Intuit Reaffirms First Quarter and Fiscal 2016 Guidance; Updates Fiscal 2017 Outlook

Company Hosts Annual Investor Day;
Highlights Cloud and Ecosystem Momentum

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq: INTU) reaffirmed its financial guidance for the first quarter and full fiscal year 2016 and updated its outlook for fiscal 2017. The company's fiscal year runs from Aug. 1 to July 31.

Intuit provided these updates in conjunction with Investor Day, being held today at the company’s Mountain View, Calif., headquarters. President and Chief Executive Officer Brad Smith (@IntuitBrad) will address the company’s sharpened focus in its businesses that strengthen the ecosystem and align with two strategic goals: to be the operating system behind small business success, and to do the nations’ taxes in the U.S. and Canada.

“We are a company transformed—and I’m looking forward to sharing more on the strategic business decisions we’ve made, why we made them, and how we are putting all of our innovation against the critical few things that will change the most customers’ lives and drive our growth,” said Smith. “Our focus has never been clearer, and our global cloud strategy continues to gain traction.”

In addition to Smith’s presentation, Neil Williams, Intuit’s chief financial officer, will present the company’s financials, including an overview of drivers of subscriber and earnings growth. The session will also include overviews of Intuit’s strategic priorities, presented by Intuit’s senior leaders.

Forward-looking Guidance

“We’re making the right tradeoffs to grow small business customers and revenue double-digits over the next few years,” Smith said. “I’ve never had greater confidence as we build this company for long-term success.”

Fiscal 2016 Guidance

Intuit announced guidance for fiscal year 2016, which ends July 31, on Aug. 20. The company is reiterating guidance set and expects:

• Revenue of $4.525 billion to $4.600 billion, growth of 8 to 10 percent.
• GAAP operating income of $1.115 billion to $1.145 billion, growth of 51 to 55 percent.
• Non-GAAP operating income of $1.450 billion to $1.480 billion, growth of 27 to 30 percent.
• GAAP diluted earnings per share of $2.50 to $2.55, versus $1.28 in fiscal 2015, which included goodwill and intangible asset impairment charges.
• Non-GAAP diluted EPS of $3.40 to $3.45, growth of 31 to 33 percent.

Intuit expects the following segment revenue growth for fiscal year 2016:

• Small Business Group: 7 to 9 percent.
  • Total Small Business, including Consumer Ecosystem (Mint, Mint Bills and OFX): 5 to 7 percent.
• Consumer Tax Group: 5 to 7 percent.
• Professional Tax: 48 to 51 percent.
  • For the fiscal first quarter, the company expects Professional Tax revenue of approximately $100 million.

First Quarter Fiscal 2016 Guidance

Intuit expects:

• Revenue of $660 million to $680 million, growth of 8 to 11 percent.
• GAAP operating loss of $95 million to $100 million, compared to an operating loss of $109 million in the year-ago quarter.
• Non-GAAP operating loss of $5 million to $10 million, compared to an operating loss of $42 million in the year-ago quarter.
• GAAP net loss per share of $0.26 to $0.27, compared to a net loss per share of $0.29 in the year-ago quarter.
• Non-GAAP loss per share of $0.03 to $0.04, compared to a loss per share of $0.11 in the year-ago quarter.

Fiscal 2017 Outlook

Intuit is also providing targets for key metrics in fiscal 2017:

• QuickBooks Online subscribers of 2.0 million to 2.2 million, implying average year-over-year growth of more than 40 percent over the next two years.
• GAAP earnings per share of $3.25 to $3.75.
• Non-GAAP earnings per share of $4.00 to $4.50, growth of greater than 15 percent.

Investor Day-How to Participate

The event will be broadcast live on Intuit’s website at http://investors.intuit.com/events/default.aspx. A replay of the video webcast will be available on Intuit’s website two hours after the meeting ends.

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® 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 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 2015. The company has approximately 7,700 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.

Intuit and the Intuit logo, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.

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 titled "About Non-GAAP Financial Measures" as well as the related Table 1. A copy of the press release issued by Intuit today can be found on the investor relations page of Intuit's Web site.

Cautions About Forward-looking Statements

This press release contains forward-looking statements, including forecasts of expected growth and future financial results of Intuit and its reporting segments; Intuit’s prospects for the business in fiscal 2016 and beyond; expectations regarding Intuit’s growth outside the US; expectations regarding timing and growth of revenue for each of Intuit’s reporting segments and from current or future products and services; expectations regarding customer growth; expectations regarding changes to our products and their impact on Intuit’s business; expectations regarding the amount and timing of any future dividends or share repurchases; expectations regarding availability of our offerings; expectations regarding the impact of our strategic decisions on Intuit’s business; and all of the statements under the heading “Forward-looking Guidance”.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, without limitation, the following: inherent difficulty in predicting consumer behavior; difficulties in receiving, processing, or filing customer tax submissions; consumers may not respond as we expected to our advertising and promotional activities; product introductions and price competition from our competitors can have unpredictable negative effects on our revenue, profitability and market position; governmental encroachment in our tax businesses or other governmental activities or public policy affecting the preparation and filing of tax returns could negatively affect our operating results and market position; we may not be able to successfully innovate and introduce new offerings and business models to meet our growth and profitability objectives, and current and future offerings may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; business interruption or failure of our information technology and communication systems may impair the availability of our products and services, which may damage our reputation and harm our future financial results; as we upgrade and consolidate our customer facing applications and supporting information technology infrastructure, any problems with these implementations could interfere with our ability to deliver our offerings; any failure to properly use and protect personal customer information and data could harm our revenue, earnings and reputation; if we are unable to develop, manage and maintain critical third party business relationships, our business may be adversely affected; increased government regulation of our businesses may harm our operating results; if we fail to process transactions effectively or fail to adequately protect against potential fraudulent activities, our revenue and earnings may be harmed; related publicity regarding such fraudulent activity could cause customers to lose confidence in using our software and adversely impact our results; any significant offering quality problems or delays in our offerings could harm our revenue, earnings and reputation; our participation in the Free File Alliance may result in lost revenue opportunities and cannibalization of our traditional paid franchise; the continuing global economic downturn may continue to impact consumer and small business spending, financial institutions and tax filings, which could negatively affect our revenue and profitability; year-over-year changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise may result in lost revenue opportunities; our revenue and earnings are highly seasonal and the timing of our revenue between quarters is difficult to predict, which may cause significant quarterly fluctuations in our financial results; our financial position may not make repurchasing shares advisable or we may issue additional shares in an acquisition causing our number of outstanding shares to grow; our inability to adequately protect our intellectual property rights may weaken our competitive position and reduce our revenue and earnings; our acquisition and divestiture activities may disrupt our ongoing business, may involve increased expenses and may present risks not contemplated at the time of the transactions; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operation; and litigation involving intellectual property, antitrust, shareholder and other matters may increase our costs. More details about the risks that may impact our business are included in our Form 10-K for fiscal 2015 and in our other SEC filings. You can locate these reports through our website at http://investors.intuit.com. Forward-looking statements are based on information as of September 17, 2015 and we do not undertake any duty to update any forward-looking statement or other information in these materials.

See “About Non-GAAP Financial Measures” below 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 $77 million; amortization of acquired technology of approximately $8 million; and amortization of other acquired intangible assets of approximately $5 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 $288 million; amortization of acquired technology of approximately $27 million; and amortization of other acquired intangible assets of approximately $20 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.

[e] Reflects estimated adjustments for share-based compensation expense of approximately $300 million; amortization of acquired technology of approximately $15 million; and amortization of other acquired intangible assets of approximately $11 million. Also reflects 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 September 17, 2015 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 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 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 and equity securities and other investments. We exclude from our non-GAAP financial measures gains and losses that we record when we sell or impair available-for-sale debt and equity securities and other investments.

Income tax effects and adjustments. We use a long-term non-GAAP tax rate for evaluating operating results and for planning, forecasting, and analyzing future periods. This long-term non-GAAP tax rate excludes the income tax effects of the non-GAAP pre-tax adjustments described above, assumes the federal research and experimentation credit is continuously in effect, and eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Based on our current long-term projections, we are using a long-term non-GAAP tax rate of 34% which is consistent with the average of our normalized fiscal year tax rate over a four year period that includes the past three fiscal years plus the current fiscal year. 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.

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Investors
Intuit Inc.
Matt Rhodes, 650-944-2536
matthew_rhodes@intuit.com
or
Media
Intuit Inc.
Diane Carlini, 650-944-6251
diane_carlini@intuit.com

Source: Intuit Inc.

Released September 17, 2015