Growth Driven by Significant Innovation
Across Offerings; TurboTax Online Units Grew 15 Percent
Intuit Inc. (Nasdaq: INTU)
announced financial results for the third quarter of fiscal year
2016, which ended April 30.
“This was simply a great season for TurboTax,” said Brad Smith,
Intuit’s chairman and chief executive officer. “We delivered an
awesome product experience and we remain committed to continuing to
invest and build on our competitive advantage to drive share gains
for our product and the category.
“This was a strong quarter for small business as well, led by
robust new-user growth in our QuickBooks Online ecosystem. As a
result of the strong year we’ve delivered through three quarters,
we’ve raised our revenue, operating income and earnings per share
guidance for the year,” Smith said.
Financial Highlights
In the third quarter Intuit:
- Reported revenue of $2.304 billion, up
8 percent.
- Grew TurboTax Online units 15 percent
for the tax season. Total TurboTax units grew 12 percent.
- Added 140,000 QuickBooks Online
subscribers in the quarter, bringing the total to 1,397,000 paid
subscribers worldwide at the end of April.
- Raised revenue, operating income and
earnings per share guidance for the fiscal year.
Unless otherwise noted, all growth rates refer to the current
period versus the comparable prior-year period, and the business
metrics and associated growth rates refer to worldwide business
metrics.
Business Segment Results
The segment results below exclude results for QuickBase, Quicken
and Demandforce, which were recently sold, and reported as
discontinued operations.
Small Business
- Total Small Business segment revenue
increased 12 percent.
- Small business online ecosystem revenue
grew approximately 24 percent, driven by online customer
acquisition.
- New QuickBooks desktop and online
customers combined grew 16 percent year to date.
- Roughly 75,000 QuickBooks Online
subscribers are using QuickBooks Self-Employed, up from 50,000 last
quarter.
- Outside the United States, QuickBooks
Online grew 60 percent, to 255,000 paying subscribers.
- Online payroll customers grew by 17
percent.
- Online payments customers increased by
6 percent, and online payments charge volume increased by 18
percent.
Consumer and Professional
Tax
- Consumer Tax revenue was up 7 percent
in the third quarter.
- The company increased full-year
Consumer Tax revenue growth guidance to 9 percent, up from the
previous guidance range of 5 to 7 percent.
- For the third consecutive year,
TurboTax gained share within the DIY software category, bringing
Intuit’s total software category share to roughly 65 percent.
- ProConnect Group professional tax
revenue was $126 million for the quarter, roughly the same as in
the third quarter of fiscal 2015.
Snapshot of Third-quarter Results
GAAP Non-GAAP
Q3FY 16
Q3FY 15
Change
Q3FY 16
Q3FY 15
Change Revenue $ 2,304 $ 2,135
8 % $ 2,304 $ 2,135 8 %
Operating
Income $ 1,285 $ 1,066 21 % $ 1,359
$ 1,221 11 %
EPS $ 3.94 $ 1.78
121 % $ 3.43 $ 2.85 20 %
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 results reflect the
impact of changes to certain desktop software offerings; revenue
for those offerings is recognized as services are delivered, rather
than up front. GAAP earnings per share reflects an after-tax gain
of $176 million on the divestiture of Quicken, QuickBase and
Demandforce.
Capital Allocation Summary
In the third quarter the company:
- Repurchased $465 million of shares,
with $435 million remaining on its authorization as of April
30.
- Received board approval for a $0.30 per
share dividend for the fiscal fourth quarter, payable on July 18.
This represents a 20 percent increase versus last year.
Forward-looking Guidance
“I’m pleased with our performance and with the pace of
innovation across our businesses,” said Neil Williams, Intuit chief
financial officer. “We’re executing well, and we’re on track to
meet our targets for 2017.”
Intuit announced guidance for the fourth quarter of fiscal year
2016, which ends July 31. The company expects:
- Revenue of $720 million to $740
million.
- GAAP operating loss of $80 million to
$100 million.
- Non-GAAP operating loss of $15 million
to operating income of $5 million.
- GAAP loss per share of $0.26 to
$0.28.
- Non-GAAP earnings per share roughly
breakeven.
Intuit increased its revenue, operating income and earnings per
share guidance for full-year fiscal 2016:
- Revenue of $4.660 billion to $4.680
billion, growth of 11 to 12 percent.
- GAAP operating income of $1.185 billion
to $1.205 billion, versus $738 million in fiscal 2015.
- Non-GAAP operating income of $1.490
billion to $1.510 billion, growth of 31 to 32 percent.
- GAAP diluted EPS of $3.53 to $3.55,
versus $1.28 in fiscal 2015, which included goodwill and intangible
asset impairment charges. Full-year fiscal 2016 GAAP earnings per
share reflects an after-tax gain of $173 million on the divestiture
of Quicken, QuickBase and Demandforce.
- Non-GAAP diluted EPS of $3.63 to $3.65,
growth of 40 to 41 percent.
Intuit also reiterated its full-year fiscal 2016 guidance range
for QuickBooks Online subscribers of 1.475 million to 1.500
million.
Conference Call Details
Intuit executives will discuss the financial results on a
conference call 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 1671910.
The audio webcast will remain available on Intuit’s website for
one week after the conference call.
About Intuit
Intuit Inc. creates business and financial management solutions
that simplify the business of life for small businesses, consumers
and accounting professionals.
Its flagship products and services include QuickBooks® and
TurboTax®, which make it easier to manage small businesses
and tax preparation and filing. Mint.com provides a fresh,
easy and intelligent way for people to manage their money, while
Intuit's ProConnect brand portfolio includes ProSeries® and
Lacerte®, the company's leading tax preparation offerings for
professional accountants.
Founded in 1983, Intuit had revenue of $4.2 billion in its
fiscal year 2015. The company has approximately 7,700 employees
with major offices in the United States, Canada, the United
Kingdom, India and other locations. More information can be found
at www.intuit.com.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles, please see the section of
the accompanying tables titled "About Non-GAAP Financial Measures"
as well as the related Table B1, Table B2, and Table E. A copy of
the press release issued by Intuit today can be found on the
investor relations page of Intuit's Web site.
Cautions About Forward-looking Statements
This press release contains forward-looking statements,
including forecasts of expected growth and future financial results
of Intuit and its reporting segments; Intuit’s prospects for the
business in fiscal 2016 and beyond; expectations regarding Intuit’s
growth outside the US; expectations regarding timing and growth of
revenue for each of Intuit’s reporting segments and from current or
future products and services; expectations regarding customer
growth; expectations regarding changes to our products and their
impact on Intuit’s business; expectations regarding the amount and
timing of any future dividends or share repurchases; expectations
regarding availability of our offerings; expectations regarding the
impact of our strategic decisions on Intuit’s business; and all of
the statements under the heading “Forward-looking Guidance”.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results to differ materially from the expectations expressed
in the forward-looking statements. These factors include, without
limitation, the following: inherent difficulty in predicting
consumer behavior; difficulties in receiving, processing, or filing
customer tax submissions; consumers may not respond as we expected
to our advertising and promotional activities; product
introductions and price competition from our competitors can have
unpredictable negative effects on our revenue, profitability and
market position; governmental encroachment in our tax businesses or
other governmental activities or public policy affecting the
preparation and filing of tax returns could negatively affect our
operating results and market position; we may not be able to
successfully innovate and introduce new offerings and business
models to meet our growth and profitability objectives, and current
and future offerings may not adequately address customer needs and
may not achieve broad market acceptance, which could harm our
operating results and financial condition; business interruption or
failure of our information technology and communication systems may
impair the availability of our products and services, which may
damage our reputation and harm our future financial results; as we
upgrade and consolidate our customer facing applications and
supporting information technology infrastructure, any problems with
these implementations could interfere with our ability to deliver
our offerings; any failure to properly use and protect personal
customer information and data could harm our revenue, earnings and
reputation; if we are unable to develop, manage and maintain
critical third party business relationships, our business may be
adversely affected; increased government regulation of our
businesses may harm our operating results; if we fail to process
transactions effectively or fail to adequately protect against
potential fraudulent activities, our revenue and earnings may be
harmed; related publicity regarding such fraudulent activity could
cause customers to lose confidence in using our software and
adversely impact our results; any significant offering quality
problems or delays in our offerings could harm our revenue,
earnings and reputation; our participation in the Free File
Alliance may result in lost revenue opportunities and
cannibalization of our traditional paid franchise; the continuing
global economic downturn may continue to impact consumer and small
business spending, financial institutions and tax filings, which
could negatively affect our revenue and profitability;
year-over-year changes in the total number of tax filings that are
submitted to government agencies due to economic conditions or
otherwise may result in lost revenue opportunities; our revenue and
earnings are highly seasonal and the timing of our revenue between
quarters is difficult to predict, which may cause significant
quarterly fluctuations in our financial results; our financial
position may not make repurchasing shares advisable or we may issue
additional shares in an acquisition causing our number of
outstanding shares to grow; our inability to adequately protect our
intellectual property rights may weaken our competitive position
and reduce our revenue and earnings; our acquisition and
divestiture activities may disrupt our ongoing business, may
involve increased expenses and may present risks not contemplated
at the time of the transactions; our use of significant amounts of
debt to finance acquisitions or other activities could harm our
financial condition and results of operation; and litigation
involving intellectual property, antitrust, shareholder and other
matters may increase our costs. More details about the risks that
may impact our business are included in our Form 10-K for fiscal
2015 and in our other SEC filings. You can locate these reports
through our website at http://investors.intuit.com. Forward-looking
statements are based on information as of May 24, 2016 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, 2016 April 30, 2015
April 30, 2016 April 30, 2015
Net revenue: Product $ 459 $ 442 $ 994 $ 865 Service and other
1,845 1,693 2,946 2,631 Total net
revenue 2,304 2,135 3,940 3,496 Costs
and expenses: Cost of revenue: Cost of product revenue 30 33 99 108
Cost of service and other revenue 181 161 465 419 Amortization of
acquired technology 5 8 17 22 Selling and marketing 423 413 1,023
1,008 Research and development 228 206 646 583 General and
administrative 149 131 386 365 Amortization of other acquired
intangible assets 3 3 6 9 Goodwill impairment charge — 114
— 114 Total costs and expenses [A] 1,019
1,069 2,642 2,628 Operating income from
continuing operations 1,285 1,066 1,298 868 Interest expense (10 )
(7 ) (26 ) (21 ) Interest and other income (expense), net 2
1 (7 ) 3 Income before income taxes 1,277 1,060 1,265
850 Income tax provision [B] 429 404 419 335
Net income from continuing operations 848 656 846 515 Net
income (loss) from discontinued operations [C] 178 (155 )
173 (164 ) Net income $ 1,026 $ 501 $ 1,019
$ 351 Basic net income per share from
continuing operations $ 3.30 $ 2.37 $ 3.21 $ 1.82 Basic net income
(loss) per share from discontinued operations 0.70 (0.56 )
0.65 (0.58 ) Basic net income per share $ 4.00 $ 1.81
$ 3.86 $ 1.24 Shares used in basic per share
calculations 257 277 264 282
Diluted net income per share from continuing operations $ 3.26 $
2.33 $ 3.17 $ 1.79 Diluted net income (loss) per share from
discontinued operations 0.68 (0.55 ) 0.64 (0.57 )
Diluted net income per share $ 3.94 $ 1.78 $ 3.81
$ 1.22 Shares used in diluted per share calculations
260 282 267 288 Cash dividends
declared per common share $ 0.30 $ 0.25 $ 0.90
$ 0.75
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 30,2016
April 30,2015
April 30,2016
April 30,2015
Cost of revenue $ 2 $ 2 $ 6 $ 4 Selling and marketing 18 17 55 50
Research and development 21 19 63 56 General and administrative 24
21 73 62 Total share-based compensation
expense $ 65 $ 59 $ 197 $ 172 [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.
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%.
Our effective tax rates for the three and
nine months ended April 30, 2015 were approximately 38% and 39%.
Excluding discrete tax items primarily related to the goodwill
impairment and the reinstatement of the federal research and
experimentation credit, as well as including the effects of losses
in certain jurisdictions where we do not recognize a tax benefit,
our effective tax rate for those periods was approximately 36% 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 $354 million pre-tax gain on
the disposal of these businesses that was partially offset by a
related income tax provision of $178 million, resulting in a net
gain on disposal of $176 million in the third quarter of 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 these businesses totaled $22 million and $137 million for the
three and nine months ended April 30, 2016. Net revenue from these
businesses totaled $59 million and $179 million for the three and
nine months ended April 30, 2015. Net income from the operations of
these discontinued operations for the three and nine months ended
April 30, 2016 was not significant. Including a $149 million
goodwill impairment charge, we recorded net losses of $155 million
and $164 million from the operations of these discontinued
operations for the three and nine months ended April 30, 2015. We
have also segregated the net assets of these businesses from
continuing operations on our balance sheet at July 31, 2015.
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 2016
Nine MonthsEnded
Q1 Q2 Q3 Q4 April 30, 2016
GAAP operating income (loss) from continuing operations $
(29 ) $ 42 $ 1,285 $ — $ 1,298 Amortization of acquired technology
6 6 5 — 17 Amortization of other acquired intangible assets 2 1 3 —
6 Gain on sale of long-lived assets — — 1 — 1 Share-based
compensation expense 67 65 65 — 197
Non-GAAP operating income (loss) from continuing
operations $ 46 $ 114 $ 1,359 $ — $
1,519
GAAP net income (loss) $ (31 ) $ 24 $
1,026 $ — $ 1,019 Amortization of acquired technology 6 6 5 — 17
Amortization of other acquired intangible assets 2 1 3 — 6 Gain on
sale of long-lived assets — — 1 — 1 Share-based compensation
expense 67 65 65 — 197 Net (gain) loss on debt securities and other
investments 1 1 2 — 4 Income tax effects and adjustments [A] (21 )
(35 ) (31 ) — (87 ) Net (income) loss from discontinued operations
— 5 (178 ) — (173 )
Non-GAAP net income
(loss) $ 24 $ 67 $ 893 $ — $ 984
GAAP diluted net income (loss) per share $
(0.11 ) $ 0.09 $ 3.94 $ — $ 3.81 Amortization of acquired
technology 0.02 0.02 0.02 — 0.06 Amortization of other acquired
intangible assets 0.01 — 0.01 — 0.02 Gain on sale of long-lived
assets — — — — — Share-based compensation expense 0.25 0.25 0.25 —
0.74 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 ) — (0.33 ) Net (income) loss from discontinued operations —
0.02 (0.68 ) — (0.64 )
Non-GAAP diluted net
income (loss) per share $ 0.09 $ 0.25 $ 3.43
$ — $ 3.68
Shares used in GAAP
diluted per share calculation 272 266 260
— 267
Shares used in non-GAAP diluted per
share calculation 275 266 260 — 267
[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 and first nine months
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 B2
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES
(In millions, except per share
amounts)
(Unaudited)
Fiscal 2015 Q1 Q2
Q3 Q4 Full Year GAAP
operating income (loss) from continuing operations $ (109 ) $
(89 ) $ 1,066 $ (130 ) $ 738 Amortization of acquired technology 7
7 8 8 30 Amortization of other acquired intangible assets 3 3 3 3
12 Professional fees for business combinations — 1 1 — 2 Goodwill
and intangible asset impairment charges — — 114 34 148 Gain on sale
of long-lived assets — — (30 ) (1 ) (31 ) Share-based compensation
expense 57 56 59 70 242
Non-GAAP operating income (loss) from continuing operations
$ (42 ) $ (22 ) $ 1,221 $ (16 ) $ 1,141
GAAP net income (loss) $ (84 ) $ (66 ) $ 501 $ 14 $ 365
Amortization of acquired technology 7 7 8 8 30 Amortization of
other acquired intangible assets 3 3 3 3 12 Professional fees for
business combinations — 1 1 — 2 Goodwill and intangible asset
impairment charges — — 114 34 148 Gain on sale of long-lived assets
— — (30 ) (1 ) (31 ) Share-based compensation expense 57 56 59 70
242 Net (gain) loss on debt securities and other investments 1 — 3
2 6 Income tax effects and adjustments (19 ) (25 ) (10 ) (29 ) (83
) Net (income) loss from discontinued operations 3 6
155 (116 ) 48
Non-GAAP net income (loss) $ (32
) $ (18 ) $ 804 $ (15 ) $ 739
GAAP diluted
net income (loss) per share $ (0.29 ) $ (0.23 ) $ 1.78 $ 0.05 $
1.28 Amortization of acquired technology 0.02 0.02 0.03 0.03 0.10
Amortization of other acquired intangible assets 0.01 0.01 0.01
0.01 0.04 Professional fees for business combinations — — — — 0.01
Goodwill and intangible asset impairment charges — — 0.40 0.12 0.52
Gain on sale of long-lived assets — — (0.11 ) — (0.11 ) Share-based
compensation expense 0.20 0.20 0.21 0.25 0.85 Net (gain) loss on
debt securities and other investments — — 0.01 0.01 0.02 Income tax
effects and adjustments (0.06 ) (0.08 ) (0.03 ) (0.10 ) (0.29 ) Net
(income) loss from discontinued operations 0.01 0.02
0.55 (0.42 ) 0.17
Non-GAAP diluted net income
(loss) per share $ (0.11 ) $ (0.06 ) $ 2.85 $ (0.05 ) $
2.59
Shares used in GAAP diluted per share
calculation 286 285 282 277 286
Shares used in non-GAAP diluted per share
calculation 286 285 282 277 286
See “About Non-GAAP Financial Measures” immediately following
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure
and excludes the specified amounts in arriving at each non-GAAP
financial measure.
TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30,2016
July 31,2015
ASSETS Current assets: Cash and cash equivalents $ 1,289 $ 808
Investments 324 889 Accounts receivable, net 214 91 Income taxes
receivable 4 84 Deferred income taxes — 231 Prepaid expenses and
other current assets 108 94 Current assets of discontinued
operations — 26 Current assets before funds held for
customers 1,939 2,223 Funds held for customers 372 337 Total
current assets 2,311 2,560 Long-term investments 28 27
Property and equipment, net 989 682 Goodwill 1,282 1,266 Acquired
intangible assets, net 57 87 Long-term deferred income taxes 165 5
Other assets 108 106 Long-term assets of discontinued operations —
235 Total assets $ 4,940 $ 4,968 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt $ 500
$ — Accounts payable 270 190 Accrued compensation and related
liabilities 228 283 Deferred revenue 854 691 Income taxes payable
442 7 Other current liabilities 199 143 Current liabilities of
discontinued operations — 93 Current liabilities before
customer fund deposits 2,493 1,407 Customer fund deposits 372
337 Total current liabilities 2,865 1,744 Long-term
debt 500 500 Long-term deferred revenue 174 152 Other long-term
obligations 153 172 Long-term obligations of discontinued
operations — 68 Total liabilities 3,692 2,636
Stockholders’ equity 1,248 2,332 Total liabilities and
stockholders’ equity $ 4,940 $ 4,968 NOTE: In
the second quarter of fiscal 2016, we elected to early adopt ASU
2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of
Deferred Taxes” on a prospective basis. This new standard requires
all deferred tax assets and liabilities, and any related valuation
allowance, to be classified as noncurrent on the balance sheet.
Prior periods were not adjusted.
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Nine Months Ended
April 30,2016
April 30,2015
Cash flows from operating activities: Net income $ 1,019 $
351 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 145 115 Amortization of acquired
intangible assets 30 55 Goodwill impairment charge — 263
Share-based compensation expense 200 184 Pre-tax gain on sale of
discontinued operations (354 ) — Deferred income taxes 40 (3 ) Tax
benefit from share-based compensation plans 30 51 Excess tax
benefit from share-based compensation plans (30 ) (51 ) Other 11
(3 ) Total adjustments 72 611 Changes in
operating assets and liabilities: Accounts receivable (125 ) (76 )
Income taxes receivable 79 27 Prepaid expenses and other assets (15
) 18 Accounts payable 77 125 Accrued compensation and related
liabilities (69 ) (29 ) Deferred revenue 213 407 Income taxes
payable 435 224 Other liabilities 25 64 Total changes
in operating assets and liabilities 620 760
Net
cash provided by operating activities 1,711
1,722 Cash flows from investing activities:
Purchases of available-for-sale debt securities (589 ) (785 ) Sales
of available-for-sale debt securities 990 534 Maturities of
available-for-sale debt securities 160 406
Net change in money market funds and other
cash equivalents held to satisfy customer fund obligations
(35 ) (41 ) Net change in customer fund deposits 35 41 Purchases of
property and equipment (449 ) (183 ) Acquisitions of businesses,
net of cash acquired — (95 ) Proceeds from divestiture of
businesses 463 — Other 3 28
Net cash provided by
(used in) investing activities 578 (95
) Cash flows from financing activities: Proceeds from
borrowings under revolving credit facilities 995 — Repayments on
borrowings under revolving credit facilities (995 ) — Proceeds from
long-term debt 500 — Net proceeds from issuance of stock under
employee stock plans 89 129 Cash paid for purchases of treasury
stock (2,190 ) (1,234 ) Dividends and dividend rights paid (238 )
(212 ) Excess tax benefit from share-based compensation plans 30 51
Other
(5 ) — Net cash used in
financing activities (1,814 ) (1,266
) Effect of exchange rates on cash and cash equivalents 6
(17 )
Net increase in cash and cash equivalents
481 344 Cash and cash equivalents at beginning of
period 808 849
Cash and cash equivalents at end of
period $ 1,289 $ 1,193
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME (LOSS), AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance
GAAPRange of Estimate
Non-GAAPRange of
Estimate
From To Adjmts From
To Three Months Ending July 31, 2016 Revenue $ 720 $
740 $ — $ 720 $ 740 Operating income (loss) $ (100 ) $ (80 ) $ 85
[a] $ (15 ) $ 5 Diluted income (loss) per share $ (0.28 ) $ (0.26 )
$ 0.26 [b] $ (0.02 ) $ —
Twelve Months Ending July 31,
2016 Revenue $ 4,660 $ 4,680 $ — $ 4,660 $ 4,680 Operating
income $ 1,185 $ 1,205 $ 305 [c] $ 1,490 $ 1,510 Diluted earnings
per share $ 3.53 $ 3.55 $ 0.10 [d] $ 3.63 $ 3.65
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 $80 million; amortization of
acquired technology of approximately $4 million; and amortization
of other acquired intangible assets of approximately $1 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 $277 million; amortization of acquired technology
of approximately $21 million; and amortization of other acquired
intangible assets of approximately $7 million. [d] Reflects
the estimated adjustments in item [c], income taxes related to
these adjustments, other income tax effects related to the use of
the long-term non-GAAP tax rate, and an adjustment to exclude the
$173 million net gain on the sale of discontinued operations from
non-GAAP results.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated May 24, 2016 contains
non-GAAP financial measures. Table B1, Table B2 and Table E
reconcile the non-GAAP financial measures in that press release to
the most directly comparable financial measures prepared in
accordance with Generally Accepted Accounting Principles (GAAP).
These non-GAAP financial measures include non-GAAP operating income
(loss), non-GAAP net income (loss) and non-GAAP net income (loss)
per share.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. These non-GAAP financial measures
do not reflect a comprehensive system of accounting, differ from
GAAP measures with the same names and may differ from non-GAAP
financial measures with the same or similar names that are used by
other companies.
We compute non-GAAP financial measures using the same consistent
method from quarter to quarter and year to year. We may consider
whether other significant items that arise in the future should be
excluded from our non-GAAP financial measures.
We exclude the following items from all of our non-GAAP
financial measures:
- Share-based compensation expense
- Amortization of acquired
technology
- Amortization of other acquired
intangible assets
- Goodwill and intangible asset
impairment charges
- Professional fees for business
combinations
We also exclude the following items from non-GAAP net income
(loss) and diluted net income (loss) per share:
- Gains and losses on debt and equity
securities and other investments
- Income tax effects and adjustments
- Discontinued operations
We believe that these non-GAAP financial measures provide
meaningful supplemental information regarding Intuit’s operating
results primarily because they exclude amounts that we do not
consider part of ongoing operating results when planning and
forecasting and when assessing the performance of the organization,
our individual operating segments or our senior management. Segment
managers are not held accountable for share-based compensation
expense, amortization, or the other excluded items and,
accordingly, we exclude these amounts from our measures of segment
performance. We believe that our non-GAAP financial measures also
facilitate the comparison by management and investors of results
for current periods and guidance for future periods with results
for past periods.
The following are descriptions of the items we exclude from our
non-GAAP financial measures.
Share-based compensation expenses. These consist of non-cash
expenses for stock options, restricted stock units and our Employee
Stock Purchase Plan. When considering the impact of equity awards,
we place greater emphasis on overall shareholder dilution rather
than the accounting charges associated with those awards.
Amortization of acquired technology and amortization of other
acquired intangible assets. When we acquire an entity, we are
required by GAAP to record the fair values of the intangible assets
of the entity and amortize them over their useful lives.
Amortization of acquired technology in cost of revenue includes
amortization of software and other technology assets of acquired
entities. Amortization of other acquired intangible assets in
operating expenses includes amortization of assets such as customer
lists, covenants not to compete and trade names.
Goodwill and intangible asset impairment charges. We exclude
from our non-GAAP financial measures non-cash charges to adjust the
carrying value of goodwill and other acquired intangible assets to
their estimated fair values.
Professional fees for business combinations. We exclude from our
non-GAAP financial measures the professional fees we incur to
complete business combinations. These include investment banking,
legal and accounting fees.
Gains and losses on debt and equity securities and other
investments. We exclude from our non-GAAP financial measures gains
and losses that we record when we sell or impair available-for-sale
debt and equity securities and other investments.
Income tax effects and adjustments. We use a long-term non-GAAP
tax rate for evaluating operating results and for planning,
forecasting, and analyzing future periods. This long-term
non-GAAP tax rate excludes the income tax effects of the non-GAAP
pre-tax adjustments described above, assumes the federal research
and experimentation credit is continuously in effect, and
eliminates the effects of non-recurring and period specific items
which can vary in size and frequency. Based on our current
long-term projections, we are using a long-term non-GAAP tax rate
of 34% which is consistent with the average of our normalized
fiscal year tax rate over a four year period that includes the past
three fiscal years plus the current fiscal year forecast. We will
evaluate this long-term non-GAAP tax rate on an annual basis and
whenever any significant events occur which may materially affect
this long-term rate. This long-term non-GAAP tax rate could be
subject to change for various reasons including significant changes
in our geographic earnings mix or fundamental tax law changes in
major jurisdictions in which we operate.
Operating results and gains and losses on the sale of
discontinued operations. From time to time, we sell or otherwise
dispose of selected operations as we adjust our portfolio of
businesses to meet our strategic goals. In accordance with GAAP, we
segregate the operating results of discontinued operations as well
as gains and losses on the sale of these discontinued operations
from continuing operations on our GAAP statements of operations but
continue to include them in GAAP net income or loss and net income
or loss per share. We exclude these amounts from our non-GAAP
financial measures.
The reconciliations of the forward-looking non-GAAP financial
measures to the most directly comparable GAAP financial measures in
Table E include all information reasonably available to Intuit at
the date of this press release. These tables include adjustments
that we can reasonably predict. Events that could cause the
reconciliation to change include acquisitions and divestitures of
businesses, goodwill and other asset impairments, and sales of
available-for-sale debt securities and other investments.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160524006539/en/
InvestorsIntuit Inc.Matt Rhodes,
650-944-2536matthew_rhodes@intuit.comorMediaIntuit Inc.Diane
Carlini, 650-944-6251diane_carlini@intuit.com
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