Small Business Online Ecosystem Revenue
Powers Growth; TurboTax Online Gains Share
Intuit Inc. (Nasdaq: INTU) announced financial results for the
third quarter of fiscal 2019, which ended April 30.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190523005695/en/
Sasan Goodarzi is chief executive officer
(CEO) of Intuit, leads the company on its mission of powering
prosperity around the world. (Photo: Business Wire)
“This was a strong quarter across the company," said Sasan
Goodarzi, Intuit's CEO. "We are on-track to exceed the guidance we
provided at the beginning of the year."
"We had a great tax season, growing the Do-It-Yourself (DIY)
category overall as well as our share within the category driven by
our innovation and significantly improved customer experience. We
produced our most robust free offering yet and made significant
progress in our effort to transform the assisted category.
"We continue to see momentum in our Small Business and
Self-Employed Group driven by Online Ecosystem revenue growth.
We’re making progress in solving key customer pain points and
becoming the center of small business growth around the globe,"
said Goodarzi.
Financial Highlights
For the third quarter, Intuit:
- Grew total revenue to $3.3 billion, up
12 percent.
- Increased TurboTax Online share within
the DIY category by an estimated half a point.
- Increased Small Business Online
Ecosystem revenue by 38 percent.
- Grew Consumer Group revenue by 10
percent to $2.2 billion.
- Grew Small Business and Self-Employed
Group revenue 19 percent to $887 million.
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, ASC 606.
Snapshot of Third-quarter
Results
GAAP
Non-GAAP
Q3FY19
Q3FY18
Change
Q3FY19
Q3FY18
Change Revenue $3,272
$2,912 12% $3,272
$2,912 12%
Operating Income
$1,784 $1,601 11%
$1,888 $1,700 11%
Earnings Per
Share $5.22 $4.53 15%
$5.55 $4.78 16%
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
Intuit is focused on becoming the center of small business
growth by helping customers get paid faster, pay their employees
and contractors, access capital and have total confidence that
their books are done right.
- QuickBooks Capital has funded $360
million in cumulative loans in the last 18 months. At the end of
Q3, the notes receivable balance was $96 million.
- QuickBooks Online subscribers grew 32
percent ending the quarter with over 4.2 million subscribers.
- Growth remains strong across multiple
geographies, with U.S. subscribers up 25 percent to over 3.1
million and international subscribers increasing 55 percent to over
1.1 million.
- Within QuickBooks Online, Self-Employed
subscribers grew to approximately 970,000, up from roughly 680,000
one year ago.
- Approximately 440,000 QuickBooks
Self-Employed customers are from the TurboTax Self-Employed
offering, up from 330,000 last year.
Consumer and Strategic Partner
Groups
Intuit is focused on expanding its share in DIY, transforming
the assisted tax preparation category and expanding beyond tax with
a consumer platform. This is in service to helping customers make
ends meet, get their largest tax refund and make smart decisions
with their money.
- TurboTax Online units grew 7 percent
this season.
- Customers using TurboTax Live more than
tripled year-over-year.
- The Turbo platform has over 14 million
registered users, up from 5 million last year.
- The Strategic Partner Group reported
$235 million of professional tax revenue for the third quarter, in
line with expectations.
Capital Allocation Summary
In the third quarter the company:
- Repurchased $135 million of shares,
with $2.8 billion remaining on the company's authorization.
- Received Board approval for a quarterly
dividend of $0.47 per share, payable July 18, 2019. This
represents a 21 percent increase compared to last year.
Forward-looking Guidance
"With strong performance and momentum across the company, we are
raising our revenue, operating income and earnings per share
guidance for fiscal year 2019," said Michelle Clatterbuck, Intuit's
chief financial officer. "We will continue to execute against our
strategy of becoming an A.I.-driven expert platform that focuses on
our customers' common set of needs as we pursue our mission to
power prosperity around the world."
Intuit announced guidance for the fourth quarter of fiscal year
2019, which ends July 31. The company expects:
- Revenue growth of 10 to 12
percent,
- GAAP loss per share of $0.35 to $0.33,
and
- Non-GAAP diluted loss per share of
$0.16 to $0.14.
Intuit raised guidance for full fiscal year 2019. The company
now expects:
- Revenue of $6.738 billion to $6.758
billion, growth of 12 percent.
- GAAP operating income of $1.827 billion
to $1.837 billion, growth of 17 to 18 percent.
- Non-GAAP operating income of $2.258
billion to $2.268 billion, growth of 10 to 11 percent.
- GAAP diluted earnings per share of
$5.72 to $5.74, growth of 12 to 13 percent.
- Non-GAAP diluted earnings per share of
$6.67 to $6.69, growth of 15 to 16 percent.
The company also updated segment revenue results. For fiscal
year 2019, the company now expects:
- Small Business and Self-Employed Group:
growth of 15 percent.
- Consumer Group: growth of 10
percent.
- Strategic Partner Group: growth of 4
percent.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call at 1:30 p.m. Pacific time on May 23. 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 8488901.
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
presentation. 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 Nine Months Ended
April 30, 2019
April 30, 2018
April 30, 2019
April 30, 2018
*As Adjusted *As Adjusted Net revenue:
Product $ 498 $ 479 $ 1,378 $ 1,378 Service and other 2,774
2,433 4,412 3,783 Total net revenue 3,272
2,912 5,790 5,161 Costs and expenses:
Cost of revenue: Cost of product revenue 19 20 60 65 Cost of
service and other revenue 330 280 811 674 Amortization of acquired
technology 5 5 15 10 Selling and marketing 652 549 1,546 1,326
Research and development 311 296 900 875 General and administrative
170 159 447 447 Amortization of other acquired intangible assets 1
2 4 4 Total costs and expenses [A]
1,488 1,311 3,783 3,401 Operating
income 1,784 1,601 2,007 1,760 Interest expense (4 ) (5 ) (12 ) (16
) Interest and other income, net 17 7 23 15
Income before income taxes 1,797 1,603 2,018 1,759 Income
tax provision [B] 419 417 417 392 Net
income $ 1,378 $ 1,186 $ 1,601 $ 1,367
Basic net income per share $ 5.30 $ 4.62 $
6.16 $ 5.34 Shares used in basic per share
calculations 260 257 260 256
Diluted net income per share $ 5.22 $ 4.53 $ 6.06
$ 5.25 Shares used in diluted per share calculations
264 262 264 260 Cash dividends
declared per common share $ 0.47 $ 0.39 $ 1.41
$ 1.17 * 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 Nine Months Ended (in
millions)
April 30,2019
April 30,2018
April 30,2019
April 30,2018
Cost of revenue $ 15 $ 14 $ 44 $ 30 Selling and marketing 23 25 78
75 Research and development 32 30 101 99 General and administrative
28 23 80 79 Total share-based compensation
expense $ 98 $ 92 $ 303 $ 283
[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 nine months ended April 30,
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%. We recorded a provisional benefit of $37 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 a provisional charge of $10 million related
to the re-measurement of certain deferred tax balances, resulting
in a net tax benefit of $27 million for the nine months ended April
30, 2018. In the second quarter of fiscal 2019, we completed our
accounting for the income tax effects of the 2017 Tax Act, and
there have been no material adjustments during the fiscal 2019
period. For the three and nine months ended April 30, 2019,
we recognized excess tax benefits on share-based compensation of
$20 million and $69 million, respectively, in our provision for
income taxes. 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, respectively, in our provision for income
taxes. Our effective tax rates for the three and nine months
ended April 30, 2019 were approximately 23% and 21%, respectively.
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 April 30, 2018 was approximately 26% and did
not differ significantly from the federal statutory rate of 26.9%.
Our effective tax rate for the nine months ended April 30, 2018 was
22%. Excluding discrete tax items, primarily related to the
re-measurement of certain deferred tax balances and the share-based
compensation tax benefits mentioned above, our effective tax rate
for that period 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 $ 1,784
$ — $ 2,007 Amortization of acquired technology 5 5 5 — 15
Amortization of other acquired intangible assets 2 1 1 — 4
Share-based compensation expense 105 100 98 —
303
Non-GAAP operating income (loss) $ 102
$ 339 $ 1,888 $ — $ 2,329
GAAP net income (loss) $ 34 $ 189 $ 1,378 $ — $ 1,601
Amortization of acquired technology 5 5 5 — 15 Amortization of
other acquired intangible assets 2 1 1 — 4 Share-based compensation
expense 105 100 98 — 303 Net (gain) loss on debt securities and
other investments 1 2 2 — 5 Other income tax effects and
adjustments [A] (71 ) (33 ) (19 ) — (123 )
Non-GAAP net
income (loss) $ 76 $ 264 $ 1,465 $ —
$ 1,805
GAAP diluted net income (loss) per
share $ 0.13 $ 0.72 $ 5.22 $ — $ 6.06 Amortization of acquired
technology 0.02 0.02 0.02 — 0.06 Amortization of other acquired
intangible assets 0.01 — — — 0.02 Share-based compensation expense
0.40 0.38 0.38 — 1.15 Net (gain) loss on debt securities and other
investments — 0.01 0.01 — 0.02 Other income tax effects and
adjustments [A] (0.27 ) (0.13 ) (0.08 ) — (0.47 )
Non-GAAP diluted net income (loss) per share $ 0.29 $
1.00 $ 5.55 $ — $ 6.84
Shares
used in GAAP diluted per share calculation 264 264
264 — 264
Shares used in
non-GAAP diluted per share calculation 264 264
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)
April 30,2019
July 31, 2018 * As Adjusted ASSETS
Current assets: Cash and cash equivalents $ 2,946 $ 1,464
Investments 400 252 Accounts receivable, net 262 98 Income taxes
receivable 3 39 Prepaid expenses and other current assets 255
202 Current assets before funds held for customers 3,866
2,055 Funds held for customers 383 367 Total current assets
4,249 2,422 Long-term investments 13 13 Property and
equipment, net 799 812 Goodwill 1,611 1,611 Acquired intangible
assets, net 43 61 Other assets 202 215 Total assets $ 6,917
$ 5,134 LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Short-term debt $ 50 $ 50 Accounts payable 383 178
Accrued compensation and related liabilities 311 369 Deferred
revenue 572 581 Income taxes payable 338 3 Other current
liabilities 254 195 Current liabilities before customer fund
deposits 1,908 1,376 Customer fund deposits 383 367 Total
current liabilities 2,291 1,743 Long-term debt 398 388
Long-term deferred income tax liabilities 13 68 Other long-term
obligations 145 119 Total liabilities 2,847 2,318
Stockholders’ equity 4,070 2,816 Total liabilities
and stockholders’ equity $ 6,917 $ 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)
Nine Months Ended April 30, 2019
April 30, 2018 * As Adjusted Cash flows
from operating activities: Net income $ 1,601 $ 1,367
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 147 173 Amortization of acquired
intangible assets 19 18 Share-based compensation expense 303 283
Deferred income taxes (44 ) 1 Other 12 (1 ) Total
adjustments 437 474 Changes in operating assets and
liabilities: Accounts receivable (165 ) (207 ) Income taxes
receivable 67 62 Prepaid expenses and other assets (30 ) (37 )
Accounts payable 205 160 Accrued compensation and related
liabilities (55 ) (8 ) Deferred revenue (7 ) (61 ) Income taxes
payable 334 351 Other liabilities 59 48 Total changes
in operating assets and liabilities 408 308
Net
cash provided by operating activities 2,446
2,149 Cash flows from investing activities:
Purchases of corporate and customer fund investments (379 ) (303 )
Sales of corporate and customer fund investments 60 87 Maturities
of corporate and customer fund investments 175 137 Net change in
customer fund deposits 16 47 Purchases of property and equipment
(129 ) (97 ) Acquisitions of businesses, net of cash acquired —
(363 ) Originations of term loans to small businesses (235 ) (77 )
Principal repayments of term loans from small businesses 188 44
Other 3 (16 )
Net cash used in investing activities
(301 ) (541 ) Cash flows from
financing activities: Proceeds from borrowings under unsecured
revolving credit facility — 800 Repayments on borrowings under
unsecured revolving credit facility — (800 ) Proceeds from
borrowings under secured revolving credit facility 48 — Repayment
of debt (38 ) (38 ) Proceeds from issuance of stock under employee
stock plans 231 205 Payments for employee taxes withheld upon
vesting of restricted stock units (93 ) (58 ) Cash paid for
purchases of treasury stock (408 ) (272 ) Dividends and dividend
rights paid (374 ) (305 ) Other (7 ) (1 )
Net cash used in
financing activities (641 ) (469 )
Effect of exchange rates on cash, cash equivalents, restricted
cash, and restricted cash equivalents (6 ) (7 )
Net increase in
cash, cash equivalents, restricted cash, and restricted cash
equivalents 1,498 1,132 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 $ 3,129 $ 1,833
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 $
2,946 $ 1,614 Restricted cash and restricted cash equivalents
included in funds held for customers [A] 183 219
Total cash, cash equivalents, restricted cash, and restricted
cash equivalents at end of period $ 3,129
$ 1,833 * 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. [A] See quarterly reports
filed on Form 10-Q for reconciliation of funds held for customers
by investment category.
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME (LOSS), AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From
To Three Months Ending July 31, 2019
Revenue $ 948 $ 968 $ — $ 948 $ 968 Operating loss $ (180 ) $ (170
) $ 109 [a] $ (71 ) $ (61 ) Diluted loss per share $ (0.35 ) $
(0.33 ) $ 0.19 [b] $ (0.16 ) $ (0.14 )
Twelve Months
Ending July 31, 2019 Revenue $ 6,738 $ 6,758 $ — $ 6,738 $
6,758 Operating income $ 1,827 $ 1,837 $ 431 [c] $ 2,258 $ 2,268
Diluted earnings per share $ 5.72 $ 5.74 $ 0.95 [d] $ 6.67 $ 6.69
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 $103 million;
amortization of acquired technology of approximately $4 million;
and amortization of other acquired intangible assets 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 non-GAAP tax
rate. [c] Reflects estimated adjustments for share-based
compensation expense of approximately $406 million; amortization of
acquired technology of approximately $19 million; and amortization
of other acquired intangible assets of approximately $6 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 May 23, 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/20190523005695/en/
InvestorsKim WatkinsIntuit
Inc.650-944-3324kim_watkins@intuit.com
MediaDiane CarliniIntuit
Inc.650-944-6251diane_carlini@intuit.com
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