Results Led by Strong Tax Season; Small Business Returns to Double-Digit Growth
• Revenue increased 13 percent over the year-ago quarter to $1.6 billion, exceeding the guidance range.
• On a GAAP basis (Generally Accepted Accounting Principles), operating income grew 16 percent to $888 million. Non-GAAP operating income grew 12 percent to $938 million.
• GAAP diluted earnings per share were $1.78, up 21 percent over the third quarter of last year. Non-GAAP diluted earnings per share were $1.89, up 13 percent.
• The Consumer Tax group generated revenue of $871 million in the third quarter, growing 12 percent over the previous year.
• Financial Management Solutions revenue increased 16 percent over the prior year, led by strong growth in QuickBooks for the desktop, QuickBooks Online and Intuit Websites.
The company raised fiscal year guidance based on strong results across the board. For fiscal year 2010, which ends July 31, Intuit expects revenue of $3.410 billion to $3.425 billion, growth of 10 percent.
Note: all comparisons are versus the same period a year ago.
"We delivered another quarter of strong results, with revenue and earnings per share exceeding the top end of our guidance," said Brad Smith, Intuit's president and chief executive officer. "We saw across-the-board strength, fueled by a great tax season, a return to double-digit revenue growth in small business, and continued strong performance from our financial institutions segment. With these strong results, we are once again raising our revenue and earnings outlook for the year.
"We've worked hard over the past few years to position Intuit to take advantage of the secular market trends that we see as catalysts for sustained growth. In addition, we've invested in hiring and developing skills and capabilities that will benefit us for years. We've strengthened our engineering talent pool, and we've developed technology that improves the usability of our products, adds mobile capabilities, and readies our solutions for global deployment. We've also invested to ensure our customers are delighted with our products and find them incredibly easy to use. This quarter's performance is another proof point that we are stronger now than when the recession began," Smith said.
Quarterly Business Segment Results and Highlights.
Small Business total revenue grew 13 percent for the third quarter, driven by strong performance in Financial Management Solutions and Employee Management Solutions.
Financial Management Solutions
• Revenue increased 16 percent versus the third quarter of 2009, led by outstanding growth in QuickBooks for the desktop, QuickBooks Online and Intuit Websites. The online customer base grew 32 percent compared to the year-ago quarter.
• Intuit Websites continued to make strong progress, with customers increasing 80 percent over last year, to more than 300,000.
Employee Management Solutions
• Employee Management Solutions revenue grew 13 percent, powered by Intuit Online Payroll.
• Revenue grew 8 percent, driven by a 16 percent increase in merchants. Charge volume grew 1 percent year over year, the first increase since the third quarter of fiscal 2008.
Consumer Tax Group
• Revenue increased 12 percent, with an increase in share in both the desktop and online categories. Total units were up 11 percent for the season, with Web units up 18 percent. We now believe Consumer Tax revenue will grow 12 to 13 percent in fiscal 2010.
• Online tax units represented more than 70 percent of total TurboTax units this season, as more customers continued to choose an online solution.
• Accounting Professionals revenue grew 15 percent over last year, capping off a solid tax season for the segment. Excluding a $9 million revenue shift deferred from the second to the third quarter, Accounting Professionals revenue grew 10 percent.
• Financial Services revenue grew 21 percent and bill pay users grew 16 percent. This tax season, more than 1,100 financial institutions offered TurboTax for Online Banking. Revenue grew 9 percent, excluding TurboTax for Online Banking. Approximately 450 financial institutions are signed up to offer FinanceWorks, with a growing number of banks adopting Intuit's online bill payment and mobile banking solutions.
• Segment revenue grew 20 percent, driven primarily by strength in Personal Finance and favorable foreign currency impact from the Canada and United Kingdom businesses.
• Mint.com growth continues to accelerate. New registered users for the third quarter were more than 2.5 times greater than the same quarter last year.
• Intuit signed an agreement to acquire Medfusion, the leading patient-to-provider communications solution. This transaction will provide Intuit with a software-as-a-service offering currently used by more than 30,000 healthcare providers, the vast majority of whom are essentially small businesses.
Intuit increased its guidance range for the full 2010 fiscal year, which ends July 31, and expects:
• Revenue of $3.410 billion to $3.425 billion, growth of 10 percent.
• GAAP operating income of $840 million to $850 million. Non-GAAP operating income of $1.065 billion to $1.075 billion, growth of 15 to 16 percent.
• GAAP diluted earnings per share of $1.69 to $1.72, or growth of 25 to 27 percent. Non-GAAP diluted EPS of $2.03 to $2.06, growth of 12 to 13 percent.
• Intuit also updated its previous fiscal year revenue guidance for the Consumer Tax segment, which is now expected to grow 12 to 13 percent. All other segment revenue guidance remained unchanged.
Conference Call Information
Intuit executives will discuss the financial results on a conference call today at 1:30 pm Pacific time. 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 investors.intuit.com/events.cfm. Prepared remarks for the call will be available on Intuit's website 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 1452142.
The audio webcast will remain available on Intuit's website for one week after the conference call.
About Intuit, Inc.
Intuit, Inc. (intuit.com) is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants. Intuit Financial Services helps banks and credit unions grow by providing on-demand solutions and services that make it easier for consumers and businesses to manage their money.
Founded in 1983, Intuit had annual revenue of $3.1 billion in its fiscal year 2009. The company has approximately 7,800 employees with major offices in the United States, Canada, the United Kingdom, India and other locations.
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 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 Intuit's future expected financial results; its prospects for the business in fiscal 2010; projected growth in consumer tax for fiscal 2010; 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; 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; 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; any failure to maintain reliable and responsive service levels for our offerings could cause us to lose customers and negatively impact our revenues and profitability; any significant product quality problems or delays in our products could harm our revenue, earnings and reputation; our participation in the Free File Alliance may result in lost revenue opportunities and cannibalization of our traditional paid franchise; any failure to properly use and protect personal customer information could harm our revenue, earnings and reputation; our acquisition activities may be disruptive to Intuit and may not result in expected benefits; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operations; 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; 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 investors.intuit.com. Forward-looking statements are based on information as of May 20, 2010, and we do not undertake any duty to update any forward-looking statement or other information in these materials.