Intuit Inc. (Nasdaq: INTU) today announced that revenue and
operating income, and diluted earnings per share from its second
fiscal quarter were lower than expected due to the tax season
forming more slowly than usual. The company expects consumer tax
revenue to shift to the third fiscal quarter and therefore
reiterated full fiscal-year guidance.
Intuit’s second fiscal quarter ended Jan. 31. For the second
quarter, the company expects to report:
- Revenue of $1,010 million to $1,015
million.
- GAAP operating income of $15 million to
$20 million.
- Non-GAAP operating income of $100
million to $105 million.
- GAAP diluted earnings per share of
$0.04 to $0.05.
- Non-GAAP diluted earnings per share of
$0.24 to $0.25.
Consumer tax revenue is recognized as returns are filed. IRS
data issued Feb. 6 suggests that the broader tax preparation market
is forming later than usual, with total returns processed through
Jan. 27 down 33 percent and self-prepared e-file receipts down 31
percent compared with last year. Intuit’s processed consumer tax
returns for that same period are down 29 percent.
“Data points to the tax category forming slowly for all prep
methods,” said Dan Wernikoff, executive vice president and general
manager of Intuit’s TurboTax business. “We believe we have a strong
and winning hand that combines innovation across the end-to-end
experience, an effective go-to-market campaign and great value for
taxpayers. One thing we know about the tax business is that
everyone needs to file by April 18. We are looking forward to a
strong finish to the season.”
Full-year Guidance
The company expects full-year revenue and operating income for
Intuit and all business segments to meet expectations in line with
guidance issued on Nov. 17. Intuit reiterated full-year revenue,
operating income, and earnings per share guidance. For fiscal year
2017, 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.
The company will announce second-quarter results and will issue
the first of two season-to-date unit updates for its consumer tax
products and services on Feb. 23. The second units update will be
provided at the end of the tax season.
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 Table 1 titled "About Non-GAAP Financial
Measures."
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; the size of the market for
tax preparation software and the timing of when individuals will
file their tax returns; forecasts of total tax season results based
on preliminary IRS and other internal and external data points that
may, in certain cases, be based on small sample sizes; 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 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
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 February 8, 2017 and we
do not undertake any duty to update any forward-looking statement
or other information in these materials.
TABLE 1
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 Ended January 31, 2017 Revenue
$ 1,010 $ 1,015 $ — $ 1,010 $ 1,015 Operating income $ 15 $ 20 $ 85
[a] $ 100 $ 105 Diluted earnings per share $ 0.04 $ 0.05 $ 0.20 [b]
$ 0.24 $ 0.25
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 [a]
Reflects estimated adjustments for share-based compensation expense
of approximately $81 million and amortization of acquired
technology of approximately $4 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 February 8, 2017 contains
non-GAAP financial measures. Table 1 reconciles 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 and non-GAAP net income
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 diluted net
income 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 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 1 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/20170208005388/en/
Intuit Inc.InvestorsKim Watkins,
650-944-3324kim_watkins@intuit.comorMediaDiane Carlini,
650-944-6251diane_carlini@intuit.com
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