Platinum Xero Advisor Bookkeeper 360 says "Why QuickBooks Sucks"

Platinum Xero Advisor  Steve Muller / Bookkeeper 360 writes: "Why QuickBooks Sucks"

TOO EXPENSIVE

When looking at their choices, many small business owners think that purchasing a copy of QuickBooks would be more cost-effective than using an expensive accounting firm. It may seem that a one-time fee of a few hundred dollars would be a good investment for a tight budget. However, while one copy of QuickBooks may only be a few hundred dollars, hidden additional costs include its pricey yearly upgrades and time required to learn how to use the complicated interface (taking a class, getting one-on-one training, or buying a book). And forget about ever using QuickBooks Online – its new interface is too ineffective and disorganized to get anything done.

TECHNICAL TROUBLES

QuickBooks is absolutely rampant with glitches and technical bugs. Are you familiar with the error “QuickBooks has stopped working”?And if the ol’ ‘reboot and reinstall’ trick isn’t working – you’re out of luck. And don’t bother even calling the technical service…they will have you on the phone for hours – on hold – left with a broken computer. With QuickBooks, you need to spend frustrating, mindless hours laboring at the computer and plugging in data from your invoices and receipts in a shoebox.  Inputting data into QuickBooks is time-consuming and inefficient and requires double entering data and maintaining huge files. Plus, importing and exporting data through Excel spreadsheets is an unnecessary hassle.

HUGE LEARNING CURVE

For the small business owner, QuickBooks is not the accounting solution. QuickBooks tries to sell itself as the accounting software for all businesses but there is a huge difference between a 10-person small business and a 100-person business. Even then, QuickBooks’ many functions are better suited for mid-sized and large businesses with more resources than Ma and Pop’s small business. All these extra features, although useful to a huge corporation, only confuse a SMB owner who may lack a background in accounting.  Learning basic functions in QuickBooks can take a lot of time. And even then, there are always more questions and never enough answers.

TERRIBLE TECHNICAL SUPPORT

Just a simple Google search will reveal the massive number of dissatisfied customers and their many complaints. From the unresponsive and unfriendly customer service to the convoluted instructions given by technical support, Intuit – the company behind QuickBooks – fails to properly serve their customers. Even ConsumerAffairs gives Intuit – Quickbooks a one-star rating for their customer support.

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Talk to one of our representatives to see how we save your business from the QuickBooks disaster at 800.478.5082

Wedbush Boosts Intuit Price Target to $95.00 (INTU)

i3investor.com writes: Investment analysts at Wedbush upped their target price on shares of Intuit (NASDAQ:INTU) from $87.00 to $95.00 in a note issued to investors on Friday. The firm currently has an “outperform” rating on the stock. Wedbush’s price objective would indicate a potential upside of 10.71% from the stock’s previous close.

Several other analysts have also recently commented on the stock. Analysts at Morgan Stanley reiterated an “underweight” rating on shares of Intuit in a research note on Wednesday. They now have a $66.00 price target on the stock, down previously from $72.00. Analysts at JPMorgan Chase & Co. reiterated a “neutral” rating on shares of Intuit in a research note on Wednesday, May 28th. They now have a $84.00 price target on the stock, up previously from $77.00. One equities research analyst has rated the stock with a sell rating, seven have issued a hold rating, three have assigned a buy rating and one has assigned a strong buy rating to the company’s stock. The stock presently has an average rating of “Hold” and an average price target of $79.92.

Shares of Intuit (NASDAQ:INTU) opened at 85.81 on Friday. Intuit has a one year low of $61.50 and a one year high of $85.89. The stock has a 50-day moving average of $82.16 and a 200-day moving average of $78.37. The company has a market cap of $24.360 billion and a price-to-earnings ratio of 27.22. Intuit also saw some unusual options trading on Thursday. Stock traders bought 6,247 call options on the stock. This is an increase of 832% compared to the typical daily volume of 670 call options.

Intuit (NASDAQ:INTU) last issued its quarterly earnings data on Thursday, August 21st. The company reported $0.01 EPS for the quarter, missing the Thomson Reuters consensus estimate of $0.07 by $0.06. The company had revenue of $714.00 million for the quarter, compared to the consensus estimate of $699.49 million. The company’s quarterly revenue was up 12.6% on a year-over-year basis. On average, analysts predict that Intuit will post $3.58 earnings per share for the current fiscal year.

Intuit Inc (NASDAQ:INTU) is a provider of business and financial management solutions for small businesses, consumers, accounting professionals and financial institutions.

Digital First: Xero Interview: Rod Drury and Chris Ridd at Xerocon

Sholto MacPherson for Digital First writes: Xero CEO Rod Drury and MD of Australia Chris Ridd put down their skateboard and guitar for a couple of minutes during Xerocon to have a chat about some of the newest developments for the online accounting program.

A central theme of the conference was connected services. The first company outside of a bank to connect to Xero is CGU, an insurer which has created a way for Xero users to request insurance quotes by giving CGU direct access to their Xero file. CGU analyses the financial data and uses it to set premiums for worker’s compensation insurance.
Digital First: Do you think people are going to feel comfortable sharing that level of information with an insurance company or a bank?

Ridd: They have full control. We are not going to do our customers don’t allow us to do, but if we can reduce the cost of credit, the ability for people to get funding to grow their business that’s a good thing.

Digital First: But we’re not talking about rational fears. It’s the same fear as data sovereignty, a fear of loss of control. Will there be a similar pushback against giving large companies access to your accounting software?

Ridd: The customer is always in control as a subscriber. It’s all about trust. (Xero could talk to) a trusted service provider like a bank, insurance company or a telco, but you’re always putting the subscriber in control of the shared data.

That’s one of the things we’ve talked about to banks and insurers, they have to demonstrate the value.

If a bank can provide a value proposition, such as to pre-approve a loan because you’re approaching that overdraft, provided you have a relationship with the bank already then you would feel comfortable opting in and sharing that data.

Digital First: What are the benefits for business? Is it saving time and money by not calling up on the phone, supplying documents and so on?

Drury: Yes and in terms of lending, it’s the ability to get a loan. It’s binary – you couldn’t get one, now you can.

Ridd: CGU are thinking, where else can we go with this? A really good one is business continuity insurance. They said the biggest issue for business is under-insurance. But by integrating with Xero they can interrogate the financial data.

When I met with CGU they said the standard process is for a business owner to estimate the turnover over the next 12 months.Then the insurer selects the premium, which in reality could be above or below the fluctuating monthly turnover.

Now we can present them with a monthly premium that fluctuates in real time with the turnover in the business so they’re never underinsured. And they’re always optimised in terms of the premium they’re paying.

Drury: And it matches their cash flow.

Ridd: CGU are looking at professional indemnity insurance and all these other things. The value proposition for the small business owner is, ‘Let us opt in and we will always make sure your premiums are optimised and you’re always covered’.

Digital First: Is it permanent access or timed access where the provider can only view the business owner’s financial data for a restricted time?

Ridd: I don’t know whether they have worked that out. I would assume that at certain times they have access and it’s not ongoing access.

This is the first time that anyone has done this. Worker’s compensation insurance is an easy one because it’s a commodity, everyone needs it and they can provision it pretty easily. They can learn from it and start to roll it out through other product offerings.

Digital First: CGU is way ahead of the industry in offering these services through Xero, as are New Zealand banks. When will we see these integrations become commonplace in Australia or elsewhere?

Drury: All the banks and large companies are thinking about digital disruption in their strategies. We’re going to see so much innovation in the next two to three years, so much more than we have in the last 10.

Ridd: Now that we’re getting close to completion phase on the accounting platform we’re putting resources to working with some of these companies. A good example is Warehouse Stationery. You can order stationery online and two hours later you go into Xero and it’s there as an accounts payable invoice.

So there all these relationships we can integrate into Xero to get this whole seamless exchange of data. We’re just at the start of it now but we’re putting much more effort into those discussions now.

Drury: Everything you would do in desktop you should be able to do in cloud and we’re finally getting there.

Over the last year or so we have built all these parallel teams and now we’re starting to do the next thing which is to change the product category. It’s just logical, right?

We’ve never thought of ourselves as an accounting software business, that’s just what you have to do at the beginning.

Keeping ahead of the competition

Digital First: Why criticise Intuit for buying up the ecosystem if you’re building it out anyway? What’s the difference?

Drury: They are completely different approaches. Ours is open APIs around everything, we try to nurture our ecosystem. We bought Workflow Max which was a time and cost system and we wanted to provide that software for our accountants vertical but we kept it on its own.

We don’t do any cross selling, we haven’t discounted it, we let it compete out there. We see those applications will absolutely verticalise over the next couple of years. Like what we have done for the accounting side of the equation.

The reason that Intuit is buying up apps, I don’t believe they are delivering on their core application so they’re using their balance sheet to go out and buy these things. So you end up being a bit of a bride of Frankenstein and I’ve had a lot of feedback from accountants saying they don’t want to go into a bunch of different apps.

can understand why they do it in the short term but in the long term I don’t think it’s the right strategy. We know that open wins and you can see the response we’re getting.

Digital First: What do you think about independent app marketplaces. Do you think they have a future?

Drury: No I don’t actually, to be honest. There’s no margin in this business and it’s very expensive cost of sales to pass long term ongoing margin, and you just have to do the work to build the channel and the customer base.

We love it when guys do stuff like that but you see what we’re doing with dashboarding, that’s just features and we’re building that into the product. And we’re building the channel. So they don’t add any value to us and we have this mass and the customers the other third parties are working alongside us. I’ve never seen an example where those marketplaces have worked.

Digital First: Don’t you think that the other cloud programs are catching up in features?

Drury: There’s this assumption that all accounting software is the same. and up until this point we’ve had to all build the same features – reconciliation, general ledger, reporting, debtors, creditors, expense management.

And people have got there through different journeys, whether it’s syncing your desktop to the cloud or start with an old code base and hack stuff onto it, we started with a clean platform and now we’re getting the benefit.

Now we’re just turning on business intelligence and doing that for all our customers and their data. We’re entering this interesting phase where you can now see the results of the investments in the platforms we’ve made. So the difference of what we’ve done compared to everyone else is starting to show.

Xero and the Missing Mobile Platform

Digital First: The mobile payments place is exploding and Xero doesn’t have a strong solution for its users. Xero integrates with Square but that is US only and has had negative press recently. Other accounting software providers have bank-backed solutions. What are your plans for mobile payments?

Ridd: We just announced one yesterday – Ingogo are now an add-on partner. They have been disrupting the taxi industry which is arguably the hardest mobile payments market because cab drivers aren’t necessarily tech savvy and it’s a pretty tough environment.

They are now looking into other industry verticals that are mobile, so we’ve done some really clever integration and they have a really broad platform that they can take forward.

Drury: We’re not really excited about the B2C (business to consumer) space. Yes, our customers can pick any one of a number of gadgets to fit onto their phone and take B2C payments, and that’s a brutally competitive market.

Eventually the big guys will probably win, probably it becomes bank native. What we’re much more interested in is the B2B space, or how do you a do a $5,000 or $50,000 bill and how do you do that without putting a tax across all small businesses?

We’re much more interested in what’s happening in real-time bank clearing and inter-bank work, that’s where we’re spending time with the banks and that’s where the money is.

Digital First: What’s the latest on that?

Drury: Really good. We’ve rolled out what we call a banking 2.0 model. Ee have pathfinder banks rolling that out now. It’s absolutely being noticed in Australia, we have another big bank going through that model. It’s just a matter of them lining up projects with their core banking systems. The best way to get the industry to move is to get your first bank, and we’re making good progress with all of those.

If you’re on the same bank there’s no reason you can’t get paid by the bank within the hour.

Digital First: You mean triggering the payment from within Xero, right?

Drury: Yeah. And then get it securely to your bank, and having the accountant or the bookkeeper do the heavy lifting, and then the business owner does an “Approve” on their mobile app using all their banking security and get that paid really quickly to the other party.

Ridd: And that’s the key workflow. It’s directing it from internet banking and you have the mobile workflow on the phone so that the business on the road can make those payments.

Digital First: Is that live in New Zealand?

Ridd: Yes, with ASB. And in Australia banks are working on it too.

The new breed of add-on programs

Digital First: What is the ideal profile of a Xero add-on partner?

Drury: We’re into the next phase of SaaS applications. So the first phase, crazy valuations, everyone got funded, lots of startups. There’s been a fundamental re-rate of SaaS companies, not forever but for a period of time.

Also what’s happened is that the two big platform players, Intuit and Xero, are now getting to scale and Intuit is taking an approach of buying up the ecosystem and because we have our teams firing we can pull some of that in (the horizontal features).

So I think the end of the horizontal features, there’s maybe a year or two left for those because they will get pulled into the main platforms. So we’re saying to add-on partners that they need to start thinking about at higher-value verticals, that’s looking for franchise opportunities where there’s lower cost of sales to get to those customers where you can provide some real value.

It’s not just providing just a bit of code that you write but how do you get the data. If you’re doing a trade management app go and get the plumbing catalogues, and those applications. That’s the sustainable place that the ecosystem needs to go now.

Digital First: What advice would you give a young Rod Drury who is a 24 year-old programmer and wants to build his own app? How much capital does he need, and what people does he need on his team?

Drury: If he’s 24 he should come and work for us and have five or six years of experience and doing the internship. If you’re going to go out on your own you can’t just build little horizontal features anymore. There’s plenty of time recording software. That’s done.

So it’s now finding the really good niches where you can understand that niche especially where there’s a bit of data that can move around, a reengineering of that industry. That’s exciting.

So we’ve invested $250 million in our accounting platform so they can focus on that business vertical. I think finding partners that they can work with who really understand an industry and understand the disruption that comes from moving into the cloud, those are exciting opportunities.

Digital First: How much money would you require? What types of roles?

Drury: You just plot it on a curve. If you’re going to build a business with 10 people, say $100,000 fully loaded, that’s $1 million a year. Then you have to work out that if I could get $1 million a year, say I fund that for two or three years, are you going to go for a high number of low value sales or a low number of high value sales?

If you go for a large number of sales you need marketing, network effects and all those things. I think now we’ve gone through that raw exuberance in business SaaS and actually money won’t be as easy to get.

They need to think about where they place themselves on the curve. Personally I would be looking as high a value mid to large size business opportunities where the heroics of the founder can sell those first 10 to 20 deals and you get that lumpy revenue.

Digital First: Who makes the sales? Selling to enterprise takes long sales cycles, skilled sales execs.

Drury: The founder, right? It’s the passion of the founder that gets those first couple of deals. That’s what I did with AfterMama me and the senior dudes were doing the selling and other guys were writing the code. And in those enterprise deals you can get $30k deals and you just need to go out and do the selling.

If you do something at $50 a month you need to attach to ecosystems like ours where you have 330,000 customers to sell to. I’m just worried that little horizontal features are being pulled into the platform. We want to see people move into these higher value verticals where you’re getting $10k-$20k per customer a year.

Sholto Macpherson - Editor and Publisher

Sholto is a journalist, presenter and public speaker with 14 years’ experience writing about IT for enterprise and consumer audiences.  Digital First was formerly named BoxFreeIT.com.au from its launch in June 2011 until 28 July, 2014.

AuditFile has raised $3 million in funding. AuditFile is a provider of engagement solutions for CPA firms.

Brothers Steven and Kevin Bong have combined their accounting and programming skills to transform the audit industry with AuditFile, a secure, cloud-based solution that helps CPA firms perform dramatically more efficient engagements.

Watching their father, a seasoned CPA, struggle with cumbersome software, they seized an opportunity to create a better solution by utilizing cloud-based technology to simplify and elevate the entire process.

Enlisting the help of over a dozen CPA firms to create a simple and logical workflow, the duo launched AuditFile in 2011. The San Francisco-based company recently raised an impressive $3 million in a round led by Banneker Ventures to increase sales efforts. “No company has a solution like this,” stated Stephen Davis, a partner at Banneker. “They saw a real problem experienced by their father and have solved it in a very unique way.”

The brothers will use their investment to continue refining and enhancing the app, paving a new path for auditors in the 21st century. “It’s time we streamline the audit process with today’s technology” said Steven Bong. “AuditFile is not just another audit software, it’s a game.

The company now employs 15 individuals, including their father Gary Bong, who serves as CFO. As part of its new sales efforts, the firm is creating national awareness about their dynamic solution. “We have garnered the support of many investors who want to help improve the audit process. We’re excited to help CPAs with a great solution.” added COO Kevin Bong. Other investors include Banneker Partners, Tim Draper, Ray Tonsing, Greenvisor Capital, Rothenberg Ventures, BoostVC, 500 Startups, and more than two dozen individuals.

About AuditFile
A secure, cloud-based solution, AuditFile specializes in helping CPA firms perform dramatically more efficient engagements. Created for CPAs by CPAs, AuditFile solves real-world challenges faced every day with technology that meets the highest standards for security and accuracy.

Based in San Francisco, California, AuditFile serves CPA firms across the country. Learn more at www.auditfile.com

Intuit’s cloud transformation continues, bringing mixed results in its final quarter. Those results, along with guidance into 2015 indicate Intuit plans to take a full hit on its business model next year as it anticipates an accelerated transition to subscription based services.

Den Howlett for Diginomica writes: [excerpt] "Right now it is hard to see anyone making big inroads to Intuit’s home turf. Their brand, product range, partner ecosystem changes and inbuilt maturity put them streets ahead of the only viable competition. But as Intuit already knows, these are early days and there is still a vast market to be captured. From the buyer’s perspective, Intuit is starting to look more like the kind of subscription/cloud vendor it needs to be in order to take a credible place in that market".

Click Here To read the Den Howlett Diginomica Article in its entirety

Is it time to sell Xero as growth trumps profits? / Is it time to sell Xero as cloud rivals rev up?

Rose Powell for The Australian Financial Review & Sydney Morning Herald writes: Cloud-based accounting software company Xero has announced further growth in its Australian paying customer base as it seeks to address concerns that it has been over-valued by investors keen to buy into the potential of cloud computing.

The newly released data showed Xero’s Australian user base grew from 109,000 accounts in March this year to 147,000. The figures show Australians make up just under half of Xero’s total user base of the more than 300,000 worldwide.

News of customer growth will please investors, who have largely bought into growth story from founder and chief executive Rod Drury, despite continuing losses and no sign of a profit tipped for at least a further 18 months.

Mr Drury said his team was focused on a “land grab” growth strategy, particularly in the United States and the United Kingdom.

Xero has raised over $NZ250 million in growth capital, some from early angel investors but the majority from listing. The startup has so far delighted investors with a 425 per cent stock increase in 2013, peaking at $43 on the ASX early in 2014, earning them the “Apple of accounting” moniker from investment bank Credit Suisse.

It is still well above its initial offer price, but on Friday, the stock was trading at around $21.30.

The company has touted plans to list in the United States as early as next year, and Mr Drury said keeping investors happy would be a priority in the pre-profit years. This means taking on criticism of those cynical about the long term value of the stock

“The fun bit of doing this as a public company is that everyone, literally everyone, has an opinion,” Mr Drury said. “But I don’t really care what other people think. We just get on and do our own thing. It’s worked so far.”

TIME TO SELL

Select Equities analyst Mark Southwell-Keely has a blunt assessment that Xero’s stock is significantly overvalued, and said the executive team should sell the company now.

“Even half of what the stock is priced at now is way more than it’s worth,” Mr Southwell-Keely said.

Mr Southwell-Keely said Xero was growing well but that new cloud-based products from competitors such as MYOB, Reckon and Intuit would drastically alter the market.

“The market is pricing Xero essentially on the basis of a hypothetical of addressable market, but the market will change so much even in two years I’d say there is little to no chance of those predictions being accurate,” Mr Southwell-Keely said.

Mr Drury said he had no plans to exit and was building the business for the long haul, with confidence in their current strategy.

“We know what we’re doing, we’ve shown that so far. We’re in fantastic shape and only at the beginning of the journey,” he said.

An obsession with growth has been a feature of Mr Drury’s entrepreneurial career, which included shutting down two earlier companies that were not growing fast enough.

The first was a document management software startup he closed in 2002. The second was an initiative to lay an internet cable directly linking Australia, New Zealand and the United States.

He had success selling email service Aftermail to Quest for $US45 million in 2006.

Xero’s new user data was announced at the company’s annual convention in New Zealand on Friday morning. Australian managing director Chris Ridd also announced partnerships with Telstra, insurer CGU and the Australian Taxation Office at the conference.

Intuit's (INTU) CEO Brad Smith on Q4 2014 Results - Earnings Call Transcript

Intuit Inc. (NASDAQ:INTU)

Q4 2014 Earnings Conference Call

August 21, 2014 04:30 PM ET

Executives

Matt Rhodes - IR

Brad Smith - President and CEO

Neil Williams - CFO

Scott Cook - Founder

Analysts

Brent Thill - UBS Investment Research

Walter Pritchard - Citi

Kash Rangan - Bank of America/Merrill Lynch

Sterling Auty - JP Morgan

Gil Luria - Wedbush Securities

Raimo Lenschow - Barclays

Jennifer Lowe - Morgan Stanley

David Togut - Evercore Partners

Scott Schneeberger - Oppenheimer

James MacDonald - First Analysis

Operator

Good afternoon. My name is Saheed (Ph), and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit’s Fourth Quarter Full Year Fiscal 2014 Conference Call. (Operator Instructions) With that, now, I will turn the call over to Matt Rhodes, Intuit’s Director of Investor relations. Mr. Rhodes, you may begin.

Matt Rhodes

Thank you, sir. Good afternoon, everyone, and welcome to Intuit’s fourth quarter fiscal 2014 conference call. I’m here with Brad Smith, our President and CEO; Neil Williams, our CFO; and Scott Cook, our founder.

Before we start, I’d like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit’s results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon our Form 10-K for fiscal 2013 and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit’s website at intuit.com. We assume no obligation to update any forward-looking statements.

Some of the numbers in this report are presented on a non-GAAP basis. We’ve reconciled the comparable GAAP and non-GAAP numbers in today’s press release. 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. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. Our fact sheet and press release include new disclosures and other materials to help you understand and model the financial impact of the strategic decisions that we’ll discuss today.

And with that, I’ll turn the call over to Brad Smith.

Brad Smith

All right. Thank you Matt and thanks to all of you for joining us. I’ve been looking forward to today’s earnings call for two reasons. First because we have some positive results to discuss. And second because we want to share some exciting strategic decision that positions us for accelerated performance as we look ahead. Let me begin with the positive result. We closed down our fiscal year 2014 on a strong note with excellent momentum in each of our businesses. For the full fiscal year total revenue grew 8% and earnings per share increased 9%.

The strong results we’re in the context of an acceleration file base subscription the shifted revenue in the future reporting period. The results also reflect the significant restructuring effort that we executed in our fiscal fourth quarter to reallocate resources to our online services and to drive a separate improvement in our product and customer growth. Adjusting for the impact of the related restructuring charges our revenue, our operating income and our earnings per share would have at the high end of our guidance range.

Stepping beyond the current period result and even more excited about the choices that we’re making for the future. To sum it up, we’re fully committed the wining in the cloud. Over three decades we’ve navigated several platform shifts from Dos to Windows to the web and in every instance we see the opportunity to reimagine our offerings and extend our market leadership position and we’re doing it again. We’ve been delivering cloud based services for over a decade with more than 30 million Intuit customers using offerings across a variety of desktop and mobile devices. The benefits are clear, online experiences are simply better for customer. They expand our total addressable market and they generate more predictable recurring revenue strength.

Today we’ll discuss several decisions to further accelerate our shift the cloud based services which will include changes that we’re making to our desktop product that will lead us to recognize desktop revenue overtime.

The combination of these choices will create a transition year for fiscal 2015 financial reporting as we will explain this is a short term impact and we fully expect our fiscal 2015 results to return to double digit top and bottom line growth and alignment with financial principals. Our outlook for fiscal 2017 is a company approaching $6 billion and predictable recurring revenue and generating roughly $5 in non-GAAP earnings per share.

Now with that context let me flip down and share my reflections on the company’s current period performance as well as the strategic choices that we’re making starting with our small business group.

I’m quite encouraged by the increasing momentum and our QuickBooks Online ecosystem. This past quarter we reached a strategic inflection point with more new to the franchise customers choosing QuickBooks Online over QuickBooks Desktop for the first time ever. The achievement in this milestone was driven by two factors.

First, the circular shift with the cloud is now in full swing for small businesses just as it was several years ago for our consumer businesses. This tailwind is in the early stages of development and it will continue for many years. And second, we’ve been accelerating this small business adoption at file services. Our catalyst is the success of our QuickBooks Online offering as an open platform

This enables Intuit and third-party products to work together seamlessly in the cloud. The new QuickBooks Online is one of the biggest breakthrough products we have launched and it is leaving us with filling. QuickBooks Online subscribers grew 40%, up from 36% in the previous quarter. We added approximately 60,000 net customers in a seasonally slower quarter. We closed fiscal 2014 with nearly 700,000 QuickBooks Online customers and more than 1 million total QuickBooks subscribers. The new Online experience enables the seamless purchase of additional services as evidenced by our payroll attach rate improving to 19% in the fourth quarter, up from 16% a year ago. The attach rate for active payments customers is currently 5% also up from 3% in the prior year.

These improved attach rates are contributing to an increase in the annualized recurring revenue for subscriber. And finally the new QuickBooks Online is a global platform which has significantly increased our total addressable market. Outside the U.S., QuickBooks Online subscribers were up more than 150% in the fourth quarter, further accelerating from the 130% growth last quarter.

Now shifting to our consumer tax business, the team delivered an exceptional year. As the category champion, we helped drive digital category growth of more than 6% compared with assisted tax spread method such as tax stores declining 1%. The secular shift to do-it-yourself software is the continuation of a decade long transition to digital solution and our efforts simply added fuel to the trend.

Within the software category TurboTax gained over 2 point of share, growing TurboTax online units 14% and total TurboTax unit 10%. Our investment in product improvement paid off with Web site traffic, conversion, retention and overall net promoter scores improved in every single dimension. Hitting the total key, consumer tax revenue grew 7% for the fiscal year better than our original guidance of 4% to 5%. But as we shared this was just a first year of a multiyear journey towards our ultimate product vision and the team has some exciting things in the pipeline as we look forward to the next half season.

We also had strong results in our Pro-tax and consumer ecosystem businesses, both businesses exceeded their internal plan, their external guidance, they have a strong pipeline of innovative offering in the work and they are definitely looking forward to another strong year in fiscal year ‘15. When you sum up the results across the company, customer growth and more specifically subscriber growth is accelerated. Active use is improving, attach rates are increasing and global adoption has hit a stride which takes me to my second reason, we are looking forward to today’s call. The explanation of several strategic choices that we have made that will enable us to further accelerate the growth of our online ecosystem.

First, as I mentioned earlier, we restructured our small business organization in the fourth quarter to increase the focus and investment on the QuickBooks Online ecosystem. The actions that we have taken improve our speed of decision making, prioritize key functionality and compliant services that are necessary to win in each of the global geographies and they include some soon to be announced initiatives that will make it even more attractive for accountants and their clients to sign up for QuickBooks Online. We have increased our investment in R&D, sales and marketing and infrastructure to capitalize on a huge addressable market with our global-ready QuickBooks Online offering.

Our demonstrated success in fiscal 2014 convinced us that now is the time to make this investment. Second, in support of our goal to win every cloud decision, we are making important product changes to continue to delight our QuickBooks Desktop customers, many of them will be cloud customers in the future. As you know roughly 4 million small businesses use QuickBooks Desktop. Our goal is to attract them with compelling online experiences and incentives to move to the cloud. To that end, we are strengthening our desktop products beginning in 2015 by delivering ongoing experience releases. These will continuously improve the product experience, support operating system update and provide access to connected services.

These actions are designed to ensure that our desktop customers and/or accountants remain our most vocal advocates today and become our cloud customers of tomorrow. As a result of these changes to our desktop product, we will begin recognizing desktop revenue over time as opposed to upfront at the time of purchase. This change will apply to our future QuickBooks, Pro-tax and Quicken desktop products. This is a strategic decision in favor of the customer that will push about $400 million of revenue from our fiscal 2015 into deferred revenue that will be recognized in future period. We will provide all the relevant disclosures for you to see and model the financial impact.

For our small business group, the combination of these decisions, positions us to more rapidly penetrate an enormous Global market with a proven Online ecosystem powered by the new QuickBooks Online and as I said the time to make these changes is now because the fruit point are clear. More specifically QuickBooks Online is opening new stores with 75% of the new QuickBooks Online customers being first-time customers to the Intuit franchise. The QuickBooks Online platform is increasing our ability to generate higher annualized recurring revenue through selling additional services seamlessly. To put the improved payroll and payments attach results in the perspective the annualized recurring revenue for a small business online ecosystem was up 34% this quarter. Adding the global opportunity and our total addressable market expansion 29 million small businesses in the U.S. and over 100 million worldwide it’s the only focus on the currently prioritized markets of Canada, the UK, Australia and India.

The number of our weekly rose new subscribers that we’re adding in non U.S. market is currently averaging 2000 per week this is up from 600 per week just one year ago. And finally for the existing QuickBooks Desktop customers and their accountant, we have the best online solution and we will be introducing new initiatives to further set them to move to the cloud. As a result we do anticipate the number of desktop migrators will continue increase meaningfully in the coming year. On that note I’m going to turn it over to Neil to walk you through the financial details and our guidance.

R. Neil Williams

Thanks Brad. Let’s start with overall company results. For fiscal 2014, we delivered revenue of $4.5 billion up 8%, non-GAAP operating income of $1.6 billion up 6%, GAAP operating income of $1.3 billion up 5%, non-GAAP earnings per share of $3.49 up 9% and GAAP earnings per share of $3.9 up 9%.

For the fourth quarter fiscal 2014, we delivered revenue of $714 million up 13%. Non-GAAP operating income up $2 million and GAAP operating loss of $73 million. Non-GAAP loss per share of $0.01 and GAAP loss per share of $0.14.

We incurred charge of approximately $40 million in the fourth quarter primarily as result of the small business restructuring effort that Brad explained earlier. This impacted our non-GAAP and GAAP operating income and earnings per share. We also sold our 11% stake in Reckon, which generated a gain of $21 million in GAAP results. We’ve included a bridge in the factsheet to illustrate this impact.

Turning to the business segments, total small business revenue grew 12% for the quarter and 10% for the year. Customer acquisition in our connected services businesses continues to be our primary goal and is driving growth in the QuickBooks Online ecosystem. QuickBooks Online subscribers grew 40% accelerating from the third quarter. Small business online ecosystem annualized recurring revenue grew 34% driven by retention and improved attach rates. Annualized recurring revenue is a new metric it will provide in our factsheet each quarter. We divide annualized recurring revenue as four times, the most recent quarterly revenue for our online offering serving small business customers. This includes QuickBooks Online subscriptions, online payroll, online payments, Demandforce and QuickBooks. Within this context our online active payments customers grew 4% and online payments charge volume grew 24% driven by an increase in charge volume for user.

Online payroll customers grew 25%. And global adoption of QuickBooks Online continue to accelerate as we finish the year with 84,000 paying QuickBooks Online customers outside of the U.S. up from 32,000 a year ago. As the adoption of the cloud becomes more prevalent and we focus our energy and resources in this area our recurring revenue will increase and QuickBooks Desktop unit will continue to be flat. In the fourth quarter desktop units declined 10% and for the full year they declined 10%. The decline in desktop units in fiscal 2014 was more than offset by growth of subscribers as total QuickBooks customer growth accelerated to 6%.

We expect total QuickBooks customer to continue to grow next year as we emphasis the QuickBooks Online ecosystem even though desktop units and revenue will decline. We describe cloud is a better experience for customers it’s also a better business model for our shareholders, this is onetime revenue QuickBooks Online customers are greater than that are desktop customers and it increases the predictability of revenues.

We provided details on our factsheet to help you understand the unit economics of our online and desktop ecosystems as we stand today and we’ll talk about the levels per growth as we execute against our top priority expanding the category for growing customers and share globally. There is one way to compare online and desktop using fiscal 2014 as an example. As you can see on the factsheet online ecosystem revenue was $592 million. Using ending QuickBooks Online subscribers of 683,000, we generated more than $800 in annual revenue per customer. On the desktop side, dividing $1.6 billion and fiscal 2014 revenue by $4 million customers, we generated less than $500 per customer. We have broadened our consumer tax business that we can use price and changes to our product lineup to effectively grow customers. We have also proven that we can build lifetime value through improved retention and attached services.

To drive customer growth in QuickBooks online ecosystem, we will continue to experiment with pricing, promotions and bundles that deliver value for more end-users. We will also continue to improve attach and retention to enhance lifetime value. This is our strategy to accelerate growth in customers and revenue over the next few years.

Now let’s look more closely at the financial impact of the strategic decision to provide ongoing support and services to our desktop customers that Brad described. This decision will affect future sales of QuickBooks and Desktop products for revenue we recognized ratably over approximately three years and our professional tax solutions where more revenue will be recognized over the entire tax year. For customers, this enables seamless product enhancements as well as better tier and online services ensuring that we keep our desktop customers happy and retain them in the Intuit franchise. They are our future online customers. For our employees, the strategic decision means clarity of work priorities, bringing up their time to build better online products and for shareholders this means more customers and faster growth longer term.

Desktop revenue will now be recognized over time similar to how monthly subscription revenue is recognized. Now when we sell our desktop unit, the cash comes in, and our deferred revenue balance increases, so you will be able to easily track our progress on our balance sheet and cash flow statement. We are committed to transparency and clarity around the strategic decision that will make modeling our business easier over time as the predictability of our revenue increases. We expect these changes to lower fiscal 2015 revenues by approximately $400 million, increasing deferred revenue by the same amount. We have included a bridge in our press release and factsheet that will help you understand the impact of this change and revenue recognition and accelerated QuickBooks Online growth on our revenue guidance for fiscal 2015.

So best way to gauge the success and health of our small business ecosystem going forward, will be through subscriber counts and annualized recurring revenue, will help you bridge reported results of the next few quarters to our historically reported results. Moving over to tax, consumer tax revenue grew 22% for the fourth quarter and 7% for the year. We will continue to invest in the product experience and to prioritize growth in share and customers above margin expansion. Pro-tax revenue grew 16% for the fourth quarter and 4% for the year. Our Pro-tax business also had a great season which much of our customer coming in higher value solutions. One thing that is not changed is our disciplined approach through capital management.

For approximately $1.9 billion cash in our balance sheet, our first priority is investing for customer growth. We also look for M&A opportunities and in fiscal 2014; we made 10 acquisitions totaling approximately $550 million. We will return cash to shareholders via share repurchases and we repurchased a $152 million of shares in the fourth quarter, about $1.9 billion remains on our current share repurchase authorization. We reduced our share count by 4% net in fiscal 2014 and we expected to be in the market consistently in fiscal 2015. Our capital plans included cash dividend of up to a $1 per share for fiscal 2015 with the first quarter dividend of $0.25 per share payable on October 20. This represents a 32% increase versus last year and reflects our confidence in our business strategy and our large and growing cash position as well as more recurring and predictable revenue streams.

Now let’s move onto guidance, taking into account the impact of the strategic decisions Brad described, our outlook for fiscal 2015 is revenue of $4.275 billion to $4.375 billion. Adjusted for the financial impact of the strategic decisions, fiscal 2015 revenue guidance would have been growth of 5% to 8%; GAAP operating income of $800 million to $830 million; non-GAAP operating income of $1.11 billion to $1.14 billion; GAAP diluted EPS of a $1.70 to a $1.75; non-GAAP diluted EPS of $2.45 to $2.50.

Moving to our segment guidance for fiscal 2015, we expect QuickBooks Online subscribers of 925,000 to 950,000 for growth of 35% to 39%. Small business group revenue to decline 3% to 6% but adjusting for the changes we discussed revenue will grow roughly 10%.

Consumer group revenue growth of 3% to 4% with Consumer Tax revenue growth of 5% to 7% and professional tax revenue decline of 34% to 37% but adjusting for the change in our product, our Pro-tax revenue grow approximately 5%. Guidance for our first quarter revenue, operating income, EPS and QuickBooks Online subscribers is available in our press release and our factsheet.

Looking beyond fiscal 2015, we provided a longer term outlook in our factsheet and press release. Beginning in fiscal 2016, we expect to grow revenues double-digits as we recognize the revenue we’ve deferred this year and continue to experience strong growth in our QuickBooks Online subscriber base in ecosystem. We expect to grow revenues faster than expenses generating operating leverage. For fiscal 2017, we expect QuickBooks Online subscribers of approximately 2 million, an increase from 683,000 today providing compounded annual growth of more than 40%. Intuit revenue of roughly 5.8 billion or 9% growth on average over the next three years and non-GAAP earnings per share of approximately $5, reflecting low teens growth on average over the next three years. We’ve shared mainly disclosures with you on our factsheet breaking our small business customer metrics and revenue disclosures clearly into online and desktop ecosystems.

And with that, I’ll turn it back to Brad to close.

Brad Smith

All right Neil. You had covered a lot of stuff there buddy.

Neil Williams

That’s right.

Brad Smith

So let me start to summarize it. We reached the inflection point and we are seizing the opportunities. Our Company is focused on two strategic outcomes we’ve spoken to you about in the past; number one, to the operating system on small businesses expanse; and number two, to do the nations taxes. Our small business momentum continues to build and our QuickBooks Online ecosystem growth is accelerating, driving value for customers and for Intuit. We’ve reorganized our small business group and prioritized investments that will further accelerate our online ecosystem globally while ensuring the best product experience for existing desktop customers speeding up their move to the cloud.

We have a proven formula to Intuit if we innovate into live customers with the absolute best solution in the market we will expand our category, we will grow our share and we will increase lifetime value over time. So we’re stepping on the gas to drive share gain and longer term growth opportunities in all of our businesses. We have lots of runway in front of us and we remain deeply committed to accelerating customer and revenue growth. And we’re going to talk more about these things and our strategy to execute against them at our Investor Day, which we’ll hold on our Mountain View Campus on September 30th, and we look forward to seeing you there.

As always, I want to thank our employees for their hard work and their ongoing focus. And with that, let’s open it up to you to hear what’s on your mind.

Question-and-Answer Session

Operator

Thank you (Operator Instructions) Our first question comes from Brent Thill from UBS. Your line is open please go ahead.

Brent Thill - UBS Investment Research

Maybe Brad for you and then one for Neil. When you look at the adjusted revenue guidance of 5% to 8%, it seems like on an apples-to-apples comparison from past years that is a little lower than where you’ve initially guided. It sounds like if I am bringing this trickling that the delta in that might be your willingness to be a little more aggressive on price. I am just curious if you could address that? And maybe for Neil certain we’ve all seen this will Adobe and oDesk the transition. But when you think about the very long term, and you think about the operating margin structure there is a lot of questions, is this more profitable or less profitable. I am just curious I know you’re going to give anything past $5 in range but is it, from your perspective, has this opened up an opportunity to effectively become a lot more profitable longer term? Thank you.

Brad Smith

Brent, thank you. This is Brad I’ll take that first one. First of all as you identified the guidance next year of 5% to 8% on an adjusted basis does reflect the fact that we’ve hit this inflection point and we realized the way to grow this company long term is to acquire new customers the licenses so that they stay and then earn the opportunity to sell additional services. We also recognized and in addition to focusing on customer growth which is the first of that formula that we need also have a good cross value relationship. And we’ve talked about pulling back a little bit on some of the dependency we’ve had on price over the years in some of our businesses and we’ve been making those decisions along the way like the simplified payments price that we talked to you about this year.

When you put it all together there I think it’s important to look at the fiscal year ’16 and ’17 guidance we’ve provided where we’ve clearly articulated that we can see a return to double digit top line and bottom line growth. So this is a one year transition next year and it is a reflection of us being very aggressive about expanding the categories, growing customer growth and then earning the opportunity to sell additional services every time.

Neil Williams

And so Brent I would just say as it relates to the margin the outlook we’ve talked about for ’16 and ’17 clearly initiate we get back to where we were last year in terms of margin percentage. But as you know we talked about this a lot we really have operating income growth over margin expansion. If we can see more customer growth and more top line growth we will invest more and we’re really focused more on the operating income growth and the dollars over the long haul than we are in the margin percentages. And so we’ll see how that plays out and we’ll see what’s available to us and how much growth we get on the top line and that will determine how much we invest and spend. But as you seen now we’re expecting to get back in this same neighborhood a little better than we are today by the out years.

Brent Thill - UBS Investment Research

Thanks.

Operator

And our next question comes from Walter Pritchard from Citi. your line is open please go ahead.

Walter Pritchard - Citi

Thanks. Just I guess Neil a question for you; you did very clearly outlined on the revenue side the 475 million in tax. I’m wondering as we think about impact on EPS just thinking about 75 million as copying straight down in the bottom line in terms of EPS in fiscal ‘15 and then I just had one follow up as it relates to implication to that.

Brad Smith

The simple answer Walter is yes, I mean that’s why we think about it 475 drops all the way through and as you know these adjusted deferral of revenue out to prior periods for most of us so there is really no impact on marketing our build expense so it’s all margin compression.

Walter Pritchard - Citi

And it does looks like if I just adjust that out and it’s worth about $25 in fiscal ‘15 if I add that back to your guidance you’re slightly shy of where and maybe we’d expect you to guide in what the sort of margin progress you can only had over the years, that’s just incremental spend about beyond the transition behind kind of push online and other initiatives that have going for transition?

Brad Smith

I would say its two things Walter; first of all, it does reflect some additional investment an expansion outside of the U.S. and moving more of our engineering resources to online products and services. It also reflects that we didn’t buys many shares back in 2014 as we would have liked or as we had hoped. We were out of the market for a significant period of time during the pack season and you probably notice late in the fourth quarter our trading volume was unusually low for our shares. And so our original aspiration will probably get more shares brought in this year than we were able to accomplish and that’s piece of the EPS count.

Operator

Thank you. And our next question comes from Kash Rangan from Bank of America/Merrill Lynch. Your line is open. Please go ahead.

Kash Rangan - Bank of America/Merrill Lynch

Hi guys. Bold transformation, congratulations on this initiative. Can you talk about the implied acceleration just like fiscal ‘15 is going to find this year but as we look at the ‘16 and ‘17 there is an implied acceleration in your top line, how comfortable are you with that and what are your assumptions behind the acceleration maybe it pick up customer growth or ARR growth or attach payroll and payments, can you just walk through the quantitative consideration and also how should we think about your margin I know that your focus is on growing operating income but as we look at your $5 in non-GAAP earnings targeting fiscal ‘17 what is the embedded operating margin assumption behind it? Thank you very much.

Brad Smith

All right Kash this is Brad. Let me start with the first piece the implied acceleration. So first and forecast we’re going to have a benefit from the cash that will be collecting for desktop purchases in fiscal year ‘15 that we’ll show up as recognized revenue in ‘16 and ‘17 but the bigger driver is customer growth and subscriber growth and it’s recurring as predictable revenue and as you can see we continue to accelerate our subscriber growth in QuickBooks Online and that is the primary driver both in the U.S. and outside the U.S. a new global markets. And the second and third big drivers here is our ability to continue to deliver more delightful experience and so our attrition is being reduced and so customers are staying and actively using the product and last but not least as evidence by the payroll and payments attach rate that I talk about earlier is a much easier experience for additional services in QuickBooks Online and so as we continue to drive additional fast services we’re going to able to drop annualized accruing revenue.

So there is a bankable set of revenue coming in from the ratable revenue shift and ‘16 and ‘17and we see continued acceleration of our subscriber growth which is job one in addition to that we’ll continue to improve retention and then we’ll have the ability to sale additional services which we’re already proven we can do in QuickBooks Online and that drop the acceleration in top-line revenue. And I’ll shift it over the Neil to talk about the margin aspect.

Neil Williams

Yes, I mean cash to get to the $5 a share that we’ve talked about 317 with that revenue level would indicate an operating margin in the mid to high 30s that’s probably one per week build the most confidence and we have the most ability to manage. Just going back to the comment I made earlier I’ll be totally fine if we get more revenue $5 a share with a lower margin percentage in the way we’re getting there now but our assumption we have today is that margins back in mid to half 30s by 2014.

Kash Rangan - Bank of America/Merrill Lynch

That’s truly tremendous guys I don’t cover many companies that’s have five bucks and earnings per share coming up pretty soon so congratulations on that.

Operator

Thank you. Our next question comes from Sterling Auty from JP Morgan. Your line is open. Please go ahead.

Sterling Auty - JP Morgan

Hi guys I want to start with I think there you made that the transition would be complete after one year, lot of times the subscription transitions take a couple of years to get to point where you’re seeing the normalized growth and normalized revenue contribution, can you just walk be through highway from here to completion in what timeframe.

Brad Smith

Yes, let us tag team on this but two Sterling. First of all I think it’s important to recognize that we’ve been on this journey for some time we have a large number of customers already signed up on connected services and host the products. Across the company we talk about 45 million customers and little over 30 million are already using hosted products and through mobile devices. And so we’ve just reached this point in small business and then as a result we see it happening in the remaining businesses like pro tax we said let’s just move this entire model now to a ratable revenue model and let’s hit the gap on this file basis option.

And so what you see right now is a relatively short transition period for us because we’re already so far down the journey and it give us the ability to bounce back quickly to the double digit top line and bottom line growth that we typically generate. Can you add to that Neil?

Neil Williams

Yes, Brad. It’s really just a couple of other comments just to remind you of. The QuickBooks Desktop and Quicken would probably be close to a three year life as we mentioned in the scripts and those are the longer but the thing to remember is that all of our online customers or most of them, the large part pay monthly. And so a pretty short transition period for those that are converting voluntarily from desktop to online services. As Brad mentioned, probably as much as the third of the impact of this ratable change is in our ProTax solutions and those products are amortized over the tax year, so it will be a little longer than a fiscal year period for us but not much longer maybe 15, 16 months. So, the traditional QuickBooks Desktop and Quicken customers who might be over a longer period time are relatively small part of the transition. So, that’s why it’s a little faster, the recoveries are little sooner than you might see with someone else.

Sterling Auty - JP Morgan

And when you get done, will you have any products where you are recognizing the revenue ratably but the use of the software could be used perpetually or everything will be finally on kind of a term years?

Brad Smith

Everything we have, Sterling, will be on a ratable accounting process. It is possible to use the desktop product, if you are not using any connected services and if you are not using any of the other products, we sale that required connectivity. It’s possible we continue to use it longer term. We don’t support it after a three year period of time and all of your connectivity will be terminated but you can still use it if you don’t use any of that.

Operator

Thank you. Our next question comes from Gil Luria from Wedbush Securities. Your line is open. Please go ahead.

Gil Luria - Wedbush Securities

Could you provide a little bit of free cash flow guidance just as a sanity check. It looks like your CapEx is going to up but the changes you are going through as you said are, you are still going to collect the cash up front. So, does that mean approximately flat free cash flow given the higher CapEx?

Brad Smith

We are spending a little more in CapEx net year, Gil, than we have. The last few years have been unusually low for us at about $150 or $175 million. We are constructing a new building in Mountain View beginning in 2015 and have some other calls that are pushing us above that, a little above $300 million. So, free cash flow will be roughly flat. Total cash flow up about 8% versus last year.

Gil Luria - Wedbush Securities

Got it and then in terms of the international success of QuickBooks Online, is there one of those particularly countries that’s doing particularly well and can you give us a sense ahead of Analyst Day what are some of your early takeaways about what’s driven that success?

Brad Smith

Yes, Gil, it’s Brad. Actually each of the four countries are outperforming the expectations we had set for ourselves and we have raised those expectations twice in the year. But it really is come down to -- we are treating each market individually in terms of making sure that we understand the local compliance needs. We are winning the hearts and minds of the accounts which are the secret sauce to every country that we are serving. We have great country leadership in each of the four prioritized countries that I mentioned earlier. And we are seeing the ability for us to get the same sort of adoption and then the word of mouth through high net promoter scores that we have seen in the U.S.

So, we now have a formula, our team refers to it as a country in a box which allows us to move from country to country but that doesn’t oversee or it doesn’t overlook the fact that we have to make sure that we have the best product that is more local than the local competition and then from there we have to win the hearts and minds of the accountants and the customers who use the products that they will recommend it to everyone else. And that really has been the formula and we will dive a little bit deeper and show you some things at Investor Day but you are not going to hear a lot different at Investor Day than that, that is the secret sauce.

Operator

Thank you. Our next question comes from Raimo Lenschow from Barclays. Your line is open. Please go ahead.

Raimo Lenschow - Barclays

Thanks for taking my questions. Two questions from me. First, and to stay on cash flow, if I think about the 2017, should I have a better cash flow than net income at that point of time and is there any idea for you to kind of maybe start guiding on cash flow because given the more subscription focus of the business that will be your bigger focus? And then just a quick one for Brad on the desktop side and the new program that’s evolving out there, so how do I have to think about that? Is that kind of basically just trying to get them closer to online so that I convert them over time or you expect them to be still desktop customers and you just want to protect them from kind of going to someone else?

Neil Williams

Hey Raimo, this is Neil; I will start off with your first question. I do think we can provide more clarity around cash flow. We will do that at Investor Day, as far as where we are today and what our expectations are, I wouldn’t necessarily expect cash flow to outpace revenue by the time you get out to 2017 and beyond. But as I mentioned earlier our model is for most customers to pay us monthly that indicates they have got high engagement with the product and it’s the way that really encourages and accelerates customer growth. I think about that more between and my first reaction is I wouldn’t expect cash flow to be significantly faster growth than customers or than revenue by the time we get fully implemented into ratable.

Matt Rhodes

And Raimo, it’s Matt. Cash flow growth should be steadier because we are still getting cash from those customers, by the products on the desktop side and you are going to see revenue growth and earnings growth we pick up as we recognize the revenue in later years but the cash will keep coming in so the growth is going to be a little steadier there. You will see more acceleration on revenue growth and op income of EPS growth.

Brad Smith

And Raimo I’ll take the second question and I am glad that you asked that because it gives me a chance to explain it for everybody on the call. So you asked about the desktop announcement that we made today and why we’re going to provide ongoing releases. And what does that mean in terms of the outcome for customers. So let me start by saying what is does not mean is adding new features to QuickBooks Desktop, we described these as experience releases because we have the opportunities to build more self-help, eliminate some of those mid-wing things that we know of them getting in the way of desktop users today and also connect some important services like EM voicing or what we talked to you in the past is Intuit commerce network the ability to send an electronic demo voice and they get paid back electronically and move that money in a frictionless way.

Those kind of services we know we’re gliders and the really important to keep is customers happy and in the Intuit franchise. So that’s what we wanted to do. Why we’re doing that is because not only our small businesses getting increasingly comfortable with the cloud but as you know the accountants relationship is critical and we have accountants out there today who have some of their customers in the cloud of QuickBooks Online and some of their customers in the Desktop and what we want to be able to do is make sure we support both of those customers and keep them as Intuit advocates. And then as they get increasingly more comfortable their accountant along with our own incentives and our opportunity to earn their trust we will move them to the cloud.

Ultimately, our goal is to get them very comfortable with the cloud and help them move to the future because we absolutely know that is a better experience for them it’s a better experience for their accountants and it’s a win overall. So what we’re doing right now is we’re not leaving any of our QuickBooks Desktop customers behind but we are putting all of our new energy, all of our new features and all of our opportunities into the cloud and we’re going to help those customers make it to the cloud on their time frame, not ours.

Operator

Thank you. Our next question comes from Jennifer Lowe from Morgan Stanley. Your line is open please go ahead.

Jennifer Lowe - Morgan Stanley

My first question maybe just a follow up on the thought there Brad. You talked in the past about the ability to charge a premium for QuickBooks Online because it’s a premium experience. To the extent that you are rolling in some of these new experienced features for the Desktop product, does that give you more flexibility on Desktop pricing?

Brad Smith

Jen, one of the things I would like to not do today is talk a lot about pricing because we haven’t announced anything and we’ll do that a little closer so when we release products and we meet you at Investor Day. What I would say though is that we’re clearly looking for the opportunity to incentivize customers to move to the cloud. And as you mentioned, today Neil described we get about $800 in annualized recurring revenue with QuickBooks Online today and it’s a little less than $500 on the Desktop. We have opportunities in both areas so look at different pricing strategies and different bundling strategies to help customers move to the cloud and we’ll talk more about that as we go down the road. But ultimately our ultimate goal was to make sure we’re delivering a good value for the price so the customer’s stays with us and does not chose another alternative and you will see that show up in some of the decisions that we’ll make in the coming months.

Jennifer Lowe - Morgan Stanley

And I have a question hopefully a quick one, everyone is asking about small business but that’s only one of the major franchises you have. As you think about the fiscal ’17 guidance and overlaying that with some of the commentary around last year being kind of a rebuilding year in the tax business and then expectations of the growth there should improve over a multiyear horizon. Is there any expectation in that fiscal ’17 guide that there will be an improvement in the growth rate and tax?

Brad Smith

Thank you, Jen we do have a lot of other good businesses here and I have to say our consumers have seen us probably start a little bit tax hasn’t come up yet until this point in the call. So that’s very exciting for a lot of reasons. And we have provided a multiyear guidance on the tax business the 5% to 10% obviously this year we delivered 7% and we said that this is the first year of a multiyear journey and we’re encouraged about some of the things our team is working on for next year. But we aren’t this point prepared to adjust anything. You can assume that as we look at our long term model that’s the guidance that’s kind of giving us the confidence that we can put out there in 2017 outlook what we did today and still pretty confident in it.

Operator

Thank you. Our next question comes from David Togut from Evercore. Your line is open please go ahead.

David Togut - Evercore Partners

Thank you. Neil could you comment on what you see as the biggest risk factors in the fiscal ’17 earnings guidance that you’ve given out today?

Neil Williams

Well, that’s a good question. I think the key components if you think about the online subscriber growth we’ve talked about for QuickBooks it’s a big number, it’s an aggressive growth rate and we feel pretty confident about that. We talked about the margin percentage and I mentioned that’s one of the areas where I feel like we have most control. Clearly we put this outlook out with concerns and with situations pretty much steady state in the global economy and in other external factors. Probably the biggest risk that I would think of is something external to Intuit that would happen in the market or what happens some of our customer or things like that. I think the things were embedded in the guidance we provided to give out to ’15 and our outlook for ’16 and ’17 have taken into account things that are in our control we feel pretty confident about that.

David Togut - Evercore Partners

Just as a quick follow up on that Neil in the QuickBooks Online subscriber target for ’17, how much of that number is from new subscribers versus transition of the desktop franchise.

David Togut - Evercore Partners

We definitely think the migration is going to continue to accelerate and there is some things we are going to be doing to do that, probably a fourth roughly of that number will come from our existing base moving over perhaps that’s what you would expect?

Brad Smith

It is, we do believe that’s pretty much the range that we have got in our sub growth right now for 2017. Obviously we will view it more successful if we can get more of those customers off the desktop into the cloud but we are trying to be realistic and pragmatic about what we think those customers will be ready to do in the next couple of years.

David Togut - Evercore Partners

Just on that point Brad, what made your functionality still not in QBO that’s in QB Desktop that you need to add to QBO over the next 12, 18 months?

Brad Smith

Yes, David obviously we have some work still to do in a few key areas, self-formed customization, job casting and inventory or the ones we hear the most from our small business customers as well as from the accountant. The good news is those are all on the roadmap. We did the acquisition of a small inventory company called Lettuce a couple of months ago and our teams are diligently working to integrate that more deeply into the customer experience. And so we believe by the end of this fiscal year we are going to have the majority of the key functionality that we need for the largest portion of our customers up and running in QuickBooks Online.

In each of the different geographies, there is typically a small compliant piece that we have to have done in each of those countries and we believe we will have that fully in place by the end of this first fiscal quarter. So, we are well on our way and I don’t want that to be the reason that people think that the migration isn’t happening quickly because today we actually having a functionality for 70% of our QuickBooks customers on the desktop to move over. It’s simply our opportunity to earn the right to get them to move to the cloud and that’s where we are putting our energy.

David Togut - Evercore Partners

Thanks. Just a quick final question, Neil, do you have a view on possible fiscal ‘16 adjusted EPS, that’s the one number that’s not quite in the guidance.

Neil Williams

David, we are not going to talk about that at this point. We may give you some more direction at Investor Day possibly but we are not going to pen something down at this point. We want to have as much flexibility to get as many customers as we can over the next couple of years. So, we are not going to get more specific and to say that we expect double-digit revenue growth and margin expansion next year.

Operator

Thank you. Our next question comes from Scott Schneeberger from Oppenheimer. Your line is open. Please go ahead.

Scott Schneeberger - Oppenheimer

Thanks. Good afternoon guys. I have a three separate amount of questions. I think I was going to ask in the different order but just of that last question, Neil. I think last year you provided share count guide and I haven’t seen it in the release maybe I missed it. For fiscal ‘15 and then ideally if you had a thought on fiscal ‘17 and if not just to give us a feel for how aggressive you think you will be with buybacks after later than expected in fiscal ‘13 and ‘14? Thanks.

Neil Williams

Scott, the four we usually think about is the least offsetting any dilution from stock based compensation. So, we look at the shares we issue every year and that kind of provides a minimum level that we like to acquire and beyond that it just goes to what’s our availability, whatever opportunities we have to invest our cash during the year and other things that we may be considering or have in the pipeline. So, we don’t typically set a maximum level. We have got, I mentioned we got almost 2 billion remaining in our authorization but we never had a trouble getting more authorization if we have the opportunity based on funding and things like that. But I think of at least enough to keep the share count flat as a minimum level.

Scott Schneeberger - Oppenheimer

Thanks and just a follow-on to that, 10 acquisitions this year, 550 million and are those numbers right? As a group obviously small in size, so is that the M&A strategy going forward or might we see some spark? Thanks.

Brad Smith

Scott, we have a strategic game plan in each of our businesses and as you just pointed out our track record tend to be looking at talent or technology tuck-ins that accelerate our time to market to execute those strategies. So, if there is an opportunity that comes along that maybe larger in size and it made strategic sense, we wouldn’t say no but that’s typically not the kind of acquisitions we do. So, I think you can continue to anticipate these kinds of acquisitions and they really are adding acceleration to each of the business units.

Scott Schneeberger - Oppenheimer

Okay, thanks. And swinging over to operational guidance, Brad for tax for fiscal ‘15 I think 5% to 7% is the revenue guide. Could you give, as you have in years past, the breakdown individual federal returns software category share, TurboTax share revenue for return?

Brad Smith

Scott, we are going to dive a little deeper on that at Investor Day. It’s still the same four levers and we will show you what we anticipate in an outlook for fiscal year ‘15 at that time. So, I would like to just hold off on that if you don’t mind until we get to the end of September 30th and that will a reason for you to show us and we will get a chance to see and talk to you then.

Scott Schneeberger - Oppenheimer

Sounds good, I will be there and then last one and I might get the same answer but with regard to QuickBooks Online, last year at Investor Day, you said I think it was bridging for five year which would be I guess out of fiscal ’18, 2 billion incremental QuickBooks, U.S. 1 billion incremental QuickBooks global and now for fiscal ‘17, is there any change to that or is that consistent just on might be measuring apples and oranges but wanted to get a little clarity.

Brad Smith

Yes, actually Scott I’ll give you one on this I won’t make you wait till Investor Day.

Unidentified Company Representative

Thanks.

Brad Smith

So headline number one as your numbers are correct we have an inspirational goal of adding 3 million more QuickBooks customers by 2018. We’ve articulated today that we can see our line of sight to 2 million with high degree of confidence that we’re going to actually tell you today for 2017 I would also tell you that we’re pretty prudent and sometimes conservative and trying to make sure that we can put something out there that we can achieve. And so just anticipate that our team has a different goal than what we’re talking dealers our and our full commitment is to get to that 3 million about 2018.

Operator

Thank you. Our final question for today comes from Jim MacDonald from First Analysis. Your line is open. Please go ahead.

James MacDonald - First Analysis

Good morning guys. Could you give a little more about the organizational changes that go along with your new components of online and desktop and how that works globally as well?

Brad Smith

Yes, Jim it’s Brad, happy to do that. What we ended up doing small business as we took what have been standalone business units, Small Business financial solutions, Small Business Management solutions which is wrote down in the QuickBook payroll payments and then demand for us in QuickBase and we’d say we not need to move to one small business ecosystem but the top priority being online global subscriber growth. And we brought all these businesses together, we reallocated our engineering to focus on the online platforms and then we basically put our energy and to making sure that we got rid of the redundancy where we end up in a Noah’s Ark model. Every one of those businesses had one of everything and when you put them together we ended up with three or four. And so we had some inefficacies there and it allowed us to reallocate resources against the things that would help us accelerate our global expansion, that was really the crux of the old structure is uniting these four individual businesses into one online ecosystem and putting all the energy in resources and to getting to the cloud globally. There is one other aspect of it Jim which is customer care.

As you move to a new customer care model in a mobile world customers expect quality to be built-in, if you’re using a mobile app they don’t expect to have the call from one and if they do there is all kinds of new analog like day button from Amazon. So we put more energy into our customer care model for the future and we made some decisions to move out of pieces of customer care that we don’t think are core and we found good partners who will handle that piece for us and that impacted some of our organizational restructure as well.

So, all that is under the context of more energy and more resources to online and global with mobile devices.

James MacDonald - First Analysis

Great. And going back to somebody other questions as you add these experience all features to the desktop, you mentioned increasing attach on payments but what are your thoughts on attach broader than that for the desktop people as you kind of ease them into the cloud.

Brad Smith

Jim we just touched on important fees, we don’t think we’re pass out in terms of attach rate for QuickBooks Desktop. We do think however we have allowed things to get in the way of the customers being able to have more seamless experience and quite honestly our engineers have been, they haven’t been able to work on those things because if they did it would impact how we have to accounts for the revenue. So we’ve eliminated those barriers and we’re going to have the team focused on making that more seamless experience which allows us to get even improve attach rate in desktop while we build all the new step in QuickBooks Online. So your assumption is correct we should have the ability to continue to get a tax rate in payroll and payment in the desktop probably put all of energy into the cloud.

Operator

Thank you. I’m showing no further questions at this time. Gentlemen, would you like to close with any additional remarks.

Brad Smith

I just want to thank everybody, we know we hit you with a lot, we think very important and different information today if I can just summarize the full year we’re coming out of fiscal year ‘14 with accelerating momentum. We really like our trajectory and we’re making the decisions today to build an even strong future and I’m hoping that we’re going to get a chance to see all of you on September 30th in Mountain View for Investor Day where we share even more information and break this down and to be able to walk through it and talk to you if any question you may have but in the meantime everybody have a great weekend and we’ll speak with you soon.

Operator

Ladies and gentlemen thank you for participating in today’s conference. This concludes our program. You may all disconnect and have a wonderful day.