Intuit Reports Third-quarter Results: Revenue Grows 14 Percent, Led by Cloud Solutions

SeekingAlpha writes: TurboTax Online Units Increased 14 Percent;

QuickBooks Online Subscribers Accelerated To 36 Percent Growth

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc (INTU) . (Nasdaq: INTU) today announced financial results for the third quarter of fiscal 2014, which ended April 30.

Our momentum is building with our transition to the cloud, increasing value for customers and for Intuit, said Brad Smith, Intuits president and chief executive officer. Executing against our growth strategy we delivered strong results across the board. We grew share in our tax businesses, and our small business subscriber growth continues to accelerate globally.

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. During the quarter, Intuit:

• Delivered total company revenue of $2.4 billion, up 14 percent.
• Increased GAAP diluted earnings per share 25 percent and non-GAAP diluted EPS 20 percent.
• Grew GAAP operating income 17 percent and non-GAAP operating income 16 percent.
• Ended the third quarter with cash and investments of $2.6 billion.
• Increased TurboTax Online units 14 percent for the season.
• Grew QuickBooks Online subscribers 36 percent to 624,000, adding more than 60,000 net customers versus the second quarter.
• Increased global QuickBooks Online subscribers more than 130 percent to 64,000, accelerating from 90 percent growth last quarter.
• Grew total QuickBooks subscribers 30 percent through continued momentum in the adoption of small business connected services.

Business Segment Results

Small Business

• Total Small Business segment revenue grew 8 percent.
• Small Business Financial Solutions revenue increased 4 percent.
• Subscriber growth increased:
  • QuickBooks Online subscribers grew 36 percent.
  • QuickBooks Desktop subscribers grew 22 percent.
  • QuickBooks Enterprise subscribers grew 18 percent.
• Small Business Management Solutions revenue grew 16 percent.
• Employee Management Solutions revenue grew 13 percent, driven by strong growth in online customers across do-it-yourself and assisted offerings.
• Demandforce subscribers grew 44 percent, which includes the recent acquisition of CustomerLink. Organically, subscribers grew 28 percent.
• Intuit Online Payroll subscribers grew 23 percent.

Consumer

• TurboTax Online units grew 14 percent in the season and total TurboTax units climbed 10 percent.
• Consumer segment revenue increased 13 percent in the third quarter and 7 percent year-to-date.

Professional Tax

• ProTax revenue grew 32 percent in the third quarter and 3 percent year-to-date, driven by strong customer acquisition in Intuits higher-value offerings.

CFO Remarks

Intuit Chief Financial Officer Neil Williams commented on Intuits business segment results for the quarter in prepared remarks for investors.

Thanks to a strong tax season, we exceeded our goals for customer growth and also improved our year-to-date Consumer Group margin. Im pleased with our performance this year and we expect to continue to invest in the product experience and to prioritize growth in share and customers over the long term.

Snapshot of Third-quarter Results

GAAP								Non-GAAP
		Q3 FY14		Q3 FY13		Change		Q3 FY14		Q3 FY13		Change
Revenue		$2,388		$2,091		14%		$2,388		$2,091		14%
Operating Income		$1,494		$1,282		17%		$1,556		$1,337		16%
EPS		$3.39		$2.71		25%		$3.53		$2.94		20%

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.

Snapshot of Year-to-date Results

GAAP								Non-GAAP
		YTD FY14		YTD FY13		Change		YTD FY14		YTD FY13		Change
Revenue		$3,792		$3,537		7%		$3,792		$3,537		7%
Operating Income		$1,371		$1,293		6%		$1,553		$1,461		6%
EPS		$3.22		$2.89		11%		$3.49		$3.20		9%

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.

Capital Allocation Summary

• Intuit repurchased $1.4 billion in shares during the first nine months of fiscal 2014; over $2 billion remains on the current share repurchase authorization.
• The company also approved a quarterly cash dividend of $0.19 per share, payable on July 18 to shareholders of record on July 10.

Forward-looking Guidance

Intuit updated guidance for full fiscal year 2014 and the fourth quarter of fiscal 2014, both ending July 31.

For full fiscal year 2014 Intuit expects:

• Revenue of $4.475 billion to $4.505 billion, growth of 7 to 8 percent.
• GAAP operating income of $1.325 billion to $1.345 billion, growth of 7 to 9 percent.
• Non-GAAP operating income of $1.580 billion to $1.600 billion, growth of 7 to 9 percent.
• GAAP diluted earnings per share of $3.08 to $3.12, growth of 9 to 10 percent.
• Non-GAAP diluted EPS of $3.54 to $3.58, growth of 11 to 12 percent.

For the fourth quarter of fiscal 2014, Intuit expects:

• Revenue of $683 million to $713 million.
• GAAP operating loss of $26 million to $46 million.
• Non-GAAP operating income of $27 million to $47 million.
• GAAP loss per share of $0.10 to $0.12.
• Non-GAAP diluted EPS of $0.06 to $0.08.

Conference Call Information

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on May 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 1636923.

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

About Intuit Inc.

Intuit Inc.  creates business and financial management solutions that simplify the business of life for small businesses, consumers and accounting professionals.

Its flagship products and services include QuickBooks®, Quicken® and TurboTax®, which make it easier to manage small businesses and payroll processing, personal finance, and tax preparation and filing. Mint.com provides a fresh, easy and intelligent way for people to manage their money, while Demandforce® offers marketing and communication tools for small businesses. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants.

Founded in 1983, Intuit had revenue of $4.2 billion in its fiscal year 2013. The company has approximately 8,000 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 and the Intuit logo, 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 Intuits future expected financial results; expectations regarding growth from connected services and from current or future products and services; expectations regarding Intuits global strategy, strategic outcomes, product launches and marketing campaigns and their impacts on Intuits business; Intuits prospects for the business in fiscal 2014; 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; 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, financial institutions and tax filings, which could negatively affect our revenue and profitability; year-over-year changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise may result in lost revenue opportunities; 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 2013 and in our other SEC (SCUR) filings. You can locate these reports through our website at http://investors.intuit.com. Forward-looking statements are based on information as of May 20, 2014, and we do not undertake any duty to update any forward-looking statement or other information in these materials.