Form: 8-K

Current report filing

February 23, 2023

Exhibit 99.01
Contacts:     Investors    Media
   Kim Watkins    Abby Smith
   Intuit Inc.    Intuit Inc.
   650-944-3324    408-839-6028
   kim_watkins@intuit.com    abby_smith@intuit.com


Intuit Reports Strong Second Quarter Results and Reiterates Full Year Guidance

Small Business and Self-Employed Group Revenue Grew 20 Percent

MOUNTAIN VIEW, Calif. - February 23, 2023 - Intuit Inc. (Nasdaq: INTU) the global financial technology platform that makes TurboTax, Credit Karma, QuickBooks, and Mailchimp,
announced financial results for the second quarter of fiscal 2023, which ended January 31.
“We had a strong second quarter as we executed on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses,” said Sasan Goodarzi, Intuit's chief executive officer. “As we celebrate our 40th anniversary this year we are proud of our history of thriving during various economic cycles and we are confident that the benefits of the Intuit platform are more mission-critical than ever to our customers."
Financial Highlights
For the second quarter, Intuit:
Grew total revenue to $3.0 billion, up 14 percent.
Increased Small Business and Self-Employed Group revenue 20 percent to $1.9 billion.
Grew Online Ecosystem revenue 24 percent to $1.4 billion.
Increased Consumer Group revenue to $516 million, up 26 percent.
Reported Credit Karma revenue of $375 million, down 16 percent.
Grew ProTax Group revenue to $253 million, up 7 percent.
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.
1


Snapshot of Second-quarter Results
GAAP Non-GAAP
Q2
FY23
Q2
FY22
Change Q2
FY23
Q2
FY22
Change
Revenue $3,041 $2,673 14% $3,041 $2,673 14%
Operating Income
$270 $56 382% $856 $612 40%
Earnings Per Share
$0.60 $0.35 71% $2.20 $1.55 42%

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 and Self-Employed Group
QuickBooks Online Accounting revenue grew 27 percent in the quarter, driven primarily by customer growth, higher effective prices, and mix-shift.
Online Services revenue grew 21 percent, driven by growth in QuickBooks Online payroll, Mailchimp, and QuickBooks Online payments.
Total international online revenue grew 17 percent on a constant currency basis.

Credit Karma
The decline in Credit Karma revenue in the quarter was driven by headwinds in personal loans, home loans, auto insurance and auto loans, partially offset by growth in credit cards and Credit Karma Money.

Capital Allocation Summary
In the second quarter the company:
Reported a total cash and investments balance of approximately $2.1 billion and $7.1 billion in debt as of January 31, 2023.
Repurchased $500 million of shares, with $2.5 billion remaining on the company's share repurchase authorization.
Received Board approval for a quarterly dividend of $0.78 per share, payable April 18, 2023. This represents a 15 percent increase compared to the same period last year.
Forward-looking Guidance
2


Intuit reiterated guidance for the full fiscal year 2023. The company expects:
Revenue of $14.035 billion to $14.250 billion, growth of approximately 10 to 12 percent.
GAAP operating income of $2.794 billion to $2.899 billion, growth of approximately 9 to 13 percent.
Non-GAAP operating income of $5.258 billion to $5.363 billion, growth of approximately 17 to 19 percent.
GAAP diluted earnings per share of $6.92 to $7.22, a decline of approximately 5 to 1 percent.
Non-GAAP diluted earnings per share of $13.59 to $13.89, growth of approximately 15 to 17 percent.
The company also reiterated full fiscal year 2023 segment revenue guidance:
Small Business and Self-Employed Group: growth of 19 to 20 percent.
Consumer Group: growth of 9 to 10 percent.
ProTax Group: growth of 3 percent.
Credit Karma: a decline of 15 to 10 percent.
Intuit announced guidance for the third quarter of fiscal year 2023, which ends April 30. The company expects:
Revenue to grow approximately 8 to 9 percent.
GAAP earnings per share of $6.82 to $6.89.
Non-GAAP diluted earnings per share of $8.42 to $8.49.
Conference Call Details
Intuit executives will discuss the financial results on a conference call at 1:30 p.m. PT on February 23. The conference call can 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 800-770-2030, or 609-800-9909 from international locations. The passcode is 6854059. The audio webcast will remain available on Intuit’s website for one week after the conference call.
About Intuit
3


Intuit is the global financial technology platform that powers prosperity for the people and communities we serve. With more than 100 million customers worldwide using TurboTax, Credit Karma, QuickBooks, and Mailchimp, we believe that everyone should have the opportunity to prosper. We never stop working to find new, innovative ways to make that possible. Please visit us at Intuit.com and find us on social for the latest information about Intuit and our products and services.
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 expectations regarding: forecasts and timing of growth and future financial results of Intuit and its reporting segments; the impact of macroeconomic conditions on our business, segments and products; Intuit’s prospects for the business in fiscal 2023; timing and growth of revenue from current or future products and services; Intuit's corporate tax rate; the amount and timing of any future dividends or share repurchases; and the impact of acquisitions and other strategic decisions on our business; as well as 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 risks and uncertainties may be amplified by the effects of global developments, conditions or events like inflationary pressure, the Russia-Ukraine war and the COVID-19 pandemic, which have caused significant global economic instability and uncertainty. Given these risks and uncertainties, persons regarding this communication are cautioned not to place any undue reliance on such forward-looking statements. These factors include, without limitation, the following: our ability to compete successfully; potential governmental encroachment in our tax businesses; our ability to adapt to technological change; our ability to predict consumer behavior; our reliance on third-party intellectual property; our ability to protect our intellectual property rights; any harm to our reputation; risks associated with our ESG and DEI practices; risks associated with acquisition and divestiture activity, including the
4


integration of Credit Karma and Mailchimp; the issuance of equity or incurrence of debt to fund an acquisition; 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; our failure to process transactions effectively; interruption or failure of our information technology; our ability to maintain critical third-party business relationships; our ability to attract and retain talent; any deficiency in the quality or accuracy of our offerings (including the advice given by experts on our platform); any delays in product launches; difficulties in processing or filing customer tax submissions; risks associated with international operations; risks associated with climate change; changes to public policy, laws or regulations affecting our businesses; legal proceedings in which we are involved; the seasonal nature of our tax business; changes in tax rates and tax reform legislation; global economic conditions (including, without limitation, inflation); exposure to credit, counterparty and other risks in providing capital to businesses; amortization of acquired intangible assets and impairment charges; our ability to repay or otherwise comply with the terms of our 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 2022 and in our other SEC filings. You can locate these reports through our website at http://investors.intuit.com. Third-quarter and full-year fiscal 2023 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. Except as required by law, we do not undertake any duty to update any forward-looking statement or other information in this presentation.




5


TABLE A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
 
  Three Months Ended Six Months Ended
  January 31,
2023
January 31,
2022
January 31,
2023
January 31,
2022
Net revenue:
Product $ 607  $ 525  $ 1,034  $ 922 
Service and other 2,434  2,148  4,604  3,758 
Total net revenue 3,041  2,673  5,638  4,680 
Costs and expenses:
Cost of revenue:
Cost of product revenue 23  20  38  35 
Cost of service and other revenue 709  503  1,329  890 
Amortization of acquired technology 41  42  82  57 
Selling and marketing 924  942  1,719  1,492 
Research and development 630  590  1,255  1,120 
General and administrative 323  399  627  661 
Amortization of other acquired intangible assets 121  121  242  174 
Total costs and expenses [A] 2,771  2,617  5,292  4,429 
Operating income 270  56  346  251 
Interest expense (65) (21) (114) (28)
Interest and other income (loss), net 23  (5) 28  45 
Income before income taxes 228  30  260  268 
Income tax provision (benefit) [B] 60  (70) 52  (60)
Net income $ 168  $ 100  $ 208  $ 328 
Basic net income per share $ 0.60  $ 0.35  $ 0.74  $ 1.18 
Shares used in basic per share calculations 281  283  281  278 
Diluted net income per share $ 0.60  $ 0.35  $ 0.73  $ 1.16 
Shares used in diluted per share calculations 282  287  283  282 

See accompanying Notes.
1


INTUIT INC.
NOTES TO TABLE A
 
[A]The following table summarizes the total share-based compensation expense that we recorded in operating income for the periods shown. 
  Three Months Ended Six Months Ended
(in millions) January 31,
2023
January 31,
2022
January 31,
2023
January 31,
2022
Cost of revenue $ 91  $ 38  $ 177  $ 65 
Selling and marketing 108  83  214  147 
Research and development 132  132  268  241 
General and administrative 92  83  186  163 
Total share-based compensation expense $ 423  $ 336  $ 845  $ 616 

[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.
For the three and six months ended January 31, 2023, we recognized tax shortfalls on share-based compensation of $9 million and $2 million, respectively, in our provision for income taxes. For the three and six months ended January 31, 2022, we recognized excess tax benefits on share-based compensation of $62 million and $109 million, respectively, in our provision for income taxes.
Our effective tax rates for the three and six months ended January 31, 2023 were approximately 26% and 20%, respectively. Excluding discrete tax items primarily related to share-based compensation, our effective tax rate for both periods was approximately 24%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the tax benefit we received from the federal research and experimentation credit.
We recorded a $70 million tax benefit on pretax income of $30 million for the three months ended January 31, 2022. We recorded a $60 million tax benefit on pretax income of $268 million for the six months ended January 31, 2022. Excluding discrete tax items primarily related to share-based compensation tax benefits mentioned above, our effective tax rate for both periods was approximately 25%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the tax benefit we received from the federal research and experimentation credit.
In the current global tax policy environment, the U.S. and other domestic and foreign governments continue to consider, and in some cases enact, changes in corporate tax laws. As changes occur, we account for finalized legislation in the period of enactment.

2


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 2023
  Q1 Q2 Q3 Q4 Year to Date
GAAP operating income (loss) $ 76  $ 270  $ —  $ —  $ 346 
Amortization of acquired technology 41  41  —  —  82 
Amortization of other acquired intangible assets 121  121  —  —  242 
Professional fees for business combinations —  — 
Share-based compensation expense 422  423  —  —  845 
Non-GAAP operating income (loss) $ 662  $ 856  $ —  $ —  $ 1,518 
GAAP net income (loss) $ 40  $ 168  $ —  $ —  $ 208 
Amortization of acquired technology 41  41  —  —  82 
Amortization of other acquired intangible assets 121  121  —  —  242 
Professional fees for business combinations —  — 
Share-based compensation expense 422  423  —  —  845 
Net (gain) loss on debt securities and other investments —  —  — 
Income tax effects and adjustments [A] (156) (136) —  —  (292)
Non-GAAP net income (loss) $ 470  $ 620  $ —  $ —  $ 1,090 
GAAP diluted net income (loss) per share $ 0.14  $ 0.60  $ —  $ —  $ 0.73 
Amortization of acquired technology 0.14  0.14  —  —  0.28 
Amortization of other acquired intangible assets 0.43  0.43  —  —  0.86 
Professional fees for business combinations 0.01  —  —  —  0.01 
Share-based compensation expense 1.49  1.50  —  —  2.99 
Net (gain) loss on debt securities and other investments —  0.01  —  —  0.01 
Income tax effects and adjustments [A] (0.55) (0.48) —  —  (1.03)
Non-GAAP diluted net income (loss) per share $ 1.66  $ 2.20  $ —  $ —  $ 3.85 
Shares used in GAAP diluted per share calculation 284  282  —  —  283 
Shares used in non-GAAP diluted per share calculation 284  282  —  —  283 
[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. Income tax adjustments consist primarily of the tax impact of the non-GAAP pre-tax adjustments and period specific GAAP items related to share-based compensation tax effects.
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.
3


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 2022
  Q1 Q2 Q3 Q4 Full Year
GAAP operating income (loss) $ 195  $ 56  $ 2,395  $ (75) $ 2,571 
Amortization of acquired technology 15  42  42  41  140 
Amortization of other acquired intangible assets 53  121  121  121  416 
Professional fees for business combinations 12  57  —  —  69 
Share-based compensation expense 280  336  346  346  1,308 
Non-GAAP operating income (loss) $ 555  $ 612  $ 2,904  $ 433  $ 4,504 
GAAP net income (loss) $ 228  $ 100  $ 1,794  $ (56) $ 2,066 
Amortization of acquired technology 15  42  42  41  140 
Amortization of other acquired intangible assets 53  121  121  121  416 
Professional fees for business combinations 12  57  —  —  69 
Share-based compensation expense 280  336  346  346  1,308 
Net (gain) loss on debt securities and other investments [A] (42) —  (7) —  (49)
Income tax effects and adjustments [B] (123) (210) (111) (141) (585)
Non-GAAP net income (loss) $ 423  $ 446  $ 2,185  $ 311  $ 3,365 
GAAP diluted net income (loss) per share $ 0.82  $ 0.35  $ 6.28  $ (0.20) $ 7.28 
Amortization of acquired technology 0.06  0.14  0.15  0.15  0.49 
Amortization of other acquired intangible assets 0.19  0.42  0.42  0.43  1.46 
Professional fees for business combinations 0.04  0.20  —  —  0.24 
Share-based compensation expense 1.01  1.17  1.21  1.22  4.61 
Net (gain) loss on debt securities and other investments [A] (0.15) —  (0.02) —  (0.17)
Income tax effects and adjustments [B] (0.44) (0.73) (0.39) (0.50) (2.06)
Non-GAAP diluted net income (loss) per share $ 1.53  $ 1.55  $ 7.65  $ 1.10  $ 11.85 
Shares used in GAAP diluted per share calculation 277  287  286  282  284 
Shares used in non-GAAP diluted per share calculation 277  287  286  284  284 
[A]    During the three months ended October 31, 2021, we recognized $39 million of net gains on other long-term investments.
[B]    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. 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.
4


TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
January 31,
2023
July 31,
2022
ASSETS
Current assets:
Cash and cash equivalents $ 1,547  $ 2,796 
Investments 524  485 
Accounts receivable, net 903  446 
Notes receivable 948  509 
Income taxes receivable 67  93 
Prepaid expenses and other current assets 391  287 
Current assets before funds receivable and amounts held for customers 4,380  4,616 
Funds receivable and amounts held for customers 376  431 
Total current assets 4,756  5,047 
Long-term investments 108  98 
Property and equipment, net 931  888 
Operating lease right-of-use assets 508  549 
Goodwill 13,779  13,736 
Acquired intangible assets, net 6,737  7,061 
Long-term deferred income tax assets 12  11 
Other assets 371  344 
Total assets $ 27,202  $ 27,734 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ 501  $ 499 
Accounts payable 811  737 
Accrued compensation and related liabilities 502  576 
Deferred revenue 852  808 
Other current liabilities 820  579 
Current liabilities before funds payable and amounts due to customers 3,486  3,199 
Funds payable and amounts due to customers 376  431 
Total current liabilities 3,862  3,630 
Long-term debt 6,576  6,415 
Long-term deferred income tax liabilities 320  619 
Operating lease liabilities 514  542 
Other long-term obligations 88  87 
Total liabilities 11,360  11,293 
Stockholders’ equity 15,842  16,441 
Total liabilities and stockholders’ equity $ 27,202  $ 27,734 

5


TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
  Six Months Ended
January 31,
2023
January 31,
2022
Cash flows from operating activities:
Net income $ 208  $ 328 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 94  96 
Amortization of acquired intangible assets 324  233 
Non-cash operating lease cost 46  40 
Share-based compensation expense 845  616 
Deferred income taxes [A] (290) (12)
Other 42  (29)
Total adjustments 1,061  944 
Changes in operating assets and liabilities:
Accounts receivable (456) (472)
Income taxes receivable 27  (117)
Prepaid expenses and other assets (108) (133)
Accounts payable 60  84 
Accrued compensation and related liabilities (75) (523)
Deferred revenue 40  83 
Operating lease liabilities (38) (41)
Other liabilities (107) 77 
Total changes in operating assets and liabilities (657) (1,042)
Net cash provided by operating activities 612  230 
Cash flows from investing activities:
Purchases of corporate and customer fund investments (388) (318)
Sales of corporate and customer fund investments 125  1,429 
Maturities of corporate and customer fund investments 225  154 
Purchases of property and equipment (132) (107)
Acquisitions of businesses, net of cash acquired (33) (5,682)
Originations and purchases of loans (1,015) (317)
Principal repayments of loans 530  175 
Other (16) (16)
Net cash used in investing activities (704) (4,682)
Cash flows from financing activities:
Proceeds from issuance of long-term debt —  4,700 
Repayment of debt (9) — 
Proceeds from borrowings under secured revolving credit facilities 175 
Repayments on borrowings under secured revolving credit facilities (16) — 
Proceeds from issuance of stock under employee stock plans 81  75 
Payments for employee taxes withheld upon vesting of restricted stock units (259) (355)
Cash paid for purchases of treasury stock (1,017) (874)
Dividends and dividend rights paid (446) (385)
Net change in funds receivable and funds payable and amounts due to customers (199) (82)
Cash received from a bank partner 336  — 
Other (1) (9)
Net cash provided by (used in) financing activities (1,355) 3,072 
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents (1) (6)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents (1,448) (1,386)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period 2,997  2,819 
6


Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 1,549  $ 1,433 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the condensed consolidated balance sheets to the total amounts reported on the condensed consolidated statements of cash flows
Cash and cash equivalents $ 1,547  $ 1,257 
Restricted cash and restricted cash equivalents included in funds receivable and amounts held for customers 176 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 1,549  $ 1,433 
Supplemental schedule of non-cash investing activities:
Issuance of common stock in business combinations $   $ 6,316 
[A] Under the 2017 Tax Cuts & Jobs Act, research and experimental costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective August 1, 2022. Unless this provision of the act is repealed or its effectiveness is deferred, the mandatory capitalization requirement significantly increases our deferred tax assets and cash tax payments for fiscal 2023.
7


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
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From To
Three Months Ending April 30, 2023
Revenue $ 6,063  $ 6,113  $ —  $ 6,063  $ 6,113 
Operating income $ 2,595  $ 2,620  $ 580  [a] $ 3,175  $ 3,200 
Diluted net income per share $ 6.82  $ 6.89  $ 1.60  [b] $ 8.42  $ 8.49 
Twelve Months Ending July 31, 2023
Revenue $ 14,035  $ 14,250  $ —  $ 14,035  $ 14,250 
Operating income $ 2,794  $ 2,899  $ 2,464  [c] $ 5,258  $ 5,363 
Diluted net income per share $ 6.92  $ 7.22  $ 6.67  [d] $ 13.59  $ 13.89 
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.
[a]     Reflects estimated adjustments for share-based compensation expense of approximately $420 million; amortization of other acquired intangible assets of approximately $120 million; and amortization of acquired technology of approximately $40 million.
[b]     Reflects estimated adjustments in item [a], income taxes related to these adjustments, and other income tax effects related to the use of the non-GAAP tax rate.
[c]     Reflects estimated adjustments for share-based compensation expense of approximately $1.8 billion; amortization of other acquired intangibles of approximately $483 million; amortization of acquired technology of approximately $162 million; and professional fees for business combinations of approximately $3 million.
[d]    Reflects estimated adjustments in item [c], income taxes related to these adjustments, other income tax effects related to the use of the non-GAAP tax rate.
8


INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated February 23, 2023 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
Gains and losses on disposals of businesses and long-lived assets
Professional fees and transaction costs 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 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 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 a business in a business combination, we are required by GAAP to record the fair values of the intangible assets of the business 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 businesses. 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.

9


Professional fees and transaction costs 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 credit losses on available-for-sale debt securities and gains and losses on 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. Based on our current long-term projections, we are using a long-term non-GAAP tax rate of 24% for fiscal 2022 and fiscal 2023. This long-term non-GAAP tax rate could be subject to change for various reasons including significant acquisitions, 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.

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 measure 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 business and long-lived assets.
10