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Intuit First-Quarter Operating Results Exceed Guidance
Revenue Growth at High End of Guidance: Driven by Payroll and Financial Institutions Businesses
MOUNTAIN VIEW, Calif. – Nov. 19, 2009 – Intuit Inc. (Nasdaq: INTU) today announced financial results for its first quarter ended Oct. 31.
- Strong customer growth across core businesses.
- Revenue increased 2 percent to $493 million and operating results exceeded the company's guidance.
- Revenue growth in core businesses was led by the Employee Management Solutions' Payroll service, at 9 percent, and the Financial Institutions segment, at 7 percent.
- Operating results exceeded guidance due to a shift in marketing expenses from Q1 to Q2 and to continued diligence on spending and resource allocation. Last year's Q1 results included an unusual $17 million benefit from compensation related items. Adjusting for that unusual item, the Q1 operating loss is $7 million less than it was last year. Intuit typically posts a seasonal loss in its first quarter when there is little revenue from its tax businesses but expenses remain relatively constant.
- Intuit ended the quarter with more than $1 billion in cash and investments, maintaining a strong balance sheet, consistent with its financial operating principles.
- The company repurchased $300 million of shares of stock in the quarter, and the board approved a new repurchase program of $600 million.
- Intuit acquired Mint.com and reaffirmed its full-year 2010 guidance inclusive of the transaction. Previously, Intuit had expected to reduce its full-year 2010 non-GAAP (Generally Accepted Accounting Principles) earnings per share by 2 cents following the close of the transaction.
Note: all comparisons are versus the same period a year ago.
|Q1 10||Q1 09||% change||Q1 10||Q1 09||% change|
Dollars in millions except for EPS
"Intuit's solid revenue and operating results give us a good start to the fiscal year, with our most important quarters ahead of us," said Brad Smith, Intuit's president and chief executive officer. "With these early results, we are confident that we will grow revenue and expand operating margins. We will continue to invest in targeted, high-yield opportunities while also managing expenses.
"We continue to see growth in our core businesses and are making progress in building out adjacent businesses. At the same time, we are accelerating our transition to a connected services company, with the recent acquisitions of online payroll provider PayCycle and the fast-growing online personal finance service Mint.com. We'll also continue to invest in our products and in innovations that position us well for future growth."
Business Segment Results and Highlights
Small Business Group revenue was flat with customer growth in all segments. This group includes these three business segments.
Financial Management Solutions
- Revenue for the segment, including QuickBooks, of $134 million, down 7 percent from the prior year. QuickBooks revenue in the first quarter reflects promotional pricing during the final months of QuickBooks 2009 edition.
- QuickBooks unit growth, at 15 percent, was strong even in a challenging environment. QuickBooks 2010 debuted to good customer reviews in October, receiving an Editor's Choice award and other positive industry reviews. QuickBooks 2010 delivers valuable features to help small businesses save and make money.
Employee Management Solutions
- Revenue was $97 million, up 9 percent from the prior year.
- With the PayCycle acquisition, Intuit created a stronger offering by adopting the online payroll provider's best practices and strengths into its technology, processes and culture. At 100 days into the integration, customer retention is very strong.
- Revenue was $75 million, up 4 percent from the prior year.
- New merchant growth was up 12 percent from the prior year.
- The company continues to add extensions to the Payments offering to attract new customers. Customers have responded well to our GoPayment offering, a new way to process credit card payments using handheld and mobile devices.
- Revenue was $22 million, up $8 million from last year.
- TurboTax for 2009 will go on sale in retail stores on Nov. 27; the season begins in earnest in January.
- Revenue was $22 million, up 3 percent from the prior year.
- Intuit is provided a free trial version of ProLine Tax Online Edition for tax professionals. This innovative, software-as-a-service tax solution helps professionals quickly and easily prepare and file federal and state tax returns.
- Revenue was $80 million, up 7 percent from the prior year.
- The segment continues to gain momentum with the Internet Banking end-user base increasing 4 percent and the Bill Pay end-user base growing 19 percent.
- TurboTax for Online Banking won a Best of Show award at Finovate 2009, which showcases the best new innovations in financial and banking technology. This product responds to customers' increasing desire to "never enter data," and turns their online banking site into a valuable tax resource. It will be available to over 1,200 financial institutions for the upcoming tax season.
- Revenue, which includes Intuit's small business and tax offerings in Canada and the United Kingdom, as well as Quicken and Intuit Real Estate Solutions, was $63 million, down 5 percent from the prior year.
- Intuit acquired Mint.com on Nov. 2, adding a fast-growing consumer brand and successful software-as-a-service offering that helps people save and make money.
- Medical Mutual of Ohio joined CIGNA and United Healthcare in offering Quicken Health Expense Tracker to their members. In 2010, Intuit expects to provide free access to Quicken Health Tracker to more than 26 million people through these three providers. The product is a growing part of Intuit's connected services strategy and is a long-term growth opportunity for the company.
Intuit reaffirmed its financial full-year guidance for fiscal 2010, inclusive of the Mint transaction, and provided guidance for the second quarter, ending January 31. For fiscal 2010 the company expects:
- Revenue of $3.3 billion to $3.43 billion, growth of 4 to 8 percent.
- Non-GAAP operating income of $985 million to $1.025 billion, growth of 6 to 10 percent.
For the second quarter the company expects:
- Revenue of $800 million to $835 million, or growth of 1 to 6 percent.
- GAAP operating income of $94 million to $109 million.
- Non-GAAP operating income of $160 million to $175 million.
- GAAP diluted EPS of $0.15 to $0.18.
- Non-GAAP diluted EPS of $0.29 to $0.32.
Webcast and Conference Call Information
Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time on Nov. 19. To hear the call, dial 866-238-1645 in the United States or 703-639-1163 from international locations. No reservation or access code is needed. The conference call can also be heard live via webcast at http://investors.intuit.com/events.cfm. Prepared remarks for the call will be available on Intuit's Web site after the call ends.
A replay of the conference call will also be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1406973.
The audio webcast will remain available on Intuit's Web site for one week after the conference call.
Intuit, the Intuit logo and QuickBooks, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "About Non-GAAP Financial Measures" as well as the related Table B and Table E. A copy of the press release issued by Intuit on Nov. 19, 2009 can be found on the investor relations page of Intuit's Web site.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements, including forecasts of Intuit's future expected financial results; its prospects for the business in fiscal 2010; the features and availability of future products and services; and all of the statements under the heading "Forward-looking Guidance."
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, without limitation, the following: product introductions and price competition from our competitors can have unpredictable negative effects on our revenue, profitability and market position; governmental encroachment in our tax businesses or other governmental activities or public policy affecting the preparation and filing of tax returns could negatively affect our operating results and market position; we may not be able to successfully introduce new products and services to meet our growth and profitability objectives, and current and future products and services may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; business interruption or failure of our information technology and communication systems may impair the availability of our products and services, which may damage our reputation and harm our financial results; if economic and market conditions in the U.S. and worldwide continue to decline, our customers may delay or reduce technology purchases which may harm our business, results of operations and financial condition; any significant product quality problems or delays in our products could harm our revenue, earnings and reputation; any failure to properly use and protect personal customer information could harm our revenue, earnings and reputation; our revenue and earnings are highly seasonal and the timing of our revenue between quarters is difficult to predict, which may cause significant quarterly fluctuations in our financial results; predicting tax-related revenues is challenging due to the heavy concentration of activity in a short time period; we have implemented, and are continuing to upgrade, new information systems and any problems with these new systems could interfere with our ability to deliver products and services and gather information to effectively manage our business; our financial position may not make repurchasing shares advisable or we may issue additional shares in an acquisition causing our number of outstanding shares to grow; our acquisition activities may be disruptive to Intuit and may not result in expected benefits; and litigation involving intellectual property, antitrust, shareholder and other matters may increase our costs. More details about these and other risks that may impact our business are included in our Form 10-K for fiscal 2009 and in our other SEC filings. You can locate these reports through our website at http://www.intuit.com/about_intuit/investors. Forward-looking statements are based on information as of Nov. 19, 2009, and we do not undertake any duty to update any forward-looking statement or other information in these remarks.