Delaware | 000-21180 | 77-0034661 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
2700 Coast Avenue Mountain View, CA 94043 | ||||
(Address of Principal Executive Offices) (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.01 | Press release issued on August 21, 2014, reporting financial results for the quarter and year ended July 31, 2014 and announcing the cash dividend.* |
* | This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended. |
Date: August 21, 2014 | INTUIT INC. | |||
By: | /s/ R. Neil Williams | |||
R. Neil Williams | ||||
Senior Vice President and Chief Financial Officer |
Exhibit Number | Description | |
99.01 | Press release issued on August 21, 2014, reporting financial results for the quarter and year ended July 31, 2014 and announcing the cash dividend.* |
* | This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended. |
Contacts: | Investors | Media | ||
Matt Rhodes | Diane Carlini | |||
Intuit Inc. | Intuit Inc. | |||
650-944-2536 | 650-944-6251 | |||
matthew_rhodes@intuit.com | diane_carlini@intuit.com |
• | Delivered total company revenue of $714 million, up 13 percent. |
• | Reached a key inflection point in Small Business; for the first time more new customers chose QuickBooks Online over QuickBooks Desktop. |
• | Increased QuickBooks Online subscribers by 40 percent, adding approximately 60,000 customers. |
• | Finished the year with 7 percent revenue growth in Consumer Tax, above the high end of guidance for the segment. |
• | Accelerated adoption of QuickBooks Online subscribers outside the U.S., growing more than 150 percent to 84,000. |
• | Delivered total company revenue of $4.5 billion, up 8 percent, and diluted earnings per share (EPS) growth of 9 percent. |
• | Ended with 683,000 QuickBooks Online customers, and more than 1 million total QuickBooks subscribers. |
• | Finished the fiscal year with cash and investments of over $1.9 billion. |
• | Completed 10 acquisitions, adding talent and technology across the small business and consumer ecosystems. |
• | Total QuickBooks paying customers grew 6 percent in fiscal 2014, up from 4 percent. |
• | Small Business Online Ecosystem annualized recurring revenue (ARR) grew 34 percent, driven by subscriber growth and improved attach rates for additional services. |
• | Annualized recurring revenue (ARR) is defined as four times the most recent quarterly revenue for online offerings serving small business customers. |
• | QuickBooks Online subscribers grew 40 percent, compared to 36 percent last quarter. |
• | Online payroll subscribers grew 25 percent with the attach rate improving to 19 percent from 16 percent a year ago. |
• | Attach rates for payments improved to 5 percent, from 3 percent a year ago. |
• | Consumer Tax revenue grew 22 percent for the fourth quarter and 7 percent for the year. |
• | ProTax revenue grew 16 percent for the fourth quarter and 4 percent for the year. |
GAAP | Non-GAAP | |||||||||||||||||||||
Q4 FY14 | Q4 FY13 | Change | Q4 FY14 | Q4 FY13 | Change | |||||||||||||||||
Revenue | $ | 714 | $ | 634 | 13 | % | $ | 714 | $ | 634 | 13 | % | ||||||||||
Operating Income (Loss) | $ | (73 | ) | $ | (60 | ) | NM | $ | 2 | $ | 9 | (78 | )% | |||||||||
EPS | $ | (0.14 | ) | $ | (0.05 | ) | NM | $ | (0.01 | ) | $ | 0.00 | NM |
GAAP | Non-GAAP | |||||||||||||||||||||
FY14 | FY13 | Change | FY14 | FY13 | Change | |||||||||||||||||
Revenue | $ | 4,506 | $ | 4,171 | 8 | % | $ | 4,506 | $ | 4,171 | 8 | % | ||||||||||
Operating Income | $ | 1,298 | $ | 1,233 | 5 | % | $ | 1,555 | $ | 1,470 | 6 | % | ||||||||||
EPS | $ | 3.09 | $ | 2.83 | 9 | % | $ | 3.49 | $ | 3.20 | 9 | % |
• | Intuit repurchased $152.5 million of shares in the fourth quarter; about $1.9 billion remains on the authorization. |
• | The company approved a dividend of up to $1.00 per share for fiscal 2015. This represents a 32 percent increase versus last year and reflects a large and growing cash position, as well as more recurring and predictable revenue streams. The first quarterly dividend of $0.25 per share will be payable on Oct. 20. |
• | Revenue of $4.275 billion to $4.375 billion, a decline of 3 percent to 5 percent. |
◦ | Adjusted revenue of $4.75 billion to $4.85 billion, growth of 5 percent to 8 percent. This adjusted revenue guidance takes into account the expected increase in deferred revenue due to the change in future desktop product offerings, as well as acceleration in QuickBooks Online ecosystem growth, which impacts near-term revenue growth as customers pay monthly subscription fees. |
• | 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 $1.70 to $1.75. |
• | Non-GAAP diluted EPS of $2.45 to $2.50. |
Fiscal 2015 Revenue Guidance Bridge | ||||
$ millions | Fiscal 2015 Revenue Guidance | Add Impact of Desktop Product Offering Change | Add Impact of Accelerated QuickBooks Online Growth | Adjusted Fiscal 2015 Revenue |
Revenue | $4,275 - $4,375 | Approx. $400 | Approx. $75 | $4,750 - $4,850 |
Revenue Growth | (5%) - (3%) | NA | NA | 5% - 8% |
• | Small Business revenue decline of 3 percent to 6 percent. Adjusting for the financial impact of the acceleration in QuickBooks Online growth and the changes in future desktop product offerings, Small Business revenue would grow approximately 10 percent. |
◦ | QuickBooks Online subscriber growth of 35 percent to 39 percent. |
• | Consumer Group revenue growth of 3 percent to 4 percent, which includes the financial impact of the changes to future Quicken desktop product offerings. |
◦ | Within Consumer Group, Consumer Tax revenue growth of 5 percent to 7 percent. |
• | Professional Tax revenue decline of 34 percent to 37 percent. Adjusting for the financial impact of the change in future desktop product offerings, ProTax revenue would grow approximately 5 percent. |
• | Revenue of $620 million to $630 million. |
• | GAAP operating loss of $155 million to $160 million. |
• | Non-GAAP operating loss of $80 million to $85 million. |
• | GAAP loss per share of $0.36 to $0.37. |
• | Non-GAAP loss per share of $0.20 to $0.21. |
• | Revenue of approximately $5.8 billion, 9 percent growth on average over the next three years. |
• | Non-GAAP earnings per share of approximately $5.00, compounded annual growth of 13 percent. |
• | Adjusting for share-based compensation expenses and amortization of intangibles, GAAP earnings per share of approximately $4.25. |
• | QuickBooks Online subscribers of approximately 2 million, an increase from 683,000 at the end of fiscal 2014, compounded annual growth rate of more than 40 percent. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
July 31, 2014 | July 31, 2013 | July 31, 2014 | July 31, 2013 | ||||||||||||
Net revenue: | |||||||||||||||
Product | $ | 271 | $ | 248 | $ | 1,522 | $ | 1,515 | |||||||
Service and other | 443 | 386 | 2,984 | 2,656 | |||||||||||
Total net revenue | 714 | 634 | 4,506 | 4,171 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of revenue: | |||||||||||||||
Cost of product revenue | 33 | 28 | 141 | 130 | |||||||||||
Cost of service and other revenue | 138 | 95 | 501 | 429 | |||||||||||
Amortization of acquired technology | 8 | 4 | 26 | 18 | |||||||||||
Selling and marketing | 259 | 256 | 1,281 | 1,219 | |||||||||||
Research and development | 210 | 182 | 758 | 685 | |||||||||||
General and administrative | 133 | 115 | 481 | 422 | |||||||||||
Amortization of other acquired intangible assets | 6 | 14 | 20 | 35 | |||||||||||
Total costs and expenses [A] | 787 | 694 | 3,208 | 2,938 | |||||||||||
Operating income (loss) from continuing operations | (73 | ) | (60 | ) | 1,298 | 1,233 | |||||||||
Interest expense | (7 | ) | (7 | ) | (31 | ) | (30 | ) | |||||||
Interest and other income, net | 23 | — | 31 | 7 | |||||||||||
Income (loss) from continuing operations before income taxes | (57 | ) | (67 | ) | 1,298 | 1,210 | |||||||||
Income tax provision (benefit) [B] | (18 | ) | (21 | ) | 447 | 387 | |||||||||
Net income (loss) from continuing operations | (39 | ) | (46 | ) | 851 | 823 | |||||||||
Net income from discontinued operations [C] | — | 30 | 46 | 35 | |||||||||||
Net income (loss) | $ | (39 | ) | $ | (16 | ) | $ | 897 | $ | 858 | |||||
Basic net income (loss) per share from continuing operations | $ | (0.14 | ) | $ | (0.15 | ) | $ | 2.99 | $ | 2.78 | |||||
Basic net income per share from discontinued operations | — | 0.10 | 0.16 | 0.11 | |||||||||||
Basic net income (loss) per share | $ | (0.14 | ) | $ | (0.05 | ) | $ | 3.15 | $ | 2.89 | |||||
Shares used in basic per share calculations | 284 | 298 | 285 | 297 | |||||||||||
Diluted net income (loss) per share from continuing operations | $ | (0.14 | ) | $ | (0.15 | ) | $ | 2.93 | $ | 2.72 | |||||
Diluted net income per share from discontinued operations | — | 0.10 | 0.16 | 0.11 | |||||||||||
Diluted net income (loss) per share | $ | (0.14 | ) | $ | (0.05 | ) | $ | 3.09 | $ | 2.83 | |||||
Shares used in diluted per share calculations | 284 | 298 | 291 | 303 | |||||||||||
Dividends declared per common share | $ | 0.19 | $ | 0.17 | $ | 0.76 | $ | 0.68 |
[A] | The following table summarizes the total share-based compensation expense that we recorded for the periods shown. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
(in millions) | July 31, 2014 | July 31, 2013 | July 31, 2014 | July 31, 2013 | |||||||||||
Cost of revenue | $ | 2 | $ | 2 | $ | 8 | $ | 6 | |||||||
Selling and marketing | 15 | 17 | 59 | 64 | |||||||||||
Research and development | 20 | 16 | 66 | 55 | |||||||||||
General and administrative | 19 | 16 | 71 | 59 | |||||||||||
Total share-based compensation expense from continuing operations | 56 | 51 | 204 | 184 | |||||||||||
Discontinued operations | — | 2 | — | 11 | |||||||||||
Total share-based compensation expense | $ | 56 | $ | 53 | $ | 204 | $ | 195 |
[B] | We compute our annual provision for income taxes by applying the annual effective tax rate to income from recurring operations and adding the effects of any discrete income tax items specific to the period. Our effective tax rate for the twelve months ended July 31, 2014 was approximately 34% and did not differ significantly from the statutory rate of 35%. Our effective tax rate for the twelve months ended July 31, 2013 was approximately 32%. Excluding a discrete tax benefit related to the retroactive reinstatement of the federal research and experimentation credit, our effective tax rate for that period was approximately 33% and did not differ significantly from the statutory rate of 35%. |
[C] | On August 1, 2013 we completed the sale of our Intuit Financial Services (IFS) business for approximately $1.025 billion in cash. We recorded a gain on the disposal of IFS of approximately $36 million, net of income taxes, in the first quarter of fiscal 2014. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
July 31, 2014 | July 31, 2013 | July 31, 2014 | July 31, 2013 | ||||||||||||
GAAP operating income (loss) | $ | (73 | ) | $ | (60 | ) | $ | 1,298 | $ | 1,233 | |||||
Amortization of acquired technology | 8 | 4 | 26 | 18 | |||||||||||
Amortization of other acquired intangible assets | 6 | 14 | 20 | 35 | |||||||||||
Professional fees for business combinations | 5 | — | 7 | — | |||||||||||
Share-based compensation expense | 56 | 51 | 204 | 184 | |||||||||||
Non-GAAP operating income | $ | 2 | $ | 9 | $ | 1,555 | $ | 1,470 | |||||||
GAAP net income (loss) | $ | (39 | ) | $ | (16 | ) | $ | 897 | $ | 858 | |||||
Amortization of acquired technology | 8 | 4 | 26 | 18 | |||||||||||
Amortization of other acquired intangible assets | 6 | 14 | 20 | 35 | |||||||||||
Professional fees for business combinations | 5 | — | 7 | — | |||||||||||
Share-based compensation expense | 56 | 51 | 204 | 184 | |||||||||||
Net gains on debt securities and other investments | (21 | ) | — | (21 | ) | 1 | |||||||||
Income tax effect of non-GAAP adjustments | (17 | ) | (22 | ) | (74 | ) | (91 | ) | |||||||
Net income from discontinued operations | — | (30 | ) | (46 | ) | (35 | ) | ||||||||
Non-GAAP net income (loss) | $ | (2 | ) | $ | 1 | $ | 1,013 | $ | 970 | ||||||
GAAP diluted net income (loss) per share | $ | (0.14 | ) | $ | (0.05 | ) | $ | 3.09 | $ | 2.83 | |||||
Amortization of acquired technology | 0.03 | 0.01 | 0.09 | 0.06 | |||||||||||
Amortization of other acquired intangible assets | 0.02 | 0.04 | 0.07 | 0.11 | |||||||||||
Professional fees for business combinations | 0.02 | — | 0.02 | — | |||||||||||
Share-based compensation expense | 0.19 | 0.17 | 0.70 | 0.61 | |||||||||||
Net gains on debt securities and other investments | (0.07 | ) | — | (0.07 | ) | — | |||||||||
Income tax effect of non-GAAP adjustments | (0.06 | ) | (0.07 | ) | (0.25 | ) | (0.30 | ) | |||||||
Net income from discontinued operations | — | (0.10 | ) | (0.16 | ) | (0.11 | ) | ||||||||
Non-GAAP diluted net income (loss) per share | $ | (0.01 | ) | $ | — | $ | 3.49 | $ | 3.20 | ||||||
Shares used in diluted per share calculation | 284 | 304 | 291 | 303 |
July 31, 2014 | July 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 849 | $ | 1,009 | |||
Investments | 1,065 | 652 | |||||
Accounts receivable, net | 134 | 130 | |||||
Income taxes receivable | 35 | 62 | |||||
Deferred income taxes | 139 | 166 | |||||
Prepaid expenses and other current assets | 116 | 98 | |||||
Current assets of discontinued operations | — | 44 | |||||
Current assets before funds held for customers | 2,338 | 2,161 | |||||
Funds held for customers | 289 | 235 | |||||
Total current assets | 2,627 | 2,396 | |||||
Long-term investments | 31 | 83 | |||||
Property and equipment, net | 606 | 555 | |||||
Goodwill | 1,635 | 1,246 | |||||
Acquired intangible assets, net | 199 | 149 | |||||
Other assets | 109 | 102 | |||||
Long-term assets of discontinued operations | — | 955 | |||||
Total assets | $ | 5,207 | $ | 5,486 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 176 | $ | 137 | |||
Accrued compensation and related liabilities | 278 | 218 | |||||
Deferred revenue | 526 | 495 | |||||
Other current liabilities | 168 | 156 | |||||
Current liabilities of discontinued operations | — | 39 | |||||
Current liabilities before customer fund deposits | 1,148 | 1,045 | |||||
Customer fund deposits | 289 | 235 | |||||
Total current liabilities | 1,437 | 1,280 | |||||
Long-term debt | 499 | 499 | |||||
Other long-term obligations | 203 | 167 | |||||
Long-term obligations of discontinued operations | — | 9 | |||||
Total liabilities | 2,139 | 1,955 | |||||
Stockholders’ equity | 3,068 | 3,531 | |||||
Total liabilities and stockholders’ equity | $ | 5,207 | $ | 5,486 |
Twelve Months Ended | |||||||
July 31, 2014 | July 31, 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 897 | $ | 858 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 144 | 166 | |||||
Amortization of acquired intangible assets | 53 | 66 | |||||
Goodwill and intangible asset impairment charge | — | 46 | |||||
Share-based compensation expense | 204 | 195 | |||||
Pre-tax gain on sale of discontinued operations (1) | (40 | ) | (53 | ) | |||
Net realized gain on sale of available-for-sale equity securities | (21 | ) | — | ||||
Deferred income taxes | 87 | 13 | |||||
Tax benefit from share-based compensation plans | 82 | 69 | |||||
Excess tax benefit from share-based compensation plans | (82 | ) | (69 | ) | |||
Other | 24 | 19 | |||||
Total adjustments | 451 | 452 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (5 | ) | 12 | ||||
Income taxes receivable | 27 | (9 | ) | ||||
Prepaid expenses and other assets | (14 | ) | (33 | ) | |||
Accounts payable | 34 | 4 | |||||
Accrued compensation and related liabilities | 43 | 8 | |||||
Deferred revenue | 15 | 62 | |||||
Other liabilities | 6 | 12 | |||||
Total changes in operating assets and liabilities | 106 | 56 | |||||
Net cash provided by operating activities | 1,454 | 1,366 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale debt securities | (1,334 | ) | (869 | ) | |||
Sales of available-for-sale debt securities | 346 | 333 | |||||
Maturities of available-for-sale debt securities | 567 | 228 | |||||
Net change in money market funds and other cash equivalents held to satisfy customer fund obligations | (54 | ) | 55 | ||||
Net change in customer fund deposits | 54 | (55 | ) | ||||
Proceeds from the sale of available-for-sale equity securities | 26 | — | |||||
Purchases of property and equipment | (194 | ) | (195 | ) | |||
Acquisitions of businesses, net of cash acquired | (471 | ) | (17 | ) | |||
Acquisitions of intangible assets | (15 | ) | (14 | ) | |||
Proceeds from divestiture of businesses | 1,025 | 60 | |||||
Other | (7 | ) | (11 | ) | |||
Net cash used in investing activities | (57 | ) | (485 | ) | |||
Cash flows from financing activities: | |||||||
Net proceeds from issuance of stock under employee stock plans | 165 | 165 | |||||
Purchases of treasury stock | (1,577 | ) | (292 | ) | |||
Cash dividends paid to stockholders | (220 | ) | (203 | ) | |||
Excess tax benefit from share-based compensation plans | 82 | 69 | |||||
Other | (1 | ) | (1 | ) | |||
Net cash used in financing activities | (1,551 | ) | (262 | ) | |||
Effect of exchange rates on cash and cash equivalents | (6 | ) | (3 | ) | |||
Net increase (decrease) in cash and cash equivalents | (160 | ) | 616 | ||||
Cash and cash equivalents at beginning of period | 1,009 | 393 | |||||
Cash and cash equivalents at end of period | $ | 849 | $ | 1,009 |
(1) | Because the cash flows of our discontinued operations were not material for any period presented, we have not segregated the cash flows of those businesses on these statements of cash flows. We have presented the effect of the gains on disposals of discontinued operations on these statements |
Forward-Looking Guidance | ||||||||||||||||||||||
GAAP Range of Estimate | Non-GAAP Range of Estimate | |||||||||||||||||||||
From | To | Adjmts | From | To | ||||||||||||||||||
Three Months Ending October 31, 2014 | ||||||||||||||||||||||
Revenue | $ | 620 | $ | 630 | $ | — | $ | 620 | $ | 630 | ||||||||||||
Operating loss | $ | (160 | ) | $ | (155 | ) | $ | 75 | [a] | $ | (85 | ) | $ | (80 | ) | |||||||
Diluted loss per share | $ | (0.37 | ) | $ | (0.36 | ) | $ | 0.16 | [b] | $ | (0.21 | ) | $ | (0.20 | ) | |||||||
Twelve Months Ending July 31, 2015 | ||||||||||||||||||||||
Revenue | $ | 4,275 | $ | 4,375 | $ | — | $ | 4,275 | $ | 4,375 | ||||||||||||
Operating income | $ | 800 | $ | 830 | $ | 310 | [c] | $ | 1,110 | $ | 1,140 | |||||||||||
Diluted earnings per share | $ | 1.70 | $ | 1.75 | $ | 0.75 | [d] | $ | 2.45 | $ | 2.50 |
[a] | Reflects estimated adjustments for share-based compensation expense of approximately $59 million; amortization of acquired technology of approximately $10 million; and amortization of other acquired intangible assets of approximately $6 million. |
[b] | Reflects the estimated adjustments in item [a] and income taxes related to these adjustments. |
[c] | Reflects estimated adjustments for share-based compensation expense of approximately $253 million; amortization of acquired technology of approximately $34 million; and amortization of other acquired intangible assets of approximately $23 million. |
[d] | Reflects the estimated adjustments in item [c] and income taxes related to these adjustments. |
• | Share-based compensation expense |
• | Amortization of acquired technology |
• | Amortization of other acquired intangible assets |
• | Goodwill and intangible asset impairment charges |
• | Professional fees for business combinations |
• | Gains and losses on debt securities and other investments |
• | Income tax effects of excluded items and related discrete tax items |
• | Discontinued operations |