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Intuit Fourth Quarter Revenue Up 15 Percent, Full Year Up 13 Percent

August 22, 2019

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Aug 22, 2019--

Intuit Inc. (Nasdaq: INTU) announced financial results for the fourth quarter and full fiscal year 2019, which ended July 31.

“Our business continued its strong momentum in the fourth quarter, resulting in full year revenue growth of 13 percent, exceeding our original guidance of 8 to 10 percent growth,” said Sasan Goodarzi, Intuit’s chief executive officer. “These results were fueled by 15 percent growth in the Small Business and Self-Employed Group, and 11 percent growth in the Consumer Group.”

“By focusing on delivering more value to our customers - and addressing their biggest pain points - we’ve achieved strong Online Ecosystem revenue growth and posted a second consecutive year of double-digit revenue growth in our Consumer business. This reflects significant improvements to the customer experience across both the DIY and assisted tax preparation categories,” said Goodarzi.

“Our strategy to become an A.I.-driven expert platform has already delivered strong results and we think we’re well-positioned for durable growth in the future.”

Financial Highlights

For the fourth quarter, Intuit:

For the full year, Intuit:

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. Fiscal 2018 amounts have been restated for the adoption of the accounting standard on revenue recognition, ASC 606.

Snapshot of Fourth-quarter Fiscal Year 2019 Results

GAAP

Non-GAAP

 

Q4
FY19

Q4
FY18

Change

Q4
FY19

Q4
FY18

Change

Revenue

$994

$864

15%

$994

$864

15%

Operating Loss

$(153)

$(200)

(24)%

$(47)

$(15)

213%

Loss Per Share

$(0.17)

$(0.15)

13%

$(0.09)

$(0.01)

800%

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).

Note: Operating loss for fiscal year 2018 includes a $79 million charge from the sale of our data center in Quincy, Washington. GAAP loss per share for fiscal year 2019 and fiscal year 2018 includes the effects of a change in the corporate tax rate as well as tax benefits recognized during the period.

Snapshot of Fiscal Year 2019 Full-year Results

GAAP

Non-GAAP

 

FY19

FY18

Change

FY19

FY18

Change

Revenue 1

$6,784

$6,025

13%

$6,784

$6,025

13%

Operating Income

$1,854

$1,560

19%

$2,282

$2,044

12%

Earnings Per Share

$5.89

$5.09

16%

$6.75

$5.78

17%

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).

Note: Operating income for fiscal year 2018 includes a $79 million charge from the sale of our data center in Quincy, Washington. GAAP loss per share for fiscal year 2019 and fiscal year 2018 includes the effects of a change in the corporate tax rate as well as tax benefits recognized during the period.

1 QBO platform revenue refers to Online Ecosystem Revenue. TurboTax Online (TTO) platform revenue totaled $2,250 million in fiscal year 2019 and $1,958 million in fiscal year 2018.

Business Segment Results

Small Business and Self-Employed Group

Consumer and Strategic Partner Groups

Capital Allocation Summary

Forward-looking Guidance

Intuit announced guidance for the first quarter of fiscal year 2020, which ends Oct. 31. The company expects:

Intuit also announced guidance for full fiscal year 2020. The company expects:

The company expects the following segment revenue results for fiscal year 2020:

Conference Call Details

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on Aug. 22. To hear the call, dial 844-246-4601 in the United States or 703-639-1172 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 website after the call ends.

Replay Information

A replay of the conference call will be available for one week by calling 855-859-2056, or 404-537-3406 from international locations. The access code for this call is 1466819.

The audio webcast will remain available on Intuit’s website for one week after the conference call.

Investor Day 2019

Intuit will host its annual Investor Day at its Mountain View, Calif., headquarters on Oct. 3 at 8:15 a.m. Pacific time. The half-day event will include presentations from Sasan Goodarzi, president and chief executive officer, Michelle Clatterbuck, chief financial officer, and other leaders.

About Intuit

Intuit’s mission is to Power Prosperity Around the World. Our global products and platforms, including TurboTax, QuickBooks, Mint and Turbo, are designed to empower consumers, self-employed and small businesses to improve their financial lives, finding them more money with the least amount of work, while giving them complete confidence in their actions and decisions. Our innovative ecosystem of financial management solutions serves approximately 50 million customers worldwide, unleashing the power of many for the prosperity of one. Please visit us for the latest news and in-depth information about Intuit and its brands and find us on social.

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 2020 and beyond; 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 Intuit’s corporate tax rate; 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: our ability to compete successfully; our participation in the Free File Alliance; governmental encroachment in our tax businesses, our ability to adapt to technological change; our ability to predict consumer behavior; our ability to protect our intellectual property rights; our reliance on third-party intellectual property; any harm to our reputation; risks associated with acquisitions and divestitures; issue of additional shares as consideration or incurring debt to fund an acquisition; our cybersecurity incidents (including those affecting the third parties we rely on); customer concerns about privacy and cybersecurity incidents; fraudulent activities by third parties using our offerings; failure to process transactions effectively; interruption or failure of our information technology; ability to maintain critical third party business relationships; our ability to attract and retain talent; deficiency in quality, accuracy or timely launch of products; difficulties in processing or filing customer tax submissions; risks associated with international operations; changes to public policy, laws or regulations affecting our businesses; litigation in which we are involved; seasonal nature of our tax business; changes in tax rates and tax reform legislation; global economic changes; exposure to credit risk of the businesses we provide capital to; amortization of acquired intangible assets and impairment charges; our ability to repay outstanding debt; our ability to repurchase shares or distribute dividends; volatility of our stock price; and our ability to successfully market our offerings. More details about these and other risks that may impact our business are included in our Form 10-K for fiscal 2018 and in our other SEC filings. You can locate these reports through our website at http://investors.intuit.com. Fiscal 2020 guidance speaks only as of the date it was publicly issued by Intuit. Other forward-looking statements represent the judgment of the management of Intuit as of the date of this presentation. We do not undertake any duty to update any forward-looking statement or other information in this presentation.

TABLE A

INTUIT INC.

GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

July 31,
2019

 

July 31,
2018

 

July 31,
2019

 

July 31,
2018

 

 

 

*As Adjusted

 

 

 

*As Adjusted

Net revenue:

 

 

 

 

 

 

 

Product

$

245

 

 

$

246

 

 

$

1,623

 

 

$

1,624

 

Service and other

749

 

 

618

 

 

5,161

 

 

4,401

 

Total net revenue

994

 

 

864

 

 

6,784

 

 

6,025

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of product revenue

17

 

 

17

 

 

77

 

 

82

 

Cost of service and other revenue

259

 

 

207

 

 

1,070

 

 

881

 

Amortization of acquired technology

5

 

 

5

 

 

20

 

 

15

 

Selling and marketing

381

 

 

305

 

 

1,927

 

 

1,631

 

Research and development

333

 

 

311

 

 

1,233

 

 

1,186

 

General and administrative

150

 

 

217

 

 

597

 

 

664

 

Amortization of other acquired intangible assets

2

 

 

2

 

 

6

 

 

6

 

Total costs and expenses [A]

1,147

 

 

1,064

 

 

4,930

 

 

4,465

 

Operating income (loss)

(153

)

 

(200

)

 

1,854

 

 

1,560

 

Interest expense

(3

)

 

(4

)

 

(15

)

 

(20

)

Interest and other income, net

19

 

 

11

 

 

42

 

 

26

 

Income (loss) before income taxes

(137

)

 

(193

)

 

1,881

 

 

1,566

 

Income tax provision (benefit) [B]

(93

)

 

(155

)

 

324

 

 

237

 

Net income (loss)

$

(44

)

 

$

(38

)

 

$

1,557

 

 

$

1,329

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

$

(0.17

)

 

$

(0.15

)

 

$

5.99

 

 

$

5.18

 

Shares used in basic per share calculations

260

 

 

258

 

 

260

 

 

256

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

$

(0.17

)

 

$

(0.15

)

 

$

5.89

 

 

$

5.09

 

Shares used in diluted per share calculations

260

 

 

258

 

 

264

 

 

261

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.47

 

 

$

0.39

 

 

$

1.88

 

 

$

1.56

 

* Prior-period information has been restated for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on August 1, 2018.

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 (loss) for the periods shown.

 

Three Months Ended

 

Twelve Months Ended

(in millions)

July 31,
2019

 

July 31,
2018

 

July 31,
2019

 

July 31,
2018

Cost of revenue

$

14

 

 

$

13

 

 

$

58

 

 

$

43

 

Selling and marketing

25

 

 

26

 

 

103

 

 

101

 

Research and development

35

 

 

34

 

 

136

 

 

133

 

General and administrative

24

 

 

26

 

 

104

 

 

105

 

Total share-based compensation expense

$

98

 

 

$

99

 

 

$

401

 

 

$

382

 

[B]

Our effective tax rate for the twelve months ended July 31, 2018 has been restated to reflect the full retrospective application of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”

 

The Tax Cuts and Jobs Act (2017 Tax Act) was enacted on December 22, 2017 and reduced the U.S. statutory federal corporate tax rate from 35% to 21%. The effective date of the tax rate change was January 1, 2018. The change resulted in a blended lower U.S. statutory federal rate of 26.9% for fiscal 2018. In fiscal 2019, we fully benefited from the enacted lower tax rate of 21%.

 

We recorded a provisional benefit of $29 million for fiscal 2018 related to the re-measurement of certain deferred tax balances as a result of the 2017 Tax Act. In the second quarter of fiscal 2019, we completed our accounting for the income tax effects of the 2017 Tax Act, and there have been no material adjustments during the fiscal 2019 period.

 

During fiscal year 2018, we completed a reorganization which resulted in a taxable liquidation of a subsidiary. The transaction gave rise to a capital loss that resulted in a tax benefit of approximately $35 million.

 

We recognized excess tax benefits on share-based compensation of $120 million in our provision for income taxes for the twelve months ended July 31, 2019 and $100 million for the twelve months ended July 31, 2018.

 

Our effective tax rate for the twelve months ended July 31, 2019 was approximately 17%. Excluding tax benefits related to share-based compensation, our effective tax rate was 24%. This differed from the federal statutory rate of 21% primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the benefit we received from the federal research and experimentation credit.

 

Our effective tax rate for the twelve months ended July 31, 2018 was approximately 15%. Excluding the tax benefits related to the share-based compensation, the reorganization of a subsidiary, and the re-measurement of certain deferred tax balances, our effective tax rate was approximately 26% and did not differ significantly from the federal statutory rate of 26.9%.

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 2019

 

Q1

 

Q2

 

Q3

 

Q4

 

Full Year

GAAP operating income (loss)

$

(10

)

 

$

233

 

 

$

1,784

 

 

$

(153

)

 

$

1,854

 

Amortization of acquired technology

5

 

 

5

 

 

5

 

 

5

 

 

20

 

Amortization of other acquired intangible assets

2

 

 

1

 

 

1

 

 

2

 

 

6

 

Professional fees for business combinations

 

 

 

 

 

 

1

 

 

1

 

Share-based compensation expense

105

 

 

100

 

 

98

 

 

98

 

 

401

 

Non-GAAP operating income (loss)

$

102

 

 

$

339

 

 

$

1,888

 

 

$

(47

)

 

$

2,282

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

$

34

 

 

$

189

 

 

$

1,378

 

 

$

(44

)

 

$

1,557

 

Amortization of acquired technology

5

 

 

5

 

 

5

 

 

5

 

 

20

 

Amortization of other acquired intangible assets

2

 

 

1

 

 

1

 

 

2

 

 

6

 

Professional fees for business combinations

 

 

 

 

 

 

1

 

 

1

 

Share-based compensation expense

105

 

 

100

 

 

98

 

 

98

 

 

401

 

Net (gain) loss on debt securities and other investments

1

 

 

2

 

 

2

 

 

1

 

 

6

 

Other income tax effects and adjustments [A]

(71

)

 

(33

)

 

(19

)

 

(86

)

 

(209

)

Non-GAAP net income (loss)

$

76

 

 

$

264

 

 

$

1,465

 

 

$

(23

)

 

$

1,782

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income (loss) per share

$

0.13

 

 

$

0.72

 

 

$

5.22

 

 

$

(0.17

)

 

$

5.89

 

Amortization of acquired technology

0.02

 

 

0.02

 

 

0.02

 

 

0.02

 

 

0.08

 

Amortization of other acquired intangible assets

0.01

 

 

 

 

 

 

0.01

 

 

0.03

 

Professional fees for business combinations

 

 

 

 

 

 

 

 

 

Share-based compensation expense

0.40

 

 

0.38

 

 

0.38

 

 

0.38

 

 

1.52

 

Net (gain) loss on debt securities and other investments

 

 

0.01

 

 

0.01

 

 

 

 

0.02

 

Other income tax effects and adjustments [A]

(0.27

)

 

(0.13

)

 

(0.08

)

 

(0.33

)

 

(0.79

)

Non-GAAP diluted net income (loss) per share

$

0.29

 

 

$

1.00

 

 

$

5.55

 

 

$

(0.09

)

 

$

6.75

 

 

 

 

 

 

 

 

 

 

 

Shares used in GAAP diluted per share calculation

264

 

 

264

 

 

264

 

 

260

 

 

264

 

 

 

 

 

 

 

 

 

 

 

Shares used in non-GAAP diluted per share calculation

264

 

 

264

 

 

264

 

 

260

 

 

264

 

[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. Other income tax adjustments consist primarily of the tax impact of the non-GAAP pre-tax adjustments and the excess tax benefits on share-based compensation.

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 2018

 

* As Adjusted

 

Q1

 

Q2

 

Q3

 

Q4

 

Full Year

GAAP operating income (loss)

$

(35

)

 

$

194

 

 

$

1,601

 

 

$

(200

)

 

$

1,560

 

Amortization of acquired technology

2

 

 

3

 

 

5

 

 

5

 

 

15

 

Amortization of other acquired intangible assets

1

 

 

1

 

 

2

 

 

2

 

 

6

 

Professional fees for business combinations

 

 

2

 

 

 

 

 

 

2

 

Loss on sale of long-lived assets

 

 

 

 

 

 

79

 

 

79

 

Share-based compensation expense

97

 

 

94

 

 

92

 

 

99

 

 

382

 

Non-GAAP operating income (loss)

$

65

 

 

$

294

 

 

$

1,700

 

 

$

(15

)

 

$

2,044

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

$

(2

)

 

$

183

 

 

$

1,186

 

 

$

(38

)

 

$

1,329

 

Amortization of acquired technology

2

 

 

3

 

 

5

 

 

5

 

 

15

 

Amortization of other acquired intangible assets

1

 

 

1

 

 

2

 

 

2

 

 

6

 

Professional fees for business combinations

 

 

2

 

 

 

 

 

 

2

 

Loss on sale of long-lived assets

 

 

 

 

 

 

79

 

 

79

 

Share-based compensation expense

97

 

 

94

 

 

92

 

 

99

 

 

382

 

Net (gain) loss on debt securities and other investments

2

 

 

2

 

 

 

 

2

 

 

6

 

Other income from divested businesses [A]

 

 

 

 

(8

)

 

 

 

(8

)

2017 Tax Act [B]

 

 

(37

)

 

10

 

 

(2

)

 

(29

)

Income tax effects and adjustments [C]

(56

)

 

(29

)

 

(36

)

 

(150

)

 

(271

)

Non-GAAP net income (loss)

$

44

 

 

$

219

 

 

$

1,251

 

 

$

(3

)

 

$

1,511

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income (loss) per share

$

(0.01

)

 

$

0.70

 

 

$

4.53

 

 

$

(0.15

)

 

$

5.09

 

Amortization of acquired technology

0.01

 

 

0.01

 

 

0.02

 

 

0.02

 

 

0.06

 

Amortization of other acquired intangible assets

 

 

 

 

0.01

 

 

0.01

 

 

0.02

 

Professional fees for business combinations

 

 

0.01

 

 

 

 

 

 

0.01

 

Loss on sale of long-lived assets

 

 

 

 

 

 

0.31

 

 

0.30

 

Share-based compensation expense

0.38

 

 

0.36

 

 

0.35

 

 

0.38

 

 

1.46

 

Net (gain) loss on debt securities and other investments

0.01

 

 

0.01

 

 

 

 

0.01

 

 

0.02

 

Other income from divested businesses [A]

 

 

 

 

(0.03

)

 

 

 

(0.03

)

2017 Tax Act [B]

 

 

(0.14

)

 

0.04

 

 

(0.01

)

 

(0.11

)

Other income tax effects and adjustments [C]

(0.22

)

 

(0.11

)

 

(0.14

)

 

(0.58

)

 

(1.04

)

Non-GAAP diluted net income (loss) per share

$

0.17

 

 

$

0.84

 

 

$

4.78

 

 

$

(0.01

)

 

$

5.78

 

 

 

 

 

 

 

 

 

 

 

Shares used in GAAP diluted per share calculation

256

 

 

260

 

 

262

 

 

258

 

 

261

 

 

 

 

 

 

 

 

 

 

 

Shares used in non-GAAP diluted per share calculation

259

 

 

260

 

 

262

 

 

258

 

 

261

 

 

* Information has been restated for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on August 1, 2018.

[A]

During the three months ended April 30, 2018, we received payments from contingent earn out provisions related to businesses we previously divested.

[B]

The 2017 Tax Act adjustments relate to the provisional tax benefit for the re-measurement of our deferred tax balances at the enacted lower tax rate.

[C]

As discussed in “About Non-GAAP Financial Measures - Income Tax Effects and Adjustments” following Table E, our non-GAAP tax rate eliminates the effects of non-recurring and period-specific items. Other income tax adjustments consist primarily of the tax impact of the non-GAAP pre-tax adjustments, which includes the loss on the sale of long-lived assets; the excess tax benefits on share-based compensation; and the tax benefits on a loss from a subsidiary reorganization.

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)

 

 

July 31, 2019

 

July 31, 2018

 

 

 

* As Adjusted

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,116

 

 

$

1,464

 

Investments

624

 

 

252

 

Accounts receivable, net

87

 

 

98

 

Income taxes receivable

65

 

 

39

 

Prepaid expenses and other current assets

266

 

 

202

 

Current assets before funds held for customers

3,158

 

 

2,055

 

Funds held for customers

436

 

 

367

 

Total current assets

3,594

 

 

2,422

 

 

 

 

 

Long-term investments

13

 

 

13

 

Property and equipment, net

780

 

 

812

 

Goodwill

1,655

 

 

1,611

 

Acquired intangible assets, net

54

 

 

61

 

Other assets

187

 

 

215

 

Total assets

$

6,283

 

 

$

5,134

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

50

 

 

$

50

 

Accounts payable

274

 

 

178

 

Accrued compensation and related liabilities

385

 

 

369

 

Deferred revenue

619

 

 

581

 

Other current liabilities

202

 

 

198

 

Current liabilities before customer fund deposits

1,530

 

 

1,376

 

Customer fund deposits

436

 

 

367

 

Total current liabilities

1,966

 

 

1,743

 

 

 

 

 

Long-term debt

386

 

 

388

 

Long-term deferred income tax liabilities

37

 

 

68

 

Other long-term obligations

145

 

 

119

 

Total liabilities

2,534

 

 

2,318

 

 

 

 

 

Stockholders’ equity

3,749

 

 

2,816

 

Total liabilities and stockholders’ equity

$

6,283

 

 

$

5,134

 

* Prior-period information has been restated for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on August 1, 2018.

TABLE D

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Twelve Months Ended

 

July 31, 2019

 

July 31, 2018

 

 

 

* As Adjusted

Cash flows from operating activities:

 

 

 

Net income

$

1,557

 

 

$

1,329

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

199

 

 

228

 

Amortization of acquired intangible assets

26

 

 

25

 

Share-based compensation expense

401

 

 

382

 

Loss on sale of long-lived assets

 

 

79

 

Deferred income taxes

(7

)

 

(5

)

Other

15

 

 

6

 

Total adjustments

634

 

 

715

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

11

 

 

5

 

Income taxes receivable

5

 

 

(1

)

Prepaid expenses and other assets

(37

)

 

(33

)

Accounts payable

90

 

 

12

 

Accrued compensation and related liabilities

16

 

 

75

 

Deferred revenue

39

 

 

6

 

Other liabilities

9

 

 

4

 

Total changes in operating assets and liabilities

133

 

 

68

 

Net cash provided by operating activities

2,324

 

 

2,112

 

Cash flows from investing activities:

 

 

 

Purchases of corporate and customer fund investments

(752

)

 

(407

)

Sales of corporate and customer fund investments

84

 

 

128

 

Maturities of corporate and customer fund investments

303

 

 

286

 

Net change in customer fund deposits

69

 

 

(5

)

Purchases of property and equipment

(155

)

 

(124

)

Acquisitions of businesses, net of cash acquired

(64

)

 

(363

)

Originations of term loans to small businesses

(316

)

 

(137

)

Principal repayments of term loans from small businesses

267

 

 

82

 

Other

(2

)

 

3

 

Net cash used in investing activities

(566

)

 

(537

)

Cash flows from financing activities:

 

 

 

Proceeds from borrowings under unsecured revolving credit facility

 

 

800

 

Repayments on borrowings under unsecured revolving credit facility

 

 

(800

)

Proceeds from borrowings under secured revolving credit facility

48

 

 

 

Repayment of debt

(50

)

 

(50

)

Proceeds from issuance of stock under employee stock plans

284

 

 

295

 

Payments for employee taxes withheld upon vesting of restricted stock units

(251

)

 

(199

)

Cash paid for purchases of treasury stock

(556

)

 

(272

)

Dividends and dividend rights paid

(501

)

 

(407

)

Other

(8

)

 

(1

)

Net cash used in financing activities

(1,034

)

 

(634

)

Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents

(3

)

 

(11

)

Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents

721

 

 

930

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period

1,631

 

 

701

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

$

2,352

 

 

$

1,631

 

 

 

 

 

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the consolidated balance sheet to the total amounts reported on the consolidated statement of cash flows

 

 

 

Cash and cash equivalents

$

2,116

 

 

$

1,464

 

Restricted cash and restricted cash equivalents included in funds held for customers

236

 

 

167

 

Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

$

2,352

 

 

$

1,631

 

* Prior-period information has been restated for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, both of which we adopted on August 1, 2018.

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

 

 

GAAP
Range of Estimate

 

 

 

 

 

Non-GAAP
Range of Estimate

 

 

From

 

To

 

Adjmts

 

 

 

From

 

To

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ending October 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,105

 

 

$

1,125

 

 

$

 

 

 

 

$

1,105

 

 

$

1,125

 

Operating income (loss)

 

$

(50

)

 

$

(40

)

 

$

115

 

 

[a]

 

$

65

 

 

$

75

 

Diluted earnings (loss) per share

 

$

(0.04

)

 

$

(0.02

)

 

$

0.27

 

 

[b]

 

$

0.23

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ending July 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

7,440

 

 

$

7,540

 

 

$

 

 

 

 

$

7,440

 

 

$

7,540

 

Operating income

 

$

2,065

 

 

$

2,115

 

 

$

450

 

 

[c]

 

$

2,515

 

 

$

2,565

 

Diluted earnings per share

 

$

6.35

 

 

$

6.45

 

 

$

1.15

 

 

[d]

 

$

7.50

 

 

$

7.60

 

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 $109 million; amortization of acquired technology of approximately $5 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 $423 million; amortization of acquired technology of approximately $21 million; and amortization of other acquired intangible assets 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 August 22, 2019 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:

We also exclude the following items from non-GAAP net income (loss) and diluted net income (loss) per share:

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. We believe 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 values of goodwill and other acquired intangible assets to their estimated fair values.

Gains and losses on disposals of businesses and long-lived assets. We exclude from our non-GAAP financial measures gains and losses on disposals of businesses and long-lived assets because they are unrelated to our ongoing business operating results.

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, and eliminates the effects of non-recurring and period specific items which can vary in size and frequency. The long term rate includes the effect of the reduction in the U.S. federal statutory rate to 21%, as a result of the 2017 Tax Cuts and Jobs Act (2017 Tax Act). As the change in the U.S. federal statutory rate, as a result of the 2017 Tax Act, occurred in the second quarter of our fiscal 2018, the calculation of our fiscal 2019 long-term non-GAAP rate references only our current forecast considerations and is equal to the average of our forecasted tax rates over our long term forecast period. For our fiscal 2020, the rate references our current long-term projections and is consistent with our past post tax reform fiscal year tax rate. Based on our current long-term projections, we are using a long-term non-GAAP tax rate of 23% for fiscal 2019 and 2020. 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. 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 rate.

In the first quarter of fiscal 2018 we used 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 excluded the income tax effects of the non-GAAP pre-tax adjustments described above and eliminated the effects of non-recurring and period-specific items which can vary in size and frequency. This rate was consistent with the average of our normalized fiscal year tax rate over a four year period that included the past three fiscal years plus the current fiscal year forecast. Based on our current long-term projections at that time we used a long-term non-GAAP tax rate of 33%.

Starting in the second quarter of our fiscal 2018, we revised our estimated annual non-GAAP tax rate to reflect the change in the U.S. federal statutory rate, as a result of the 2017 Tax Act. The federal statutory rate change to 21%, was effective January 1, 2018, and therefore, the change resulted in a blended U.S. federal statutory rate of 26.9% for our fiscal 2018. Because of the transitional impact of the 2017 Tax Act provisions, the fiscal 2018 non-GAAP tax rate starting with the second quarter was based on our current year results only, without reference to long-term forecasts. This non-GAAP tax rate similarly excluded the income tax effects of the non-GAAP pre-tax adjustments described above and eliminated the effects of the non-recurring and period specific items. The full year fiscal 2018 non-GAAP tax rate was 26.2%.

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, sales of available-for-sale debt securities and other investments, and disposals of businesses and long-lived assets.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190822005594/en/

CONTACT: Investors

Kim Watkins

Intuit Inc.

650-944-3324

kim_watkins@intuit.comMedia

Kali Fry

Intuit Inc.

650-944-3036

kali_fry@intuit.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: TECHNOLOGY FINANCE ACCOUNTING PROFESSIONAL SERVICES SOFTWARE INTERNET DATA MANAGEMENT

SOURCE: Intuit Inc.

Copyright Business Wire 2019.

PUB: 08/22/2019 04:00 PM/DISC: 08/22/2019 04:01 PM

http://www.businesswire.com/news/home/20190822005594/en