Intuit Fourth Quarter Revenue Up 17 Percent, Full Year Up 15 Percent

August 23, 2018

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Aug 23, 2018--Intuit Inc. (Nasdaq: INTU) announced financial results for the fourth quarter and full fiscal year 2018, which ended July 31.

“Growth accelerated across our businesses this year, fueled by 18 percent growth in the Small Business and Self-Employed Group, and 14 percent growth in the Consumer Group,” said Brad Smith, Intuit’s chairman and chief executive officer.

“Both Online Ecosystem revenue and QuickBooks Online subscribers grew at a rapid pace. We are also pleased with the strong product innovation in our Consumer business, focused on better serving our customers.

“One year into our focus on the One Intuit Ecosystem, our results affirm that our strategy is working and is positioning the company for durable growth,” said Smith.

Financial Highlights

For the fourth quarter, Intuit:

Grew revenue to $988 million, up 17 percent year-over-year. Grew Online Ecosystem revenue by 43 percent.

For the full year, Intuit:

Grew revenue to nearly $6.0 billion, up 15 percent year-over-year. Grew Online Ecosystem revenue by 40 percent. Finished the year with over 3.4 million QuickBooks Online subscribers, growth of 43 percent. Grew Consumer Group revenue 14 percent. Increased GAAP operating income to $1.5 billion, up from $1.4 billion in the prior year. Increased non-GAAP operating income to $2.0 billion, up 14 percent. Increased GAAP and non-GAAP earnings per share by 25 percent and 27 percent respectively.

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.

Snapshot of Fourth-quarter Results

NM = Not meaningful.

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 fourth quarter include a $79 million charge from the sale of our data center in Quincy, Washington. The impact of this charge on net income and EPS was offset by recognized tax benefits.

Snapshot of FY ’18 Full-year Results

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 fiscal year 2018 include a $79 million charge from the sale of our data center in Quincy, Washington. The impact of this charge on net income and EPS was offset by recognized tax benefits.

Business Segment Results

Small Business and Self-Employed Group

Grew total Small Business and Self-Employed Group revenue 20 percent for the quarter and 18 percent for the year. Added over 1 million QuickBooks Online subscribers during fiscal year 2018. Increased the QuickBooks Online subscriber base in the U.S. 38 percent, to approximately 2.6 million, and outside the U.S. 62 percent to over 800,000 subscribers. Increased QuickBooks Self-Employed subscribers to nearly 720,000.

Consumer and Strategic Partner Groups

Grew Consumer Group revenue by 14 percent for the year. Increased professional tax revenue in the Strategic Partner Group by 4 percent for the year.

Capital Allocation Summary

Repurchased over $270 million of stock during fiscal year 2018. Received board approval for a new $2 billion repurchase authorization, bringing the total authorization to $3.2 billion to repurchase shares, including the remaining amount on the prior authorization. The board approved a quarterly dividend of $0.47 per share, payable October 18, 2018. This represents a 21 percent increase versus last year.

New Accounting Standard

Intuit adopted the new revenue recognition standard, ASC606, in fiscal year 2019, which began August 1, 2018. The company elected to adopt ASC606 under the full retrospective method for comparability, and is providing restated financial information for fiscal years 2017 and 2018. The impact of adopting the new standard is an increase to reported revenue in fiscal years 2017 and 2018 of $19 million and $61 million, respectively, and a decrease to expected revenue for fiscal year 2019 of $30 million.

“While we are changing how we account for revenue under ASC606, this is an accounting change only, and has no impact on customer billings or cash flow,” said Intuit CFO Michelle Clatterbuck. “In addition, how we recognize revenue for all online offerings, supplies, and desktop payroll and payments will not change.”

What will change under the new standard is how the company accounts for revenue associated with QuickBooks Desktop units, QuickBooks desktop subscription offerings, and consumer and professional tax desktop offerings.

In the Small Business and Self-Employed Group the timing of revenue for QuickBooks desktop solutions is expected to shift to earlier quarters within each fiscal year.

In the Consumer and Strategic Partner Groups, more revenue will be recognized at the beginning of the tax season for consumer and professional desktop solutions.

Additional details presenting restated information based on the adoption of the new standard are in Table E, Table F1, Table F2, Table G, Table H and Table I.

Additional information highlighting the significant changes under ASC606 can be found on Intuit’s Investor Relations site.

Forward-looking Guidance

First quarter and full-year fiscal 2019 guidance are reported under ASC606.

Intuit announced guidance for the first quarter of fiscal year 2019, which ends Oct. 31. The company expects:

Revenue of $955 million to $975 million, growth of 5 to 7 percent. GAAP operating loss of $70 million to $80 million. Non-GAAP operating income of $30 million to $40 million. GAAP loss per share of $0.17 to $0.19. Non-GAAP diluted earnings per share of $0.09 to $0.11.

First quarter fiscal year 2019 revenue guidance would have been approximately $30 million higher under 605 than it is under 606.

Intuit also announced 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.

The company expects the following segment revenue results under ASC606 for fiscal year 2019:

Small Business and Self-Employed Group: growth of 9 to 11 percent. Consumer Group: growth of 9 to 10 percent. Strategic Partner Group: growth of 2 to 4 percent.

Intuit also provided fiscal 2019 guidance under ASC605 in order to compare with the previous year. Full year fiscal 2019 guidance under the historical ASC605 standard includes:

Total company revenue growth range of 10 to 12 percent, GAAP diluted earnings per share of $5.35 to $5.45, and Non-GAAP diluted earnings per share of $6.50 to $6.60.

Going forward, guidance will only be provided in accordance with ASC606.

Conference Call Details

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on Aug. 23. 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.

Replay Information

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 8395535.

The audio webcast will remain available on Intuit’s website for one week after the conference call.

Investor Day 2018

Intuit will host its annual Investor Day at its Mountain View, Calif., headquarters on Sept. 27 at 8 a.m. Pacific time. The half-day event will include presentations from Brad Smith, chairman and chief executive officer, Michelle Clatterbuck, chief financial officer, and other leaders.

About Intuit

Intuit’s mission is to Power Prosperity Around the World. Our global products and platforms, including TurboTax, QuickBooksMint  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, Table F1, Table F2, and Table J. 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, the Online Ecosystem and from current or future products and services; expectations regarding the impact of the One Intuit Ecosystem strategy on Intuit’s business; 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 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: 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 or any of our businesses; our ability to innovate and adapt to technological change; availability of our products and services could be impacted by business interruption or failure of our information technology and communication systems; any problems with implementing upgrades to our customer facing applications and supporting information technology infrastructure; any failure to properly use and protect personal customer and our business information and data; our ability to develop, manage and maintain critical third-party business relationships; our dependence on third party technology and services; increases in or changes to government regulation affecting our businesses; any failure to process transactions effectively or to adequately protect against potential fraudulent activities; any loss of confidence in using our software as a result of publicity regarding fraudulent activity, even if it does not directly involve our products or services; any significant product accuracy or quality problems or delays; any lost revenue opportunities or cannibalization of our traditional paid franchise due to our participation in the Free File Alliance; the global economic environment may impact consumer and small business spending, financial institutions and tax filings; changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise; the seasonal and unpredictable nature of our revenue; our ability to attract, retain and develop highly skilled employees; increased risks associated with international operations; unanticipated changes in our income tax rates; the effect of tax reform legislation; changes in the amounts or frequency of share repurchases or dividends; 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; 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 the risks that may impact our business are included in our Form 10-K for fiscal 2017 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 August 23, 2018, and we do not undertake any duty to update any forward-looking statement or other information in these materials.

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