Thursday, February 20, 2014

Intuit Announces Second-quarter Results; Reiterates Full-year Guidance / QuickBooks Online Increases Subscriptions 30 Percent; Early TurboTax Trends Positive

Intuit Inc (INTU) . (Nasdaq: INTU) today announced financial results for the second quarter of fiscal 2014, which ended Jan. 31.
With a renewed focus, our teams are now aligned against 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 Brad Smith, Intuits president and chief executive officer. "I'm pleased that we are seeing momentum across our businesses driven by our platform shift to the cloud.
While the tax season is just underway, we are encouraged by our product innovations, our focus on filers with simple returns and a strong branding campaign. This momentum, along with early-season unit growth, give us confidence we're off to a good start, Smith said.
Financial Highlights
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.
  • Accelerated subscriber growth across small business, led by QuickBooks Online growth of 30 percent, with customer growth outside the U.S. increasing 90 percent.
  • Gained momentum in the adoption of connected services with total QuickBooks subscribers growing 26 percent.
  • Raised guidance for the third quarter and reiterated guidance for full fiscal year revenue, operating income and earnings per share, expecting full fiscal year revenue growth of 6 to 8 percent.
  • Completed an accelerated share repurchase agreement to buy back $1.4 billion in shares.
Second-quarter Revenue
Total second-quarter revenue declined 12 percent to $782 million, reflecting processing delays and changes in Intuits tax offerings that will shift revenue into the third quarter.
Business Segment Highlights
Small Business
  • Grew total Small Business segment revenue 8 percent.
  • Grew Small Business Financial Solutions revenue 5 percent, including QuickBooks revenue growth of 12 percent and flat payments revenue.
  • Delivered 16 percent higher revenue in Small Business Management Solutions led by Employee Management Solutions revenue growth of 14 percent and Demandforce revenue growth of 32 percent.
  • Showed promising results for the new QuickBooks Online, adding more than 45,000 net new customers in the past quarter.
  • Generated more than 11 billion impressions through the Small Business Big Game marketing program, culminating in an ad campaign that drove worldwide visibility for Intuit and the four small business finalists.
Consumer
  • Released the first of two season-to-date updates; TurboTax units grew 7 percent through Feb. 15, versus the comparable prior-year period. TurboTax Online units grew 11 percent.
  • Launched a Spanish language version of SnapTax, Intuits mobile app for simple tax returns.
Snapshot of Second-quarter Results
GAAPNon-GAAP
Q2
FY14
Q2
FY13
Change
Q2
FY14
Q2
FY13
Change
Revenue$782$884(12)%$782$884(12)%
Operating
Income
(Loss)
$(46)$84NM$17$140(88)%
EPS$(0.13)$0.23NM$0.02$0.30(93)%
Dollars are in millions, except earnings per share (EPS). See About Non-GAAP Financial Measures below for more information regarding financial measures not prepared in accordance with Generally Accepted Accounting Principles (GAAP). All figures in the table above have been reclassified to reflect Intuit Websites, Intuit Financial Services, and Intuit Health as discontinued operations and to exclude their results from non-GAAP EPS.
CFO Remarks
Intuit Chief Financial Officer Neil Williams commented on Intuits results for the quarter in prepared remarks for investors.
On the small business front, our guidance remains 10 to 12 percent revenue growth for the year, driven primarily by customer acquisition and mix improvement and less from price, a healthy mix that bodes well for continued customer growth, he said.
Capital Allocation Summary
The company continued to return value to shareholders through its stock repurchase program and quarterly dividend.
  • Completed an accelerated share repurchase agreement to buy back $1.4 billion in shares in December 2013; approximately $2 billion remains on the current share repurchase authorization.
  • Approved a quarterly cash dividend of $0.19 per share, payable on April 18 to shareholders of record on April 10.
Forward-looking Guidance
Intuit reiterated guidance for full fiscal year 2014, which ends July 31, and updated guidance for the remaining quarters of fiscal 2014.
For full fiscal year 2014 Intuit expects:
  • Revenue of $4.440 billion to $4.525 billion, growth of 6 to 8 percent.
  • GAAP operating income of $1.345 billion to $1.375 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.
For the third quarter of fiscal 2014, Intuit now expects:
  • Revenue of $2.325 billion to $2.400 billion.
  • GAAP operating income of $1.480 billion to $1.500 billion.
  • Non-GAAP operating income of $1.530 billion to $1.550 billion.
  • GAAP diluted EPS of $3.33 to $3.38.
  • Non-GAAP diluted EPS of $3.46 to $3.51.
For the fourth quarter of fiscal 2014, Intuit expects:
  • Revenue of $710 million to $720 million.
  • GAAP loss per share of $0.02 to $0.04.
  • Non-GAAP diluted EPS of $0.11 to $0.13.
Conference Call Information
Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on Feb. 20. To hear the call, dial 866-875-5291 in the United States or 973-935-8702 from international locations. No reservation or access code is needed. The conference call can also be heard live athttp://investors.intuit.com/events/default.aspx.
Prepared remarks for the call will be available on Intuits website after the call ends.
Replay Information
A replay of the conference 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 1631993.
The audio webcast will remain available on Intuits website for one week after the conference call.

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