QuickBooks Online Subscribers Grew 41
Percent Worldwide; Company Sets the Stage for Tax Season
Intuit Inc. (Nasdaq:INTU) announced financial results for the
first quarter of fiscal 2017, which ended Oct. 31.
“We are off to a strong start to the fiscal year with QuickBooks
Online continuing to build momentum as we pursue large global
market opportunities,” said Brad Smith, Intuit’s chairman and chief
executive officer. “Customer growth is expanding globally in
Canada, the U.K., and Australia, and QuickBooks Self-Employed is
contributing to category growth worldwide.
“It’s also time to gear up for tax season, and we’re investing
in product innovation focused on driving customer growth and market
share. In ProConnect we are focused on multiservice accountants who
do both books and taxes for their customers so we can become the
operating system behind accountant success. We also continue to
promote a set of best practices and standards within the industry
that help the Internal Revenue Service and the states to improve
their ability to combat tax fraud.
“Overall we are off to a nice start across our businesses and
are looking forward to building on this success through the year,”
Smith said.
Financial Highlights
For the first quarter, Intuit:
- Reported revenue of $778 million, up 9
percent.
- Grew total QuickBooks Online
subscribers 41 percent to more than 1.6 million subscribers.
- Grew QuickBooks Online subscribers
outside the U.S. by 50 percent, to 323,000 subscribers, led by
growth in the U.K., Australia and Canada; subscriber growth in the
U.K. accelerated to 87 percent.
- Increased QuickBooks Self-Employed
customers to roughly 110,000 of QuickBooks Online subscribers, up
from 85,000 last quarter.
Unless otherwise noted, all growth rates refer to the current
period versus the comparable prior-year period, and the business
metrics and associated growth rates refer to worldwide business
metrics.
Snapshot of First-quarter Results
GAAP
Non-GAAP Q1
FY 17
Q1
FY 16
Change Q1
FY 17
Q1
FY 16
Change Revenue $778
$713 9% $778 $713
9%
Operating Income (Loss) $(61)
$(29) NM $32 $46 (30)%
Earnings Per Share $(0.12)
$(0.11) NM $0.06 $0.09
(33)%
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).
Business Segment Results
Small Business
- Total Small Business segment revenue
increased 11 percent.
- Small business online ecosystem revenue
grew 26 percent, driven by online customer acquisition.
- Intuit’s third annual QuickBooks
Connect conference in late October reached record attendance,
reinforcing the power of the ecosystem through creating
indispensable connections between small business owners,
accountants and developers.
- There are approximately 1,285 apps on
the QuickBooks Online platform; 435 are published in the QuickBooks
Apps Store.
- Intuit QuickBooks recently announced a
number of new integrations with third-party partners, including
Google, Apple Pay, PayPal and American Express and strategic
partnerships with Bill.com and TSheets.
Consumer Tax and
ProConnect
- Consumer Tax revenue for the first
quarter totaled $60 million and ProConnect revenue was $112
million.
Capital Allocation Summary
In the first quarter the company:
- Repurchased 1.8 million shares for $192
million, and $2.2 billion remains on the authorization.
- Received board approval for a $0.34 per
share dividend for the second quarter of fiscal 2017, payable on
Jan. 18, 2017.
Accounting Standards
Update
Intuit’s fiscal 2017 GAAP earnings per share include the impact
of the early adoption of the new accounting standard update for
share-based compensation. This update requires excess tax benefits
realized upon the settlement of a share-based compensation award to
flow through the earnings statement instead of the balance sheet.
We expect this accounting change to reduce the GAAP tax rate from
approximately 34 percent to approximately 32 percent for full
fiscal 2017. The impact on GAAP earnings per share is an increase
of approximately 7 cents in the first quarter and 12 cents for the
full year.
Forward-looking Guidance
“Our goal is to be the operating system behind small business
success, helping small businesses save time and improve their cash
flow, so they thrive when times are good, and remain resilient in
times of uncertainty,” said Neil Williams, Intuit’s chief financial
officer. “Small business product improvements and innovations
coming to market continue to boost our confidence in the continued
acceleration of QuickBooks Online subscribers in the second half of
the fiscal year.”
Intuit announced guidance for the second quarter of fiscal year
2017, which ends Jan. 31. The company expects:
- Revenue of $1.045 billion to $1.065
billion, growth of 13 to 15 percent.
- GAAP operating income of $60 million to
$70 million.
- Non-GAAP operating income of $142
million to $152 million.
- GAAP diluted earnings per share of
$0.12 to $0.15.
- Non-GAAP diluted earnings per share of
$0.33 to $0.36.
- Ending QuickBooks Online subscribers of
approximately 1.77 million
Intuit reiterated guidance for full fiscal year 2017, except for
higher GAAP earnings per share guidance due to the early adoption
of the accounting standard update. The company expects:
- Revenue of $5 billion to $5.1 billion,
growth of 7 to 9 percent.
- GAAP operating income of $1.33 billion
to $1.38 billion, growth of 7 to 11 percent.
- Non-GAAP operating income of $1.675
billion to $1.725 billion, growth of 8 to 11 percent.
- GAAP diluted earnings per share of
$3.47 to $3.57, versus $3.69 in fiscal 2016. Fiscal 2016 earnings
per share includes $0.65 net income per share from discontinued
operations.
- Non-GAAP diluted earnings per share of
$4.30 to $4.40, growth of 14 to 16 percent.
- QuickBooks Online subscribers of 2.0
million to 2.2 million.
Tax Season Unit Updates
The company will provide a tax unit update in late February,
concurrent with second-quarter earnings. A final update will be
provided in late April after the tax season ends.
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
866-658-3991 in the United States or 973-935-8714 from
international locations. No reservation or access code is needed.
The conference call can also be heard live at
http://investors.intuit.com/events.cfm. 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 1677908.
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 ProConnect Tax
Online, ProSeries® and Lacerte®, the company's leading
tax preparation offerings for professional accountants.
Founded in 1983, Intuit had revenue of $4.7 billion in its
fiscal year 2016. The company has approximately 7,900 employees
with major offices in the United States, Canada, the United
Kingdom, India and other locations. More information can be found
at www.intuit.com.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles, please see the section of
the accompanying tables titled "About Non-GAAP Financial Measures"
as well as the related Table B1, Table B2, and Table E. A copy of
the press release issued by Intuit today can be found on the
investor relations page of Intuit's website.
Cautions About Forward-looking Statements
This press release contains forward-looking statements,
including forecasts of expected growth and future financial results
of Intuit and its reporting segments; Intuit’s prospects for the
business in fiscal 2017 and beyond; expectations regarding Intuit’s
growth outside the US; expectations regarding timing and growth of
revenue for each of Intuit’s reportable segments and from current
or future products and services; expectations regarding customer
growth; expectations regarding changes to our products and their
impact on Intuit’s business; expectations regarding the impact of
the early adoption of the new accounting standards update on our
financial results; expectations regarding the amount and timing of
any future dividends or share repurchases; expectations regarding
availability of our offerings; expectations regarding the impact of
our strategic decisions on Intuit’s business; and all of the
statements under the heading “Forward-looking Guidance”.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results to differ materially from the expectations expressed
in the forward-looking statements. These factors include, without
limitation, the following: inherent difficulty in predicting
consumer behavior; difficulties in receiving, processing, or filing
customer tax submissions; consumers may not respond as we expected
to our advertising and promotional activities; the competitive
environment; governmental encroachment in our tax businesses or
other governmental activities or public policy affecting the
preparation and filing of tax returns; our ability to innovate and
adapt to technological change; availability of our products and
services could be impacted by business interruption or failure of
our information technology and communication systems; any problems
with implementing upgrades to our customer facing applications and
supporting information technology infrastructure; any failure to
properly use and protect personal customer information and data;
our ability to develop, manage and maintain critical third-party
business relationships; increases in or changes to government
regulation of our businesses; any failure to process transactions
effectively or to adequately protect against potential fraudulent
activities; any loss of confidence in using our software as a
result of publicity regarding such fraudulent activity; any
significant product accuracy or quality problems or delays; any
lost revenue opportunities or cannibalization of our traditional
paid franchise due to our participation in the Free File Alliance;
the global economic environment may impact consumer and small
business spending, financial institutions and tax filings; changes
in the total number of tax filings that are submitted to government
agencies due to economic conditions or otherwise; the seasonal and
unpredictable nature of our revenue; our ability to attract, retain
and develop highly skilled employees; increased risks associated
with international operations; unanticipated changes in our income
tax rates; changes in the amounts or frequency of share repurchases
or dividends; we may issue additional shares in an acquisition
causing our number of outstanding shares to grow; our inability to
adequately protect our intellectual property rights may weaken our
competitive position; disruptions, expenses and risks associated
with our acquisitions and divestitures; amortization of acquired
intangible assets and impairment charges; our use of significant
amounts of debt to finance acquisitions or other activities; and
the cost of, and potential adverse results in, litigation involving
intellectual property, antitrust, shareholder and other matters.
More details about the risks that may impact our business are
included in our Form 10-K for fiscal 2016 and in our other SEC
filings. You can locate these reports through our website at
http://investors.intuit.com. Forward-looking statements are based
on information as of November 17, 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
October 31,
October 31, 2016 2015 Net
revenue: Product $ 297 $ 271 Service and other 481 442
Total net revenue
778 713 Costs and expenses: Cost of revenue: Cost of
product revenue 29 29 Cost of service and other revenue 151 131
Amortization of acquired technology 3 6 Selling and marketing 283
244 Research and development 246 213 General and administrative 126
117 Amortization of other acquired intangible assets 1 2
Total costs and expenses [A] 839 742 Operating
loss from continuing operations (61 ) (29 ) Interest expense (9 )
(7 ) Interest and other income (expense), net (2 ) (4 ) Loss before
income taxes (72 ) (40 ) Income tax provision (benefit) [B] (42 )
(9 ) Net loss from continuing operations (30 ) (31 ) Net income
from discontinued operations [C] — — Net loss $ (30 )
$ (31 ) Basic net loss per share from continuing operations
$ (0.12 ) $ (0.11 ) Basic net income per share from discontinued
operations — — Basic net loss per share $ (0.12 ) $
(0.11 ) Shares used in basic per share calculations 258 272
Diluted net loss per share from continuing operations
$ (0.12 ) $ (0.11 ) Diluted net income per share from discontinued
operations — — Diluted net loss per share $ (0.12 ) $
(0.11 ) Shares used in diluted per share calculations 258
272 Cash dividends declared per common share $ 0.34
$ 0.30
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 October 31, October 31, (in
millions)
2016 2015 Cost of revenue $ 2 $ 2 Selling
and marketing 25 19 Research and development 36 21 General and
administrative 26 25 Total share-based compensation expense
$ 89 $ 67 [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.
During the first quarter of fiscal 2017,
we elected to early adopt ASU 2016-09, "Compensation—Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting." As required by ASU 2016-09, starting in fiscal
2017 we reflect excess tax benefits recognized on stock-based
compensation expense in the condensed consolidated statements of
operations as a component of the provision for income taxes on a
prospective basis.
Our effective tax rate for the three months ended October
31, 2016 was approximately 58%. Excluding discrete tax items
primarily related to share-based compensation tax benefits
resulting from the adoption of ASU 2016-09, our effective tax rate
for the period was 34% and did not differ significantly from the
federal statutory rate of 35%. Our effective tax rate for
the three months ended October 31, 2015 was approximately 22%.
Excluding discrete tax items primarily related to share-based
compensation as well as including the effects of losses in certain
jurisdictions where we do not recognize a tax benefit, our
effective tax rate for the three months ended October 31, 2015 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 pre-tax
gain of $354 million and a net gain of $173 million on the disposal
of these three businesses in fiscal 2016. We classified our
Demandforce, QuickBase, and Quicken businesses as discontinued
operations and have therefore segregated their operating results
from continuing operations in our statements of operations for all
periods presented. Net revenue from discontinued operations was $59
million for the three months ended October 31, 2015. Net income
from discontinued operations was not significant for the three
months ended October 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 2017 Q1
Q2 Q3 Q4
Year to Date GAAP operating income (loss) from
continuing operations $ (61 ) $ — $ — $ — $ (61 ) Amortization
of acquired technology 3 — — — 3 Amortization of other acquired
intangible assets 1 — — — 1 Share-based compensation expense 89
— — — 89
Non-GAAP operating
income (loss) from continuing operations $ 32 $ —
$ — $ — $ 32
GAAP net income
(loss) $ (30 ) $ — $ — $ — $ (30 ) Amortization of acquired
technology 3 — — — 3 Amortization of other acquired intangible
assets 1 — — — 1 Share-based compensation expense 89 — — — 89 Net
(gain) loss on debt securities and other investments 1 — — — 1
Income tax effects and adjustments [A] (49 ) — — —
(49 )
Non-GAAP net income (loss) $ 15 $ —
$ — $ — $ 15
GAAP diluted net
income (loss) per share $ (0.12 ) $ — $ — $ — $ (0.12 )
Amortization of acquired technology 0.01 — — — 0.01 Amortization of
other acquired intangible assets 0.01 — — — 0.01 Share-based
compensation expense 0.34 — — — 0.34 Net (gain) loss on debt
securities and other investments 0.01 — — — 0.01 Income tax effects
and adjustments [A] (0.19 ) — — — (0.19 )
Non-GAAP diluted net income (loss) per share $ 0.06 $
— $ — $ — $ 0.06
Shares used
in GAAP diluted per share calculation 258 — —
— 258
Shares used in non-GAAP
diluted per share calculation 261 — — —
261 [A] As discussed in “About Non-GAAP
Financial Measures - Income Tax Effects and Adjustments” following
Table E, our long-term non-GAAP tax rate eliminates the effects of
non-recurring and period specific items. Consequently, our non-GAAP
results for the first quarter of fiscal 2017 have been adjusted to
exclude the $19 million discrete GAAP tax benefit that we recorded
related to the adoption of ASU 2016-09. See note B to Table A for
more information.
See “About Non-GAAP Financial Measures”
immediately following Table E for information on these measures,
the items excluded from the most directly comparable GAAP measures
in arriving at non-GAAP financial measures, and the reasons
management uses each measure and excludes the specified amounts in
arriving at each non-GAAP financial measure.
TABLE B2
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES
(In millions, except per share
amounts)
(Unaudited)
Fiscal 2016 Q1
Q2 Q3 Q4
Full Year GAAP operating income (loss) from
continuing operations $ (29 ) $ 42 $ 1,285 $ (56 ) $ 1,242
Amortization of acquired technology 6 6 5 5 22 Amortization of
other acquired intangible assets 2 1 3 6 12 (Gain) loss on sale of
long-lived assets — — 1 — 1 Share-based compensation expense 67
65 65 81 278
Non-GAAP
operating income (loss) from continuing operations $ 46
$ 114 $ 1,359 $ 36 $ 1,555
GAAP net income (loss) $ (31 ) $ 24 $ 1,026 $ (40 ) $ 979
Amortization of acquired technology 6 6 5 5 22 Amortization of
other acquired intangible assets 2 1 3 6 12 (Gain) loss on sale of
long-lived assets — — 1 — 1 Share-based compensation expense 67 65
65 81 278 Net (gain) loss on debt securities and other investments
1 1 2 1 5 Income tax effects and adjustments [A] (21 ) (35 ) (31 )
(33 ) (120 ) Net (income) loss from discontinued operations —
5 (178 ) — (173 )
Non-GAAP net income
(loss) $ 24 $ 67 $ 893 $ 20 $ 1,004
GAAP diluted net income (loss) per share $
(0.11 ) $ 0.09 $ 3.94 $ (0.16 ) $ 3.69 Amortization of acquired
technology 0.02 0.02 0.02 0.02 0.08 Amortization of other acquired
intangible assets 0.01 — 0.01 0.02 0.04 (Gain) loss on sale of
long-lived assets — — — — — Share-based compensation expense 0.25
0.25 0.25 0.32 1.05 Net (gain) loss on debt securities and other
investments — — 0.01 — 0.02 Income tax effects and adjustments [A]
(0.08 ) (0.13 ) (0.12 ) (0.12 ) (0.45 ) Net (income) loss from
discontinued operations — 0.02 (0.68 ) — (0.65
)
Non-GAAP diluted net income (loss) per share $ 0.09
$ 0.25 $ 3.43 $ 0.08 $ 3.78
Shares used in GAAP diluted per share calculation 272
266 260 257 265
Shares used
in non-GAAP diluted per share calculation 275 266
260 260 265 [A] As discussed in “About
Non-GAAP Financial Measures - Income Tax Effects and Adjustments”
following Table E, our long-term non-GAAP tax rate assumes the
federal research and experimentation credit is continuously in
effect and eliminates the effects of non-recurring and period
specific items. Consequently, our non-GAAP results for the second
quarter of fiscal 2016 have been adjusted to exclude the $12
million discrete GAAP tax benefit that we recorded for the
retroactive reinstatement of the research and experimentation
credit. See note B to Table A for more information.
See “About Non-GAAP Financial Measures”
immediately following Table E for information on these measures,
the items excluded from the most directly comparable GAAP measures
in arriving at non-GAAP financial measures, and the reasons
management uses each measure and excludes the specified amounts in
arriving at each non-GAAP financial measure.
TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
October 31, July
31, 2016 2016 ASSETS Current assets: Cash and
cash equivalents $ 360 $ 638 Investments 245 442 Accounts
receivable, net 121 108 Income taxes receivable 57 20 Prepaid
expenses and other current assets 153 102 Current assets
before funds held for customers 936 1,310 Funds held for customers
326 304
Total current assets
1,262 1,614 Long-term investments 28 28 Property and
equipment, net 1,047 1,031 Goodwill 1,293 1,282 Acquired intangible
assets, net 39 44 Long-term deferred income taxes 151 139 Other
assets 113 112 Total assets $ 3,933 $ 4,250
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Short-term debt $ 625 $ 512 Accounts payable 165 184 Accrued
compensation and related liabilities 136 289 Deferred revenue 739
801 Other current liabilities 190 161 Current liabilities
before customer fund deposits 1,855 1,947 Customer fund deposits
326 304 Total current liabilities 2,181 2,251
Long-term debt 475 488 Long-term deferred revenue 197 204 Other
long-term obligations 144 146 Total liabilities 2,997
3,089 Stockholders’ equity 936 1,161 Total
liabilities and stockholders’ equity $ 3,933 $ 4,250
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Three Months Ended October 31,
October 31, 2016 2015 Cash flows from
operating activities: Net loss $ (30 ) $ (31 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation 49 45 Amortization of acquired intangible assets 6 10
Share-based compensation expense 89 69 Deferred income taxes (9 )
(2 )
Tax benefit from share-based compensation
plan
—
9
Other 1 10 Total adjustments 136
141
Changes in operating assets and liabilities: Accounts
receivable (14 ) (28 ) Income taxes receivable (38 )
(17
) Prepaid expenses and other assets (50 ) (29 ) Accounts payable (2
) (6 ) Accrued compensation and related liabilities (148 ) (145 )
Deferred revenue (67 ) (54 ) Other liabilities 8 (19 ) Total
changes in operating assets and liabilities (311 )
(298
)
Net cash used in operating
activities
(205 ) (188 ) Cash flows from
investing activities: Purchases of corporate and customer fund
investments (125 ) (117 ) Sales of corporate and customer fund
investments 298 940 Maturities of corporate and customer fund
investments 22 64 Net change in cash and cash equivalents held to
satisfy customer fund obligations (22 ) (10 ) Net change in
customer fund deposits 22 10 Purchases of property and equipment
(86 ) (70 ) Other (11 ) (1 )
Net cash provided by investing
activities 98 816 Cash flows
from financing activities: Proceeds from borrowings under
revolving credit facilities 100 350 Proceeds from issuance of stock
under employee stock plans 43 47
Payments for employee taxes withheld upon
vesting of restricted stock units
(45 ) (23 ) Cash paid for purchases of treasury stock (175 ) (1,253
) Dividends and dividend rights paid (89 ) (82 )
Net cash used in financing
activities
(166 ) (961 ) Effect of exchange rates
on cash and cash equivalents (5 ) (1 )
Net decrease in cash and
cash equivalents (278 ) (334 ) Cash
and cash equivalents at beginning of period 638 808
Cash and cash equivalents at end of period $
360 $ 474
During the first quarter of fiscal 2017,
we elected to early adopt ASU 2016-09, "Compensation—Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting." As required by ASU 2016-09, starting in fiscal
2017 we reflect excess tax benefits recognized on stock-based
compensation expense in the condensed consolidated statements of
operations as a component of the provision for income taxes on a
prospective basis. Excess tax benefits are classified as an
operating activity in our condensed consolidated statements of cash
flows and we have applied this provision on a retrospective
basis.
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME, AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Non-GAAP Range
of Estimate Range of Estimate From
To Adjmts From To
Three Months Ending January 31, 2017 Revenue $ 1,045 $ 1,065
$
—
$ 1,045 $ 1,065 Operating income $ 60 $ 70 $ 82 [a] $ 142 $ 152
Diluted earnings per share $ 0.12 $ 0.15 $ 0.21 [b] $ 0.33 $ 0.36
Twelve Months Ending July 31, 2017 Revenue $ 5,000 $
5,100 $ — $ 5,000 $ 5,100 Operating income $ 1,330 $ 1,380 $ 345
[c] $ 1,675 $ 1,725 Diluted earnings per share $ 3.47 $ 3.57 $ 0.83
[d] $ 4.30 $ 4.40 See “About Non-GAAP Financial Measures”
immediately following this Table E for information on these
measures, the items excluded from the most directly comparable GAAP
measures in arriving at non-GAAP financial measures, and the
reasons management uses each measure and excludes the specified
amounts in arriving at each non-GAAP financial measure. [a]
Reflects estimated adjustments for share-based compensation expense
of approximately $79 million and amortization of acquired
technology of approximately $3 million. [b] Reflects the
estimated adjustments in item [a], income taxes related to these
adjustments, and other income tax effects related to the use of the
long-term non-GAAP tax rate. [c] Reflects estimated
adjustments for share-based compensation expense of approximately
$332 million; amortization of acquired technology of approximately
$12 million; and amortization of other acquired intangible assets
of approximately $1 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 November 17, 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% for fiscal 2016 and 33% for fiscal 2017. These rates are
consistent with the average of our normalized fiscal year tax rate
over a four year period that includes the past three fiscal years
plus the current fiscal year forecast. We will evaluate this
long-term non-GAAP tax rate on an annual basis and whenever any
significant events occur which may materially affect this long-term
rate. This long-term non-GAAP tax rate could be subject to change
for various reasons including significant changes in our geographic
earnings mix or fundamental tax law changes in major jurisdictions
in which we operate.
Operating results and gains and losses on the sale of
discontinued operations. From time to time, we sell or otherwise
dispose of selected operations as we adjust our portfolio of
businesses to meet our strategic goals. In accordance with GAAP, we
segregate the operating results of discontinued operations as well
as gains and losses on the sale of these discontinued operations
from continuing operations on our GAAP statements of operations but
continue to include them in GAAP net income or loss and net income
or loss per share. We exclude these amounts from our non-GAAP
financial measures.
The reconciliations of the forward-looking non-GAAP financial
measures to the most directly comparable GAAP financial measures in
Table E include all information reasonably available to Intuit at
the date of this press release. These tables include adjustments
that we can reasonably predict. Events that could cause the
reconciliation to change include acquisitions and divestitures of
businesses, goodwill and other asset impairments, and sales of
available-for-sale debt securities and other investments.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161117006291/en/
Intuit Inc.InvestorsKim Watkins,
650-944-3324kim_watkins@intuit.comorMediaDiane Carlini,
650-944-6251diane_carlini@intuit.com
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