Our QuickBooks, Consumer Tax and Accounting Professionals offerings are highly
seasonal. Revenue from our QuickBooks software products tends to be highest
during our second and third fiscal quarters. Sales of income tax preparation
products and services are heavily concentrated in the period from November
through April. In our Consumer Tax business, a greater proportion of our revenue
has been occurring later in this seasonal period due in part to the growth in
sales of TurboTax Online, for which revenue is recognized upon printing or
electronic filing of a tax return. The seasonality of our Consumer Tax and
Accounting Professionals revenue is also affected by the timing of the
availability of tax forms from taxing agencies and the ability of those agencies
to receive electronic tax return submissions. Delays in the availability of tax
forms or the ability of taxing agencies to receive submissions can cause revenue
to shift between our fiscal quarters. These seasonal patterns mean that our
total net revenue is usually highest during our second quarter ending January 31
and third quarter ending April 30. We typically report losses in our first
quarter ending October 31 and fourth quarter ending July 31. During these
quarters, revenue from our tax businesses is minimal while core operating
expenses such as research and development continue at relatively consistent
levels. We believe the seasonality of our revenue and profitability is likely to
continue in the future.
Key Challenges and Risks
Our growth strategy depends upon our ability to initiate and embrace disruptive
technology trends, to enter new markets, and to drive broad adoption of the
products and services we develop and market. Our future growth also increasingly
depends on the strength of our third-party business relationships and our
ability to continue to develop, maintain and strengthen new and existing
relationships. To remain competitive and continue to grow, we are investing
significant resources in our product development, marketing, and sales
capabilities, and we expect to continue to do so in the future.
As we continue transitioning to offer more connected services, the ongoing
operation and availability of our information technology and communication
systems and those of our external service providers is becoming increasingly
important. Because we help customers manage their financial lives, we face risks
associated with the hosting, collection, use and retention of personal customer
information and data. We are investing significant management attention and
resources in our information technology infrastructure and in our privacy and
security capabilities, and we expect to continue to do so in the future.
For a complete discussion of the most significant risks and uncertainties
affecting our business, please see "Forward-Looking Statements and Risk Factors"
in Item 1A of this Report.
Overview of Financial Results
Total net revenue for fiscal 2013 was $4.2 billion, an increase of 10% compared
with fiscal 2012. Our Small Business Group and our Consumer Tax segment were the
key drivers of revenue growth. Revenue in our Small Business Group increased 16%
compared with fiscal 2012 due to growth in connected services offerings and our
May 2012 acquisition of Demandforce. Revenue in our Consumer Tax segment
increased 4% compared with fiscal 2012 due to 4% growth in paid federal units.