Intuit Inc. (Nasdaq: INTU), maker of TurboTax, QuickBooks and
Mint, announced financial results for the first quarter of fiscal
2021, which ended Oct. 31.
"We had a strong start to the year as we continue to accelerate
innovation on our A.I.-driven expert platform," said Sasan
Goodarzi, Intuit’s chief executive officer. "We delivered
double-digit revenue growth in the quarter and are excited by the
velocity of our innovation."
Financial Highlights
For the first quarter, Intuit reported:
- Total revenue of $1.3 billion, up 14 percent.
- Small Business and Self-Employed Group revenue up 13 percent to
$1.2 billion.
- Small Business Online Ecosystem revenue grew 24 percent.
- Consumer Group revenue grew 19 percent to $119 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.
Snapshot of First-quarter Results
GAAP
Non-GAAP
Q1 FY21
Q1 FY20
Change
Q1 FY21
Q1 FY20
Change
Revenue
$1,323
$1,165
14%
$1,323
$1,165
14%
Operating Income
$209
$10
NM
$334
$129
159%
Earnings Per Share
$0.75
$0.22
241%
$0.94
$0.41
129%
NM = Not Meaningful
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
- Grew QuickBooks online accounting revenue 28 percent in the
quarter, driven primarily by customer growth and mix-shift.
- Increased Online Services revenue 17 percent, driven by
QuickBooks Online payments and QuickBooks Online payroll.
- Grew total international online revenue 51 percent.
Consumer and ProConnect
Groups
- Reported $119 million of Consumer Group revenue and $23 million
of professional tax revenue in the ProConnect Group for the first
quarter, in line with expectations.
Capital Allocation Summary
In the first quarter the company:
- Had a total cash and investments balance of approximately $5.8
billion as of Oct. 31. Intuit expects to use approximately $3.6
billion of cash as part of consideration for the Credit Karma
acquisition.
- Did not repurchase any shares, as share purchases were
temporarily suspended in conjunction with the Credit Karma
acquisition. $2.4 billion remains on the company's
authorization.
- Received Board approval for a quarterly dividend of $0.59 per
share, payable January 19, 2021. This represents an 11 percent
increase compared to the same period last year.
Forward-looking Guidance
Intuit announced guidance for the second quarter of fiscal year
2021, which ends Jan. 31. The company expects:
- Revenue growth of approximately 8 to 9 percent.
- GAAP earnings per share of $0.89 to $0.92.
- Non-GAAP diluted earnings per share of $1.31 to $1.34.
Intuit also announced guidance for full fiscal year 2021. The
company expects:
- Revenue of $8.265 billion to $8.415 billion, growth of
approximately 8 to 10 percent.
- GAAP operating income of $2.425 billion to $2.475 billion,
growth of approximately 11 to 14 percent.
- Non-GAAP operating income of $2.960 billion to $3.010 billion,
growth of approximately 11 to 13 percent.
- GAAP diluted earnings per share of $7.00 to $7.15, growth of
approximately 1 to 3 percent.
- Non-GAAP diluted earnings per share of $8.40 to $8.55, growth
of approximately 7 to 9 percent.
The company expects the following segment revenue results for
fiscal year 2021:
- Small Business and Self-Employed Group: growth of approximately
8 to 10 percent.
- Consumer Group: growth of approximately 9 to 10 percent.
- ProConnect Group: growth of approximately 0 to 1 percent.
Intuit continues to expect the Credit Karma acquisition to be
accretive over time. However, Credit Karma’s business was
negatively impacted over the last 7 months as lenders tightened
access to credit due to economic uncertainty related to the
pandemic. The company has seen continued recovery after reaching a
low point in June, with the October revenue run-rate nearly back to
pre-COVID levels. Therefore, Intuit expects the acquisition to be
modestly dilutive to non-GAAP earnings per share in fiscal 2021,
and neutral to modestly dilutive to non-GAAP earnings per share in
the first full fiscal year after close in fiscal 2022.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call at 1:30 p.m. Pacific time on Nov. 19. To hear the
call, dial 866-417-5279 in the United States or 409-937-8904 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 7594497. 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. We are
a mission-driven, global financial platform company with products
including TurboTax, QuickBooks, Mint and Turbo, designed to empower
consumers, self-employed and small businesses to improve their
financial lives. Our platform and products help customers get 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 more than 50 million
customers worldwide. 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 contain 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 2021 and beyond; expectations regarding timing and growth of
revenue for each of Intuit’s reporting segments and from current or
future products and services; expectations regarding customer
growth; expectations regarding Intuit's corporate tax rate;
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; expectations
regarding the timing, completion and impact of the Credit Karma
acquisition; 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 risks and uncertainties
may be amplified by the COVID-19 pandemic, which has caused
significant global economic instability and uncertainty. These
factors include, without limitation, the following: our ability to
compete successfully; our participation in the Free File Alliance;
potential governmental encroachment in our tax businesses; our
ability to adapt to technological change; our ability to predict
consumer behavior; our reliance on third-party intellectual
property; our ability to protect our intellectual property rights;
any harm to our reputation; risks associated with acquisition and
divestiture activity; the issuance of equity or incurrence of 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; our failure to process
transactions effectively; interruption or failure of our
information technology; our ability to maintain critical
third-party business relationships; our ability to attract and
retain talent; any deficiency in the quality or accuracy of our
products (including the advice given by experts on our platform);
any delays in product launches; 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; the seasonal nature of our tax business; changes in tax
rates and tax reform legislation; global economic changes; exposure
to credit, counterparty and other risks in providing capital to
businesses; amortization of acquired intangible assets and
impairment charges; our ability to repay or otherwise comply with
the terms of our 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 2020 and in our other SEC filings. You can
locate these reports through our website at
http://investors.intuit.com. Fiscal 2021 full-year and Q2 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
October 31, 2020
October 31, 2019
Net revenue:
Product
$
367
$
353
Service and other
956
812
Total net revenue
1,323
1,165
Costs and expenses:
Cost of revenue:
Cost of product revenue
15
17
Cost of service and other revenue
234
267
Amortization of acquired technology
7
6
Selling and marketing
362
383
Research and development
325
334
General and administrative
169
146
Amortization of other acquired intangible
assets
2
2
Total costs and expenses [A]
1,114
1,155
Operating income
209
10
Interest expense
(8
)
(2
)
Interest and other income, net
9
14
Income before income taxes
210
22
Income tax provision (benefit) [B]
12
(35
)
Net income
$
198
$
57
Basic net income per share
$
0.75
$
0.22
Shares used in basic per share
calculations
263
261
Diluted net income per share
$
0.75
$
0.22
Shares used in diluted per share
calculations
265
264
Cash dividends declared per common
share
$
0.59
$
0.53
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
(in millions)
October 31, 2020
October 31, 2019
Cost of revenue
$
15
$
15
Selling and marketing
32
30
Research and development
38
38
General and administrative
26
28
Total share-based compensation expense
$
111
$
111
[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.
We recognized excess tax benefits on
share-based compensation of $52 million and $29 million in our
provision for income taxes for the three months ended October 31,
2020 and 2019, respectively.
Our effective tax rate for the three
months ended October 31, 2020 was approximately 6%. Excluding
discrete tax items primarily related to share-based compensation
tax benefits mentioned above, our effective tax rate was 25%. The
difference from the federal statutory rate of 21% was primarily due
to state income taxes and non-deductible share-based compensation,
which were partially offset by the tax benefit we received from the
federal research and experimentation credit.
We recorded a $35 million tax benefit on
pretax income of $22 million for the three months ended October 31,
2019. Excluding discrete tax items primarily related to share-based
compensation tax benefits mentioned above, our effective tax rate
was 24%. The difference from the federal statutory rate of 21% was
primarily due to state income taxes and non-deductible share-based
compensation, which were partially offset by the tax benefit we
received from the federal research and experimentation credit.
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 2021
Q1
Q2
Q3
Q4
Year to Date
GAAP operating income (loss)
$
209
$
—
$
—
$
—
$
209
Amortization of acquired technology
7
—
—
—
7
Amortization of other acquired intangible
assets
2
—
—
—
2
Professional fees for business
combinations
5
—
—
—
5
Share-based compensation expense
111
—
—
—
111
Non-GAAP operating income
(loss)
$
334
$
—
$
—
$
—
$
334
GAAP net income (loss)
$
198
$
—
$
—
$
—
$
198
Amortization of acquired technology
7
—
—
—
7
Amortization of other acquired intangible
assets
2
—
—
—
2
Professional fees for business
combinations
5
—
—
—
5
Share-based compensation expense
111
—
—
—
111
Net (gain) loss on debt securities and
other investments
(7
)
—
—
—
(7
)
Income tax effects and adjustments [A]
(66
)
—
—
—
(66
)
Non-GAAP net income (loss)
$
250
$
—
$
—
$
—
$
250
GAAP diluted net income (loss) per
share
$
0.75
$
—
$
—
$
—
$
0.75
Amortization of acquired technology
0.03
—
—
—
0.03
Amortization of other acquired intangible
assets
—
—
—
—
—
Professional fees for business
combinations
0.02
—
—
—
0.02
Share-based compensation expense
0.42
—
—
—
0.42
Net (gain) loss on debt securities and
other investments
(0.03
)
—
—
—
(0.03
)
Income tax effects and adjustments [A]
(0.25
)
—
—
—
(0.25
)
Non-GAAP diluted net income (loss) per
share
$
0.94
$
—
$
—
$
—
$
0.94
Shares used in GAAP diluted per share
calculation
265
—
—
—
265
Shares used in non-GAAP diluted per
share calculation
265
—
—
—
265
[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. 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 2020
Q1
Q2
Q3
Q4
Full Year
GAAP operating income (loss)
$
10
$
270
$
1,413
$
483
$
2,176
Amortization of acquired technology
6
6
5
5
22
Amortization of other acquired intangible
assets
2
1
2
1
6
Professional fees for business
combinations
—
—
16
13
29
Share-based compensation expense
111
107
103
114
435
Non-GAAP operating income
(loss)
$
129
$
384
$
1,539
$
616
$
2,668
GAAP net income (loss)
$
57
$
240
$
1,084
$
445
$
1,826
Amortization of acquired technology
6
6
5
5
22
Amortization of other acquired intangible
assets
2
1
2
1
6
Professional fees for business
combinations
—
—
16
13
29
Share-based compensation expense
111
107
103
114
435
Net (gain) loss on debt securities and
other investments
1
1
2
1
5
Income tax effects and adjustments [A]
(68
)
(49
)
(29
)
(102
)
(248
)
Non-GAAP net income (loss)
$
109
$
306
$
1,183
$
477
$
2,075
GAAP diluted net income (loss) per
share
$
0.22
$
0.91
$
4.11
$
1.68
$
6.92
Amortization of acquired technology
0.02
0.02
0.02
0.02
0.08
Amortization of other acquired intangible
assets
0.01
—
0.01
—
0.02
Professional fees for business
combinations
—
—
0.06
0.05
0.11
Share-based compensation expense
0.42
0.41
0.39
0.44
1.65
Net (gain) loss on debt securities and
other investments
—
—
0.01
—
0.02
Income tax effects and adjustments [A]
(0.26
)
(0.18
)
(0.11
)
(0.38
)
(0.94
)
Non-GAAP diluted net income (loss) per
share
$
0.41
$
1.16
$
4.49
$
1.81
$
7.86
Shares used in GAAP diluted per share
calculation
264
264
264
264
264
Shares used in non-GAAP diluted per
share calculation
264
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. 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 C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions)
(Unaudited)
October 31, 2020
July 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
5,174
$
6,442
Investments
619
608
Accounts receivable, net
99
149
Income taxes receivable
29
12
Prepaid expenses and other current
assets
246
314
Current assets before funds held for
customers
6,167
7,525
Funds held for customers
484
455
Total current assets
6,651
7,980
Long-term investments
28
19
Property and equipment, net
743
734
Operating lease right-of-use assets
232
226
Goodwill
1,697
1,654
Acquired intangible assets, net
63
28
Long-term deferred income taxes
60
65
Other assets
233
225
Total assets
$
9,707
$
10,931
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Short-term debt
$
325
$
1,338
Accounts payable
256
305
Accrued compensation and related
liabilities
233
482
Deferred revenue
574
652
Other current liabilities
280
297
Current liabilities before customer fund
deposits
1,668
3,074
Customer fund deposits
484
455
Total current liabilities
2,152
3,529
Long-term debt
2,032
2,031
Operating lease liabilities
228
221
Other long-term obligations
50
44
Total liabilities
4,462
5,825
Stockholders’ equity
5,245
5,106
Total liabilities and stockholders’
equity
$
9,707
$
10,931
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
October 31, 2020
October 31, 2019
Cash flows from operating
activities:
Net income
$
198
$
57
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation
37
49
Amortization of acquired intangible
assets
9
8
Non-cash operating lease cost
13
16
Share-based compensation expense
111
111
Deferred income taxes
17
(18
)
Other
(16
)
4
Total adjustments
171
170
Originations of loans held for sale
(43
)
—
Sale and principal payments of loans held
for sale
147
—
Changes in operating assets and
liabilities:
Accounts receivable
47
(16
)
Income taxes receivable
(17
)
(22
)
Prepaid expenses and other assets
(38
)
(63
)
Accounts payable
(58
)
(5
)
Accrued compensation and related
liabilities
(248
)
(180
)
Deferred revenue
(85
)
(68
)
Operating lease liabilities
(12
)
(14
)
Other liabilities
(17
)
14
Total changes in operating assets and
liabilities
(428
)
(354
)
Net cash provided by (used in)
operating activities
45
(127
)
Cash flows from investing
activities:
Purchases of corporate and customer fund
investments
(198
)
(207
)
Sales of corporate and customer fund
investments
30
53
Maturities of corporate and customer fund
investments
156
156
Purchases of property and equipment
(38
)
(38
)
Acquisitions of businesses, net of cash
acquired
(85
)
—
Originations of term loans to small
businesses
(11
)
(81
)
Principal repayments of term loans from
small businesses
29
79
Other
(13
)
(19
)
Net cash used in investing
activities
(130
)
(57
)
Cash flows from financing
activities:
Repayments on borrowings under unsecured
revolving credit facility
(1,000
)
—
Repayment of debt
(13
)
(13
)
Proceeds from issuance of stock under
employee stock plans
88
63
Payments for employee taxes withheld upon
vesting of restricted stock units
(99
)
(71
)
Cash paid for purchases of treasury
stock
—
(140
)
Dividends and dividend rights paid
(158
)
(141
)
Net change in customer fund deposits
29
(23
)
Net cash used in financing
activities
(1,153
)
(325
)
Effect of exchange rates on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(1
)
—
Net decrease in cash, cash equivalents,
restricted cash, and restricted cash equivalents
(1,239
)
(509
)
Cash, cash equivalents, restricted cash,
and restricted cash equivalents at beginning of period
6,697
2,352
Cash, cash equivalents, restricted
cash, and restricted cash equivalents at end of period
$
5,458
$
1,843
Reconciliation of cash, cash equivalents,
restricted cash, and restricted cash equivalents reported within
the condensed consolidated balance sheets to the total amounts
reported on the condensed consolidated statements of cash flows
Cash and cash equivalents
$
5,174
$
1,630
Restricted cash and restricted cash
equivalents included in funds held for customers [A]
284
213
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents at end of
period
$
5,458
$
1,843
[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, 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 January 31,
2021
Revenue
$
1,825
$
1,845
$
—
$
1,825
$
1,845
Operating income
$
313
$
323
$
152
[a]
$
465
$
475
Diluted earnings per share
$
0.89
$
0.92
$
0.42
[b]
$
1.31
$
1.34
Twelve Months Ending July 31,
2021
Revenue
$
8,265
$
8,415
$
—
$
8,265
$
8,415
Operating income
$
2,425
$
2,475
$
535
[c]
$
2,960
$
3,010
Diluted earnings per share
$
7.00
$
7.15
$
1.40
[d]
$
8.40
$
8.55
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.
[a]
Reflects estimated adjustments for
share-based compensation expense of approximately $113 million;
professional fees for business combinations of approximately $31
million; amortization of acquired technology of approximately $7
million; and amortization of other acquired intangible assets of
approximately $1 million.
[b]
Reflects 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 $470 million;
professional fees for business combinations of approximately $36
million; amortization of acquired technology of approximately $24
million; and amortization of other acquired intangibles of
approximately $5 million.
[d]
Reflects 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 November 19, 2020 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 a business in a
business combination, we are required by GAAP to record the fair
values of the intangible assets of the business 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 businesses. 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. Based on our current long-term projections, we are using
a long-term non-GAAP tax rate of 23% for fiscal 2020 and 24% for
fiscal 2021. 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.
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.
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Investors Kim Watkins Intuit Inc. 650-944-3324
kim_watkins@intuit.com
Media Karen Nolan Intuit Inc. 650-944-6619
karen_nolan@intuit.com