10-QPeriod: Q2 FY2015

INTUIT INC. Quarterly Report for Q2 Ended Jan 31, 2015

Filed February 19, 2015For Securities:INTU

Summary

Intuit Inc. reported its financial results for the six months ended January 31, 2015, which concluded with a net loss of $150 million, an increase from the $48 million net loss in the prior year period. This widened loss was primarily driven by a significant increase in operating loss, a 72% rise year-over-year for the six-month period, largely due to changes in revenue recognition for desktop software offerings and increased operating expenses related to staffing, marketing, and share-based compensation. Despite the increased loss, total net revenue grew by 5% year-over-year to $1.5 billion, propelled by a strong 26% increase in the Consumer segment, benefiting from an earlier IRS tax filing season start. The company highlighted a strategic shift in its Small Business segment, with continued growth in QuickBooks Online services offsetting declines in QuickBooks desktop software sales, reflecting a broader move towards cloud-based solutions. The Professional Tax segment experienced a notable revenue decrease, also impacted by the desktop software revenue recognition changes. Intuit maintained a solid liquidity position with $1.4 billion in cash, cash equivalents, and investments at the end of the period and an unused $500 million revolving credit facility.

Financial Highlights

53 data points
Beta

Revenue

$749.00M

74.9% Gross Margin

Net Income

-$66.00M

-8.8% Net Margin

EPS (Diluted)

$-0.23

Total Assets

$5.25B

Cash & Equivalents

$482.00M

Free Cash Flow

$304.00M

Financial Statements
Beta
Revenue$749.00M
Cost of Revenue$188.00M
Gross Profit$561.00M
R&D Expenses$188.00M
Operating Expenses$650.00M
Operating Income-$89.00M
Interest Expense$7.00M
Net Income-$66.00M
EPS (Basic)$-0.23
EPS (Diluted)$-0.23
Shares Outstanding (Basic)285.00M
Shares Outstanding (Diluted)285.00M

Key Highlights

  • 1Net loss from continuing operations widened to $150 million for the six months ended January 31, 2015, compared to $94 million in the prior year period.
  • 2Total net revenue increased by 5% to $1.5 billion for the six months ended January 31, 2015, driven by a 26% growth in the Consumer segment.
  • 3Operating loss from continuing operations significantly increased by 72% to $212 million for the six months ended January 31, 2015.
  • 4Changes in revenue recognition for desktop software products are impacting revenue and are expected to continue to do so.
  • 5The Consumer segment benefited from an earlier IRS tax filing season start, contributing to its revenue growth.
  • 6Intuit continued to repurchase shares, spending $668 million in the six months ended January 31, 2015, with $1.2 billion remaining authorization.
  • 7Liquidity remains strong with $1.4 billion in cash, cash equivalents, and investments as of January 31, 2015.

Frequently Asked Questions

The primary driver for the increased net loss from continuing operations is a substantial rise in operating loss, which more than doubled year-over-year for the six-month period. This was due to a combination of factors, including the impact of changes in how revenue is recognized for desktop software offerings and increased operating expenses in areas like staffing, marketing, and share-based compensation.

The company began recognizing revenue for certain future desktop software products (like QuickBooks and Quicken) and professional tax solutions over time as services are provided, rather than upfront. This change, implemented in fiscal 2015, has impacted revenue recognition patterns, particularly for desktop offerings, and is expected to continue to influence comparability of quarterly and annual results.

Intuit continues to return capital to shareholders through stock repurchases and cash dividends. In the six months ended January 31, 2015, the company repurchased $668 million of its common stock and paid $147 million in dividends. As of January 31, 2015, there was approximately $1.2 billion remaining authorization for future stock repurchases.

Intuit maintains a strong liquidity position. As of January 31, 2015, the company held $1.4 billion in cash, cash equivalents, and investments. Additionally, it has an unused $500 million unsecured revolving credit facility, providing ample resources for operations and strategic opportunities.