TurboTax Online Unit Growth of 12 Percent and QuickBooks Online
Subscriber Growth of 49 Percent Drive Momentum
Intuit Inc. (Nasdaq:INTU) announced
financial results for the second quarter of fiscal 2016. The company’s
fiscal second quarter ended Jan. 31.
“We’re out of the gates strong in the first half of fiscal 2016. We grew
revenue 23 percent in the second quarter, and exceeded our guidance
across the board. We also saw record QuickBooks Online subscriber growth
in this quarter, with over 80 percent of customers new to the Intuit
franchise,” said Brad Smith, Intuit’s chairman and chief executive
officer.
“Our tax strategy is focused on expanding the do-it-yourself software
category while driving customer growth and share gains, particularly in
the simple returns segment. As we shared today, TurboTax units grew 9
percent through February 20, demonstrating we’re off to a strong start.
Early adoption has been driven by product innovation, as we continue on
our journey to reimagine tax preparation.”
Financial Highlights
In the second quarter Intuit:
-
Reported 23 percent revenue growth, which includes the impact of
ratable revenue recognition for certain desktop software offerings and
an extra weekend day in January versus last year for tax filers.
-
Reported TurboTax Online units grew 12 percent year to date through
Feb. 20, versus the comparable prior-year period. Total TurboTax units
grew 9 percent.
-
Increased total QuickBooks Online subscribers by 49 percent.
-
Repurchased 4.8 million of its common shares for $455 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.
Business Segment Results
The segment results below reflect the treatment of assets held for sale,
including QuickBase, Quicken and Demandforce, as discontinued operations.
Small Business
-
Total Small Business segment revenue increased 7 percent.
-
Small business online ecosystem revenue grew approximately 23 percent
for the quarter, as online customer acquisition continues to drive
growth.
-
Added nearly 100,000 QuickBooks Online subscribers in the quarter,
bringing the total to 1,257,000 customers worldwide as of the end
of January.
-
Grew QuickBooks Self-Employed subscribers to 50,000, up from
35,000 in the last quarter.
-
Grew QuickBooks Online users outside the U.S. by roughly 80
percent, to 230,000 paying subscribers.
-
Increased online payments customers by 5 percent, and online
payments charge volume by 17 percent.
-
Grew online payroll customers by 17 percent.
Consumer and Professional Tax
-
Consumer Tax revenue was up 29 percent, driven by an extra weekend day
in January versus last year for tax filers. Intuit reiterated fiscal
2016 Consumer Tax revenue growth guidance of 5 percent to 7 percent.
-
ProTax grew revenue to $84 million, driven by changes to desktop
offerings that affected the timing of revenue recognition.
Intuit will provide a final tax unit update in April after the tax
season ends.
|
Snapshot of Second-quarter Results
|
|
|
|
|
GAAP
|
|
|
Non-GAAP
|
|
|
|
Q2 FY 16
|
|
|
Q2 FY 15
|
|
|
Change
|
|
|
Q2 FY 16
|
|
|
Q2 FY 15
|
|
|
Change
|
Revenue
|
|
|
$923
|
|
|
$749
|
|
|
23%
|
|
|
$923
|
|
|
$749
|
|
|
23%
|
Operating Income (Loss)
|
|
|
$42
|
|
|
($89)
|
|
|
NM
|
|
|
$114
|
|
|
($22)
|
|
|
NM
|
EPS
|
|
|
$0.09
|
|
|
($0.23)
|
|
|
NM
|
|
|
$0.25
|
|
|
($0.06)
|
|
|
NM
|
Dollars are in millions, except earnings per share (EPS). See “About
Non-GAAP Financial Measures” below for more information regarding
financial measures not prepared in accordance with Generally
Accepted Accounting Principles (GAAP). Q2 FY16 results reflect the
impact of changes to certain desktop software offerings; revenue for
those offerings is recognized as services are delivered, rather than
up front. Q2 FY16 results also reflect the treatment of assets held
for sale as discontinued operations.
|
|
Capital Allocation Summary
In the second quarter the company:
-
Repurchased 4.8 million shares for $455 million, with $900 million
remaining on its authorization as of January 31.
-
Received board approval for a $0.30 per share dividend for the fiscal
third quarter, payable on April 18. This represents a 20 percent
increase versus last year.
Forward-looking Guidance
“I’m pleased with our performance for the first half of our fiscal year.
Based on these results, we’re on pace to deliver against our full-year
guidance,” Smith said. “That’s why we’ll continue to play offense, with
investing for customer growth remaining our first priority. We have lots
of opportunity in front of us, and we remain deeply committed to
accelerating customer and revenue growth.”
Intuit announced guidance for the third quarter of fiscal year 2016,
which ends April 30. The company expects:
-
Revenue of $2.21 billion to $2.26 billion, growth of 4 to 6 percent.
Third-quarter revenue growth guidance reflects the shift of Consumer
Tax revenue into the second quarter due to an extra weekend day in
January versus last year for tax filers.
-
GAAP operating income of $1.20 billion to $1.22 billion, growth of 13
to 14 percent.
-
Non-GAAP operating income of $1.28 billion to $1.30 billion, growth of
5 to 6 percent.
-
GAAP earnings per share of $2.95 to $3.00, versus $1.78 in the
year-ago quarter.
-
Non-GAAP earnings per share of $3.15 to $3.20, growth of 11 to 12
percent.
-
QuickBooks Online subscribers of approximately 1.38 million.
Intuit reiterated its revenue, operating income and earnings per share
guidance for fiscal 2016:
-
Revenue of $4.525 billion to $4.600 billion, growth of 8 to 10 percent.
-
GAAP operating income of $1.115 billion to $1.145 billion, growth of
51 to 55 percent.
-
Non-GAAP operating income of $1.450 billion to $1.480 billion, growth
of 27 to 30 percent.
-
GAAP diluted EPS of $2.55 to $2.60, versus $1.28 in fiscal 2015, which
included goodwill and intangible asset impairment charges.
-
Non-GAAP diluted EPS of $3.45 to $3.50, growth of 33 to 35 percent.
Intuit also narrowed its full-year guidance range for QuickBooks Online
subscribers, to 1.475 million to 1.500 million.
Management Rotation Planned for May 1, 2016
Effective May 1, Dan Wernikoff, executive vice president and general
manager of Intuit’s Small Business Group, will become general manager of
the Consumer Tax Group. At the same time, Sasan Goodarzi, executive vice
president and general manager of the Consumer Tax Group, will take over
as head of the Small Business Group.
As the company accelerates its journey to becoming a single Intuit
ecosystem, strengthening and developing senior talent is critical. This
rotation enables Intuit’s Small Business and Consumer Tax leaders to
develop deep empathy for each of the company’s core customers, as well
as an understanding and appreciation of the collective products and
technologies in the Intuit ecosystem.
“We’re able to make leadership moves like this from a position of
strength,” said Smith. “We’ve got great momentum and a strong outlook in
both Small Business and Consumer Tax, and I’m excited to watch that
momentum continue.”
Conference Call Details
Intuit executives will discuss the financial results on a conference
call at 1:30 p.m. Pacific time today, Feb. 25. To hear the call, dial
866-348-8108 in the United States or 908-982-4619 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 Investor
Relations website after the call ends.
Replay Information
A replay of the conference call will be available for one week by
calling 888-266-2081, or 703-925-2533 from international locations. The
access code for this call is 1668417.
The audio webcast will remain available on Intuit’s website for one week
after the conference call.
About Intuit
Intuit Inc. creates business and
financial management solutions that simplify the business of life for
small businesses, consumers and accounting professionals.
Its flagship products and services include QuickBooks® and
TurboTax®, which make it
easier to manage small businesses
and tax preparation and filing.
Mint.com provides a fresh, easy and
intelligent way for people to manage their money, while ProSeries®
and Lacerte® are Intuit's
leading tax preparation offerings for professional accountants.
Founded in 1983, Intuit had revenue of $4.2 billion in its fiscal year
2015. The company has approximately 7,700 employees with major offices
in the United States, Canada,
the United Kingdom, India
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 Web site.
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
2016 and beyond; expectations regarding Intuit’s growth outside the US;
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 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; product introductions and price competition
from our competitors can have unpredictable negative effects on our
revenue, profitability and market position; governmental encroachment in
our tax businesses or other governmental activities or public policy
affecting the preparation and filing of tax returns could negatively
affect our operating results and market position; we may not be able to
successfully innovate and introduce new offerings and business models to
meet our growth and profitability objectives, and current and future
offerings may not adequately address customer needs and may not achieve
broad market acceptance, which could harm our operating results and
financial condition; business interruption or failure of our information
technology and communication systems may impair the availability of our
products and services, which may damage our reputation and harm our
future financial results; as we upgrade and consolidate our customer
facing applications and supporting information technology
infrastructure, any problems with these implementations could interfere
with our ability to deliver our offerings; any failure to properly use
and protect personal customer information and data could harm our
revenue, earnings and reputation; if we are unable to develop, manage
and maintain critical third party business relationships, our business
may be adversely affected; increased government regulation of our
businesses may harm our operating results; if we fail to process
transactions effectively or fail to adequately protect against potential
fraudulent activities, our revenue and earnings may be harmed; related
publicity regarding such fraudulent activity could cause customers to
lose confidence in using our software and adversely impact our results;
any significant offering quality problems or delays in our offerings
could harm our revenue, earnings and reputation; our participation in
the Free File Alliance may result in lost revenue opportunities and
cannibalization of our traditional paid franchise; the continuing global
economic downturn may continue to impact consumer and small business
spending, financial institutions and tax filings, which could negatively
affect our revenue and profitability; year-over-year changes in the
total number of tax filings that are submitted to government agencies
due to economic conditions or otherwise may result in lost revenue
opportunities; our revenue and earnings are highly seasonal and the
timing of our revenue between quarters is difficult to predict, which
may cause significant quarterly fluctuations in our financial results;
our financial position may not make repurchasing shares advisable or we
may issue additional shares in an acquisition causing our number of
outstanding shares to grow; our inability to adequately protect our
intellectual property rights may weaken our competitive position and
reduce our revenue and earnings; our acquisition and divestiture
activities may disrupt our ongoing business, may involve increased
expenses and may present risks not contemplated at the time of the
transactions; our use of significant amounts of debt to finance
acquisitions or other activities could harm our financial condition and
results of operation; and litigation involving intellectual property,
antitrust, shareholder and other matters may increase our costs. More
details about the risks that may impact our business are included in our
Form 10-K for fiscal 2015 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 February 25,
2016 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
|
|
Six Months Ended
|
|
|
January 31, 2016
|
|
January 31, 2015
|
|
January 31, 2016
|
|
January 31, 2015
|
Net revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
264
|
|
|
$
|
195
|
|
|
$
|
535
|
|
|
$
|
423
|
|
Service and other
|
|
659
|
|
|
554
|
|
|
1,101
|
|
|
938
|
|
Total net revenue
|
|
923
|
|
|
749
|
|
|
1,636
|
|
|
1,361
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Cost of product revenue
|
|
40
|
|
|
42
|
|
|
69
|
|
|
75
|
|
Cost of service and other revenue
|
|
153
|
|
|
139
|
|
|
284
|
|
|
258
|
|
Amortization of acquired technology
|
|
6
|
|
|
7
|
|
|
12
|
|
|
14
|
|
Selling and marketing
|
|
356
|
|
|
344
|
|
|
600
|
|
|
595
|
|
Research and development
|
|
205
|
|
|
188
|
|
|
418
|
|
|
377
|
|
General and administrative
|
|
120
|
|
|
115
|
|
|
237
|
|
|
234
|
|
Amortization of other acquired intangible assets
|
|
1
|
|
|
3
|
|
|
3
|
|
|
6
|
|
Total costs and expenses [A]
|
|
881
|
|
|
838
|
|
|
1,623
|
|
|
1,559
|
|
Operating income (loss) from continuing operations
|
|
42
|
|
|
(89
|
)
|
|
13
|
|
|
(198
|
)
|
Interest expense
|
|
(9
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|
(14
|
)
|
Interest and other income (expense), net
|
|
(5
|
)
|
|
2
|
|
|
(9
|
)
|
|
2
|
|
Income (loss) before income taxes
|
|
28
|
|
|
(94
|
)
|
|
(12
|
)
|
|
(210
|
)
|
Income tax benefit [B]
|
|
(1
|
)
|
|
(34
|
)
|
|
(10
|
)
|
|
(69
|
)
|
Net income (loss) from continuing operations
|
|
29
|
|
|
(60
|
)
|
|
(2
|
)
|
|
(141
|
)
|
Net loss from discontinued operations [C]
|
|
(5
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|
(9
|
)
|
Net income (loss)
|
|
$
|
24
|
|
|
$
|
(66
|
)
|
|
$
|
(7
|
)
|
|
$
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share from continuing operations
|
|
$
|
0.11
|
|
|
$
|
(0.21
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.50
|
)
|
Basic net loss per share from discontinued operations
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
(0.03
|
)
|
Basic net income (loss) per share
|
|
$
|
0.09
|
|
|
$
|
(0.23
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.53
|
)
|
Shares used in basic per share calculations
|
|
263
|
|
|
285
|
|
|
267
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share from continuing operations
|
|
$
|
0.11
|
|
|
$
|
(0.21
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.50
|
)
|
Diluted net loss per share from discontinued operations
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
(0.03
|
)
|
Diluted net income (loss) per share
|
|
$
|
0.09
|
|
|
$
|
(0.23
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.53
|
)
|
Shares used in diluted per share calculations
|
|
266
|
|
|
285
|
|
|
267
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
$
|
0.30
|
|
|
$
|
0.25
|
|
|
$
|
0.60
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (loss) from continuing
operations for the periods shown.
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(in millions)
|
|
January 31, 2016
|
|
January 31, 2015
|
|
January 31, 2016
|
|
January 31, 2015
|
Cost of revenue
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
2
|
Selling and marketing
|
|
18
|
|
|
17
|
|
|
37
|
|
|
33
|
Research and development
|
|
21
|
|
|
18
|
|
|
42
|
|
|
37
|
General and administrative
|
|
24
|
|
|
20
|
|
|
49
|
|
|
41
|
Total share-based compensation expense
|
|
$
|
65
|
|
|
$
|
56
|
|
|
$
|
132
|
|
|
$
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[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 December 2015 the Consolidated Appropriations Act, 2016 was
signed into law. The Act includes a permanent reinstatement of the
federal research and experimentation credit that was retroactive
to January 1, 2015. We recorded a discrete tax benefit of
approximately $12 million for the retroactive effect during the
second quarter of fiscal 2016.
|
|
|
|
|
|
We recorded a $1 million tax benefit on an income of $28 million
for the three months ended January 31, 2016. Our effective tax
rate for the six months ended January 31, 2016 was approximately
87%. Excluding discrete tax items primarily related to the
permanent reinstatement of the federal research and
experimentation credit, as well as including the effects of losses
in certain jurisdictions where we do not recognize a tax benefit,
our effective tax rate for those periods was approximately 35% and
did not differ significantly from the federal statutory rate of
35%.
|
|
|
|
|
|
Our effective tax rates for the three and six months ended January
31, 2015 were approximately 37% and 33%. Excluding discrete tax
items primarily related to the reinstatement of the federal
research and experimentation credit, as well as including the
effects of losses in certain jurisdictions where we do not
recognize a tax benefit, our effective tax rate for those periods
was approximately 36% and did not differ significantly from the
federal statutory rate of 35%.
|
|
|
|
[C]
|
|
In the fourth quarter of fiscal 2015 we determined that our
Demandforce, QuickBase, and Quicken businesses became long-lived
assets held for sale and we accounted for them as discontinued
operations.
|
|
|
|
|
|
We have segregated the operating results for these three
businesses in our statements of operations for all periods
presented. Net revenue from these businesses totaled $56 million
and $115 million for the three and six months ended January 31,
2016. Net revenue from these businesses totaled $59 million and
$120 million for the three and six months ended January 31, 2015.
Net income or loss from discontinued operations was not
significant for any period presented.
|
|
|
|
|
|
We have reclassified our balance sheets for all periods presented to
reflect these businesses as discontinued operations. Because the
cash flows of these businesses were not material for any period
presented, we have not segregated them on our statements of cash
flows.
|
|
|
|
|
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 2016
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
January 31, 2016
|
GAAP operating income (loss) from continuing operations
|
|
$
|
(29
|
)
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Amortization of acquired technology
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
12
|
|
Amortization of other acquired intangible assets
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Share-based compensation expense
|
|
67
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
132
|
|
Non-GAAP operating income (loss) from continuing operations
|
|
$
|
46
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
$
|
(31
|
)
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
Amortization of acquired technology
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
12
|
|
Amortization of other acquired intangible assets
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Share-based compensation expense
|
|
67
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
132
|
|
Net (gain) loss on debt securities and other investments
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Income tax effects and adjustments [A]
|
|
(21
|
)
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
Net (income) loss from discontinued operations
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Non-GAAP net income (loss)
|
|
$
|
24
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share
|
|
$
|
(0.11
|
)
|
|
$
|
0.09
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
Amortization of acquired technology
|
|
0.02
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
0.04
|
|
Amortization of other acquired intangible assets
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Share-based compensation expense
|
|
0.25
|
|
|
0.25
|
|
|
—
|
|
|
—
|
|
|
0.50
|
|
Net (gain) loss on debt securities and other investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Income tax effects and adjustments [A]
|
|
(0.08
|
)
|
|
(0.13
|
)
|
|
—
|
|
|
—
|
|
|
(0.21
|
)
|
Net (income) loss from discontinued operations
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
Non-GAAP diluted net income (loss) per share
|
|
$
|
0.09
|
|
|
$
|
0.25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in GAAP diluted per share calculation
|
|
272
|
|
|
266
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP diluted per share calculation
|
|
275
|
|
|
266
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[A]
|
As discussed in “About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments” following Table E, our long-term non-GAAP
tax rate assumes the federal research and experimentation credit
is continuously in effect and eliminates the effects of
non-recurring and period specific items. Consequently, our
non-GAAP results for the second quarter and first six months of
fiscal 2016 have been adjusted to exclude the $12 million discrete
GAAP tax benefit that we recorded for the retroactive
reinstatement of the research and experimentation credit. 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 2015
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Full Year
|
GAAP operating income (loss) from continuing operations
|
|
$
|
(109
|
)
|
|
$
|
(89
|
)
|
|
$
|
1,066
|
|
|
$
|
(130
|
)
|
|
$
|
738
|
|
Amortization of acquired technology
|
|
7
|
|
|
7
|
|
|
8
|
|
|
8
|
|
|
30
|
|
Amortization of other acquired intangible assets
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
12
|
|
Professional fees for business combinations
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Goodwill and intangible asset impairment charges
|
|
—
|
|
|
—
|
|
|
114
|
|
|
34
|
|
|
148
|
|
Gain on sale of long-lived assets
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(1
|
)
|
|
(31
|
)
|
Share-based compensation expense
|
|
57
|
|
|
56
|
|
|
59
|
|
|
70
|
|
|
242
|
|
Non-GAAP operating income (loss) from continuing operations
|
|
$
|
(42
|
)
|
|
$
|
(22
|
)
|
|
$
|
1,221
|
|
|
$
|
(16
|
)
|
|
$
|
1,141
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
$
|
(84
|
)
|
|
$
|
(66
|
)
|
|
$
|
501
|
|
|
$
|
14
|
|
|
$
|
365
|
|
Amortization of acquired technology
|
|
7
|
|
|
7
|
|
|
8
|
|
|
8
|
|
|
30
|
|
Amortization of other acquired intangible assets
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
12
|
|
Professional fees for business combinations
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Goodwill and intangible asset impairment charges
|
|
—
|
|
|
—
|
|
|
114
|
|
|
34
|
|
|
148
|
|
Gain on sale of long-lived assets
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(1
|
)
|
|
(31
|
)
|
Share-based compensation expense
|
|
57
|
|
|
56
|
|
|
59
|
|
|
70
|
|
|
242
|
|
Net (gain) loss on debt securities and other investments
|
|
1
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|
6
|
|
Income tax effects and adjustments
|
|
(19
|
)
|
|
(25
|
)
|
|
(10
|
)
|
|
(29
|
)
|
|
(83
|
)
|
Net (income) loss from discontinued operations
|
|
3
|
|
|
6
|
|
|
155
|
|
|
(116
|
)
|
|
48
|
|
Non-GAAP net income (loss)
|
|
$
|
(32
|
)
|
|
$
|
(18
|
)
|
|
$
|
804
|
|
|
$
|
(15
|
)
|
|
$
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share
|
|
$
|
(0.29
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
1.78
|
|
|
$
|
0.05
|
|
|
$
|
1.28
|
|
Amortization of acquired technology
|
|
0.02
|
|
|
0.02
|
|
|
0.03
|
|
|
0.03
|
|
|
0.10
|
|
Amortization of other acquired intangible assets
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.04
|
|
Professional fees for business combinations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Goodwill and intangible asset impairment charges
|
|
—
|
|
|
—
|
|
|
0.40
|
|
|
0.12
|
|
|
0.52
|
|
Gain on sale of long-lived assets
|
|
—
|
|
|
—
|
|
|
(0.11
|
)
|
|
—
|
|
|
(0.11
|
)
|
Share-based compensation expense
|
|
0.20
|
|
|
0.20
|
|
|
0.21
|
|
|
0.25
|
|
|
0.85
|
|
Net (gain) loss on debt securities and other investments
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
Income tax effects and adjustments
|
|
(0.06
|
)
|
|
(0.08
|
)
|
|
(0.03
|
)
|
|
(0.10
|
)
|
|
(0.29
|
)
|
Net (income) loss from discontinued operations
|
|
0.01
|
|
|
0.02
|
|
|
0.55
|
|
|
(0.42
|
)
|
|
0.17
|
|
Non-GAAP diluted net income (loss) per share
|
|
$
|
(0.11
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
2.85
|
|
|
$
|
(0.05
|
)
|
|
$
|
2.59
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in GAAP diluted per share calculation
|
|
286
|
|
|
285
|
|
|
282
|
|
|
277
|
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP diluted per share calculation
|
|
286
|
|
|
285
|
|
|
282
|
|
|
277
|
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See “About Non-GAAP Financial Measures” immediately following Table
E for information on these measures, the items excluded from the
most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure and
excludes the specified amounts in arriving at each non-GAAP
financial measure.
|
|
|
TABLE C
|
INTUIT INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(Unaudited)
|
|
|
|
January 31, 2016
|
|
July 31, 2015
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
334
|
|
|
$
|
808
|
Investments
|
|
—
|
|
|
889
|
Accounts receivable, net
|
|
512
|
|
|
91
|
Income taxes receivable
|
|
108
|
|
|
84
|
Deferred income taxes
|
|
—
|
|
|
231
|
Prepaid expenses and other current assets
|
|
110
|
|
|
94
|
Current assets of discontinued operations
|
|
30
|
|
|
26
|
Current assets before funds held for customers
|
|
1,094
|
|
|
2,223
|
Funds held for customers
|
|
373
|
|
|
337
|
Total current assets
|
|
1,467
|
|
|
2,560
|
|
|
|
|
|
Long-term investments
|
|
28
|
|
|
27
|
Property and equipment, net
|
|
980
|
|
|
682
|
Goodwill
|
|
1,278
|
|
|
1,266
|
Acquired intangible assets, net
|
|
67
|
|
|
87
|
Long-term deferred income taxes
|
|
211
|
|
|
5
|
Other assets
|
|
103
|
|
|
106
|
Long-term assets of discontinued operations
|
|
215
|
|
|
235
|
Total assets
|
|
$
|
4,349
|
|
|
$
|
4,968
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term debt
|
|
$
|
245
|
|
|
$
|
—
|
Accounts payable
|
|
286
|
|
|
190
|
Accrued compensation and related liabilities
|
|
179
|
|
|
283
|
Deferred revenue
|
|
961
|
|
|
691
|
Other current liabilities
|
|
208
|
|
|
150
|
Current liabilities of discontinued operations
|
|
97
|
|
|
93
|
Current liabilities before customer fund deposits
|
|
1,976
|
|
|
1,407
|
Customer fund deposits
|
|
373
|
|
|
337
|
Total current liabilities
|
|
2,349
|
|
|
1,744
|
|
|
|
|
|
Long-term debt
|
|
1,000
|
|
|
500
|
Long-term deferred revenue
|
|
153
|
|
|
152
|
Other long-term obligations
|
|
138
|
|
|
172
|
Long-term obligations of discontinued operations
|
|
68
|
|
|
68
|
Total liabilities
|
|
3,708
|
|
|
2,636
|
|
|
|
|
|
Stockholders’ equity
|
|
641
|
|
|
2,332
|
Total liabilities and stockholders’ equity
|
|
$
|
4,349
|
|
|
$
|
4,968
|
|
|
|
|
|
|
|
|
NOTE:
|
|
In the second quarter of fiscal 2016, we elected to early adopt
ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet
Classification of Deferred Taxes” on a prospective basis. This
new standard requires all deferred tax assets and liabilities, and
any related valuation allowance, to be classified as noncurrent on
the balance sheet. Prior periods were not adjusted.
|
|
|
|
|
TABLE D
|
INTUIT INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
Six Months Ended
|
|
|
January 31, 2016
|
|
January 31, 2015
|
Cash flows from operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(7
|
)
|
|
$
|
(150
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
94
|
|
|
75
|
|
Amortization of acquired intangible assets
|
|
19
|
|
|
36
|
|
Share-based compensation expense
|
|
137
|
|
|
122
|
|
Deferred income taxes
|
|
(11
|
)
|
|
(16
|
)
|
Tax benefit from share-based compensation plans
|
|
20
|
|
|
38
|
|
Excess tax benefit from share-based compensation plans
|
|
(20
|
)
|
|
(38
|
)
|
Other
|
|
10
|
|
|
19
|
|
Total adjustments
|
|
249
|
|
|
236
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
(431
|
)
|
|
(327
|
)
|
Income taxes receivable
|
|
(26
|
)
|
|
(110
|
)
|
Prepaid expenses and other assets
|
|
(18
|
)
|
|
12
|
|
Accounts payable
|
|
103
|
|
|
116
|
|
Accrued compensation and related liabilities
|
|
(100
|
)
|
|
(79
|
)
|
Deferred revenue
|
|
296
|
|
|
439
|
|
Other liabilities
|
|
43
|
|
|
110
|
|
Total changes in operating assets and liabilities
|
|
(133
|
)
|
|
161
|
|
Net cash provided by operating activities
|
|
109
|
|
|
247
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of available-for-sale debt securities
|
|
(181
|
)
|
|
(619
|
)
|
Sales of available-for-sale debt securities
|
|
942
|
|
|
458
|
|
Maturities of available-for-sale debt securities
|
|
126
|
|
|
328
|
|
Net change in money market funds and other cash equivalents
held to satisfy customer fund obligations
|
|
(35
|
)
|
|
(65
|
)
|
Net change in customer fund deposits
|
|
35
|
|
|
65
|
|
Purchases of property and equipment
|
|
(394
|
)
|
|
(116
|
)
|
Acquisitions of businesses, net of cash acquired
|
|
—
|
|
|
(76
|
)
|
Other
|
|
—
|
|
|
(10
|
)
|
Net cash provided by (used in) investing activities
|
|
493
|
|
|
(35
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from borrowings under credit facility
|
|
745
|
|
|
—
|
|
Net proceeds from issuance of stock under employee stock plans
|
|
56
|
|
|
101
|
|
Cash paid for purchases of treasury stock
|
|
(1,725
|
)
|
|
(554
|
)
|
Dividends and dividend rights paid
|
|
(161
|
)
|
|
(143
|
)
|
Excess tax benefit from share-based compensation plans
|
|
20
|
|
|
38
|
|
Net cash used in financing activities
|
|
(1,065
|
)
|
|
(558
|
)
|
Effect of exchange rates on cash and cash equivalents
|
|
(11
|
)
|
|
(21
|
)
|
Net decrease in cash and cash equivalents
|
|
(474
|
)
|
|
(367
|
)
|
Cash and cash equivalents at beginning of period
|
|
808
|
|
|
849
|
|
Cash and cash equivalents at end of period
|
|
$
|
334
|
|
|
$
|
482
|
|
|
|
|
|
|
|
|
|
|
|
TABLE E
|
INTUIT INC.
|
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL
MEASURES
|
TO PROJECTED GAAP REVENUE, OPERATING INCOME, AND EPS
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
Forward-Looking Guidance
|
|
|
GAAP Range of Estimate
|
|
|
|
|
|
Non-GAAP Range of Estimate
|
|
|
From
|
|
To
|
|
Adjmts
|
|
|
|
From
|
|
To
|
Three Months Ending April 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,210
|
|
|
$
|
2,260
|
|
|
$
|
—
|
|
|
|
|
$
|
2,210
|
|
|
$
|
2,260
|
Operating income
|
|
$
|
1,200
|
|
|
$
|
1,220
|
|
|
$
|
80
|
|
|
[a]
|
|
$
|
1,280
|
|
|
$
|
1,300
|
Diluted earnings per share
|
|
$
|
2.95
|
|
|
$
|
3.00
|
|
|
$
|
0.20
|
|
|
[b]
|
|
$
|
3.15
|
|
|
$
|
3.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ending July 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
4,525
|
|
|
$
|
4,600
|
|
|
$
|
—
|
|
|
|
|
$
|
4,525
|
|
|
$
|
4,600
|
Operating income
|
|
$
|
1,115
|
|
|
$
|
1,145
|
|
|
$
|
335
|
|
|
[c]
|
|
$
|
1,450
|
|
|
$
|
1,480
|
Diluted earnings per share
|
|
$
|
2.55
|
|
|
$
|
2.60
|
|
|
$
|
0.90
|
|
|
[d]
|
|
$
|
3.45
|
|
|
$
|
3.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See“About Non-GAAP Financial Measures” immediately following this
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure and
excludes the specified amounts in arriving at each non-GAAP
financial measure.
|
[a]
|
|
Reflects estimated adjustments for share-based compensation expense
of approximately $72 million; amortization of acquired technology of
approximately $6 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 long-term non-GAAP tax rate.
|
|
|
|
[c]
|
|
Reflects estimated adjustments for share-based compensation expense
of approximately $303 million; amortization of acquired technology
of approximately $24 million; and amortization of other acquired
intangible assets of approximately $8 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 February 25, 2016 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
-
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.
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, assumes the federal research and experimentation credit is
continuously in effect, 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 34% which is 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, and sales of available-for-sale debt securities and
other investments.
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