Intuit Reports First Quarter Revenue Increased 12 Percent Led by 42 Percent Growth in Small Business Online Ecosystem Revenue
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Nov 19, 2018--Intuit Inc. (Nasdaq: INTU) announced financial results for the first quarter of fiscal 2019, which ended Oct. 31.
“We are off to a strong start this year, with overall revenue growth of 12 percent during the first quarter, with strength across each of our businesses,” said Brad Smith, Intuit’s chairman and chief executive officer.
“Small Business and Self-Employed Group delivered another strong quarter and we expect momentum to continue as we place an increased emphasis on online services to deliver greater value to our customers. This includes services such as QuickBooks Capital, an innovative same-day payroll capability within QuickBooks Online Payroll, and our soon to be launched next-day funding within QuickBooks Payments.
“The team is also gearing up for tax season, focused on delivering the benefits of DIY tax prep while transforming the assisted tax segment. With TurboTax Live we’re combining breakthrough technology with decades of tax expertise to deliver an outstanding end-to-end experience that increases the confidence of our customers. Looking ahead to the tax season, we are very pleased with the opportunities to address the needs of more tax filers with TurboTax Live.
While this is great start to the year, there’s plenty of game to be played, with our two largest quarters ahead of us,” said Smith.
For the first quarter, Intuit:Grew total revenue to $1.0 billion, up 12 percent. Increased Online Ecosystem revenue by 42 percent. Reported a GAAP operating loss of $10 million, versus a $35 million loss a year ago. Reported a non-GAAP operating income of $102 million, versus $65 million last year.
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. Fiscal 2018 amounts have been restated for the adoption of the new accounting standard on revenue accounting, ASC606.
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). GAAP earnings per share for the first quarter of fiscal 2019 includes a $41 million excess tax benefit on share-based compensation due to an increase in stock option exercises during the quarter.
Business Segment Results
Small Business and Self-Employed GroupTotal Small Business and Self-Employed Group revenue grew 11 percent. QuickBooks Online subscribers grew 41 percent, ending the quarter with nearly 3.6 million subscribers. U.S. subscribers grew 35 percent to approximately 2.7 million, and international subscribers grew 61 percent to over 880,000. Within QuickBooks Online, Self-Employed subscribers grew to approximately 745,000, up from roughly 425,000 one year ago. Since launched a year ago, QuickBooks Capital has funded $200 million in cumulative loans.
Consumer and Strategic Partner GroupsGrew Consumer revenue by 22 percent. Grew professional tax revenue within the Strategic Partner Group by 6 percent.
Capital Allocation Summary
In the first quarter the company:Repurchased over $101 million of shares, with $3.1 billion remaining on the company’s authorization. Received board approval for a quarterly dividend of $0.47 per share, payable Jan. 18, 2019. This represents a 21 percent increase compared to last year.
Intuit announced guidance for the second quarter of fiscal year 2019, which ends Jan. 31. The company expects:Revenue of $1.470 billion to $1.490 billion, growth of 10 to 11 percent. GAAP operating income of $180 million to $190 million. Non-GAAP operating income of $290 million to $300 million. GAAP diluted earnings per share of $0.55 to $0.58. Non-GAAP diluted earnings per share of $0.85 to $0.88.
Intuit reiterated guidance for full fiscal year 2019. The company expects:Revenue of $6.530 billion to $6.630 billion, growth of 8 to 10 percent. GAAP operating income of $1.725 billion to $1.775 billion, growth of 11 to 14 percent. Non-GAAP operating income of $2.165 billion to $2.215 billion, growth of 6 to 8 percent. GAAP diluted earnings per share of $5.25 to $5.35, growth of 3 to 5 percent. Non-GAAP diluted earnings per share of $6.40 to $6.50, growth of 11 to 12 percent.
Tax Season Unit Updates
The company will provide a tax unit update in late February, concurrent with second-quarter earnings. A final update will be provided in late April after the tax season ends.
Conference Call Details
Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on Nov. 19. To hear the call, dial 844-246-4601 in the United States or 703-639-1172 from international locations. No reservation or access code is needed. The conference call can also 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.
A replay of the conference call will be available for one week by calling 855-859-2056, or 404-537-3406 from international locations. The access code for this call is 2867917.
The audio webcast will remain available on Intuit’s website for one week after the conference call.
Intuit’s mission is to Power Prosperity Around the World. Our global products and platforms, including TurboTax, QuickBooks, Mint and Turbo, are designed to empower consumers, self-employed and small businesses to improve their financial lives, finding them more money with the least amount of work, while giving them complete confidence in their actions and decisions. Our innovative ecosystem of financial management solutions serves approximately 50 million customers worldwide, unleashing the power of many for the prosperity of one. Please visit us for the latest news and in-depth information about Intuit and its brands and find us on social.
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 forecasts of expected growth and future financial results of Intuit and its reporting segments; Intuit’s prospects for the business in fiscal 2019 and beyond; expectations regarding timing and growth of revenue for each of Intuit’s reportable 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 Intuit’s corporate tax rate; 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: our ability to compete successfully; our participation in the Free File Alliance; governmental encroachment in our tax businesses, our ability to adapt to technological change; our ability to predict consumer behavior; our ability to protect our intellectual property rights; our reliance on third party intellectual property; any harm to our reputation; risks associated with acquisitions and divestitures; issue of additional shares as consideration or incurring debt to fund an acquisition; our 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; failure to process transactions effectively; interruption or failure of our information technology; ability to maintain critical third party business relationships; our ability to attract and retain talent; deficiency in quality, accuracy or timely launch of products; difficulties in processing or filing customer tax submissions; risks associated with international operations; changes to public policy, laws or regulations affecting our businesses; litigation in which we are involved; seasonal nature of our tax business; changes in tax rates and tax reform legislation; global economic changes; exposure to credit risk of the businesses we provide capital to; amortization of acquired intangible assets and impairment charges; our ability to repay 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 2018 and in our other SEC filings. You can locate these reports through our website at http://investors.intuit.com. Fiscal 2019 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 release. We do not undertake any duty to update any forward-looking statement or other information in this presentation.
* Prior-period information has been restated for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on August 1, 2018.
See accompanying Notes.
NOTES TO TABLE A
[A] The following table summarizes the total share-based compensation expense that we recorded in operating loss for the periods shown.
[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.
Our effective tax rate for the three months ended October 31, 2017 has been restated to reflect the full retrospective application of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”
The Tax Cuts and Jobs Act (2017 Tax Act) was enacted on December 22, 2017 and reduced the U.S. statutory federal corporate tax rate from 35% to 21%. The effective date of the tax rate change was January 1, 2018. The change resulted in a blended lower U.S. statutory federal rate of 26.9% for fiscal 2018. Our first quarter of fiscal 2018 reflects tax effects at the pre-enactment U.S. statutory federal rate of 35%. In fiscal 2019, we fully benefit from the enacted lower tax rate of 21%.
On December 22, 2017 the SEC issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Act in the period of enactment. The guidance allows us to record provisional amounts to the extent a reasonable estimate can be made and provides us with up to one year from enactment date to finalize accounting for the impacts of the 2017 Tax Act. Since the 2017 Tax Act was passed in our second quarter of fiscal 2018, the deferred tax re-measurements and other items are considered provisional due to the forthcoming guidance and ongoing analysis of the final year-end data and tax positions. As of October 31, 2018, we have not fully completed our accounting for the tax effects of enactment of the 2017 Tax Act. We did not record any significant adjustments to prior period estimates during the three months ended October 31, 2018. We expect to complete our analysis within the 12-month measurement period in accordance with SAB 118.
We recognized excess tax benefits on share-based compensation of $41 million and $25 million in our provision for income taxes for the three months ended October 31, 2018 and 2017, respectively.
We recorded a $48 million tax benefit on a pretax loss of $14 million for the three months ended October 31, 2018. Excluding discrete tax items primarily related to share-based compensation tax benefits, our effective tax rate for the period was 23% and did not differ significantly from the federal statutory rate of 21%.
Our effective tax rate for the three months ended October 31, 2017 was approximately 95%. Excluding discrete tax items primarily related to share-based compensation tax benefits, our effective tax rate for the period was 33% and did not differ significantly from the federal statutory rate of 35%.
This article has been truncated. You can see the rest of this article by visiting http://www.businesswire.com/news/home/20181119005810/en.