Intuit Reports First-Quarter Revenue Growth of 12 Percent; Reiterates Full-year Guidance
Small Business Group Grows Revenue 12 Percent, Driven by Strength in Financial Management Solutions
MOUNTAIN VIEW, Calif. (November 18, 2010) – Intuit Inc. (Nasdaq:INTU) today announced financial results for its first fiscal quarter, which ended Oct. 31.
First-Quarter 2011 Highlights:
- Revenue increased to $532 million, up 12 percent year over year.
- Intuit’s Small Business lineup showed strength across the board, with double-digit revenue growth in Financial Management Solutions and Employee Management Solutions.
- Customer growth in Small Business continued, led by QuickBooks Online, QuickBooks Enterprise and Intuit Websites.
- Intuit typically posts a seasonal loss in its first quarter when there is little revenue from its tax businesses but expenses continue at relatively consistent levels.
- Intuit reiterated full-year guidance: For fiscal year 2011 the company expects revenue of $3.74 billion to $3.84 billion, growth of 8 to 11 percent.
| GAAP | Non-GAAP | |||||||||||||||||
| Q1 FY11 | Q1 FY10 | Change | Q1 FY11 | Q1 FY10 | Change | |||||||||||||
| Revenue | $532 | $474 | 12% | $532 | $474 | 12% | ||||||||||||
| Operating Loss | $(104) | $(100) | NA | $(53) | $(40) | NA | ||||||||||||
| EPS | $(0.22) | $(0.21) | NA | $(0.12) | $(0.10) | NA |
- Dollars in millions, except EPS.
Company Perspective
“We completed another strong quarter, getting us off to a good start in fiscal 2011. Our biggest quarters lie ahead of us,” said Brad Smith, Intuit’s president and chief executive officer. “Although the macroeconomic environment remains challenging, we’re executing well against our strategy, and that’s driving solid financial performance.
“We delivered double-digit revenue growth, demonstrating that our strategy is working. Our Small Business Group continues to show strength across the board. The early feedback on QuickBooks 2011 and QuickBooks Online is very positive and shows the potential of our core products. We are also seeing more people choosing Intuit Websites solutions, and healthy interest in our newly available mobile solutions coming to market.
“The market is clearly shifting to digital, or connected services. That plays to our advantage, and will help drive the next phase of our growth. It’s especially clear in our tax business, where recent competitive events demonstrate the power and acceptance of digital services. That’s our sweet spot. As we look forward to the tax season, we believe we’re well positioned to expand the category and continue to grow share, with a strong marketing effort and a product line that offers customers the easiest-to-use solution at a compelling price.”
Quarterly Business Segment Results and Highlights
Total Small Business Group revenue grew 12 percent compared to the year-ago quarter. This group includes these three business segments.
Financial Management Solutions
- Revenue increased 15 percent compared to the year-ago quarter. Early product reviews for QuickBooks 2011 have been very strong, with new features and a new subscription product bundle that provides customers with online and mobile access and upgrades as they become available.
- QuickBooks Online subscriptions grew 46 percent year over year, and the active customer base is now roughly 217,000.
- Intuit Websites’ customer base increased by more than 60 percent year over year.
- Intuit Websites and QuickBooks Online continued bringing new customers into the small business franchise.
Employee Management Solutions
- Revenue grew 11 percent compared to the year-ago quarter.
- Intuit Online Payroll continued to attract customers by providing a cost-effective solution for small business payroll.
Payment Solutions
- Revenue grew 7 percent compared to the year-ago quarter, driven by merchant growth of 15 percent. Transaction volume per merchant was down 3 percent.
- Launched in August in a partnership with hardware provider mophie, Intuit GoPayment provides an all-in-one mobile payments solution that allows small businesses to easily swipe and process credit card payments via the Apple iPhone.
Consumer Tax
- Consumer tax revenue was $29 million, up $7 million from last year.
- While the first quarter is seasonally slow for tax, the organization is preparing for the coming season, enhancing products to build on last year’s success. TurboTax for 2010 will go on sale in retail stores on Nov. 26.
Accounting Professionals
- Accounting Professionals segment revenue grew 15 percent compared to the year-ago quarter, in line with expectations.
Financial Services
- Revenue increased 1 percent compared to the year-ago quarter. Internet banking users grew 11 percent, while bill pay users grew 19 percent. Adjusting for the divestiture of Intuit’s lending business and a nonrecurring revenue item, Financial Services revenue would have grown approximately 6 percent for the quarter.
- Consumer and business offerings, including FinanceWorks, continued to help financial institutions effectively compete and attract new customers. A key driver is a revamped consumer and business home page that brings all the most important functions up front to the user. These new, streamlined experiences will help drive increased usage and adoption and will soon be offered to more financial institutions.
Other Businesses
- Revenue grew 27 percent compared to the year-ago quarter.
- The Small Business units in Canada and the United Kingdom performed well, driven by strong desktop and subscription sales. Retail and online share in the U.K. has climbed steadily over the last year.
- Quicken desktop started strong with customer-driven product improvements and a revitalized user interface.
- During the first quarter, Intuit Health’s patient portal registered its 3 millionth user. The solution has added 1 million new patients since January.
Share Repurchase Program
Intuit repurchased $330 million of its common stock in the first quarter and has $1.67 billion remaining on its current share repurchase authorization.
Forward-looking Guidance
For the second-quarter the company expects:
- Revenue of $920 million to $940 million, growth of 10 to 12 percent.
- GAAP operating income of $135 million to $155 million, compared with $139 million in the year-ago quarter.
- GAAP diluted EPS of $0.24 to $0.28, compared with $0.35 in the year-ago quarter. GAAP diluted EPS for the year-ago quarter included $0.10 for the gain on the sale of the Intuit Real Estate Solutions business.
- Non-GAAP operating income of $190 million to $210 million, compared with $206 million in the year-ago quarter.
- Non-GAAP diluted EPS of $0.36 to $0.40, compared with $0.38 in the year-ago quarter.
Intuit also reiterated its full-year fiscal 2011 guidance. For the year ending July 31 Intuit expects:
- Revenue of $3.74 billion to $3.84 billion, growth of 8 to 11 percent.
- GAAP operating income of $980 million to $1.015 billion, or growth of 14 to 18 percent.
- GAAP diluted EPS of $1.88 to $1.95, growth of 6 to 10 percent. GAAP EPS growth rates are 7 points higher when the gain from the sale of discontinued operations is excluded from the fiscal year 2010 GAAP results.
- Non-GAAP operating income of $1.215 billion to $1.25 billion, growth of 11 to 14 percent.
- Non-GAAP diluted EPS of $2.36 to $2.43, growth of 12 to 15 percent.
Conference Call Information
Intuit executives will discuss the financial results on a conference call today at 1:30 p.m. Pacific time. To hear the call, dial 866-238-1645 in the United States or 703-639-1163 from international locations. No reservation or access code is needed. The conference call can also be heard live via webcast at http://investors.intuit.com/events.cfm. 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 also be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1493604.
The audio webcast will remain available on Intuit’s website for one week after the conference call.
About Intuit Inc.
Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit’s leading tax preparation offerings for professional accountants. Intuit Financial Services helps banks and credit unions grow by providing on-demand solutions and services that make it easier for consumers and businesses to manage their money.
Founded in 1983, Intuit had annual revenue of $3.5 billion in its fiscal year 2010. 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, 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. 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 Intuit’s future expected financial results; its prospects for the business in fiscal 2011; 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: 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 and financial institutions, which could negatively affect our revenue and profitability; 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 2010 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 November 18, 2010, and we do not undertake any duty to update any forward-looking statement or other information in these materials.
| TABLE A | |||||||||||||
| Three Months Ended | |||||||||||||
| October 31, | October 31, | ||||||||||||
| 2010 | 2009 | ||||||||||||
| Net revenue: | |||||||||||||
| Product | $ | 216 | $ | 205 | |||||||||
| Service and other | 316 | 269 | |||||||||||
| Total net revenue | 532 | 474 | |||||||||||
| Costs and expenses: | |||||||||||||
| Cost of revenue: | |||||||||||||
| Cost of product revenue | 32 | 35 | |||||||||||
| Cost of service and other revenue | 123 | 109 | |||||||||||
| Amortization of acquired technology | 4 | 22 | |||||||||||
| Selling and marketing | 220 | 180 | |||||||||||
| Research and development | 156 | 141 | |||||||||||
| General and administrative | 90 | 77 | |||||||||||
| Amortization of other acquired intangible assets | 11 | 10 | |||||||||||
| Total costs and expenses [A] | 636 | 574 | |||||||||||
| Operating loss from continuing operations | (104 | ) | (100 | ) | |||||||||
| Interest expense | (15 | ) | (16 | ) | |||||||||
| Interest and other income, net | 8 | 5 | |||||||||||
| Loss from continuing operations before | |||||||||||||
| income taxes | (111 | ) | (111 | ) | |||||||||
| Income tax benefit [B] | (41 | ) | (42 | ) | |||||||||
| Net loss from continuing operations | (70 | ) | (69 | ) | |||||||||
| Net income from discontinued operations [C] | – | 1 | |||||||||||
| Net loss | $ | (70 | ) | $ | (68 | ) | |||||||
| Basic and diluted net loss per share from | |||||||||||||
| continuing operations | $ | (0.22 | ) | $ | (0.21 | ) | |||||||
| Basic and diluted net income per share from | |||||||||||||
| discontinued operations | – | – | |||||||||||
| Basic and diluted net loss per share | $ | (0.22 | ) | $ | (0.21 | ) | |||||||
| Shares used in basic and diluted per share calculations | 316 | 320 | |||||||||||
| See accompanying Notes. | |||||||||||||
| INTUIT INC. NOTES TO TABLE A | |||||||||||||
| [A] The following table summarizes the total share-based compensation expense from continuing operations that we recorded for the periods shown. | |||||||||||||
| Three Months Ended | |||||||||||||
| October 31, | October 31, | ||||||||||||
| (in millions) | 2010 | 2009 | |||||||||||
| Cost of product revenue | $ | – | $ | – | |||||||||
| Cost of service and other revenue | 1 | 2 | |||||||||||
| Selling and marketing | 9 | 7 | |||||||||||
| Research and development | 13 | 9 | |||||||||||
| General and administrative | 12 | 9 | |||||||||||
| Total share-based compensation | $ | 35 | $ | 27 | |||||||||
| [B] Our effective tax benefit rate for the three months ended October 31, 2010 was approximately 37%. 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 the domestic production activities deduction. Our effective tax benefit rate for the three months ended October 31, 2009 was approximately 38%. 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 the domestic production activities deduction and the federal research and experimentation credit. | |||||||||||||
| [C] On January 15, 2010 we sold our Intuit Real Estate Solutions (IRES) business for approximately $128 million in cash and recorded a net gain on disposal of $35 million. IRES was part of our Other Businesses segment. We determined that IRES became a discontinued operation in the second quarter of fiscal 2010. We have therefore segregated the operating results of IRES from continuing operations in our statements of operations for all periods prior to the sale. Revenue from IRES was $19 million for the three months ended October 31, 2009. Because IRES operating cash flows were not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows. |
Source: Intuit Inc.