Intuit Inc. (Nasdaq: INTU) today announced fourth-quarter revenue of $478
million, an 11 percent increase over the year-ago quarter. Revenue for
fiscal year 2008, which ended July 31, was $3.1 billion, a 15 percent
increase over the prior year.
“We had another successful tax season and a
solid finish in small business,” said Brad
Smith, Intuit’s president and chief executive
officer. “With our focus on innovation and on
solving customer problems with connected services, we are looking
forward to another strong year in fiscal 2009.”
Fiscal 2008 Financial Highlights
Revenue of $3.1 billion increased 15 percent from fiscal 2007. Growth
was driven by strong performance in Intuit’s
tax business and the acquisition of Digital Insight in February 2007.
GAAP (Generally Accepted Accounting Principles) operating income of
$651 million increased 2 percent from fiscal 2007. GAAP diluted
earnings per share of $1.41 increased 14 percent from fiscal 2007.
Non-GAAP operating income of $856 million increased 12 percent from
fiscal 2007. Non-GAAP diluted earnings per share of $1.60 increased 12
percent from fiscal 2007.
Fiscal 2008 Business Segment Results
QuickBooks revenue was $622 million, an increase of 6 percent
from the prior year.
Payroll and Payments revenue was $561 million, an increase of 9
percent from the prior year.
Consumer Tax revenue was $929 million, an increase of 14
percent from the prior year.
Accounting Professionals revenue was $327 million, an increase
of 4 percent from the prior year. This segment was formerly known as
Professional Tax.
Financial Institutions revenue was $299 million and includes
the results of Digital Insight, which was acquired on Feb. 6, 2007.
Other Businesses revenue was $334 million, an increase of 14
percent from the prior year.
Fourth-Quarter 2008 Financial Highlights
Revenue of $478 million increased 11 percent from the year-ago quarter.
GAAP operating loss of $94 million compared with a GAAP operating loss
of $57 million in the year-ago quarter. GAAP loss per share of $0.19
compared with a GAAP loss per share of $0.04 in the year-ago quarter.
Non-GAAP operating loss of $41 million compared with a non-GAAP
operating loss of $17 million in the year-ago quarter. Non-GAAP loss
per share of $0.08 compared with a non-GAAP loss per share of $0.02 in
the year-ago quarter.
Intuit typically posts a seasonal loss in its fourth quarter when there
is little revenue from its tax businesses but expenses remain relatively
constant. The 2008 loss includes a $23 million pretax charge for
severance and facilities closures. The 2007 loss includes a pretax gain
of $31 million from the sale of outsourced payroll assets.
Forward-looking Guidance
Intuit provided its financial guidance for fiscal 2009, which will end
on July 31, 2009. The company expects:
Revenueof $3.35 billion to $3.43 billion, or growth of 9
percent to 12 percent.
Non-GAAP operating income of $970 million to $990 million, or growth
of 13 percent to 16 percent. GAAP operating income is expected to be
$724 million to $744 million.
Non-GAAP diluted earnings per share, or EPS, is expected to be $1.86
to $1.90, or growth of 16 percent to 19 percent. GAAP diluted EPS is
expected to be $1.41 to $1.45.
Fiscal 2009 Business Segment Guidance
Intuit’s expected results for its business
segments for fiscal 2009 are:
QuickBooks revenueof $670 million to $695 million, or
growth of 8 percent to 12 percent.
Payroll and Payments revenueof $639 million to $662
million, or growth of 14 percent to 18 percent.
Consumer Tax revenueof $1.0 billion to $1.04 billion,
or growth of 8 percent to 12 percent.
Accounting Professionals revenueof $345 million to $358
million, or growth of 5 percent to 9 percent.
Financial Institutions revenueof $313 million to $325
million, or growth of 5 percent to 9 percent.
Other Businesses revenueof $354 million to $367
million, or growth of 6 percent to 10 percent.
First-Quarter Fiscal 2009 Guidance
Intuit’s expected results for the first
quarter of 2009, which will end on Oct. 31, 2008, are:
Revenue of $480 million to $492 million, or growth of 8 percent to 11
percent.
Non-GAAP operating loss of $65 million to $50 million and a GAAP
operating loss of $122 million to $107 million. Intuit typically posts
a seasonal loss in its first quarter when it has little revenue from
its tax businesses but expenses remain relatively constant.
Non-GAAP net loss per share of $0.14 to $0.11 and a GAAP net loss per
share of $0.26 to $0.23.
Webcast and Conference Call Information
A live audio webcast of Intuit’s
fourth-quarter 2008 conference call is available at http://www.intuit.com/about_intuit/investors/webcast.jhtml.
The call begins today at 1:30 p.m. Pacific time. The replay of the audio
webcast will remain on Intuit's Web site for one week after the
conference call. Intuit has also posted this press release, including
the attached tables and non-GAAP to GAAP reconciliations on its Web site
and will post the conference call script shortly after the conference
call concludes. These documents may be found at http://intuit.com/about_intuit/investors/earnings/2008/.
The conference call number is 866-814-1918 in the United States or
703-639-1362 from international locations. No reservation or access code
is needed. A replay of the call will be available for one week by
calling 888-266-2081, or 703-925-2533 from international locations. The
access code for this call is 1262029.
Intuit, the Intuit logo and QuickBooks, 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 tables titled "About Non-GAAP Financial Measures" as well
as the related Table B and Table E which follow it. A copy of the press
release issued by Intuit on August 21, 2008 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 Intuit’s future expected
financial results; its prospects for the business in fiscal 2009 and
beyond; and all of the statements under the headings “Forward-looking
Guidance,”“Fiscal
2009 Business Segment Guidance” and “First-Quarter
2009 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: 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 introduce new products and services to meet our growth and
profitability objectives, and current and future products and services
may not adequately address customer needs and may not achieve broad
market acceptance, which could harm our operating results and financial
condition; any failure to maintain reliable and responsive service
levels for our offerings could cause us to lose customers and negatively
impact our revenues and profitability; any significant product quality
problems or delays in our products 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; any failure to properly use and protect personal customer
information could harm our revenue, earnings and reputation; our
acquisition activities may be disruptive to Intuit and may not result in
expected benefits; our use of significant amounts of debt to finance
acquisitions or other activities could harm our financial condition and
results of operations; 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; predicting tax-related revenues is challenging due to the heavy
concentration of activity in a short time period; we have implemented,
and are continuing to upgrade, new information systems and any problems
with these new systems could interfere with our ability to deliver
products and services and gather information to effectively manage our
business; 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; if economic growth in the U.S.
continues to slow, our customers may delay or reduce technology
purchases which may harm our business, results of operations and
financial condition; 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 2007 and in our other SEC filings.
You can locate these reports through our website at http://www.intuit.com/about_intuit/investors.
Forward-looking statements are based on information as of August 21,
2008, and we do not undertake any duty to update any forward-looking
statement or other information in these remarks.
Table A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Twelve Months Ended
July 31,
July 31,
July 31,
July 31,
2008
2007
2008
2007
Net revenue:
Product
$
219,575
$
207,160
$
1,496,655
$
1,447,392
Service and other
258,579
225,512
1,574,319
1,225,555
Total net revenue
478,154
432,672
3,070,974
2,672,947
Costs and expenses:
Cost of revenue:
Cost of product revenue
28,883
27,026
154,147
169,101
Cost of service and other revenue
108,497
90,851
414,100
309,419
Amortization of purchased intangible assets
15,823
13,055
56,011
30,926
Selling and marketing
180,188
154,665
859,647
742,368
Research and development
156,730
125,902
605,818
472,516
General and administrative
72,029
69,859
294,966
291,083
Acquisition-related charges
10,169
8,022
35,518
19,964
Total costs and expenses [A]
572,319
489,380
2,420,207
2,035,377
Operating income (loss) from continuing operations
(94,165
)
(56,708
)
650,767
637,570
Interest expense
(11,901
)
(14,268
)
(52,290
)
(27,091
)
Interest and other income
14,043
20,822
46,520
52,689
Gains on marketable equity securities and other investments, net
227
-
1,417
1,568
Gain on sale of outsourced payroll assets [B]
-
31,270
51,571
31,676
Income (loss) from continuing operations before income taxes
(91,796
)
(18,884
)
697,985
696,412
Income tax (benefit) provision [C]
(30,260
)
(6,541
)
245,579
251,607
Minority interest expense, net of tax
324
516
1,656
1,337
Net income (loss) from continuing operations
(61,860
)
(12,859
)
450,750
443,468
Net income (loss) from discontinued operations [D]
-
(781
)
26,012
(3,465
)
Net income (loss)
$
(61,860
)
$
(13,640
)
$
476,762
$
440,003
Basic net income (loss) per share from continuing operations
$
(0.19
)
$
(0.04
)
$
1.37
$
1.29
Basic net income (loss) per share from discontinued operations
-
-
0.08
(0.01
)
Basic net income (loss) per share
$
(0.19
)
$
(0.04
)
$
1.45
$
1.28
Shares used in basic per share calculations
321,641
337,550
328,545
342,637
Diluted net income (loss) per share from continuing operations
$
(0.19
)
$
(0.04
)
$
1.33
$
1.25
Diluted net income (loss) per share from discontinued operations
-
-
0.08
(0.01
)
Diluted net income (loss) per share
$
(0.19
)
$
(0.04
)
$
1.41
$
1.24
Shares used in diluted per share calculations
321,641
337,550
339,268
355,815
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
(A)
The following table summarizes the total share-based compensation
expense that we recorded for continuing operations for the periods
shown. The share-based compensation expense that we recorded for
discontinued operations for these periods was nominal.
Three Months Ended
Twelve Months Ended
July 31,
July 31,
July 31,
July 31,
2008
2007
2008
2007
Cost of product revenue
$
171
$
129
$
1,018
$
743
Cost of service and other revenue
1,317
1,200
6,211
3,283
Selling and marketing
9,838
5,205
37,948
23,518
Research and development
7,464
5,305
31,841
21,511
General and administrative
8,165
6,489
36,219
27,258
Total share-based compensation
$
26,955
$
18,328
$
113,237
$
76,313
(B)
In March 2007 we sold certain assets related to our Complete Payroll
and Premier Payroll Service businesses to Automatic Data Processing,
Inc. (ADP) for a price of up to approximately $135 million in cash.
The final purchase price was contingent upon the number of customers
that transitioned to ADP pursuant to the purchase agreement over a
period of approximately one year from the date of sale. In the
twelve months ended July 31, 2008 we recorded a pre-tax net gain of
$51.6 million on our statement of operations for customers who
transitioned to ADP during that period. We received a total price of
$93.6 million and recorded a total pre-tax gain of $83.2 million
from the inception of this transaction through its completion in the
third quarter of fiscal 2008.
In accordance with the provisions of SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," we did not account for
this transaction as a discontinued operation because the operations
and cash flows of the assets could not be clearly distinguished,
operationally or for financial reporting purposes, from the rest of
our outsourced payroll business. The assets were part of our Payroll
and Payments segment.
(C)
Our effective tax rate for the three months ended July 31, 2008 was
approximately 33%. Excluding one-time charges primarily related to
an adjustment of a deferred tax asset, our effective tax rate for
that period was 35% and did not differ significantly from the
federal statutory rate. State income taxes were offset primarily by
the benefit we received from tax exempt interest income, the
domestic production activities deduction, and federal and state
research and experimental credits. Our effective tax rate for the
three months ended July 31, 2007 was approximately 35% and did not
differ significantly from the federal statutory rate. State income
taxes were offset primarily by the benefit we received from federal
and state research and experimental credits and tax exempt interest
income.
Our effective tax rate for the twelve months ended July 31, 2008 was
approximately 35% and did not differ significantly from the federal
statutory rate. State income taxes were offset primarily by the
benefit we received from tax exempt interest income, the domestic
production activities deduction, and federal and state research and
experimental credits. Our effective tax rate for the twelve months
ended July 31, 2007 was approximately 36%. This differed from the
federal statutory rate of 35% primarily due to state income taxes,
which were partially offset by the benefit we received from federal
and state research and experimental credits and tax exempt interest
income. In addition, we benefited from the retroactive extension of
the federal research and experimental credit in the fiscal 2007
period.
(D)
In August 2007 we sold our Intuit Distribution Management
Solutions (IDMS) business for approximately $100 million in cash
and recorded a net gain on disposal of $27.5 million. IDMS was
part of our Other Businesses segment. In accordance with the
provisions of SFAS 144, "Accounting for the Impairment or Disposal
of Long-lived Assets," we determined that IDMS became a
discontinued operation in the fourth quarter of fiscal 2007. We
have therefore segregated the net assets and operating results of
IDMS from continuing operations on our balance sheets and in our
statements of operations for all periods prior to the sale. Assets
held for sale at July 31, 2007 consisted primarily of goodwill and
purchased intangible assets. Because IDMS operating cash flows
were not material for any period presented, we have not segregated
them from continuing operations on our statements of cash flows.
We have segregated the cash impact of the gain on disposal of IDMS
on our statement of cash flows for the twelve months ended July
31, 2008.
Revenue and net loss from IDMS discontinued operations were $1.9
million and $0.7 million for the twelve months ended July 31, 2008.
Revenue and net loss from IDMS discontinued operations were $12.5
million and $0.8 million for the three months ended July 31, 2007
and revenue and net loss were $52.0 million and $2.3 million for the
twelve months then ended.
We recorded net losses of $0.8 million in the second quarter of
fiscal 2008 and $1.1 million in the third quarter of fiscal 2007 for
certain contingent liabilities that became payable to the purchaser
of our Intuit Information Technology Solutions business, which we
sold in December 2005.
(A)
Operating income (loss) and related operating margin as a percentage
of revenue. We exclude share-based compensation expenses,
amortization of purchased intangible assets and acquisition-related
charges from our GAAP operating income (loss) from continuing
operations and related operating margin in arriving at our non-GAAP
operating income (loss) and related operating margin primarily
because we do not consider them part of ongoing operating results
when assessing the performance of the organization, our operating
segments and senior management or when undertaking our budget and
planning process. We believe that the exclusion of these expenses
from our non-GAAP financial measures also facilitates the comparison
of results for current periods and guidance for future periods with
results for prior periods. In addition, we exclude amortization of
purchased intangible assets and acquisition-related charges from
non-GAAP operating income (loss) and operating margin because we
believe that excluding these items facilitates comparisons to the
results of other companies in our industry, which have their own
unique acquisition histories.
(B)
Net income (loss) and net income (loss) per share (or earnings per
share). We exclude share-based compensation expenses, amortization
of purchased intangible assets, acquisition-related charges, net
gains on marketable equity securities and other investments, gains
and losses on disposals of businesses and assets, certain tax items
as described above, and amounts related to discontinued operations
from our GAAP net income (loss) and net income (loss) per share in
arriving at our non-GAAP net income (loss) and net income (loss) per
share. We exclude all of these items from our non-GAAP net income
(loss) and net income (loss) per share primarily because we do not
consider them part of ongoing operating results when assessing the
performance of the organization, our operating segments and senior
management or when undertaking our budget and planning process. We
believe that the exclusion of these items from our non-GAAP
financial measures also facilitates the comparison of results for
current periods and guidance for future periods with results for
prior periods.
In addition, we exclude amortization of purchased intangible assets
and acquisition-related charges from our non-GAAP net income (loss)
and net income (loss) per share because we believe that excluding
these items facilitates comparisons to the results of other
companies in our industry, which have their own unique acquisition
histories. We exclude net gains on marketable equity securities and
other investments from our non-GAAP net income (loss) and net income
(loss) per share because they are unrelated to our ongoing business
operating results. Our non-GAAP financial measures exclude the
income tax effects of the adjustments described above that relate to
the current period as well as adjustments for similar items that
relate to prior periods. We exclude the impact of these tax items
because management believes that they are not indicative of our
ongoing business operations. The effective tax rates used to
calculate non-GAAP net income (loss) and net income (loss) per share
were as follows: 37% for the first quarter of fiscal 2007; 36% for
the second, third and fourth quarters of fiscal 2007; 36% for the
first, second, third and fourth quarters of fiscal 2008; and 36% for
fiscal 2009 guidance. Finally, we exclude amounts related to
discontinued operations from our non-GAAP net income (loss) and net
income (loss) per share because they are unrelated to our ongoing
business operations.
Table B
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Twelve Months Ended
July 31,
July 31,
July 31,
July 31,
2008
2007
2008
2007
GAAP operating income (loss) from continuing operations
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