Company Revises Fourth Quarter and Full
Fiscal Year 2018 GAAP Operating Income Guidance
Intuit Inc. (Nasdaq: INTU) today announced the sale of its
largest data center as the company advances its strategy and
continues migrating its services to the public cloud, moving away
from investing in owning hosting platforms.
Intuit is selling its Data Center in Quincy, Wash. to H5 Data
Centers, one of the leading privately-owned data center operators
in the United States.
“We chose to move to Amazon Web Services (AWS) to accelerate
developer productivity and innovation for our customers, and to
accommodate spikes in customer usage through the tax season,” said
H. Tayloe Stansbury, Intuit Executive Vice President and Chief
Technology Officer. “Our TurboTax Online customers were served
entirely from AWS during the latter part of this tax season, and we
expect to finish transitioning QuickBooks Online this year. Now
that most of our core applications are in AWS, the time is right to
transition the ownership and operation of this data center to a
team who will expertly manage the infrastructure through the
remainder of this transition.”
Intuit was one of the first companies of scale with
enterprise-class data to move to the public cloud. With the data
center sale complete, Intuit will continue to leverage the public
cloud’s scalable and reliable service to ultimately deliver better
outcomes for customers.
Expected Impact to Financials
The sale is expected to result in a GAAP operating loss of $75
to $85 million. The impact of this GAAP operating loss on net
income and EPS is expected to be offset by tax benefits related to
the sale, share based compensation and the reorganization of a
subsidiary during the quarter.
The net impact is expected to result in no change to GAAP
Earnings per Share (EPS).
Forward-looking Guidance
Intuit revised GAAP operating income guidance and reiterated
revenue, non-GAAP operating income and EPS guidance for the fourth
quarter and full fiscal year 2018, which ends July 31.
For the fourth quarter of fiscal 2018, the company now
expects:
- Revenue of $940 million to $960
million, growth of 12 to 14 percent.
- GAAP operating loss of $100 million to
$110 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.
For the 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 $1.465 billion
to $1.475 billion, growth of 5 to 6 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.
About Intuit
Intuit’s mission is to Power Prosperity Around the World. Its
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. Intuit’s
innovative ecosystem of financial management solutions serves
partners and 46 million customers worldwide, unleashing the power
of many for the prosperity of one. For the latest news and in-depth
information about Intuit and its brands, visit Intuit.com and
follow 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 1. 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; and all of the statements under
the headings “Expected Impact to Financials” and “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 July 18, 2018 and we do not undertake any duty
to update any forward-looking statement or other information in
these materials.
TABLE 1
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME (LOSS), AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From
To Three Months Ended July 31, 2018 Revenue $ 940 $
960 $ 940 $ 960 Operating income (loss) $ (110 ) $ (100 ) $ 185 [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 $ 1,465 $
1,475 $ 485 [c] $ 1,950 $ 1,960 Diluted earnings per share $ 4.50 $
4.52 $ 1.01 [d] $ 5.51 $ 5.53 [a] Reflects estimated
adjustments for share-based compensation expense of approximately
$99 million; loss on sale of data center of approximately $80
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; loss on sale of
data center of approximately $80 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 Cuts and Jobs Act and
other income from divested businesses.
INTUIT INC.ABOUT NON-GAAP FINANCIAL
MEASURES
The accompanying press release dated July 18, 2018 contains
non-GAAP financial measures. Table 1 reconciles 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) and non-GAAP net
income 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 diluted net
income 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 “2017 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 2017
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 2017 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 2017 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 1 include all information reasonably available to Intuit at
the date of this press release. This table includes 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/20180718005259/en/
Intuit Inc.InvestorsKim Watkins,
650-944-3324kim_watkins@intuit.comorMediaDiane Carlini,
650-944-6251diane_carlini@intuit.com
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