News Column

Intuit Reports Third-quarter Results: Revenue Grows 14 Percent, Led by Cloud Solutions

May 20, 2014

TurboTax Online Units Increased 14 Percent;

QuickBooks Online Subscribers Accelerated To 36 Percent Growth

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq: INTU) today announced financial results for the third quarter of fiscal 2014, which ended April 30.

“Our momentum is building with our transition to the cloud, increasing value for customers and for Intuit,” said Brad Smith, Intuit’s president and chief executive officer. “Executing against our growth strategy we delivered strong results across the board. We grew share in our tax businesses, and our small business subscriber growth continues to accelerate globally.”

Financial Highlights

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. During the quarter, Intuit:

  • Delivered total company revenue of $2.4 billion, up 14 percent.
  • Increased GAAP diluted earnings per share 25 percent and non-GAAP diluted EPS 20 percent.
  • Grew GAAP operating income 17 percent and non-GAAP operating income 16 percent.
  • Ended the third quarter with cash and investments of $2.6 billion.
  • Increased TurboTax Online units 14 percent for the season.
  • Grew QuickBooks Online subscribers 36 percent to 624,000, adding more than 60,000 net customers versus the second quarter.
  • Increased global QuickBooks Online subscribers more than 130 percent to 64,000, accelerating from 90 percent growth last quarter.
  • Grew total QuickBooks subscribers 30 percent through continued momentum in the adoption of small business connected services.

    Business Segment Results

    Small Business

  • Total Small Business segment revenue grew 8 percent.
  • Small Business Financial Solutions revenue increased 4 percent.
  • Subscriber growth increased:
  • QuickBooks Online subscribers grew 36 percent.
  • QuickBooks Desktop subscribers grew 22 percent.
  • QuickBooks Enterprise subscribers grew 18 percent.
  • Small Business Management Solutions revenue grew 16 percent.
  • Employee Management Solutions revenue grew 13 percent, driven by strong growth in online customers across do-it-yourself and assisted offerings.
  • Demandforce subscribers grew 44 percent, which includes the recent acquisition of CustomerLink. Organically, subscribers grew 28 percent.
  • Intuit Online Payroll subscribers grew 23 percent.

    Consumer

  • TurboTax Online units grew 14 percent in the season and total TurboTax units climbed 10 percent.
  • Consumer segment revenue increased 13 percent in the third quarter and 7 percent year-to-date.

    Professional Tax

  • ProTax revenue grew 32 percent in the third quarter and 3 percent year-to-date, driven by strong customer acquisition in Intuit’s higher-value offerings.

    CFO Remarks

    Intuit Chief Financial Officer Neil Williams commented on Intuit’s business segment results for the quarter in prepared remarks for investors.

    “Thanks to a strong tax season, we exceeded our goals for customer growth and also improved our year-to-date Consumer Group margin. I’m pleased with our performance this year and we expect to continue to invest in the product experience and to prioritize growth in share and customers over the long term.”

    Snapshot of Third-quarter Results

    GAAP   Non-GAAP
        Q3

    FY14

      Q3

    FY13

      Change   Q3

    FY14

      Q3

    FY13

      Change
    Revenue   $2,388   $2,091   14%   $2,388   $2,091   14%

    Operating

    Income

      $1,494   $1,282   17%   $1,556   $1,337   16%
    EPS   $3.39   $2.71   25%   $3.53   $2.94   20%


    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). All figures in the table above have been reclassified to reflect Intuit Websites, Intuit Financial Services, and Intuit Health as discontinued operations and to exclude their results from non-GAAP EPS.

    Snapshot of Year-to-date Results

    GAAP   Non-GAAP
       

    YTD

    FY14

      YTD

    FY13

      Change  

    YTD

    FY14

     

    YTD

    FY13

      Change
    Revenue   $3,792   $3,537   7%   $3,792   $3,537   7%

    Operating

    Income

      $1,371   $1,293   6%   $1,553   $1,461   6%
    EPS   $3.22   $2.89   11%   $3.49   $3.20   9%


    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). All figures in the table above have been reclassified to reflect Intuit Websites, Intuit Financial Services, and Intuit Health as discontinued operations and to exclude their results from non-GAAP EPS.

    Capital Allocation Summary

  • Intuit repurchased $1.4 billion in shares during the first nine months of fiscal 2014; over $2 billion remains on the current share repurchase authorization.
  • The company also approved a quarterly cash dividend of $0.19 per share, payable on July 18 to shareholders of record on July 10.

    Forward-looking Guidance

    Intuit updated guidance for full fiscal year 2014 and the fourth quarter of fiscal 2014, both ending July 31.

    For full fiscal year 2014 Intuit expects:

  • Revenue of $4.475 billion to $4.505 billion, growth of 7 to 8 percent.
  • GAAP operating income of $1.325 billion to $1.345 billion, growth of 7 to 9 percent.
  • Non-GAAP operating income of $1.580 billion to $1.600 billion, growth of 7 to 9 percent.
  • GAAP diluted earnings per share of $3.08 to $3.12, growth of 9 to 10 percent.
  • Non-GAAP diluted EPS of $3.54 to $3.58, growth of 11 to 12 percent.

    For the fourth quarter of fiscal 2014, Intuit expects:

  • Revenue of $683 million to $713 million.
  • GAAP operating loss of $26 million to $46 million.
  • Non-GAAP operating income of $27 million to $47 million.
  • GAAP loss per share of $0.10 to $0.12.
  • Non-GAAP diluted EPS of $0.06 to $0.08.

    Conference Call Information

    Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on May 20. To hear the call, dial 866-875-5291 in the United States or 973-935-8702 from international locations. No reservation or access code is needed. The conference call can also be heard live at http://investors.intuit.com/events/default.aspx. Prepared remarks for the call will be available on Intuit’s website after the call ends.

    Replay Information

    A replay of the conference call will be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1636923.

    The audio webcast will remain available on Intuit’s website for one week after the conference call.

    About Intuit Inc.

    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®, Quicken® and TurboTax®, which make it easier to manage small businesses and payroll processingpersonal finance, and tax preparation and filingMint.com provides a fresh, easy and intelligent way for people to manage their money, while Demandforce® offers marketing and communication tools for small businesses. 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 2013. The company has approximately 8,000 employees with major offices in the United StatesCanada, the United KingdomIndia 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 B 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 Intuit’s future expected financial results; expectations regarding growth from connected services and from current or future products and services; expectations regarding Intuit’s global strategy, strategic outcomes, product launches and marketing campaigns and their impacts on Intuit’s business; Intuit’s prospects for the business in fiscal 2014; 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; 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 these and other risks that may impact our business are included in our Form 10-K for fiscal 2013 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 20, 2014, 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 EndedNine Months Ended
    April 30,

    2014
      April 30,

    2013
    April 30,

    2014
      April 30,

    2013
    Net revenue:
    Product $ 735 $ 638 $ 1,251 $ 1,267
    Service and other 1,653   1,453   2,541   2,270  
    Total net revenue 2,388   2,091   3,792   3,537  
    Costs and expenses:
    Cost of revenue:
    Cost of product revenue 34 30 108 102
    Cost of service and other revenue 130 110 363 334
    Amortization of acquired technology 6 5 18 14
    Selling and marketing 412 385 1,022 963
    Research and development 186 166 548 503
    General and administrative 121 106 348 307
    Amortization of other acquired intangible assets 5   7   14   21  
    Total costs and expenses [A] 894   809   2,421   2,244  
    Operating income from continuing operations 1,494 1,282 1,371 1,293
    Interest expense (8 ) (8 ) (24 ) (23 )
    Interest and other income, net 3   4   8   7  
    Income before income taxes 1,489 1,278 1,355 1,277
    Income tax provision [B] 505   420   465   408  
    Net income from continuing operations 984 858 890 869
    Net income (loss) from discontinued operations [C]   (36 ) 46   5  
    Net income $ 984   $ 822   $ 936   $ 874  
     
    Basic net income per share from continuing operations $ 3.47 $ 2.89 $ 3.12 $ 2.93
    Basic net income (loss) per share from discontinued operations   (0.12 ) 0.16   0.02  
    Basic net income per share $ 3.47   $ 2.77   $ 3.28   $ 2.95  
    Shares used in basic per share calculations 284   297   285   296  
     
    Diluted net income per share from continuing operations $ 3.39 $ 2.83 $ 3.06 $ 2.87
    Diluted net income (loss) per share from discontinued operations   (0.12 ) 0.16   0.02  
    Diluted net income per share $ 3.39   $ 2.71   $ 3.22   $ 2.89  
    Shares used in diluted per share calculations 290   304   291   303  
     
    Dividends declared per common share $ 0.19   $ 0.17   $ 0.57   $ 0.51  
     

    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
    (in millions)

    April 30,

    2014

     

    April 30,

    2013

    April 30,

    2014

     

    April 30,

    2013

    Cost of revenue $ 2 $ 1 $ 6 $ 4
    Selling and marketing 13 15 44 47
    Research and development 16 13 46 39
    General and administrative 18   14   52   43
    Total share-based compensation expense $ 49   $ 43   $ 148   $ 133

    [B] 

    We compute our provision for or benefit from income taxes by applying the estimated annual effective tax rate to income or loss from recurring operations and adding the effects of any discrete income tax items specific to the period.
    Our effective tax rates for the three and nine months ended April 30, 2014 were approximately 34% and those tax rates did not differ significantly from the federal statutory rate of 35%.
    Our effective tax rate for the three months ended April 30, 2013 was approximately 33% and did not differ significantly from the federal statutory rate of 35%. Our effective tax rate for the nine months ended April 30, 2013 was approximately 32%. Excluding discrete tax items that included the retroactive effect of the reinstatement of the research and experimentation credit as described above, our effective tax rate for that period was approximately 34% and did not differ significantly from the federal statutory rate of 35%.

    [C] 

    On August 1, 2013 we completed the sale of our Intuit Financial Services (IFS) business for approximately $1.025 billion in cash. We recorded a gain on the disposal of IFS of approximately $36 million, net of income taxes, in the first quarter of fiscal 2014.
    On August 19, 2013 we completed the sale of our Intuit Health business for cash consideration that was not significant and recorded a loss on disposal that was offset by a related income tax benefit of approximately $14 million, resulting in a net gain on disposal of approximately $10 million in the first quarter of fiscal 2014.
    On September 17, 2012 we sold our Intuit Websites business for approximately $60 million in cash and recorded a gain on disposal of approximately $32 million, net of income taxes.

    We have reclassified our statements of operations for all periods presented to reflect these three businesses as discontinued operations. We have also segregated the net assets of IFS from continuing operations on our balance sheet at July 31, 2013. The net assets of Intuit Websites and Intuit Health were not significant, so we have not segregated them from continuing operations on our balance sheet at July 31, 2013. Because the cash flows of our Intuit Websites, IFS, and Intuit Health discontinued operations were not material for any period presented, we have not segregated the cash flows of those businesses from continuing operations on our statements of cash flows.

     

    TABLE B

    INTUIT INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

    (In millions, except per share amounts)

    (Unaudited)

       
    Three Months EndedNine Months Ended

    April 30,

    2014

     

    April 30,

    2013

    April 30,

    2014

     

    April 30,

    2013

    GAAP operating income from continuing operations $ 1,494 $ 1,282 $ 1,371 $ 1,293
    Amortization of acquired technology 6 5 18 14
    Amortization of other acquired intangible assets 5 7 14 21
    Professional fees for business combinations 2 2
    Share-based compensation expense 49   43   148   133  
    Non-GAAP operating income from continuing operations $ 1,556   $ 1,337   $ 1,553   $ 1,461  
     
    GAAP net income $ 984 $ 822 $ 936 $ 874
    Amortization of acquired technology 6 5 18 14
    Amortization of other acquired intangible assets 5 7 14 21
    Professional fees for business combinations 2 2
    Share-based compensation expense 49 43 148 133
    Net gains on debt securities and other investments 1 1
    Income tax effect of non-GAAP adjustments (23 ) (20 ) (57 ) (69 )
    Net income from discontinued operations   36   (46 ) (5 )
    Non-GAAP net income $ 1,024   $ 893   $ 1,015   $ 969  
     
    GAAP diluted net income per share $ 3.39 $ 2.71 $ 3.22 $ 2.89
    Amortization of acquired technology 0.02 0.02 0.06 0.05
    Amortization of other acquired intangible assets 0.02 0.02 0.05 0.07
    Professional fees for business combinations 0.01 0.01
    Share-based compensation expense 0.17 0.14 0.51 0.44
    Net gains on debt securities and other investments
    Income tax effect of non-GAAP adjustments (0.08 ) (0.07 ) (0.20 ) (0.23 )
    Net income from discontinued operations   0.12   (0.16 ) (0.02 )
    Non-GAAP diluted net income per share $ 3.53   $ 2.94   $ 3.49   $ 3.20  
     
    Shares used in diluted per share calculation 290   304   291   303  
    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,

    2014

    July 31,

    2013

    ASSETS
    Current assets:
    Cash and cash equivalents $ 1,574 $ 1,009
    Investments 1,059 652
    Accounts receivable, net 277 130
    Income taxes receivable 2 62
    Deferred income taxes 137 166
    Prepaid expenses and other current assets 116 98
    Current assets of discontinued operations   44
    Current assets before funds held for customers 3,165 2,161
    Funds held for customers 273   235
    Total current assets 3,438 2,396
     
    Long-term investments 31 83
    Property and equipment, net 566 555
    Goodwill 1,313 1,246
    Acquired intangible assets, net 155 149
    Other assets 107 102
    Long-term assets of discontinued operations   955
    Total assets $ 5,610   $ 5,486
     
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
    Accounts payable $ 193 $ 137
    Accrued compensation and related liabilities 215 218
    Deferred revenue 499 495
    Income taxes payable 277 2
    Other current liabilities 226 154
    Current liabilities of discontinued operations   39
    Current liabilities before customer fund deposits 1,410 1,045
    Customer fund deposits 273   235
    Total current liabilities 1,683 1,280
     
    Long-term debt 499 499
    Other long-term obligations 190 167
    Long-term obligations of discontinued operations   9
    Total liabilities 2,372   1,955
     
    Stockholders’ equity 3,238   3,531
    Total liabilities and stockholders’ equity $ 5,610   $ 5,486
     

    TABLE D

    INTUIT INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In millions)

    (Unaudited)

     
    Nine Months Ended

    April 30,

    2014

     

    April 30,

    2013

    Cash flows from operating activities:
    Net income $ 936 $ 874

    Adjustments to reconcile net income to net cash provided by operating activities:

    Depreciation 110 124
    Amortization of acquired intangible assets 37 45
    Goodwill and intangible asset impairment charge 46
    Share-based compensation expense 148 142
    Pre-tax gain on sale of discontinued operations (40 ) (53 )
    Deferred income taxes 62 52
    Tax benefit from share-based compensation plans 52 65
    Excess tax benefit from share-based compensation plans (52 ) (65 )
    Other 16   12  
    Total adjustments 333   368  
    Changes in operating assets and liabilities:
    Accounts receivable (148 ) (129 )
    Income taxes receivable 60 52
    Prepaid expenses and other assets (18 ) (3 )
    Accounts payable 56 76
    Accrued compensation and related liabilities (18 ) (20 )
    Deferred revenue (9 ) (11 )
    Income taxes payable 275 274
    Other liabilities 63   79  
    Total changes in operating assets and liabilities 261   318  
    Net cash provided by operating activities1,530   1,560  
    Cash flows from investing activities:
    Purchases of available-for-sale debt securities (917 ) (675 )
    Sales of available-for-sale debt securities 218 279
    Maturities of available-for-sale debt securities 318 165
    Net change in money market funds and other cash equivalents

    held to satisfy customer fund obligations

    (38 ) 106
    Net change in customer fund deposits 38 (106 )
    Purchases of property and equipment (121 ) (147 )
    Acquisitions of businesses, net of cash acquired (90 ) (9 )
    Acquisitions of intangible assets, net of cash acquired (10 ) (2 )
    Proceeds from divestiture of businesses 1,025 60
    Other (4 ) (18 )
    Net cash provided by (used in) investing activities419   (347

    )

    Cash flows from financing activities:
    Net proceeds from issuance of stock under employee stock plans 161 185
    Purchases of treasury stock (1,425 ) (292 )
    Cash dividends paid to stockholders (165 ) (152 )
    Excess tax benefit from share-based compensation plans 52   65  
    Net cash used in financing activities(1,377)(194)
    Effect of exchange rates on cash and cash equivalents (7 )  
    Net increase in cash and cash equivalents5651,019
    Cash and cash equivalents at beginning of period 1,009   393  
    Cash and cash equivalents at end of period$1,574   $1,412  
     

    TABLE E

    INTUIT INC.

    RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES

    TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS

    (In millions, except per share amounts)

    (Unaudited)

     
    Forward-Looking Guidance
    GAAP

    Range of Estimate

          Non-GAAP

    Range of Estimate

    From   ToAdjmtsFrom   To
    Three Months Ending July 31, 2014
    Revenue $ 683 $ 713 $ $ 683 $ 713
    Operating income (loss) $ (46 ) $ (26 ) $ 73 [a] $ 27 $ 47
    Diluted earnings per share $ (0.12 ) $ (0.10 ) $ 0.18 [b] $ 0.06 $ 0.08
     
    Twelve Months Ending July 31, 2014
    Revenue $ 4,475 $ 4,505 $ $ 4,475 $ 4,505
    Operating income $ 1,325 $ 1,345 $ 255 [c] $ 1,580 $ 1,600
    Diluted earnings per share $ 3.08 $ 3.12 $ 0.46 [d] $ 3.54 $ 3.58
     
    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 $61 million, amortization of acquired technology of approximately $7 million, amortization of other acquired intangible assets of approximately $5 million.

    [b]

    Reflects the estimated adjustments in item [a] and income taxes related to these adjustments.

    [c]

    Reflects estimated adjustments for share-based compensation expense of approximately $211 million; amortization of acquired technology of approximately $25 million; and amortization of other acquired intangible assets of approximately $19 million.

    [d]

    Reflects the estimated adjustments in item [c], income taxes related to these adjustments, and the net gain on discontinued operations of $46 million.

    INTUIT INC.

    ABOUT NON-GAAP FINANCIAL MEASURES

    The accompanying press release dated May 20, 2014 contains non-GAAP financial measures. Table B 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 of excluded items
  • 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 values 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 of excluded items and certain discrete tax items. We exclude from our non-GAAP financial measures the income tax effects of the items described above, as well as income tax effects related to business combinations. In addition, the effects of one-time income tax adjustments recorded in a specific quarter for GAAP purposes are reflected on a forecasted basis in our non-GAAP financial measures. This is consistent with how we plan, forecast and evaluate our operating results.

    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.




    Investors

    Intuit Inc.

    Matt Rhodes, 650-944-2536

    matthew_rhodes@intuit.com

    or

    Media

    Intuit Inc.

    Diane Carlini, 650-944-6251

    diane_carlini@intuit.com


    Source: Intuit Inc.


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    Source: Business Wire