Intuit Inc. (Nasdaq: INTU) announced financial results for the
first quarter of fiscal 2018, which ended Oct. 31.
“We are off to a strong start growing first-quarter revenue 14
percent and exceeding our overall financial targets,” said Brad
Smith, Intuit’s chairman and chief executive officer.
“QuickBooks Online subscriber growth continues at a rapid pace
and online ecosystem revenue is accelerating for small business and
self-employed. Gearing up for the tax season, we are focusing on
delivering an outstanding end-to-end customer experience for the
do-it-yourself taxpayers while rolling out new solutions to our
customers," said Smith
Financial Highlights
For the first quarter, Intuit:
- Grew revenue to $886 million, up 14
percent.
- Increased total QuickBooks Online
subscribers 56 percent to 2.55 million subscribers.
- Grew the base of QuickBooks Online
Self-Employed users to approximately 425,000 of total QuickBooks
Online subscribers, up from 390,000 last quarter.
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 First-quarter
Results
GAAP Non-GAAP Q1
Q1 Q1 Q1
FY18 FY17 Change
FY18 FY17 Change Revenue
$886 $778 14% $886 $778
14%
Operating Income (Loss) $(57) $(61)
NM $43 $32 34%
Earnings (Loss) Per
Share $(0.07) $(0.12) NM $0.11
$0.06 83% 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 & Self-Employed
Group
- Grew total segment revenue by 17
percent.
- Increased online ecosystem revenue by
35 percent.
- Added approximately 170,000 QuickBooks
Online subscribers in the quarter, reaching 2.55 million
worldwide.
- Grew QuickBooks Online subscribers
outside the U.S. by 70 percent, to approximately 550,000.
Consumer and Strategic Partner
Groups
- Grew Consumer segment revenue by 7
percent.
- Launched TurboTax Live, a compelling
solution for those seeking access to a tax expert, that leverages
technology to transform the assisted tax prep experience.
- Unveiled Turbo, the first step towards
expanding beyond a tax offering to a consumer platform that is
designed to improve the overall financial health of the end user.
Turbo goes beyond a credit score, and unleashes the power of
verified IRS-filed income, the credit score and the debt-to-income
ratio to show customers who give consent where they truly
stand.
- Announced the first six
strategic providers on the new Turbo platform joining the
more than 40 trusted partners Intuit has today with Mint.
- Grew Strategic Partner segment revenue
by 2 percent.
“Our results and progress in the first quarter set a nice
cadence for the year to come, as we continue to develop innovative
ways to deliver on our customer benefits of no work, more money and
complete confidence,” Smith said. "With ongoing momentum across
small business, I can't wait for the tax season to begin."
Capital Allocation Summary
In the first quarter the company:
- Repurchased $170 million of shares,
with $1.4 billion remaining on the authorization.
- Received board approval for a $0.39 per
share dividend for the second quarter of fiscal 2018, payable on
January 18, 2018, an increase of 15 percent over last year.
Forward-looking Guidance
Intuit announced guidance for the second quarter of fiscal year
2018, which ends Jan. 31. The company expects:
- Revenue of $1.160 billion to $1.180
billion, growth of 14 to 16 percent.
- GAAP operating income of $35 million to
$45 million.
- Non-GAAP operating income of $130
million to $140 million.
- GAAP diluted earnings per share of
$0.08 to $0.11.
- Non-GAAP diluted earnings per share of
$0.31 to $0.34.
Intuit confirmed guidance for full fiscal-year 2018. The company
expects:
- Revenue of $5.640 billion to $5.740
billion, growth of 9 to 11 percent.
- GAAP operating income of $1.485 billion
to $1.535 billion, growth of 6 to 10 percent.
- Non-GAAP operating income of $1.885
billion to $1.935 billion, growth of 9 to 12 percent.
- GAAP diluted earnings per share of
$4.00 to $4.10, growth of 8 to 10 percent.
- Non-GAAP diluted earnings per share of
$4.90 to $5.00, growth of 11 to 13 percent.
- QuickBooks Online subscribers of 3.275
million to 3.375 million.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call at 1:30 p.m. Pacific time on Nov. 20. 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 8768479.
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 46 million customers in North
America, Europe, Australia, Brazil and India, with revenue of $5.2
billion in its fiscal year 2017. The company has approximately
8,200 employees with major offices in the United
States, Canada, the United
Kingdom, India, Israel, 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 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 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 November 20, 2017, 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
October 31,
October 31,
2017 2016 Net revenue: Product $ 319 $ 297 Service
and other 567 481 Total net revenue 886 778
Costs and expenses: Cost of revenue: Cost of product revenue
24 29 Cost of service and other revenue 170 151 Amortization of
acquired technology 2 3 Selling and marketing 308 283 Research and
development 293 246 General and administrative 145 126 Amortization
of other acquired intangible assets 1 1 Total costs
and expenses [A] 943 839 Operating loss (57 ) (61 )
Interest expense (5 ) (9 ) Interest and other income (expense), net
3 (2 ) Loss before income taxes (59 ) (72 ) Income tax
benefit [B] (42 ) (42 ) Net loss $ (17 ) $ (30 ) Basic net
loss per share $ (0.07 ) $ (0.12 ) Shares used in basic per share
calculations 256 258 Diluted net loss per
share $ (0.07 ) $ (0.12 ) Shares used in diluted per share
calculations 256 258 Cash dividends declared
per common share $ 0.39 $ 0.34
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 loss for the periods shown.
Three Months Ended October 31,
October 31,
(in millions)
2017 2016 Cost of revenue $ 3 $ 2
Selling and marketing 25 25 Research and development 39 36 General
and administrative 30 26 Total share-based compensation expense $
97 $ 89 [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 the first quarter of fiscal 2017 we
adopted ASU 2016-09. As a result, we recognized excess tax benefits
on share-based compensation of $25 million and $19 million in our
provision for income taxes for the three months ended October 31,
2017 and 2016 respectively.
Our effective tax rate for the three
months ended October 31, 2017 was approximately 72%. 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 the period was 33% and did not differ
significantly from the federal statutory rate of 35%.
Our effective tax rate for the three
months ended October 31, 2016 was approximately 58%. 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 the period 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) from
continuing operations $ (57 ) $ — $ — $ — $ (57 ) Amortization
of acquired technology 2 — — — 2 Amortization of other acquired
intangible assets 1 — — — 1 Share-based compensation expense 97
— — — 97
Non-GAAP operating
income (loss) from continuing operations $ 43 $ —
$ — $ — $ 43
GAAP net income
(loss) $ (17 ) $ — $ — $ — $ (17 ) Amortization of acquired
technology 2 — — — 2 Amortization of other acquired intangible
assets 1 — — — 1 Share-based compensation expense 97 — — — 97 Net
(gain) loss on debt securities and other investments 2 — — — 2
Income tax effects and adjustments [A] (56 ) — — —
(56 )
Non-GAAP net income (loss) $ 29 $ —
$ — $ — $ 29
GAAP diluted net
income (loss) per share $ (0.07 ) $ — $ — $ — $ (0.07 )
Amortization of acquired technology 0.01 — — — 0.01 Amortization of
other acquired intangible assets — — — — — Share-based compensation
expense 0.38 — — — 0.38 Net (gain) loss on debt securities and
other investments 0.01 — — — 0.01 Income tax effects and
adjustments [A] (0.22 ) — — — (0.22 )
Non-GAAP diluted net income (loss) per share $ 0.11 $
— $ — $ — $ 0.11
Shares used
in GAAP diluted per share calculation 256 — —
— 256
Shares used in non-GAAP
diluted per share calculation 259 — — —
259 [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 2017 Q1
Q2 Q3 Q4
Full Year GAAP operating income (loss) from
continuing operations $ (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) from continuing operations
$ 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 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 C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
October 31, July
31, 2017 2017 ASSETS Current assets: Cash and
cash equivalents $ 529 $ 529 Investments 248 248 Accounts
receivable, net 116 103 Income taxes receivable 61 63 Prepaid
expenses and other current assets 142 100 Current assets before
funds held for customers 1,096 1,043 Funds held for customers 319
372 Total current assets 1,415 1,415 Long-term investments
31 31 Property and equipment, net 1,016 1,030 Goodwill 1,294 1,295
Acquired intangible assets, net 18 22 Long-term deferred income
taxes 144 132 Other assets 146 143 Total assets $ 4,064 $ 4,068
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Short-term debt $ 450 $ 50 Accounts payable 220 157 Accrued
compensation and related liabilities 146 300 Deferred revenue 799
887 Other current liabilities 183 178 Current liabilities before
customer fund deposits 1,798 1,572 Customer fund deposits 319 372
Total current liabilities 2,117 1,944 Long-term debt 425 438
Long-term deferred revenue 191 202 Other long-term obligations 128
130 Total liabilities 2,861 2,714 Stockholders’ equity 1,203
1,354 Total liabilities and stockholders’ equity $ 4,064 $ 4,068
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Three Months Ended October 31,
October 31, 2017 2016 Cash
flows from operating activities: Net loss $ (17 ) $ (30 )
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation 60 49 Amortization of acquired intangible
assets 5 6 Share-based compensation expense 97 89 Deferred income
taxes (11 ) (9 ) Other 2 1 Total adjustments 153 136
Changes in operating assets and liabilities: Accounts receivable
(14 ) (14 ) Income taxes receivable 2 (38 ) Prepaid expenses and
other assets (25 ) (50 ) Accounts payable 61 (2 ) Accrued
compensation and related liabilities (147 ) (148 ) Deferred revenue
(99 ) (67 ) Other liabilities 8 8 Total changes in operating
assets and liabilities (214 ) (311 )
Net cash used in operating
activities (78 ) (205 ) Cash
flows from investing activities: Purchases of corporate and
customer fund investments (86 ) (125 ) Sales of corporate and
customer fund investments 38 298 Maturities of corporate and
customer fund investments 46 22 Net change in cash and cash
equivalents held to satisfy customer fund obligations 53 (22 ) Net
change in customer fund deposits (53 ) 22 Purchases of property and
equipment (50 ) (86 ) Other (23 ) (11 )
Net cash provided by
(used in) investing activities (75 ) 98
Cash flows from financing activities: Proceeds from
borrowings under revolving credit facility 400 100 Repayment of
debt (13 ) — Proceeds from issuance of stock under employee stock
plans 83 43 Payments for employee taxes withheld upon vesting of
restricted stock units (39 ) (45 ) Cash paid for purchases of
treasury stock (168 ) (175 ) Dividends and dividend rights paid
(105 ) (89 )
Net cash provided by (used in) financing
activities 158 (166 ) Effect of exchange
rates on cash and cash equivalents (5 ) (5 )
Net decrease in
cash and cash equivalents — (278 ) Cash
and cash equivalents at beginning of period 529 638
Cash
and cash equivalents at end of period $ 529
$ 360 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
Non-GAAP Range
of Estimate Range of Estimate From
To Adjmts From To
Three Months Ending January 31, 2018 Revenue $ 1,160 $ 1,180
$ — $ 1,160 $ 1,180 Operating income $ 35 $ 45 $ 95 [a] $ 130 $ 140
Diluted earnings per share $ 0.08 $ 0.11 $ 0.23 [b] $ 0.31 $ 0.34
Twelve Months Ending July 31, 2018 Revenue $ 5,640 $
5,740 $ — $ 5,640 $ 5,740 Operating income $ 1,485 $ 1,535 $ 400
[c] $ 1,885 $ 1,935 Diluted earnings per share $ 4.00 $ 4.10 $ 0.90
[d] $ 4.90 $ 5.00
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 $93 million and amortization
of acquired technology of approximately $2 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 $391 million; amortization of acquired technology of
approximately $8 million; and amortization of other acquired
intangible assets of approximately $1 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 November 20, 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
- 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. 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. Based on our current long-term projections, we are using
a long-term non-GAAP tax rate of 33% for fiscal 2017 and 2018.
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, sales of
available-for-sale debt securities and other investments, and
disposals of businesses and long-lived assets.
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InvestorsIntuit Inc.Kim Watkins,
650-944-3324kim_watkins@intuit.comorMediaIntuit Inc.Diane
Carlini, 650-944-6251diane_carlini@intuit.com
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