10-QPeriod: Q1 FY2017

INTUIT INC. Quarterly Report for Q1 Ended Oct 31, 2016

Filed November 18, 2016For Securities:INTU

Summary

For the first quarter of fiscal year 2017, ending October 31, 2016, Intuit Inc. reported a net loss of $30 million, or a basic net loss per share of $0.12. This represents a slight improvement from the prior year's net loss of $31 million, though the loss per share widened due to a decrease in outstanding shares. Total net revenue increased by 9% year-over-year to $778 million, driven primarily by growth in the Small Business segment, particularly its Online Ecosystem revenue, and the strategic shift in QuickBooks Desktop revenue recognition. The company experienced a significant increase in operating expenses, leading to a wider operating loss from continuing operations of $61 million compared to $29 million in the prior year. This increase was attributed to higher spending on staffing, marketing, and share-based compensation. Despite the increased operating loss, the net loss improved due to a higher effective tax rate in the current period, largely influenced by the early adoption of accounting standard ASU 2016-09 related to stock-based compensation. Intuit continued its robust share repurchase program, repurchasing $192 million of its common stock during the quarter.

Financial Highlights

53 data points
Beta

Revenue

$778.00M

76.5% Gross Margin

Net Income

-$30.00M

-3.9% Net Margin

EPS (Diluted)

$-0.12

Total Assets

$3.93B

Cash & Equivalents

$360.00M

Free Cash Flow

-$291.00M

Financial Statements
Beta
Revenue$778.00M
Cost of Revenue$183.00M
Gross Profit$595.00M
R&D Expenses$246.00M
Operating Expenses$656.00M
Operating Income-$61.00M
Interest Expense$9.00M
Net Income-$30.00M
EPS (Basic)$-0.12
EPS (Diluted)$-0.12
Shares Outstanding (Basic)258.00M
Shares Outstanding (Diluted)258.00M

Key Highlights

  • 1Total net revenue increased 9% to $778 million, driven by a 11% increase in the Small Business segment.
  • 2Small Business Online Ecosystem revenue grew 26%, with QuickBooks Online subscribers up 41%.
  • 3Operating loss from continuing operations widened to $61 million from $29 million due to increased expenses, particularly in marketing and staffing.
  • 4Net loss decreased slightly to $30 million from $31 million, aided by a higher effective tax rate resulting from early adoption of ASU 2016-09.
  • 5The company repurchased $192 million of its common stock, with $2.2 billion remaining authorization for future repurchases.
  • 6Basic net loss per share was $0.12, compared to $0.11 in the prior year, impacted by fewer outstanding shares.
  • 7The Consumer Tax segment revenue saw a modest 6% increase, but results are typically nominal in the first quarter due to seasonality.

Frequently Asked Questions

Intuit reported total net revenue of $778 million for the first quarter of fiscal year 2017, a 9% increase compared to the same period last year. However, the company incurred a net loss of $30 million, or a basic net loss per share of $0.12. While revenue grew, operating expenses also increased significantly, leading to the net loss.

The Small Business segment's revenue increased by 11%, primarily due to strong performance in its Online Ecosystem, which saw a 26% growth in revenue and a 41% increase in QuickBooks Online subscribers. The company also noted a positive impact from changes made to its QuickBooks Desktop software revenue recognition.

Operating expenses rose due to higher spending in several areas, including staffing costs (driven by increased headcount), advertising and marketing programs, and share-based compensation expenses. These investments were made to support business growth.

Intuit early adopted ASU 2016-09, an accounting standard related to employee share-based payment accounting. This adoption resulted in excess tax benefits related to stock-based compensation being recognized in the statements of operations as a component of the provision for income taxes. This contributed to a higher effective tax rate in the current period, which helped offset the increase in operating loss and led to a slightly improved net loss compared to the prior year.