Segment Information

12 Months Ended

Jul. 31, 2019

13. Segment Information

We have defined three reportable segments, described below, based on factors such as how we manage our operations and how our chief operating decision maker views results. We define the chief operating decision maker as our Chief Executive Officer and our Chief Financial Officer. Our chief operating decision maker organizes and manages our business primarily on the basis of product and service offerings.

Small Business & Self-Employed: This segment serves small businesses and the self-employed around the world, and the accounting professionals who serve and advise them. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, merchant payment processing solutions, and financing for small businesses.

Consumer: This segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Our Mint and Turbo offerings serve consumers and help them understand and improve their financial lives by offering a view of their financial health.

Strategic Partner: This segment serves professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, ProFile, and ProConnect Tax Online.

All of our segments operate primarily in the United States and sell primarily to customers in the United States. Total international net revenue was less than 5% of consolidated total net revenue for the twelve months ended July 31, 2019, 2018 and 2017.

We include expenses such as corporate selling and marketing, product development, general and administrative and share-based compensation, which are not allocated to specific segments, in unallocated corporate items. Unallocated corporate items also include amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges.

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1. Except for goodwill and purchased intangible assets, we do not generally track assets by reportable segment and, consequently, we do not disclose total assets by reportable segment. See Note 5, “Goodwill and Acquired Intangible Assets,” for goodwill by reportable segment.

The following table shows our financial results by reportable segment for the periods indicated.



	Twelve Months Ended July 31,
(In millions)	2019			2018			2017

Net revenue:
Small Business & Self-Employed	$	3,533		$	3,061		$	2,574
Consumer	2,775			2,508			2,182
Strategic Partner	476			456			440
Total net revenue	$	6,784		$	6,025		$	5,196

Operating income:
Small Business & Self-Employed	$	1,549		$	1,326		$	1,111
Consumer	1,742			1,587			1,376
Strategic Partner	318			284			266
Total segment operating income	3,609			3,197			2,753
Unallocated corporate items:
Share-based compensation expense	(401		)	(382		)	(326		)
Other common expenses	(1,328		)	(1,234		)	(995		)
Amortization of acquired technology	(20		)	(15		)	(12		)
Amortization of other acquired intangible assets	(6		)	(6		)	(2		)
Total unallocated corporate items	(1,755		)	(1,637		)	(1,335		)
Total operating income	$	1,854		$	1,560		$	1,418

Revenue classified by significant product and service offerings was as follows:



	Twelve Months Ended July 31,
(In millions)	2019		2018		2017
Net revenue:

QuickBooks Online Accounting	$	980	$	695	$	448
Online Services	683		511		410
Total Online Ecosystem	1,663		1,206		858
QuickBooks Desktop Accounting	732		716		599
Desktop Services and Supplies	1,138		1,139		1,117
Total Desktop Ecosystem	1,870		1,855		1,716
Small Business & Self-Employed	3,533		3,061		2,574
Consumer	2,775		2,508		2,182
Strategic Partner	476		456		440
Total net revenue	$	6,784	$	6,025	$	5,196

Revenue from our QuickBooks Desktop packaged software products was $167 million, $166 million, and $190 million for the twelve months ended July 31, 2019, 2018, and 2017, respectively. These amounts are included in the QuickBooks Desktop Accounting revenue presented in the table above.