Company Raises Full-year Revenue and QBO
Subscriber Outlook
Intuit Inc. (Nasdaq:INTU) announced financial results for the
third quarter of fiscal 2017, which ended April 30.
“This was another strong quarter for Intuit, with a hard-fought
tax season delivering the revenue we promised along with continued
momentum in our QuickBooks franchise,” said Brad Smith, Intuit’s
chairman and chief executive officer.
“Overall, we successfully delivered strong financial results. We
entered the tax season with a clear plan to extend our lead in the
do-it-yourself category and begin transforming the assisted
category as well, embracing the power of the Intuit ecosystem. In
small business, QuickBooks subscriber growth continued, driven by
improvements across our platform for self-employed, small business
and accountants,” Smith said.
Financial Highlights
For the third quarter, Intuit:
- Grew revenue to $2.541 billion, up 10
percent.
- Increased GAAP operating income to
$1.444 billion, up 12 percent.
- Increased total QuickBooks Online
subscribers 59 percent, up from 49 percent growth in the second
quarter, to over 2.2 million subscribers.
- Doubled the base of QuickBooks
Self-Employed users to roughly 360,000 of total QuickBooks Online
subscribers, up from 180,000 last quarter.
- Raised expectations to end fiscal 2017
with 2.3 million QuickBooks Online subscribers.
- Raised full-year revenue guidance and
narrowed operating income and earnings per share guidance. Intuit
now expects full-year revenue growth of 9 to 10 percent.
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 Third-quarter
Results
GAAP Non-GAAP
Q3FY 17
Q3FY 16
Change
Q3FY 17
Q3FY 16
Change Revenue $ 2,541 $2,304
10% $ 2,541 $2,304 10%
Operating Income $1,444 $1,285 12%
$1,519 $1,359 12%
Earnings Per
Share $3.70 $3.94 (6)% $3.90
$3.43 14%
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). Q3 FY16 GAAP earnings per
share included $0.68 per share for the sale of discontinued
operations.
Business Segment Results
Small Business
- Grew total Small Business segment
revenue by 16 percent.
- Grew Small Business online ecosystem
revenue by 30 percent.
- Added approximately 350,000 QuickBooks
Online subscribers in the quarter, reaching 2,220,000 subscribers
worldwide.
- Grew QuickBooks Online international
subscribers by 70 percent, to approximately 433,000.
- Made QuickBooks Self-Employed available
in Singapore, adding another geography to the company’s lineup,
with Hong Kong and South Africa soon to follow.
- There are now 1,545 apps on the
QuickBooks Online platform; 472 are published in the QuickBooks
Apps Store.
Consumer Tax and
ProConnect
- Grew Consumer Tax revenue by 9 percent
fiscal year-to-date.
- Provided broad availability of
SmartLook technology to reach more tax filers this season.
- Provided more than 1.3 million free
credit scores to TurboTax customers using the credit score
functionality in Mint.
- Grew ProConnect fiscal year-to-date
revenue by 2 percent.
“Putting it all together, we are seeing positive results from
One Intuit Ecosystem experiments, as we create more and more
connections between customers and products,” Smith said. “We’re
seeing proof points including: Consumer Tax driving QuickBooks
Self-Employed subscribers. ProConnect customers serving Consumer
Tax customers through SmartLook. And Mint providing credit scores
to TurboTax customers. There’s more to come on this front, as these
investments in innovations have put us in a strong position going
forward.”
Capital Allocation Summary
In the third quarter the company:
- Repurchased $88 million of shares, with
$1.9 billion remaining on the authorization.
- Received board approval for a $0.34 per
share dividend payable on July 18, 2017.
Forward-looking Guidance
Intuit announced guidance for the fourth quarter of fiscal year
2017, which ends July 31. The company expects:
- Revenue of $795 million to $815
million, growth of 5 to 8 percent.
- GAAP operating loss of $25 million to
$45 million.
- Non-GAAP operating income of $50
million to $70 million.
- GAAP loss per share of $0.01 to
$0.03.
- Non-GAAP diluted earnings per share of
$0.16 to $0.18.
Intuit raised guidance for full fiscal-year revenue in 2017. The
company now expects:
- Revenue of $5.13 billion to $5.15
billion, growth of 9 to 10 percent.
- GAAP operating income of $1.36 billion
to $1.38 billion, growth of 10 to 11 percent.
- Non-GAAP operating income of $1.705
billion to $1.725 billion, growth of 10 to 11 percent.
- GAAP diluted earnings per share of
$3.55 to $3.57, versus $3.69 in fiscal 2016. Fiscal 2016 earnings
per share includes $0.65 net income per share from discontinued
operations.
- Non-GAAP diluted earnings per share of
$4.38 to $4.40, growth of 16 percent.
- QuickBooks Online subscribers of 2.3
million.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call today at 1:30 p.m. Pacific time. To hear the call,
dial 844-246-4601 in the United States or 703-639-1172 from
international locations. No reservation or access code is needed.
The conference call can also be heard live at
http://investors.intuit.com/events/default.aspx. Prepared remarks
for the call will be available on Intuit’s Investor Relations
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 14708133.
The audio webcast will remain available on Intuit’s website for
one week after the conference call.
About Intuit
Intuit Inc. is committed to powering prosperity around the world
for consumers, small businesses and the self-employed through its
ecosystem of innovative financial management solutions.
Its flagship products and services
include QuickBooks® and TurboTax®, which make it
easier to manage small businesses and tax preparation and
filing. QuickBooks Self-Employed provides freelancers and
independent contractors with an easy and affordable way to manage
their finances and save money at tax time, while Mint delivers
financial tools and insights to help people make smart choices
about their money.
Intuit's ProConnect brand
portfolio includes ProConnect Tax Online, ProSeries®
and Lacerte®, the company's leading tax preparation offerings
for professional accountants.
Founded in 1983, Intuit serves 42 million customers in North
America, Europe, Australia and Brazil, with revenue of $4.7 billion
in its fiscal year 2016. The company has approximately 7,900
employees with major offices in the United
States, Canada, the United
Kingdom, India, Australia 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 website.
Cautions About Forward-looking Statements
This press release contains forward-looking statements,
including forecasts of expected growth and future financial results
of Intuit and its reporting segments; Intuit’s prospects for the
business in fiscal 2017 and beyond; expectations regarding Intuit’s
growth outside the US; expectations regarding timing and growth of
revenue for each of Intuit’s reportable segments and from current
or future products and services; expectations regarding customer
growth; expectations regarding the impact of the One Intuit
Ecosystem strategy on Intuit’s business; 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; the competitive
environment; governmental encroachment in our tax businesses or
other governmental activities or public policy affecting the
preparation and filing of tax returns; our ability to innovate and
adapt to technological change; availability of our products and
services could be impacted by business interruption or failure of
our information technology and communication systems; any problems
with implementing upgrades to our customer facing applications and
supporting information technology infrastructure; any failure to
properly use and protect personal customer information and data;
our ability to develop, manage and maintain critical third-party
business relationships; increases in or changes to government
regulation of our businesses; any failure to process transactions
effectively or to adequately protect against potential fraudulent
activities; any loss of confidence in using our software as a
result of publicity regarding such fraudulent activity; any
significant product accuracy or quality problems or delays; any
lost revenue opportunities or cannibalization of our traditional
paid franchise due to our participation in the Free File Alliance;
the global economic environment may impact consumer and small
business spending, financial institutions and tax filings; changes
in the total number of tax filings that are submitted to government
agencies due to economic conditions or otherwise; the seasonal and
unpredictable nature of our revenue; our ability to attract, retain
and develop highly skilled employees; increased risks associated
with international operations; unanticipated changes in our income
tax rates; changes in the amounts or frequency of share repurchases
or dividends; 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; disruptions, expenses and risks associated
with our acquisitions and divestitures; amortization of acquired
intangible assets and impairment charges; our use of significant
amounts of debt to finance acquisitions or other activities; and
the cost of, and potential adverse results in, litigation involving
intellectual property, antitrust, shareholder and other matters.
More details about the risks that may impact our business are
included in our Form 10-K for fiscal 2016 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 May 23, 2017, 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 Nine Months Ended April
30, April 30, April 30,
April 30, 2017 2016 2017
2016 Net revenue: Product $ 467 $ 459 $ 1,063 $ 994 Service
and other 2,074 1,845 3,272 2,946 Total
net revenue 2,541 2,304 4,335 3,940
Costs and expenses: Cost of revenue: Cost of product revenue 29 30
95 99 Cost of service and other revenue 205 181 522 465
Amortization of acquired technology 3 5 9 17 Selling and marketing
467 423 1,155 1,023 Research and development 246 228 735 646
General and administrative 146 149 412 386 Amortization of other
acquired intangible assets 1 3 2 6
Total costs and expenses [A] 1,097 1,019 2,930
2,642 Operating income from continuing operations 1,444
1,285 1,405 1,298 Interest expense (8 ) (10 ) (28 ) (26 ) Interest
and other income (expense), net 3 2 — (7 )
Income before income taxes 1,439 1,277 1,377 1,265 Income tax
provision [B] 475 429 430 419 Net
income from continuing operations 964 848 947 846 Net income from
discontinued operations [C] — 178 — 173
Net income $ 964 $ 1,026 $ 947 $ 1,019
Basic net income per share from continuing operations $ 3.76
$ 3.30 $ 3.68 $ 3.21 Basic net income per share from discontinued
operations — 0.70 — 0.65 Basic net
income per share $ 3.76 $ 4.00 $ 3.68 $ 3.86
Shares used in basic per share calculations 256 257
257 264 Diluted net income per share
from continuing operations $ 3.70 $ 3.26 $ 3.63 $ 3.17 Diluted net
income per share from discontinued operations — 0.68
— 0.64 Diluted net income per share $ 3.70 $
3.94 $ 3.63 $ 3.81 Shares used in diluted per
share calculations 260 260 261 267
Cash dividends declared per common share $ 0.34 $
0.30 $ 1.02 $ 0.90
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 from
continuing operations for the periods shown.
Three Months Ended Nine
Months Ended April 30, April 30,
April 30, April 30, (in millions)
2017 2016 2017 2016 Cost of revenue $ 2
$ 2 $ 6 $ 6 Selling and marketing 19 18 66 55 Research and
development 24 21 89 63 General and administrative 26 24
80 73 Total share-based compensation expense $ 71
$ 65 $ 241 $ 197 [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.
During the first quarter of fiscal 2017, we elected to early
adopt ASU 2016-09, "Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting." As
required by ASU 2016-09, starting in fiscal 2017 we reflect excess
tax benefits recognized on stock-based compensation expense in the
condensed consolidated statements of operations as a component of
the provision for income taxes on a prospective basis. Our
effective tax rates for the three and nine months ended April 30,
2017 were approximately 33% and 31%. Excluding discrete tax items
primarily related to share-based compensation tax benefits
resulting from the adoption of ASU 2016-09, our effective tax rate
for both periods were 34% and did not differ significantly from the
federal statutory rate of 35%. Our effective tax rates for
the three and nine months ended April 30, 2016 were approximately
34% and 33% and did not differ significantly from the federal
statutory rate of 35%.
[C]
In the third quarter of fiscal 2016 we
completed the sales of our Demandforce, QuickBase, and Quicken
businesses for $463 million in cash. We recorded a pre-tax gain of
$354 million and a net gain of $173 million on the disposal of
these three businesses in fiscal 2016.
We classified our Demandforce, QuickBase,
and Quicken businesses as discontinued operations and have
therefore segregated their operating results from continuing
operations in our statements of operations for all periods
presented. Net revenue from discontinued operations was $22 million
and $137 million for the three and nine months ended April 30,
2016. Net income from the operations of these discontinued
operations was not significant for the three or nine months ended
April 30, 2016. 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 2017 Q1 Q2
Q3 Q4
Year to Date GAAP operating income (loss) from continuing
operations $ (61 ) $ 22 $ 1,444 $ — $ 1,405 Amortization of
acquired technology 3 3 3 — 9 Amortization of other acquired
intangible assets 1 — 1 — 2 Share-based compensation expense 89
81 71 — 241
Non-GAAP
operating income (loss) from continuing operations $ 32
$ 106 $ 1,519 $ — $ 1,657
GAAP net income (loss) $ (30 ) $ 13 $ 964 $ — $ 947
Amortization of acquired technology 3 3 3 — 9 Amortization of other
acquired intangible assets 1 — 1 — 2 Share-based compensation
expense 89 81 71 — 241 Net (gain) loss on debt securities and other
investments 1 6 1 — 8 Income tax effects and adjustments [A] (49 )
(36 ) (25 ) — (110 )
Non-GAAP net income (loss) $ 15
$ 67 $ 1,015 $ — $ 1,097
GAAP diluted net income (loss) per share $ (0.12 ) $ 0.05 $
3.70 $ — $ 3.63 Amortization of acquired technology 0.01 0.01 0.01
— 0.04 Amortization of other acquired intangible assets 0.01 — 0.01
— 0.01 Share-based compensation expense 0.34 0.31 0.27 — 0.92 Net
(gain) loss on debt securities and other investments 0.01 0.03 0.01
— 0.03 Income tax effects and adjustments [A] (0.19 ) (0.14 ) (0.10
) — (0.42 )
Non-GAAP diluted net income (loss) per
share $ 0.06 $ 0.26 $ 3.90 $ — $
4.21
Shares used in GAAP diluted per share
calculation 258 260 260 — 261
Shares used in non-GAAP diluted per share
calculation 261 260 260 — 261
[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. Consequently, our non-GAAP
results have been adjusted to exclude the discrete GAAP tax
benefits that we recorded related to the adoption of ASU 2016-09.
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 2016 Q1 Q2
Q3 Q4
Full Year GAAP operating income (loss) from continuing
operations $ (29 ) $ 42 $ 1,285 $ (56 ) $ 1,242 Amortization of
acquired technology 6 6 5 5 22 Amortization of other acquired
intangible assets 2 1 3 6 12 (Gain) loss on sale of long-lived
assets — — 1 — 1 Share-based compensation expense 67 65
65 81 278
Non-GAAP operating income
(loss) from continuing operations $ 46 $ 114 $
1,359 $ 36 $ 1,555
GAAP net income
(loss) $ (31 ) $ 24 $ 1,026 $ (40 ) $ 979 Amortization of
acquired technology 6 6 5 5 22 Amortization of other acquired
intangible assets 2 1 3 6 12 (Gain) loss on sale of long-lived
assets — — 1 — 1 Share-based compensation expense 67 65 65 81 278
Net (gain) loss on debt securities and other investments 1 1 2 1 5
Income tax effects and adjustments [A] (21 ) (35 ) (31 ) (33 ) (120
) Net (income) loss from discontinued operations — 5
(178 ) — (173 )
Non-GAAP net income (loss) $ 24
$ 67 $ 893 $ 20 $ 1,004
GAAP diluted net income (loss) per share $ (0.11 ) $ 0.09 $
3.94 $ (0.16 ) $ 3.69 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 0.04 (Gain) loss on sale of long-lived assets — —
— — — Share-based compensation expense 0.25 0.25 0.25 0.32 1.05 Net
(gain) loss on debt securities and other investments — — 0.01 —
0.02 Income tax effects and adjustments [A] (0.08 ) (0.13 ) (0.12 )
(0.12 ) (0.45 ) Net (income) loss from discontinued operations —
0.02 (0.68 ) — (0.65 )
Non-GAAP diluted net
income (loss) per share $ 0.09 $ 0.25 $ 3.43
$ 0.08 $ 3.78
Shares used in GAAP
diluted per share calculation 272 266 260
257 265
Shares used in non-GAAP diluted per
share calculation 275 266 260 260
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 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 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 C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30, July 31, 2017 2016
ASSETS Current assets: Cash and cash equivalents $ 1,350 $ 638
Investments 243 442 Accounts receivable, net 245 108 Income taxes
receivable — 20 Prepaid expenses and other current assets 94
102 Current assets before funds held for customers 1,932 1,310
Funds held for customers 323 304 Total current assets 2,255
1,614 Long-term investments 28 28 Property and equipment,
net 1,041 1,031 Goodwill 1,294 1,282 Acquired intangible assets,
net 27 44 Long-term deferred income taxes 183 139 Other assets 141
112 Total assets $ 4,969 $ 4,250 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt $ 50
$ 512 Accounts payable 269 184 Accrued compensation and related
liabilities 240 289 Deferred revenue 955 801 Income taxes payable
435 4 Other current liabilities 222 157 Current liabilities
before customer fund deposits 2,171 1,947 Customer fund deposits
323 304 Total current liabilities 2,494 2,251
Long-term debt 450 488 Long-term deferred revenue 178 204 Other
long-term obligations 150 146 Total liabilities 3,272
3,089 Stockholders’ equity 1,697 1,161 Total
liabilities and stockholders’ equity $ 4,969 $ 4,250
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Nine Months Ended April 30,
April 30, 2017 2016 Cash flows from
operating activities: Net income $ 947 $ 1,019 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 156 145 Amortization of acquired intangible assets 18
30 Share-based compensation expense 241 200 Pre-tax gain on sale of
discontinued operations — (354 ) Deferred income taxes (36 ) 40 Tax
benefit from share-based compensation plans — 30 Other 9 11
Total adjustments 388 102 Changes in operating
assets and liabilities: Accounts receivable (138 ) (125 ) Income
taxes receivable 19 79 Prepaid expenses and other assets 5 (15 )
Accounts payable 104 77 Accrued compensation and related
liabilities (47 ) (69 ) Deferred revenue 130 213 Income taxes
payable 431 435 Other liabilities 50 25 Total changes
in operating assets and liabilities 554 620
Net
cash provided by operating activities 1,889
1,741 Cash flows from investing activities:
Purchases of corporate and customer fund investments (286 ) (589 )
Sales of corporate and customer fund investments 332 990 Maturities
of corporate and customer fund investments 150 160 Net change in
cash and cash equivalents held to satisfy customer fund obligations
(18 ) (35 ) Net change in customer fund deposits 18 35 Purchases of
property and equipment (178 ) (449 ) Proceeds from divestiture of
businesses — 463 Other (40 ) 3
Net cash provided by (used
in) investing activities (22 ) 578
Cash flows from financing activities: Proceeds from
borrowings under revolving credit facilities 150 995 Repayments on
borrowings under revolving credit facilities (150 ) (995 ) Proceeds
from long-term debt — 500 Repayment of debt (500 ) — Proceeds from
issuance of stock under employee stock plans 150 125 Payments for
employee taxes withheld upon vesting of restricted stock units (61
) (36 ) Cash paid for purchases of treasury stock (473 ) (2,190 )
Dividends and dividend rights paid (265 ) (238 ) Other
—
(5 )
Net cash used in financing activities
(1,149 ) (1,844 ) Effect of exchange
rates on cash and cash equivalents (6 ) 6
Net increase in
cash and cash equivalents 712 481 Cash and cash
equivalents at beginning of period 638 808
Cash
and cash equivalents at end of period $ 1,350
$ 1,289 During the first quarter of
fiscal 2017, we elected to early adopt ASU 2016-09,
"Compensation—Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting." As required by ASU
2016-09, starting in fiscal 2017 we reflect excess tax benefits
recognized on stock-based compensation expense in the condensed
consolidated statements of operations as a component of the
provision for income taxes on a prospective basis. Excess tax
benefits are classified as an operating activity in our condensed
consolidated statements of cash flows and we have applied this
provision on a retrospective basis.
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME (LOSS), AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Non-GAAP Range of
Estimate Range of Estimate From
To Adjmts From To
Three Months Ending July 31, 2017 Revenue $ 795 $ 815 $ — $
795 $ 815 Operating income (loss) $ (45 ) $ (25 ) $ 95 [a] $ 50 $
70 Diluted earnings (loss) per share $ (0.03 ) $ (0.01 ) $ 0.19 [b]
$ 0.16 $ 0.18
Twelve Months Ending July 31, 2017
Revenue $ 5,130 $ 5,150 $ — $ 5,130 $ 5,150 Operating income $
1,360 $ 1,380 $ 345 [c] $ 1,705 $ 1,725 Diluted earnings per share
$ 3.55 $ 3.57 $ 0.83 [d] $ 4.38 $ 4.40 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 $92 million and
amortization of acquired technology of approximately $3 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 $331 million; amortization of acquired technology
of approximately $12 million; and amortization of other acquired
intangible assets of approximately $2 million. [d] Reflects
the estimated adjustments in item [c], income taxes related to
these adjustments, and other income tax effects related to the use
of the long-term non-GAAP tax rate.
INTUIT INC.ABOUT NON-GAAP FINANCIAL
MEASURES
The accompanying press release dated May 23, 2017 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% for fiscal 2016 and 33% for fiscal 2017. These rates are
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/20170523006274/en/
Intuit Inc.InvestorsKim Watkins,
650-944-3324kim_watkins@intuit.comMediaDiane Carlini,
650-944-6251diane_carlini@intuit.com
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