, 2019 January 31, 2018
*As Adjusted *As Adjusted Net revenue: Product
$ 533 $ 529 $ 880 $ 899 Service and other 969 810
1,638 1,350 Total net revenue 1,502 1,339
2,518 2,249 Costs and expenses: Cost of
revenue: Cost of product revenue 26 27 41 45 Cost of service and
other revenue 254 216 481 394 Amortization of acquired technology 5
3 10 5 Selling and marketing 548 469 894 777 Research and
development 295 286 589 579 General and administrative 140 143 277
288 Amortization of other acquired intangible assets 1 1
3 2 Total costs and expenses [A] 1,269
1,145 2,295 2,090 Operating income 233 194 223
159 Interest expense (4 ) (6 ) (8 ) (11 ) Interest and other
income, net 6 5 6 8 Income before
income taxes 235 193 221 156 Income tax provision (benefit) [B] 46
10 (2 ) (25 ) Net income $ 189 $ 183 $
223 $ 181 Basic net income per share $ 0.73
$ 0.72 $ 0.86 $ 0.71 Shares used in
basic per share calculations 260 256 260 256
Diluted net income per share $ 0.72 $ 0.70
$ 0.84 $ 0.70 Shares used in diluted per share
calculations 264 260 264 260
Cash dividends declared per common share $ 0.47 $ 0.39
$ 0.94 $ 0.78
* Prior-period information has been
restated for the adoption of ASU 2014-09, Revenue from Contracts
with Customers (Topic 606), which we adopted on August 1, 2018.
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 Six
Months Ended January 31, January 31,
January 31, January 31, (in millions)
2019 2018 2019 2018 Cost of revenue $
15 $ 13 $ 29 $ 16 Selling and marketing 25 25 55 50 Research and
development 34 30 69 69 General and administrative 26 26
52 56 Total share-based compensation expense $ 100
$ 94 $ 205 $ 191
[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.
Our effective tax rates for the three and six months ended
January 31, 2018 have been restated to reflect the full
retrospective application of ASU 2014-09, “Revenue from Contracts
with Customers (Topic 606).” The Tax Cuts and Jobs Act (2017
Tax Act) was enacted on December 22, 2017 and reduced the U.S.
statutory federal corporate tax rate from 35% to 21%. The effective
date of the tax rate change was January 1, 2018. The change
resulted in a blended lower U.S. statutory federal rate of 26.9%
for fiscal 2018. In fiscal 2019, we fully benefit from the enacted
lower tax rate of 21%. On December 22, 2017 the SEC issued
Staff Accounting Bulletin No. 118 (SAB 118), which provided
guidance for companies that were not able to complete their
accounting for the income tax effects of the 2017 Tax Act in the
period of enactment. The guidance allowed us to record provisional
amounts to the extent a reasonable estimate could be made and
provided us with up to one year from enactment date to finalize
accounting for the impacts of the 2017 Tax Act. During the three
and six months ended January 31, 2018, we recorded a provisional
benefit of $37 million related to the re-measurement of our net
deferred tax liability balance. As of January 31, 2019, we have
completed our accounting for the income tax effects of the 2017 Tax
Act, and no material adjustments were made during the fiscal 2019
period. For the three and six months ended January 31, 2019,
we recognized excess tax benefits on share-based compensation of $8
million and $49 million, respectively, in our provision for income
taxes. For the three and six months ended January 31, 2018, we
recognized excess tax benefits on share-based compensation of $8
million and $33 million, respectively, in our provision for income
taxes. Our effective tax rate for the three months ended
January 31, 2019 was approximately 20%. For the six months ended
January 31, 2019 we recorded a tax benefit of $2 million on a
pretax income of $221 million. Excluding discrete tax items,
primarily related to share-based compensation tax benefits
mentioned above, our effective tax rate for both periods was 23%
and did not differ significantly from the federal statutory rate of
21%. Our effective tax rate for the three months ended
January 31, 2018 was approximately 5%. For the six months ended
January 31, 2018 we recorded a tax benefit of $25 million on pretax
income of $156 million. Excluding the discrete tax items primarily
related to the re-measurement of our net deferred tax liability
balance and the share-based compensation tax benefits mentioned
above, our effective tax rate for both periods was 27% and did not
differ significantly from the federal statutory rate of 26.9%.
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 2019 Q1 Q2
Q3 Q4 Year to Date GAAP
operating income (loss) $ (10 ) $ 233 $ — $ — $ 223
Amortization of acquired technology 5 5 — — 10 Amortization of
other acquired intangible assets 2 1 — — 3 Share-based compensation
expense 105 100 — — 205
Non-GAAP operating income (loss) $ 102 $ 339 $
— $ — $ 441
GAAP net income
(loss) $ 34 $ 189 $ — $ — $ 223 Amortization of acquired
technology 5 5 — — 10 Amortization of other acquired intangible
assets 2 1 — — 3 Share-based compensation expense 105 100 — — 205
Net (gain) loss on debt securities and other investments 1 2 — — 3
Other income tax effects and adjustments [A] (71 ) (33 ) — —
(104 )
Non-GAAP net income (loss) $ 76 $ 264
$ — $ — $ 340
GAAP diluted
net income (loss) per share $ 0.13 $ 0.72 $ — $ — $ 0.84
Amortization of acquired technology 0.02 0.02 — — 0.04 Amortization
of other acquired intangible assets 0.01 — — — 0.01 Share-based
compensation expense 0.40 0.38 — — 0.78 Net (gain) loss on debt
securities and other investments — 0.01 — — 0.01 Other income tax
effects and adjustments [A] (0.27 ) (0.13 ) — — (0.39
)
Non-GAAP diluted net income (loss) per share $ 0.29
$ 1.00 $ — $ — $ 1.29
Shares
used in GAAP diluted per share calculation 264 264
— — 264
Shares used in
non-GAAP diluted per share calculation 264 264 —
— 264
[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. Other income tax
adjustments consist primarily of the tax impact of 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 2018 * As
Adjusted Q1 Q2
Q3 Q4 Full Year
GAAP operating income (loss) $ (35 ) $ 194 $ 1,601 $ (200 )
$ 1,560 Amortization of acquired technology 2 3 5 5 15 Amortization
of other acquired intangible assets 1 1 2 2 6 Professional fees for
business combinations — 2 — — 2 (Gain) loss on sale of long-lived
assets — — — 79 79 Share-based compensation expense 97 94
92 99 382
Non-GAAP operating income
(loss) $ 65 $ 294 $ 1,700 $ (15 ) $ 2,044
GAAP net income (loss) $ (2 ) $ 183 $ 1,186 $
(38 ) $ 1,329 Amortization of acquired technology 2 3 5 5 15
Amortization of other acquired intangible assets 1 1 2 2 6
Professional fees for business combinations — 2 — — 2 Loss on sale
of long-lived assets — — — 79 79 Share-based compensation expense
97 94 92 99 382 Net (gain) loss on debt securities and other
investments 2 2 — 2 6 Other income from divested businesses [A] — —
(8 ) — (8 ) 2017 Tax Act [B] — (37 ) 10 (2 ) (29 ) Income tax
effects and adjustments [C] (56 ) (29 ) (36 ) (150 ) (271 )
Non-GAAP net income (loss) $ 44 $ 219 $ 1,251
$ (3 ) $ 1,511
GAAP diluted net income
(loss) per share $ (0.01 ) $ 0.70 $ 4.53 $ (0.15 ) $ 5.09
Amortization of acquired technology 0.01 0.01 0.02 0.02 0.06
Amortization of other acquired intangible assets — — 0.01 0.01 0.02
Professional fees for business combinations — 0.01 — — 0.01 Loss on
sale of long-lived assets — — — 0.31 0.30 Share-based compensation
expense 0.38 0.36 0.35 0.38 1.46 Net (gain) loss on debt securities
and other investments 0.01 0.01 — 0.01 0.02 Other income from
divested businesses [A] — — (0.03 ) — (0.03 ) 2017 Tax Act [B] —
(0.14 ) 0.04 (0.01 ) (0.11 ) Other income tax effects and
adjustments [C] (0.22 ) (0.11 ) (0.14 ) (0.58 ) (1.04 )
Non-GAAP
diluted net income (loss) per share $ 0.17 $ 0.84
$ 4.78 $ (0.01 ) $ 5.78
Shares used in GAAP
diluted per share calculation 256 260 262
258 261
Shares used in non-GAAP diluted per
share calculation 259 260 262 258
261
* Information has been restated for the
adoption of ASU 2014-09, Revenue from Contracts with Customers
(Topic 606), which we adopted on August 1, 2018.
[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 2017 Tax Act adjustments relate to the
provisional tax benefit for the re-measurement of our deferred tax
balances at the enacted lower tax rate.
[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 the tax impact of the non-GAAP pre-tax adjustments,
which includes the loss on the sale of long-lived assets; the
excess tax benefits on share-based compensation; and the tax
benefits on a loss from a subsidiary reorganization.
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)
January 31,2019
July 31, 2018 * As Adjusted ASSETS
Current assets: Cash and cash equivalents $ 1,075 $ 1,464
Investments 258 252 Accounts receivable, net 554 98 Income taxes
receivable 70 39 Prepaid expenses and other current assets 253
202 Current assets before funds held for customers 2,210
2,055 Funds held for customers 434 367 Total current assets
2,644 2,422 Long-term investments 13 13 Property and
equipment, net 810 812 Goodwill 1,611 1,611 Acquired intangible
assets, net 49 61 Other assets 208 215 Total assets $ 5,335
$ 5,134 LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Short-term debt $ 50 $ 50 Accounts payable 400 178
Accrued compensation and related liabilities 221 369 Deferred
revenue 639 581 Other current liabilities 257 198 Current
liabilities before customer fund deposits 1,567 1,376 Customer fund
deposits 434 367 Total current liabilities 2,001 1,743
Long-term debt 363 388 Long-term deferred income tax
liabilities 51 68 Other long-term obligations 124 119 Total
liabilities 2,539 2,318 Stockholders’ equity 2,796
2,816 Total liabilities and stockholders’ equity $ 5,335
$ 5,134
* Prior-period information has been
restated for the adoption of ASU 2014-09, Revenue from Contracts
with Customers (Topic 606), which we adopted on August 1, 2018.
TABLE D
INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
millions) (Unaudited)
Six Months Ended January
31, January 31, 2019 2018
* As Adjusted Cash flows from operating activities:
Net income $ 223 $ 181 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 99 117
Amortization of acquired intangible assets 13 10 Share-based
compensation expense 205 191 Deferred income taxes (21 ) (25 )
Other 6 7 Total adjustments 302 300
Changes in operating assets and liabilities: Accounts receivable
(456 ) (428 ) Income taxes receivable (1 ) 31 Prepaid expenses and
other assets (54 ) (65 ) Accounts payable 210 176 Accrued
compensation and related liabilities (146 ) (89 ) Deferred revenue
58 5 Other liabilities 62 63 Total changes in
operating assets and liabilities (327 ) (307 )
Net cash provided
by operating activities 198 174
Cash flows from investing activities: Purchases of corporate
and customer fund investments (153 ) (137 ) Sales of corporate and
customer fund investments 42 68 Maturities of corporate and
customer fund investments 106 66 Net change in customer fund
deposits 67 50 Purchases of property and equipment (80 ) (77 )
Acquisitions of businesses, net of cash acquired — (362 )
Originations of term loans to small businesses (152 ) (40 )
Principal repayments of term loans from small businesses 116 18
Other 13 (22 )
Net cash used in investing activities
(41 ) (436 ) Cash flows from
financing activities: Proceeds from borrowings under revolving
credit facility — 800 Repayments on borrowings under revolving
credit facility — (160 ) Repayment of debt (25 ) (25 ) Proceeds
from issuance of stock under employee stock plans 154 150 Payments
for employee taxes withheld upon vesting of restricted stock units
(76 ) (49 ) Cash paid for purchases of treasury stock (274 ) (253 )
Dividends and dividend rights paid (251 ) (205 ) Other (5 ) —
Net cash provided by (used in) financing activities
(477 ) 258 Effect of exchange rates on
cash, cash equivalents, restricted cash, and restricted cash
equivalents (2 ) 3
Net decrease in cash, cash
equivalents, restricted cash, and restricted cash equivalents
(322 ) (1 ) Cash, cash equivalents,
restricted cash, and restricted cash equivalents at beginning of
period 1,631 701
Cash, cash equivalents,
restricted cash, and restricted cash equivalents at end of
period $ 1,309 $ 700
Reconciliation of cash, cash equivalents, restricted cash,
and restricted cash equivalents reported within the consolidated
balance sheet to the total amounts reported on the consolidated
statement of cash flows Cash and cash equivalents
$
1,075 $ 478 Restricted cash and restricted
cash equivalents included in funds held for customers 234
222
Total cash, cash equivalents, restricted cash, and
restricted cash equivalents at end of period $
1,309 $ 700
* Prior-period information has been
restated for the adoption of ASU 2014-09, Revenue from Contracts
with Customers (Topic 606) and ASU 2016-18, Statement of Cash Flows
(Topic 230): Restricted Cash, both of which we adopted on August 1,
2018.
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 GAAP
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From
To Three Months Ending April 30, 2019 Revenue $ 3,210
$ 3,260 $ — $ 3,210 $ 3,260 Operating income $ 1,723 $ 1,743 $ 102
[a] $ 1,825 $ 1,845 Diluted earnings per share $ 5.03 $ 5.08 $ 0.32
[b] $ 5.35 $ 5.40
Twelve Months Ending July 31, 2019
Revenue $ 6,530 $ 6,630 $ — $ 6,530 $ 6,630 Operating income $
1,725 $ 1,775 $ 440 [c] $ 2,165 $ 2,215 Diluted earnings per share
$ 5.25 $ 5.35 $ 1.15 [d] $ 6.40 $ 6.50 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 $96 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 $416 million;
amortization of acquired technology of approximately $19 million;
and amortization of other acquired intangible assets of
approximately $5 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.
INTUIT INC.ABOUT NON-GAAP FINANCIAL
MEASURES
The accompanying press release dated February 21, 2019
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 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 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 values 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 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, and eliminates the effects of
non-recurring and period specific items which can vary in size and
frequency. The long term rate includes the effect of the reduction
in the U.S. federal statutory rate to 21%, as a result of the 2017
Tax Cuts and Jobs Act (2017 Tax Act). As the change in the U.S.
federal statutory rate, as a result of the 2017 Tax Act, occurred
in the second quarter of our fiscal 2018, the calculation of our
fiscal 2019 long-term non-GAAP rate references only our current
forecast considerations and is equal to the average of our
forecasted tax rates over our long term forecast period. Based on
our current long-term projections, we are using a long-term
non-GAAP tax rate of 23% for fiscal 2019. 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. 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 rate.
In the first quarter of 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 eliminated the effects of
non-recurring and period-specific items which can vary in size and
frequency. 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. Based on our current long-term projections at that time
we used a long-term non-GAAP tax rate of 33%.
Starting in the second quarter of our fiscal 2018, we revised
our estimated annual non-GAAP tax rate to reflect the change in the
U.S. federal statutory rate, as a result of the 2017 Tax Act. The
federal statutory rate change to 21%, was effective January 1,
2018, and therefore, the change resulted in a blended U.S. federal
statutory rate of 26.9% for our fiscal 2018. Because of the
transitional impact of the 2017 Tax Act provisions, the fiscal 2018
non-GAAP tax rate starting with the second quarter was based on our
current year results only, without reference to long-term
forecasts. This non-GAAP tax rate similarly excluded the income tax
effects of the non-GAAP pre-tax adjustments described above and
eliminated the effects of the non-recurring and period specific
items. The full year fiscal 2018 non-GAAP tax rate was 26.2%.
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/20190221005932/en/
InvestorsKim WatkinsIntuit
Inc.650-944-3324kim_watkins@intuit.com
MediaDiane CarliniIntuit
Inc.650-944-6251diane_carlini@intuit.com
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