Intuit Inc. (Nasdaq:INTU) announced financial results for the first quarter of fiscal 2017, which ended Oct. 31.

“We are off to a strong start to the fiscal year with QuickBooks Online continuing to build momentum as we pursue large global market opportunities,” said Brad Smith, Intuit’s chairman and chief executive officer. “Customer growth is expanding globally in Canada, the U.K., and Australia, and QuickBooks Self-Employed is contributing to category growth worldwide.

“It’s also time to gear up for tax season, and we’re investing in product innovation focused on driving customer growth and market share. In ProConnect we are focused on multiservice accountants who do both books and taxes for their customers so we can become the operating system behind accountant success. We also continue to promote a set of best practices and standards within the industry that help the Internal Revenue Service and the states to improve their ability to combat tax fraud.

“Overall we are off to a nice start across our businesses and are looking forward to building on this success through the year,” Smith said.

Financial Highlights

For the first quarter, Intuit:

• Reported revenue of $778 million, up 9 percent.
• Grew total QuickBooks Online subscribers 41 percent to more than 1.6 million subscribers.
• Grew QuickBooks Online subscribers outside the U.S. by 50 percent, to 323,000 subscribers, led by growth in the U.K., Australia and Canada; subscriber growth in the U.K. accelerated to 87 percent.
• Increased QuickBooks Self-Employed customers to roughly 110,000 of QuickBooks Online subscribers, up from 85,000 last quarter.

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.

Snapshot of First-quarter Results

Business Segment Results

Small Business

• Total Small Business segment revenue increased 11 percent.
• Small business online ecosystem revenue grew 26 percent, driven by online customer acquisition.
• Intuit’s third annual QuickBooks Connect conference in late October reached record attendance, reinforcing the power of the ecosystem through creating indispensable connections between small business owners, accountants and developers.
• There are approximately 1,285 apps on the QuickBooks Online platform; 435 are published in the QuickBooks Apps Store.
• Intuit QuickBooks recently announced a number of new integrations with third-party partners, including Google, Apple Pay, PayPal and American Express and strategic partnerships with Bill.com and TSheets.

Consumer Tax and ProConnect

• Consumer Tax revenue for the first quarter totaled $60 million and ProConnect revenue was $112 million.

Capital Allocation Summary

In the first quarter the company:

• Repurchased 1.8 million shares for $192 million, and $2.2 billion remains on the authorization.
• Received board approval for a $0.34 per share dividend for the second quarter of fiscal 2017, payable on Jan. 18, 2017.

Accounting Standards Update

Intuit’s fiscal 2017 GAAP earnings per share include the impact of the early adoption of the new accounting standard update for share-based compensation. This update requires excess tax benefits realized upon the settlement of a share-based compensation award to flow through the earnings statement instead of the balance sheet. We expect this accounting change to reduce the GAAP tax rate from approximately 34 percent to approximately 32 percent for full fiscal 2017. The impact on GAAP earnings per share is an increase of approximately 7 cents in the first quarter and 12 cents for the full year.

Forward-looking Guidance

“Our goal is to be the operating system behind small business success, helping small businesses save time and improve their cash flow, so they thrive when times are good, and remain resilient in times of uncertainty,” said Neil Williams, Intuit’s chief financial officer. “Small business product improvements and innovations coming to market continue to boost our confidence in the continued acceleration of QuickBooks Online subscribers in the second half of the fiscal year.”

Intuit announced guidance for the second quarter of fiscal year 2017, which ends Jan. 31. The company expects:

• Revenue of $1.045 billion to $1.065 billion, growth of 13 to 15 percent.
• GAAP operating income of $60 million to $70 million.
• Non-GAAP operating income of $142 million to $152 million.
• GAAP diluted earnings per share of $0.12 to $0.15.
• Non-GAAP diluted earnings per share of $0.33 to $0.36.
• Ending QuickBooks Online subscribers of approximately 1.77 million

Intuit reiterated guidance for full fiscal year 2017, except for higher GAAP earnings per share guidance due to the early adoption of the accounting standard update. The company expects:

• Revenue of $5 billion to $5.1 billion, growth of 7 to 9 percent.
• GAAP operating income of $1.33 billion to $1.38 billion, growth of 7 to 11 percent.
• Non-GAAP operating income of $1.675 billion to $1.725 billion, growth of 8 to 11 percent.
• GAAP diluted earnings per share of $3.47 to $3.57, versus $3.69 in fiscal 2016. Fiscal 2016 earnings per share includes $0.65 net income per share from discontinued operations.
• Non-GAAP diluted earnings per share of $4.30 to $4.40, growth of 14 to 16 percent.
• QuickBooks Online subscribers of 2.0 million to 2.2 million.

Tax Season Unit Updates

The company will provide a tax unit update in late February, concurrent with second-quarter earnings. A final update will be provided in late April after the tax season ends.

Conference Call Details

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time. To hear the call, dial 866-658-3991 in the United States or 973-935-8714 from international locations. No reservation or access code is needed. The conference call can also be heard live at http://investors.intuit.com/events.cfm. Prepared remarks for the call will be available on Intuit’s website after the call ends.

Replay Information

A replay of the conference call will be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1677908.

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

About Intuit

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

Its flagship products and services include QuickBooks® and TurboTax®, which make it easier to manage small businesses and tax preparation and filing. Mint.com provides a fresh, easy and intelligent way for people to manage their money, while Intuit's ProConnect brand portfolio includes ProConnect Tax Online, ProSeries® and Lacerte®, the company's leading tax preparation offerings for professional accountants.

Founded in 1983, Intuit had revenue of $4.7 billion in its fiscal year 2016. The company has approximately 7,900 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.

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 B1, Table B2, and Table E. A copy of the press release issued by Intuit today can be found on the investor relations page of Intuit's website.

Cautions About Forward-looking Statements

This press release contains forward-looking statements, including forecasts of expected growth and future financial results of Intuit and its reporting segments; Intuit’s prospects for the business in fiscal 2017 and beyond; expectations regarding Intuit’s growth outside the US; expectations regarding timing and growth of revenue for each of Intuit’s reportable segments and from current or future products and services; expectations regarding customer growth; expectations regarding changes to our products and their impact on Intuit’s business; expectations regarding the impact of the early adoption of the new accounting standards update on our financial results; expectations regarding the amount and timing of any future dividends or share repurchases; expectations regarding availability of our offerings; expectations regarding the impact of our strategic decisions on Intuit’s business; and all of the statements under the heading “Forward-looking Guidance”.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, without limitation, the following: inherent difficulty in predicting consumer behavior; difficulties in receiving, processing, or filing customer tax submissions; consumers may not respond as we expected to our advertising and promotional activities; the competitive environment; governmental encroachment in our tax businesses or other governmental activities or public policy affecting the preparation and filing of tax returns; our ability to innovate and adapt to technological change; availability of our products and services could be impacted by business interruption or failure of our information technology and communication systems; any problems with implementing upgrades to our customer facing applications and supporting information technology infrastructure; any failure to properly use and protect personal customer information and data; our ability to develop, manage and maintain critical third-party business relationships; increases in or changes to government regulation of our businesses; any failure to process transactions effectively or to adequately protect against potential fraudulent activities; any loss of confidence in using our software as a result of publicity regarding such fraudulent activity; any significant product accuracy or quality problems or delays; any lost revenue opportunities or cannibalization of our traditional paid franchise due to our participation in the Free File Alliance; the global economic environment may impact consumer and small business spending, financial institutions and tax filings; changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise; the seasonal and unpredictable nature of our revenue; our ability to attract, retain and develop highly skilled employees; increased risks associated with international operations; unanticipated changes in our income tax rates; changes in the amounts or frequency of share repurchases or dividends; we may issue additional shares in an acquisition causing our number of outstanding shares to grow; our inability to adequately protect our intellectual property rights may weaken our competitive position; disruptions, expenses and risks associated with our acquisitions and divestitures; amortization of acquired intangible assets and impairment charges; our use of significant amounts of debt to finance acquisitions or other activities; and the cost of, and potential adverse results in, litigation involving intellectual property, antitrust, shareholder and other matters. More details about the risks that may impact our business are included in our Form 10-K for fiscal 2016 and in our other SEC filings. You can locate these reports through our website at http://investors.intuit.com. Forward-looking statements are based on information as of November 17, 2016, and we do not undertake any duty to update any forward-looking statement or other information in these materials.

INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated November 17, 2016 contains non-GAAP financial measures. Table B1, Table B2 and Table E reconcile the non-GAAP financial measures in that press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

We compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We exclude the following items from all of our non-GAAP financial measures:

• 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

We also exclude the following items from non-GAAP net income (loss) and diluted net income (loss) per share:

• Gains and losses on debt and equity securities and other investments
• Income tax effects and adjustments
• Discontinued operations

We believe that these non-GAAP financial measures provide meaningful supplemental information regarding Intuit’s operating results primarily because they exclude amounts that we do not consider part of ongoing operating results when planning and forecasting and when assessing the performance of the organization, our individual operating segments or our senior management. Segment managers are not held accountable for share-based compensation expense, amortization, or the other excluded items and, accordingly, we exclude these amounts from our measures of segment performance. We believe that our non-GAAP financial measures also facilitate the comparison by management and investors of results for current periods and guidance for future periods with results for past periods.

The following are descriptions of the items we exclude from our non-GAAP financial measures.

Share-based compensation expenses. These consist of non-cash expenses for stock options, restricted stock units and our Employee Stock Purchase Plan. When considering the impact of equity awards, we place greater emphasis on overall shareholder dilution rather than the accounting charges associated with those awards.

Amortization of acquired technology and amortization of other acquired intangible assets. When we acquire an entity, we are required by GAAP to record the fair values of the intangible assets of the entity and amortize them over their useful lives. Amortization of acquired technology in cost of revenue includes amortization of software and other technology assets of acquired entities. Amortization of other acquired intangible assets in operating expenses includes amortization of assets such as customer lists, covenants not to compete and trade names.

Goodwill and intangible asset impairment charges. We exclude from our non-GAAP financial measures non-cash charges to adjust the carrying value of goodwill and other acquired intangible assets to their estimated fair values.

Professional fees for business combinations. We exclude from our non-GAAP financial measures the professional fees we incur to complete business combinations. These include investment banking, legal and accounting fees.

Gains and losses on debt and equity securities and other investments. We exclude from our non-GAAP financial measures gains and losses that we record when we sell or impair available-for-sale debt and equity securities and other investments.

Income tax effects and adjustments. We use a long-term non-GAAP tax rate for evaluating operating results and for planning, forecasting, and analyzing future periods. This long-term non-GAAP tax rate excludes the income tax effects of the non-GAAP pre-tax adjustments described above, assumes the federal research and experimentation credit is continuously in effect, and eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Based on our current long-term projections, we are using a long-term non-GAAP tax rate of 34% for fiscal 2016 and 33% for fiscal 2017. These rates are consistent with the average of our normalized fiscal year tax rate over a four year period that includes the past three fiscal years plus the current fiscal year forecast. We will evaluate this long-term non-GAAP tax rate on an annual basis and whenever any significant events occur which may materially affect this long-term rate. This long-term non-GAAP tax rate could be subject to change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate.

Operating results and gains and losses on the sale of discontinued operations. From time to time, we sell or otherwise dispose of selected operations as we adjust our portfolio of businesses to meet our strategic goals. In accordance with GAAP, we segregate the operating results of discontinued operations as well as gains and losses on the sale of these discontinued operations from continuing operations on our GAAP statements of operations but continue to include them in GAAP net income or loss and net income or loss per share. We exclude these amounts from our non-GAAP financial measures.

The reconciliations of the forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures in Table E include all information reasonably available to Intuit at the date of this press release. These tables include adjustments that we can reasonably predict. Events that could cause the reconciliation to change include acquisitions and divestitures of businesses, goodwill and other asset impairments, and sales of available-for-sale debt securities and other investments.