Raises Earnings per Share Guidance for
Fiscal 2016
Intuit Inc. (NASDAQ:INTU) announced financial results for the
first quarter of fiscal 2016. The company’s fiscal first quarter
ended Oct. 31.
“We started the fiscal year the same way we ended the last, with
strong momentum across our businesses as our intense focus on our
global cloud strategy takes shape,” said Brad Smith, Intuit’s
president and chief executive officer.
“We exceeded our subscriber and financial targets in the first
quarter and have raised our earnings per share guidance for the
fiscal year based on these initial strong results and our
acceleration of share repurchases in the quarter.”
Financial Highlights
In the first quarter Intuit:
- Reported 17 percent revenue growth,
which includes the impact of ratable revenue recognition for
certain desktop software offerings.
- Increased total QuickBooks Online
subscribers by 57 percent.
- More than doubled QuickBooks Online
subscribers outside the U.S. to 215,000.
- Repurchased $1.3 billion of its common
shares.
- Raised GAAP and non-GAAP earnings per
share guidance for fiscal 2016.
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 as discontinued operations.
Small Business
- Total Small Business segment revenue
increased 5 percent.
- The small business online ecosystem
continues to build momentum, with revenue growth of approximately
28 percent, driven by strong customer acquisition.
- Over 80 percent of QuickBooks Online
customers were new to the Intuit franchise, raising total
subscribers to 1,159,000.
- More than doubled QuickBooks Online
subscribers outside the U.S., reaching 215,000 customers.
- Reached 35,000 QuickBooks Self-Employed
subscribers, up from 25,000 in the last quarter.
- Online payroll customers grew 17
percent.
- Online payments customers grew 4
percent, and online payments charge volume grew 14 percent.
Consumer and Professional
Tax
- Consumer Tax revenue was flat in a
seasonally light first quarter.
- ProTax revenue grew more than 200
percent to $110 million, driven by changes to desktop offerings
that affected the timing of revenue recognition.
Intuit will provide a tax unit update in late February,
concurrent with its second-quarter earnings release, and a final
update in late April after the tax season ends.
Snapshot of First-quarter
Results
GAAP Non-GAAP Q1
FY 16
Q1
FY 15
Change Q1
FY 16
Q1
FY 15
Change Revenue $713 $612
17% $713 $612 17%
Operating Income
(Loss) ($29) ($109) NM $46
($42) NM
EPS ($0.11) ($0.29) NM
$0.09 ($0.11) 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). Q1 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. Q1 FY16 results also reflect
the treatment of assets held for sale as discontinued
operations.
Capital Allocation Summary
“Our first priority is investing for customer growth,” said Neil
Williams, chief financial officer. “This quarter we also increased
our dividend by 20 percent and repurchased $1.3 billion in
shares.”
In the first quarter the company:
- Ended with $474 million in cash and
investments.
- Repurchased shares at an average price
of $88.50 per share; about $1.4 billion remains on the
authorization.
- Received board approval for a $0.30 per
share dividend for the fiscal second quarter, payable on Jan. 19.
This represents a 20 percent increase versus last year.
Forward-looking Guidance
“Looking ahead, we remain focused on executing against a
compelling long-term growth opportunity in both tax and small
business,” Smith said. “We are expanding our categories and our
geographies. The proof points are evident in the momentum we are
building, as the QuickBooks Online ecosystem continues to grow at a
very healthy rate.”
Intuit announced guidance for the second quarter of fiscal year
2016, which ends Jan. 31. The company expects:
- Revenue of $880 million to $900
million, growth of 17 to 20 percent.
- GAAP operating income of $15 million to
$25 million, compared to an operating loss of $89 million in the
year-ago quarter.
- Non-GAAP operating income of $85
million to $95 million, compared to an operating loss of $22
million in the year-ago quarter.
- GAAP earnings per share of $0.01 to
$0.04, compared to a net loss per share of $0.23 in the year-ago
quarter.
- Non-GAAP earnings per share of $0.17 to
$0.20, compared to a loss per share of $0.06 in the year-ago
quarter.
- QuickBooks Online subscribers of
approximately 1.240 million.
For full fiscal 2016, the company now expects:
- GAAP earnings per share of $2.55 to
$2.60, versus previous guidance of $2.50 to $2.55.
- Non-GAAP earnings per share of $3.45 to
$3.50, versus previous guidance of $3.40 to $3.45.
- Capital expenditures of $490 million to
$510 million, versus previous guidance of $280 million to $300
million. The new guidance reflects the recently announced purchase
of Intuit’s San Diego campus.
Intuit also reiterated its revenue and operating income guidance
for fiscal 2016.
Intuit executives will discuss the company’s financial results
on a conference call at 1:30 p.m. Pacific time on Nov. 19. 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.cfm. 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 888-266-2081, or 703-925-2533 from international
locations. The access code for this call is 1664405.
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.
Intuit and the Intuit logo, among others, are registered
trademarks and/or registered service marks of Intuit Inc. in the
United States and other countries.
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 November 19, 2015 and we
do not undertake any duty to update any forward-looking statement
or other information in these materials.
TABLE A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended
October 31, 2015
October 31, 2014
Net revenue: Product $ 271 $ 228 Service and other 442 384
Total net revenue 713 612 Costs and expenses:
Cost of revenue: Cost of product revenue 29 33 Cost of service and
other revenue 131 119 Amortization of acquired technology 6 7
Selling and marketing 244 251 Research and development 213 189
General and administrative 117 119 Amortization of other acquired
intangible assets 2 3 Total costs and expenses [A]
742 721 Operating loss from continuing operations (29
) (109 ) Interest expense (7 ) (7 ) Interest and other income
(expense), net (4 ) — Loss before income taxes (40 ) (116 )
Income tax benefit [B] (9 ) (35 ) Net loss from continuing
operations (31 ) (81 ) Net loss from discontinued operations [C] —
(3 ) Net loss $ (31 ) $ (84 ) Basic net loss per
share from continuing operations $ (0.11 ) $ (0.28 ) Basic net loss
per share from discontinued operations — (0.01 ) Basic net
loss per share $ (0.11 ) $ (0.29 ) Shares used in basic per share
calculations 272 286 Diluted net loss per
share from continuing operations $ (0.11 ) $ (0.28 ) Diluted net
loss per share from discontinued operations — (0.01 )
Diluted net loss per share $ (0.11 ) $ (0.29 ) Shares used in
diluted per share calculations 272 286 Cash
dividends declared per common share $ 0.30 $ 0.25
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
[A]
The following table summarizes the total share-based
compensation expense that we recorded in operating loss from
continuing operations for the periods shown.
Three Months
Ended
(in millions)
October 31,2015
October 31,2014
Cost of revenue $ 2 $ 1 Selling and marketing 19 16 Research and
development 21 19 General and administrative 25 21 Total
share-based compensation expense $ 67 $ 57 [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 rate for
the three months ended October 31, 2015 was approximately 22%.
Excluding discrete tax items primarily related to share-based
compensation as well as including the effects of losses in certain
jurisdictions where we do not recognize a tax benefit, our
effective tax rate for the three months ended October 31, 2015 was
approximately 36% and did not differ significantly from the federal
statutory rate of 35%. Our effective tax rate for the three
months ended October 31, 2014 was approximately 31%. Excluding
discrete tax items primarily related to share-based compensation
and a state tax law change as well as including the effects of
losses in certain jurisdictions where we do not recognize a tax
benefit, our effective tax rate for the period was approximately
37% 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 $59 million for the three months ended October 31, 2015 and
$61 million for the three months ended October 31, 2014. 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 from continuing operations 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 Three
Months Ended Q1 Q2 Q3 Q4 October
31, 2015 GAAP operating income (loss) from continuing
operations $ (29 ) $ — $ — $ — $ (29 ) Amortization of acquired
technology 6 — — — 6 Amortization of other acquired intangible
assets 2 — — — 2 Share-based compensation expense 67 —
— — 67
Non-GAAP operating income
(loss) from continuing operations $ 46 $ — $ —
$ — $ 46
GAAP net income (loss)
$ (31 ) $ — $ — $ — $ (31 ) Amortization of acquired technology 6 —
— — 6 Amortization of other acquired intangible assets 2 — — — 2
Share-based compensation expense 67 — — — 67 Net (gain) loss on
debt securities and other investments 1 — — — 1 Income tax effects
and adjustments (21 ) — — — (21 )
Non-GAAP
net income (loss) $ 24 $ — $ — $ —
$ 24
GAAP diluted net income (loss) per share
$ (0.11 ) $ — $ — $ — $ (0.11 ) Amortization of acquired technology
0.02 — — — 0.02 Amortization of other acquired intangible assets
0.01 — — — 0.01 Share-based compensation expense 0.25 — — — 0.25
Net (gain) loss on debt securities and other investments — — — — —
Income tax effects and adjustments (0.08 ) — — —
(0.08 )
Non-GAAP diluted net income (loss) per share
$ 0.09 $ — $ — $ — $ 0.09
Shares used in diluted per share calculation 275 —
— — 275
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 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)
October 31,2015
July 31,2015
ASSETS Current assets: Cash and cash equivalents $ 474 $ 808
Investments — 889 Accounts receivable, net 124 91 Income taxes
receivable 100 84 Deferred income taxes 244 231 Prepaid expenses
and other current assets 121 94 Current assets of discontinued
operations 17 26 Current assets before funds held for
customers 1,080 2,223 Funds held for customers 347 337 Total
current assets 1,427 2,560 Long-term investments 28 27
Property and equipment, net 701 682 Goodwill 1,274 1,266 Acquired
intangible assets, net 77 87 Other assets
107
111 Long-term assets of discontinued operations
219
235 Total assets $ 3,833 $ 4,968 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current liabilities: Borrowings under
credit facility $ 350 $ — Accounts payable 178 190 Accrued
compensation and related liabilities 139 283 Deferred revenue 635
691 Other current liabilities
165
150 Current liabilities of discontinued operations
73
93 Current liabilities before customer fund deposits 1,540
1,407 Customer fund deposits 347 337 Total current
liabilities 1,887 1,744 Long-term debt 500 500 Long-term
deferred revenue 157 152 Other long-term obligations 184 172
Long-term obligations of discontinued operations 54 68 Total
liabilities 2,782 2,636 Stockholders’ equity 1,051
2,332 Total liabilities and stockholders’ equity $ 3,833
$ 4,968
TABLE D
INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
millions) (Unaudited)
Three Months Ended
October 31,2015
October 31,2014
Cash flows from operating activities: Net loss $ (31 ) $ (84
) Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation 45 36 Amortization of acquired intangible
assets 10 18 Share-based compensation expense 69 61 Deferred income
taxes (2 ) (6 ) Tax benefit from share-based compensation plans 9
18 Excess tax benefit from share-based compensation plans (9 ) (18
) Other 10 12 Total adjustments 132 121
Changes in operating assets and liabilities: Accounts receivable
(28 ) (4 ) Income taxes receivable (17 ) (56 ) Prepaid expenses and
other assets (29 ) (3 ) Accounts payable (6 ) 32 Accrued
compensation and related liabilities (145 ) (139 ) Deferred revenue
(54 ) 28 Other liabilities (19 ) (13 ) Total changes in operating
assets and liabilities (298 ) (155 )
Net cash used in operating
activities (197 ) (118 ) Cash
flows from investing activities: Purchases of
available-for-sale debt securities (117 ) (365 ) Sales of
available-for-sale debt securities 940 147 Maturities of
available-for-sale debt securities 64 229
Net change in money market funds and other
cash equivalents
held to satisfy customer fund
obligations
(10 ) (69 ) Net change in customer fund deposits 10 69 Purchases of
property and equipment (70 ) (55 ) Acquisitions of businesses, net
of cash acquired — (9 ) Other (1 ) (8 )
Net cash provided by
(used in) investing activities 816 (61
) Cash flows from financing activities: Proceeds from
borrowings under credit facility 350 — Net proceeds from issuance
of stock under employee stock plans 24 47 Cash paid for purchases
of treasury stock (1,253 ) (114 ) Dividends and dividend rights
paid (82 ) (74 ) Excess tax benefit from share-based compensation
plans 9 18
Net cash used in financing
activities (952 ) (123 ) Effect of
exchange rates on cash and cash equivalents (1 ) (5 )
Net
decrease in cash and cash equivalents (334 )
(307 ) Cash and cash equivalents at beginning of
period 808 849
Cash and cash equivalents at end of
period $ 474 $ 542
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
GAAPRange of Estimate
Non-GAAPRange of
Estimate
From To Adjmts From
To Three Months Ending January 31, 2016 Revenue $ 880
$ 900 $ — $ 880 $ 900
Operating income
$ 15 $ 25 $ 70 [a] $ 85 $ 95
Diluted earnings per share
$ 0.01 $ 0.04 $ 0.16 [b] $ 0.17 $ 0.20
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 $62 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 November 19, 2015
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151119006563/en/
InvestorsIntuit Inc.Matt Rhodes,
650-944-2536matthew_rhodes@intuit.comorMediaIntuit Inc.Diane
Carlini, 650-944-6251diane_carlini@intuit.com
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