TurboTax Online, QuickBooks Online Report
Strong Customer Growth; Company Raises Revenue Guidance
Intuit Inc. (Nasdaq:INTU) announced financial results for the
third quarter of fiscal 2015 and raised full-year revenue guidance.
The company’s third quarter ended April 30.
“We delivered a strong quarter, exceeding our company financial
revenue target amidst another strong tax season and accelerating
growth in our small business online ecosystem,” said Brad Smith,
Intuit’s president and chief executive officer. “We achieved our
goals in our tax business, increasing growth in the do-it-yourself
software category, acquiring and retaining more customers and
expanding our market share.
“Our small business online ecosystem continues to build
momentum, with QuickBooks Online subscriber growth accelerating for
the eighth consecutive quarter.
“With these strong results, we’ve increased our revenue outlook
for the full year. Our performance continues to inspire our entire
organization and sets us on a path to finish the year on a very
strong note,” said Smith.
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.
Intuit:
- Reported third-quarter revenue of $2.2
billion, above the company’s previously set guidance.
- Grew U.S. TurboTax Online units 13
percent in the tax season and total U.S. TurboTax units 9 percent,
excluding Free File Alliance.
- Grew total QuickBooks Online
subscribers by 55 percent.
- Added more than 120,000 QuickBooks
Online subscribers in the third quarter, ending with 965,000 paying
subscribers worldwide.
- Increased revenue guidance for fiscal
2015.
Business Segment Results
Small Business
- Total Small Business segment revenue
declined 5 percent for the quarter, in line with expectations and
reflecting the changes in desktop offerings that resulted in
ratable revenue recognition.
- QuickBooks total paying customers grew
20 percent.
- Small business online ecosystem revenue
increased 20 percent, with customer acquisition continuing to drive
growth.
- Total QuickBooks Online subscribers
grew 55 percent, accelerating for the eighth consecutive quarter.
- QuickBooks Online subscribers outside
the U.S. increased approximately 140 percent, to just over
150,000.
- Ended with 15,000 QuickBooks
Self-Employed subscribers, up from 5,000 last quarter.
- Online Payments charge volume grew 19
percent, driven primarily by an increase in charge volume per
customer.
- Online Payroll customers grew 20
percent.
Consumer and Professional
Tax
- Consumer Tax revenue grew 4 percent in
the third quarter and 9 percent year to date.
- ProTax revenue declined 61 percent, in
line with expectations. As previously disclosed, revenue will shift
to fiscal 2016 due to changes in current desktop offerings that
will affect the timing of revenue recognition.
- The company raised full-year guidance
for Consumer Tax revenue, and now expects growth of 9 percent for
the fiscal year, above the previous guidance range of 5 to 7
percent.
- Due to a bill payment strategy shift in
the Consumer Ecosystem Group, the company recorded a $263 million
goodwill impairment charge. This charge impacted third-quarter GAAP
operating income by $263 million and GAAP earnings per share by
$0.93.
Snapshot of Third-quarter
Results
GAAP
Non-GAAP Q3 Q3
Q3 Q3
FY ’15
FY ’14 Change FY
’15 FY ’14 Change
Revenue $2,194 $2,388
(8%) $2,194 $2,388
(8%)
Operating Income $906
$1,494 (39%) $1,221
$1,556 (22%)
EPS $1.78
$3.39 (47%) $2.85
$3.53 (19%)
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). Q3 FY15 results
reflect the impact of changes to future desktop software offerings;
revenue for those offerings is now recognized as services are
delivered, rather than up front. Q3 FY15 GAAP results also include
a $263 million impairment charge for goodwill in the company’s
Consumer Ecosystem Group.
Capital Allocation Summary
- Ended the third quarter with
approximately $2.1 billion in cash and investments.
- Repurchased $568 million of shares of
stock and received board approval for an additional $2 billion in
buyback authorization. The company now has $2.6 billion remaining
on its authorization and intends to be in the market each
quarter.
- Received board approval for a $0.25
dividend per share for the fiscal fourth quarter, payable on July
20. This represents a 32 percent increase versus last year and
reflects the company’s large and growing cash position, as well as
more recurring and predictable revenue streams.
Forward-looking Guidance
The company reiterated revenue guidance for the fourth quarter
and raised revenue guidance for fiscal 2015.
For the fourth quarter of fiscal 2015, Intuit
expects:
- Revenue of $720 million to $745
million.
- GAAP operating loss of $120 million to
$140 million.
- Non-GAAP operating loss of $25 million
to $45 million.
- GAAP loss per share of $0.34 to
$0.36.
- Non-GAAP loss per share of $0.10 to
$0.12.
For fiscal year 2015, Intuit expects:
- Revenue of $4.395 billion to $4.420
billion, versus previous guidance of $4.275 billion to $4.375
billion.
- GAAP operating income of $555 million
to $575 million, versus previous guidance of $800 million to $830
million.
- Non-GAAP operating income of $1.120
billion to $1.140 billion, versus previous guidance of $1.110
billion to $1.140 billion.
- GAAP diluted EPS of $0.88 to $0.90,
versus previous guidance of $1.70 to $1.75.
- Non-GAAP diluted EPS of $2.50 to $2.52,
versus previous guidance of $2.45 to $2.50.
- QuickBooks Online subscribers of 1
million to 1.025 million, versus previous guidance of 975,000 to 1
million.
Conference Call and Replay Information
Intuit executives will discuss the financial results on a
conference call today at 1:30 p.m. Pacific time. To hear the call,
dial 866-348-8108 in the United States or 908-982-4619 from
international locations. No reservation or access code is needed.
The conference call can also be heard live at
http://investors.intuit.com/events/default.aspx. Prepared remarks
for the call will be available on Intuit’s Investor Relations
website after the call ends.
Replay Information
A replay of the conference call will be available for one week
by calling 888-266-2081, or 703-925-2533 from international
locations. The access code for this call is 1656287.
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 processing, personal finance, and tax preparation and
filing. Mint.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 $4.5 billion in its
fiscal year 2014. The company has approximately 8,000 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 2015 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
2014 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 21, 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 Nine Months
Ended April 30, 2015 April 30,
2014 April 30, 2015 April 30,
2014 Net revenue: Product $ 447 $ 735 $ 878 $ 1,251 Service
and other 1,747 1,653 2,796 2,541 Total
net revenue 2,194 2,388 3,674 3,792
Costs and expenses: Cost of revenue:
Cost of product revenue
35 34 113 108 Cost of service and other revenue 173 130 457 363
Amortization of acquired technology 11 6 30 18 Selling and
marketing 448 412 1,105 1,022 Research and development 217 186 617
548 General and administrative 135 121 377 348 Amortization of
other acquired intangible assets 6 5 18 14 Goodwill impairment
charge 263 — 263 — Total costs and
expenses [A] 1,288 894 2,980 2,421
Operating income from continuing operations 906 1,494 694 1,371
Interest expense (7 ) (8 ) (21 ) (24 ) Interest and other income,
net 1 3 3 8 Income before income taxes
900 1,489 676 1,355 Income tax provision [B] 399 505
325 465 Net income from continuing operations 501 984
351 890 Net income from discontinued operations [C] — —
— 46 Net income $ 501 $ 984 $
351 $ 936 Basic net income per share from
continuing operations $ 1.81 $ 3.47 $ 1.24 $ 3.12 Basic net income
per share from discontinued operations — — —
0.16 Basic net income per share $ 1.81 $ 3.47
$ 1.24 $ 3.28 Shares used in basic per share
calculations 277 284 282 285
Diluted net income per share from continuing operations $ 1.78 $
3.39 $ 1.22 $ 3.06 Diluted net income per share from discontinued
operations — — — 0.16 Diluted net
income per share $ 1.78 $ 3.39 $ 1.22 $ 3.22
Shares used in diluted per share calculations 282 290
288 291 Cash dividends declared per
common share $ 0.25 $ 0.19 $ 0.75 $ 0.57
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 Nine Months Ended (in millions)
April 30,2015
April 30,2014
April 30,2015
April 30,2014
Cost of revenue $ 2 $ 2 $ 6 $ 6 Selling and marketing 19 13 55 44
Research and development 20 16 60 46 General and administrative 21
18 63 52 Total share-based compensation
expense $ 62 $ 49 $ 184 $ 148
[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 2014
the Tax Increase Prevention Act of 2014 was signed into law. The
Act includes a reinstatement of the federal research and
experimentation credit through December 31, 2014 that was
retroactive to January 1, 2014. We recorded a discrete tax benefit
of approximately $11 million for the retroactive effect during the
second quarter of fiscal 2015. Our effective tax rates for
the three and nine months ended April 30, 2015 were approximately
44% and 48%. Excluding discrete tax items primarily related to the
goodwill impairment charge, our effective tax rate for the three
months ended April 30, 2015 was approximately 36% and did not
differ significantly from the federal statutory rate of 35%.
Excluding discrete tax items primarily related to the goodwill
impairment charge and the reinstatement of the federal research and
experimentation credit, our effective tax rate for the nine months
ended April 30, 2015 was approximately 36% and did not differ
significantly from the federal statutory rate of 35%. Our
effective tax rate for the three and nine months ended April 30,
2014 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.
We have reclassified our statements of operations for all
periods presented to reflect these two businesses as discontinued
operations. Because the cash flows of our 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 B1
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES
(In millions, except per share
amounts)
(Unaudited)
Fiscal 2015
Nine MonthsEnded
Q1 Q2 Q3 Q4 April 30, 2015
GAAP operating income (loss) from continuing operations $
(114 ) $ (98 ) $ 906 $ 694 Amortization of acquired technology 10 9
11 30 Amortization of other acquired intangible assets 6 6 6 18
Professional fees for business combinations 1 2 3 6 Goodwill
impairment charge — — 263 263 Gain on sale of long-lived assets — —
(30 ) (30 ) Share-based compensation expense 61 61 62
184
Non-GAAP operating income (loss) from
continuing operations $ (36 ) $ (20 ) $ 1,221 $ —
$
1,165
GAAP net income (loss) $ (84 ) $ (66 ) $ 501 $
351 Amortization of acquired technology 10 9 11 30 Amortization of
other acquired intangible assets 6 6 6 18 Professional fees for
business combinations 1 2 3 6 Goodwill impairment charge — — 263
263 Gain on sale of long-lived assets — — (30 ) (30 ) Share-based
compensation expense 61 61 62 184 Net (gain) loss on debt
securities and other investments 1 — 3 4 Income tax effects and
adjustments (23 ) (28 ) (15 ) (66 )
Non-GAAP net income
(loss) $ (28 ) $ (16 ) $ 804 $ —
$
760
GAAP diluted net income (loss) per share $
(0.29 ) $ (0.23 ) $ 1.78 $ 1.22 Amortization of acquired technology
0.04 0.03 0.04 0.11 Amortization of other acquired intangible
assets 0.02 0.02 0.02 0.06 Professional fees for business
combinations — 0.01 0.01 0.02 Goodwill impairment charge — — 0.93
0.91 Gain on sale of long-lived assets — — (0.11 ) (0.10 )
Share-based compensation expense 0.21 0.21 0.22 0.64 Net (gain)
loss on debt securities and other investments — — 0.01 0.01 Income
tax effects and adjustments (0.08 ) (0.10 ) (0.05 ) (0.23 )
Non-GAAP diluted net income (loss) per share $ (0.10 ) $
(0.06 ) $ 2.85 $ — $ 2.64
Shares
used in diluted per share calculation 286 285 282
288 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 2014 Q1 Q2
Q3 Q4 Full Year GAAP
operating income (loss) from continuing operations $ (77 ) $
(46 ) $ 1,494 $ (57 ) $ 1,314 Amortization of acquired technology 6
6 6 8 26 Amortization of other acquired intangible assets 4 5 5 6
20 Professional fees for business combinations — — 2 5 7
Share-based compensation expense 47 52 49 56
204
Non-GAAP operating income (loss) from
continuing operations $ (20 ) $ 17 $ 1,556 $ 18
$ 1,571
GAAP net income (loss) $ (11 )
$ (37 ) $ 984 $ (29 ) $ 907 Amortization of acquired technology 6 6
6 8 26 Amortization of other acquired intangible assets 4 5 5 6 20
Professional fees for business combinations — — 2 5 7 Share-based
compensation expense 47 52 49 56 204 Net (gain) loss on debt
securities and other investments (2 ) 1 1 (21 ) (21 ) Income tax
effects and adjustments (14 ) (20 ) (23 ) (16 ) (73 ) Net income
from discontinued operations (46 ) — — — (46 )
Non-GAAP net income (loss) $ (16 ) $ 7 $ 1,024
$ 9 $ 1,024
GAAP diluted net income (loss)
per share $ (0.04 ) $ (0.13 ) $ 3.39 $ (0.10 ) $ 3.12
Amortization of acquired technology 0.02 0.02 0.02 0.03 0.09
Amortization of other acquired intangible assets 0.01 0.02 0.02
0.02 0.07 Professional fees for business combinations — — 0.01 0.02
0.02 Share-based compensation expense 0.16 0.18 0.17 0.19 0.70 Net
(gain) loss on debt securities and other investments — — — (0.07 )
(0.07 ) Income tax effects and adjustments (0.05 ) (0.07 ) (0.08 )
(0.06 ) (0.25 ) Net income from discontinued operations (0.16 ) —
— — (0.16 )
Non-GAAP diluted net income
(loss) per share $ (0.06 ) $ 0.02 $ 3.53 $ 0.03
$ 3.52
Shares used in diluted per share
calculation 288 284 290 290 291
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.
When reported on August 21, 2014, fourth
quarter results included an accrual for a loss contingency that was
resolved before we filed our fiscal 2014 Form 10-K. We have
adjusted our fiscal fourth quarter and full-year 2014 operating
income and earnings per share accordingly, resulting in a GAAP and
non-GAAP operating income increase of approximately $16 million,
and a GAAP and non-GAAP earnings per share increase of
approximately $0.03.
TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30,2015
July 31,2014
ASSETS Current assets: Cash and cash equivalents $ 1,193 $ 849
Investments 891 1,065 Accounts receivable, net 210 134 Income taxes
receivable 8 35 Deferred income taxes 135 133 Prepaid expenses and
other current assets 100 116 Current assets before funds
held for customers 2,537 2,332 Funds held for customers 330
289 Total current assets 2,867 2,621 Long-term investments
32 31 Property and equipment, net 671 606 Goodwill 1,432 1,635
Acquired intangible assets, net 183 199 Other assets 110 109
Total assets $ 5,295 $ 5,201 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 286 $
161 Accrued compensation and related liabilities 249 278 Deferred
revenue 796 526 Income taxes payable 230 6 Other current
liabilities 235 161 Current liabilities before customer fund
deposits 1,796 1,132 Customer fund deposits 330 289 Total
current liabilities 2,126 1,421 Long-term debt 499 499
Long-term deferred revenue 145 10 Other long-term obligations 204
193 Total liabilities 2,974 2,123
Stockholders’ equity 2,321 3,078 Total liabilities and
stockholders’ equity $ 5,295 $ 5,201
TABLE
D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Nine Months Ended
April 30,2015
April 30,2014
Cash flows from operating activities: Net income $ 351 $ 936
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 115 110 Amortization of acquired
intangible assets 55 37 Goodwill impairment charge 263 —
Share-based compensation expense 184 148 Pre-tax gain on sale of
discontinued operations — (40 ) Deferred income taxes (3 ) 62 Tax
benefit from share-based compensation plans 51 52 Excess tax
benefit from share-based compensation plans (51 ) (52 ) Other (3 )
16 Total adjustments 611 333 Changes in
operating assets and liabilities: Accounts receivable (76 ) (148 )
Income taxes receivable 27 60 Prepaid expenses and other assets 18
(18 ) Accounts payable 125 56 Accrued compensation and related
liabilities (29 ) (18 ) Deferred revenue 407 (9 ) Income taxes
payable 224 275 Other liabilities 64 63 Total changes
in operating assets and liabilities 760 261
Net
cash provided by operating activities 1,722
1,530 Cash flows from investing activities:
Purchases of available-for-sale debt securities (785 ) (917 ) Sales
of available-for-sale debt securities 534 218 Maturities of
available-for-sale debt securities 406 318 Net change in money
market funds and other cash equivalents
held to satisfy customer fund
obligations
(41 ) (38 ) Net change in customer fund deposits 41 38 Purchases of
property and equipment (183 ) (121 ) Acquisitions of businesses,
net of cash acquired (95 ) (90 ) Proceeds from divestiture of
businesses — 1,025 Other 28 (14 )
Net cash provided by
(used in) investing activities (95 ) 419
Cash flows from financing activities: Net proceeds
from issuance of stock under employee stock plans 129 161 Cash paid
for purchases of treasury stock (1,234 ) (1,425 ) Dividends and
dividend rights paid (212 ) (165 ) Excess tax benefit from
share-based compensation plans 51 52
Net cash used
in financing activities (1,266 ) (1,377
) Effect of exchange rates on cash and cash equivalents (17
) (7 )
Net increase in cash and cash equivalents 344
565 Cash and cash equivalents at beginning of period 849
1,009
Cash and cash equivalents at end of
period $ 1,193 $ 1,574
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME, AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From
To Three Months Ending July 31, 2015 Revenue $ 720 $
745 $ — $ 720 $ 745 Operating loss $ (140 ) $ (120 ) $ 95 [a] $ (45
) $ (25 ) Diluted loss per share $ (0.36 ) $ (0.34 ) $ 0.24 [b] $
(0.12 ) $ (0.10 )
Twelve Months Ending July 31, 2015
Revenue $ 4,395 $ 4,420 $ — $ 4,395 $ 4,420 Operating income $ 555
$ 575 $ 565 [c] $ 1,120 $ 1,140 Diluted earnings per share $ 0.88 $
0.90 $ 1.62 [d] $ 2.50 $ 2.52 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 $79 million;
amortization of acquired technology of approximately $10 million;
and amortization of other acquired intangible assets of
approximately $6 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 $262 million;
amortization of acquired technology of approximately $40 million;
amortization of other acquired intangible assets of approximately
$24 million; a goodwill impairment charge of approximately $263
million; a gain on sale of long-lived assets of approximately $30
million; and professional fees for business combinations of
approximately $6 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 21, 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 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 impairment charges. We exclude from our non-GAAP
financial measures non-cash charges to adjust the carrying value of
goodwill to its estimated fair value.
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. During fiscal 2014, we
excluded from our non-GAAP financial measures the income tax
effects of the non-GAAP pre-tax adjustments 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 were reflected on a
forecasted basis in our non-GAAP financial measures. This was
consistent with how we were evaluating our operating results and
planning, forecasting, and evaluating future periods during that
fiscal year.
During fiscal 2015, we began using 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/20150521006324/en/
InvestorsIntuit Inc.Matt Rhodes,
650-944-2536matthew_rhodes@intuit.comorMediaIntuit Inc.Diane
Carlini, 650-944-6251diane_carlini@intuit.com
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