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NASDAQ: INTU

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Intuit Updates Second-quarter Outlook to Reflect Later Tax Season Opening

Feb 11, 2014

Company Reiterates Full-year Guidance

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq: INTU) today announced it expects a shift of tax revenue, as well as GAAP and non-GAAP operating income and earnings per share, from its second fiscal quarter (which ended Jan. 31) to its third fiscal quarter as the Internal Revenue Service did not begin accepting tax returns until Jan. 31. The company also reiterated full fiscal-year guidance.

For the second quarter, Intuit expects to report:

  • Revenue of $775 million to $780 million.
  • GAAP operating loss of $45 million to $50 million.
  • Non-GAAP operating income of $10 to $15 million.
  • GAAP loss per share of $0.13 to $0.14.
  • Non-GAAP diluted earnings per share of $0.01 to $0.02.

The date of the IRS e-file opening has varied from tax season to tax season, but has increasingly been delayed beyond mid-January, this year to Jan. 31. The reasons have been associated with the passage of late tax legislation, late budget and debt agreements, and this year because of the 17-day government shutdown last fall.

The total expected shift is approximately $120 million. About $80 million of the anticipated shift in tax revenue is related to the delayed IRS opening, causing taxpayers to file later than expected. Approximately $40 million is related to state tax returns that were received but not processed before the fiscal second quarter ended on Jan. 31.

The late opening of e-file is not expected to impact full-year revenue or operating income for Intuit or the Consumer and Professional Tax segments. Intuit reiterated full-year revenue, operating income, and earnings per share guidance.

For fiscal year 2014, the company expects:

  • Revenue growth of 6 to 8 percent.
  • GAAP operating income growth of 9 to 12 percent; non-GAAP operating income growth of 7 to 10 percent.
  • GAAP diluted EPS growth of 10 to 13 percent; non-GAAP diluted EPS growth of 10 to 13 percent.

“We are simply adjusting the timing, not our expectations,” said Sasan Goodarzi, senior vice president and general manager of Intuit’s Consumer Tax Group. “We remain optimistic about our strong brand campaign that has already received accolades, and are confident that new innovations across our end-to-end experience are already delivering in the current year.”

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. 20. The second unit update will be provided at the end of the tax season.

About Intuit Inc.

Intuit Inc. creates business and financial management solutions that simplify the business of life for small businesses, consumers and accounting professionals.

Its flagship products and services include QuickBooks®, Quicken® and TurboTax®, which make it easier to manage small businesses and payroll processing, personal finance, and tax preparation and filing. Mint.com provides a fresh, easy and intelligent way for people to manage their money, while Demandforce® offers marketing and communication tools for small businesses. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants.

Founded in 1983, Intuit had revenue of $4.2 billion in its fiscal year 2013. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.

About Non-GAAP Financial Measures

This press release includes 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 Intuit’s future expected financial results for the second quarter of fiscal 2014 and the 2014 fiscal year and expected shifts in tax revenue.

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; 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 these and other risks that may impact our business are included in our Form 10-K for fiscal 2013 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 11, 2014, 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 AND OPERATING INCOME

(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 Ended January 31, 2014
Revenue $ 775 $ 780 $ $ 775 $ 780
Operating income (loss) $ (50 ) $ (45 ) $ 60 [a] $ 10 $ 15
Net income (loss) per share $ (0.14 ) $ (0.13 ) $ 0.15 [b] $ 0.01 $ 0.02
 
Twelve Months Ending July 31, 2014
Revenue $ 4,440 $ 4,525 $ $ 4,440 $ 4,525
Operating income $ 1,347 $ 1,377 $ 233 [c] $ 1,580 $ 1,610
Net income per share $ 3.11 $ 3.19 $ 0.41 [d] $ 3.52 $ 3.60

[a] Reflects estimated adjustments for share-based compensation expense of approximately $49 million; amortization of acquired technology of approximately $7 million; and amortization of other acquired intangible assets of approximately $4 million.

[b] Reflects the estimated adjustments in item [a] and income taxes related to these adjustments.

[c] Reflects estimated adjustments for share-based compensation expense of approximately $194 million; amortization of acquired technology of approximately $25 million; and amortization of other acquired intangible assets of approximately $14 million.

[d] Reflects the estimated adjustments in item [c], income taxes related to these adjustments, and a net gain on discontinued operations of $46 million.

ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated February 11, 2014 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 (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 securities and other investments
  • Income tax effects of excluded items and discrete tax items
  • 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 values 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 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 securities and other investments.

Income tax effects of excluded items and certain discrete tax items. We exclude from our non-GAAP financial measures the income tax effects of the items described above, as well as income tax effects related to business combinations. In addition, the effects of one-time income tax adjustments recorded in a specific quarter for GAAP purposes are reflected on a forecasted basis in our non-GAAP financial measures. This is consistent with how we plan, forecast and evaluate our operating results.

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.

Source: Intuit Inc.

Intuit Inc.

Matt Rhodes, 650-944-2536 (Investors)

matthew_rhodes@intuit.com

Diane Carlini, 650-944-6251 (Media)

diane_carlini@intuit.com