Intuit Reaffirms First Quarter and Fiscal 2014 Outlook
Intuit Reaffirms First Quarter and Fiscal 2014 Outlook
Premieres Completely New QuickBooks Online as the Global Small Business Operating System
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (NAS: INTU) reaffirmed its financial guidance for the first quarter and full fiscal year 2014, first provided on Aug. 20. The company's fiscal year runs from Aug. 1 to July 31.
This announcement is in conjunction with Intuit's annual Investor Day, being held today at the company's Mountain View, Calif., headquarters. President and Chief Executive Officer Brad Smith will provide an overview of Intuit's connected services growth strategy, powered by the company's global ecosystem of offerings.
"After refreshing our strategy a year ago, we took bold, transformational steps to realign the company around two strategic outcomes: to be the operating system behind small business success, and to do the nations' taxes in the U.S. and Canada," said Smith. "This interdependent ecosystem creates the unique opportunity to achieve our product visions in small business and tax."
Three-point Growth Strategy
Intuit sees opportunities to drive future growth by continuing to solve the unmet needs of small businesses, consumers and accounting professionals. The growth strategy includes three elements:
- Delivering awesome product experiences - Reimagining products to deliver awesome products and an amazing first-use experience, giving customers the value they expect from Intuit's offerings as quickly and easily as possible.
- Enabling the contributions of others via network effect platforms - Solving customers' problems faster by moving to open platforms with application programming interfaces that enable the contributions of end users and third-party developers.
- Using data to create delight - Delivering better products and breakthrough benefits by appropriately using customer data to eliminate the need to enter data, helping customers make better decisions.
Next Generation of QuickBooks
Supporting this strategy, the company unveiled the next generation of QuickBooks Online. Rebuilt to deliver a simple yet powerful platform, the new QuickBooks Online goes beyond accounting and offers small businesses an unprecedented business management solution. The new QuickBooks Online is an open platform that sets the foundation for future growth in the United States and globally.
Intuit reiterated guidance for fiscal year 2014, which ends July 31:
- Revenue of $4.440 billion to $4.525 billion, growth of 6 to 8 percent.
- GAAP operating income of $1.347 billion to $1.377 billion, growth of 9 to 12 percent.
- Non-GAAP operating income of $1.580 billion to $1.610 billion, growth of 7 to 10 percent.
- GAAP diluted earnings per share of $3.11 to $3.19, growth of 10 to 13 percent.
- Non-GAAP diluted EPS of $3.52 to $3.60, growth of 10 to 13 percent.
With the recent restructuring to focus the company on two core outcomes, Intuit has revised how it intends to report results in fiscal 2014. The company will report revenue and segment contribution margin for these three new segments and expects the following revenue growth for fiscal year 2014:
- Small Business Group: 10 to 12 percent.
- Consumer Group, which includes TurboTax, Quicken, and Mint: 3 to 5 percent.
- Within Consumer Group, Consumer Tax growth of 4 to 5 percent.
- Professional Tax: 0 to 4 percent.
Intuit also reiterated its outlook for the first quarter of fiscal 2014:
- Revenue of $595 million to $605 million, growth of 6 to 8 percent.
- GAAP operating loss of $88 million to $93 million, compared to an operating loss of $73 million in the year-ago quarter.
- Non-GAAP operating loss of $30 million to $35 million, compared to an operating loss of $16 million in the year-ago quarter.
- GAAP net loss per share of $0.10 to $0.11, compared to a net loss per share of $0.06 in the year-ago quarter.
- Non-GAAP net loss per share of $0.10 to $0.11, compared to a net loss per share of $0.05 in the year-ago quarter.
Investor Day will be broadcast live on Intuit's website at http://investors.intuit.com/events/default.aspx. A replay of the 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®, 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 $4.2 billion in its fiscal year 2013. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.
Intuit and the Intuit logo, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(In millions, except per share amounts)
|Three Months Ending October 31, 2013|
|Diluted loss per share||$||(0.11||)||$||(0.10||)||$||—||[b]||$||(0.11||)||$||(0.10||)|
|Twelve Months Ending July 31, 2014|
|Diluted earnings per share||$||3.11||$||3.19||$||0.41||[d]||$||3.52||$||3.60|
See "About Non-GAAP Financial Measures" immediately following this Table 1 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 $48 million; amortization of acquired technology of approximately $5 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 the estimated net gain on the disposal of Intuit Financial Services.
[c] Reflects estimated adjustments for share-based compensation expense of approximately $198 million; amortization of acquired technology of approximately $18 million; and amortization of other acquired intangible assets of approximately $17 million.
[d] Reflects the estimated adjustments in item [c], income taxes related to these adjustments, and the estimated net gain on the disposal of Intuit Financial Services.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated September 24, 2013 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 related 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.
Cautions About Forward-looking Statements
This press release contains forward-looking statements, including forecasts of Intuit's future expected financial results; forecasts of expected results by segment; expectations regarding growth from current or future products and services; expectations regarding Intuit's growth strategy and its impact on Intuit's business; Intuit's prospects for the business in fiscal 2014; 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; the competitive environment; governmental encroachment in our tax businesses or other governmental activities or public policy affecting the preparation and filing of tax returns; our ability to innovate and adapt to technological change; business interruption or failure of our information technology and communication systems; problems with implementing upgrades to our customer facing applications and supporting information technology infrastructure; any failure to properly use and protect personal customer information and data; our ability to develop, manage and maintain critical third party business relationships; increased government regulation of our businesses; any failure to process transactions effectively or to adequately protect against potential fraudulent activities; any significant offering quality problems or delays; our participation in the Free File Alliance; the global economic environment; changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise; the highly seasonal and unpredictable nature of our revenue; our inability to attract, retain and develop highly skilled employees; increased risks associated with international operations; our ability to repurchase shares; 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; disruptions, expenses and risks associated with our acquisitions and divestitures; amortization of acquired intangible assets and impairment charges; our use of significant amounts of debt to finance acquisitions or other activities; and the cost of, and potential adverse results in, litigation involving intellectual property, antitrust, shareholder and other matters. 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 September 24, 2013 and we do not undertake any duty to update any forward-looking statement or other information in these materials.
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