10-QPeriod: Q3 FY2015

INTUIT INC. Quarterly Report for Q3 Ended Apr 30, 2015

Filed May 22, 2015For Securities:INTU

Summary

Intuit Inc. reported a decrease in total net revenue for the nine months ended April 30, 2015, down 3% to $3.7 billion compared to the prior year. This decline was primarily attributed to a strategic shift in their desktop software offerings, impacting revenue recognition, and a significant 61% drop in revenue for the Professional Tax segment. Despite a considerable decrease in net income from continuing operations (down 61% year-over-year), largely due to a $263 million goodwill impairment charge related to the Mint Bills acquisition and increased operating expenses, the company's liquidity remains robust. Intuit ended the period with $2.1 billion in cash, cash equivalents, and investments, and a strong operating cash flow generation of $1.7 billion for the nine-month period. The company also continues its commitment to shareholder returns through significant stock repurchase programs and dividend payments.

Financial Highlights

54 data points
Beta

Revenue

$2.13B

90.5% Gross Margin

Net Income

$501.00M

23.5% Net Margin

EPS (Diluted)

$1.78

Total Assets

$5.29B

Cash & Equivalents

$1.19B

Free Cash Flow

$1.41B

Financial Statements
Beta
Revenue$2.13B
Cost of Revenue$202.00M
Gross Profit$1.93B
R&D Expenses$206.00M
Operating Expenses$867.00M
Operating Income$1.07B
Interest Expense$7.00M
Net Income$501.00M
EPS (Basic)$1.81
EPS (Diluted)$1.78
Shares Outstanding (Basic)277.00M
Shares Outstanding (Diluted)282.00M

Key Highlights

  • 1Total net revenue decreased by 3% to $3.7 billion for the nine months ended April 30, 2015, compared to the prior year, impacted by changes in desktop software revenue recognition.
  • 2Net income from continuing operations saw a significant decline of 61% to $351 million for the nine months ended April 30, 2015, year-over-year.
  • 3A substantial $263 million goodwill impairment charge was recorded in the third quarter of fiscal 2015 related to the Consumer Ecosystem reporting unit.
  • 4Operating income from continuing operations decreased by 49% for the nine months ended April 30, 2015, reflecting lower revenues and increased operating expenses.
  • 5The company generated strong operating cash flow of $1.7 billion for the nine months ended April 30, 2015.
  • 6Intuit ended the period with $2.1 billion in cash, cash equivalents, and investments, indicating a healthy liquidity position.
  • 7Significant stock repurchase activities continued, with an additional $2 billion repurchase program authorized through May 2019.

Frequently Asked Questions

The primary reason for the decrease in Intuit's total net revenue was a strategic change in how revenue is recognized for future QuickBooks and Quicken desktop products, and Professional Tax solutions. This change involves recognizing revenue over a longer service period rather than upfront, impacting the timing of revenue recognition.

Intuit recorded a $263 million goodwill impairment charge in the third quarter of fiscal 2015. This charge was related to the Consumer Ecosystem reporting unit, specifically due to a significant decline in the revenue and operating income forecast for the Mint Bills (formerly Check, Inc.) offering. This impairment significantly impacted the company's operating income and net income.

Intuit maintains a strong liquidity position, ending the period with $2.1 billion in cash, cash equivalents, and investments. The company generated $1.7 billion in cash from operations during the first nine months of fiscal 2015. Intuit also continues to return capital to shareholders through ongoing stock repurchase programs and quarterly cash dividends.

Intuit's main business segments are Small Business, Consumer, and Professional Tax. For the nine months ended April 30, 2015, the Small Business segment revenue decreased slightly (1%) primarily due to the desktop software revenue recognition changes, though QuickBooks Online revenue grew. The Consumer segment saw a 6% revenue increase, driven by TurboTax growth. The Professional Tax segment experienced a significant 55% revenue decrease, also heavily impacted by the revenue recognition changes.