Market Overview

Intuit Fourth Quarter Revenue Up 17 Percent, Full Year Up 15 Percent

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Strong Fourth Quarter Performance Led By 43 Percent Online Ecosystem
Revenue
Growth: Company Sets Guidance for Fiscal 2019

Intuit Inc. (NASDAQ:INTU)
announced financial results for the fourth quarter and full fiscal year
2018, which ended July 31.

"Growth accelerated across our businesses this year, fueled by 18
percent growth in the Small Business and Self-Employed Group, and 14
percent growth in the Consumer Group," said Brad Smith, Intuit's
chairman and chief executive officer.

"Both Online Ecosystem revenue and QuickBooks Online subscribers grew at
a rapid pace. We are also pleased with the strong product innovation in
our Consumer business, focused on better serving our customers.

"One year into our focus on the One Intuit Ecosystem, our results affirm
that our strategy is working and is positioning the company for durable
growth," said Smith.

Financial Highlights

For the fourth quarter, Intuit:

  • Grew revenue to $988 million, up 17 percent year-over-year.
  • Grew Online Ecosystem revenue by 43 percent.

For the full year, Intuit:

  • Grew revenue to nearly $6.0 billion, up 15 percent year-over-year.
  • Grew Online Ecosystem revenue by 40 percent.
  • Finished the year with over 3.4 million QuickBooks Online subscribers,
    growth of 43 percent.
  • Grew Consumer Group revenue 14 percent.
  • Increased GAAP operating income to $1.5 billion, up from $1.4 billion
    in the prior year.
  • Increased non-GAAP operating income to $2.0 billion, up 14 percent.
  • Increased GAAP and non-GAAP earnings per share by 25 percent and 27
    percent respectively.

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 Fourth-quarter Results

           

 

     

GAAP

      Non-GAAP
        Q4

FY 18

      Q4

FY 17

      Change       Q4

FY 18

      Q4

FY 17

      Change
Revenue       $988       $842       17%       $988       $842       17%
Operating Income (Loss)       $(81)       $(10)       NM       $104       $78       33%
Earnings Per Share       $0.18       $0.09       100%       $0.32       $0.20       60%
                       

NM = Not meaningful.

Dollars are in millions, except earnings per share. See "About Non-GAAP
Financial Measures" below for more information regarding financial
measures not prepared in accordance with Generally Accepted Accounting
Principles (GAAP). GAAP earnings per share for the fourth quarter
include a $79 million charge from the sale of our data center in Quincy,
Washington. The impact of this charge on net income and EPS was offset
by recognized tax benefits.

Snapshot of FY '18 Full-year Results

           

 

     

GAAP

      Non-GAAP
        FY 18       FY 17       Change       FY 18       FY 17       Change
Revenue       $5,964       $5,177       15%       $5,964       $5,177       15%
Operating Income       $1,497       $1,395       7%       $1,981       $1,735       14%
Earnings Per Share       $4.64       $3.72       25%       $5.61       $4.41       27%
                       

Dollars are in millions, except earnings per share. See "About Non-GAAP
Financial Measures" below for more information regarding financial
measures not prepared in accordance with Generally Accepted Accounting
Principles (GAAP). GAAP earnings per share for the fiscal year 2018
include a $79 million charge from the sale of our data center in Quincy,
Washington. The impact of this charge on net income and EPS was offset
by recognized tax benefits.

Business Segment Results

Small Business and Self-Employed Group

  • Grew total Small Business and Self-Employed Group revenue 20 percent
    for the quarter and 18 percent for the year.
  • Added over 1 million QuickBooks Online subscribers during fiscal year
    2018.
  • Increased the QuickBooks Online subscriber base in the U.S. 38
    percent, to approximately 2.6 million, and outside the U.S. 62 percent
    to over 800,000 subscribers.
  • Increased QuickBooks Self-Employed subscribers to nearly 720,000.

Consumer and Strategic Partner Groups

  • Grew Consumer Group revenue by 14 percent for the year.
  • Increased professional tax revenue in the Strategic Partner Group by 4
    percent for the year.

Capital Allocation Summary

  • Repurchased over $270 million of stock during fiscal year 2018.
  • Received board approval for a new $2 billion repurchase authorization,
    bringing the total authorization to $3.2 billion to repurchase shares,
    including the remaining amount on the prior authorization.
  • The board approved a quarterly dividend of $0.47 per share, payable
    October 18, 2018. This represents a 21 percent increase versus last
    year.

New Accounting Standard

Intuit adopted the new revenue recognition standard, ASC606, in fiscal
year 2019, which began August 1, 2018. The company elected to adopt
ASC606 under the full retrospective method for comparability, and is
providing restated financial information for fiscal years 2017 and 2018.
The impact of adopting the new standard is an increase to reported
revenue in fiscal years 2017 and 2018 of $19 million and $61 million,
respectively, and a decrease to expected revenue for fiscal year 2019 of
$30 million.

"While we are changing how we account for revenue under ASC606, this is
an accounting change only, and has no impact on customer billings or
cash flow," said Intuit CFO Michelle Clatterbuck. "In addition, how we
recognize revenue for all online offerings, supplies, and desktop
payroll and payments will not change."

What will change under the new standard is how the company accounts for
revenue associated with QuickBooks Desktop units, QuickBooks desktop
subscription offerings, and consumer and professional tax desktop
offerings.

In the Small Business and Self-Employed Group the timing of revenue for
QuickBooks desktop solutions is expected to shift to earlier quarters
within each fiscal year.

In the Consumer and Strategic Partner Groups, more revenue will be
recognized at the beginning of the tax season for consumer and
professional desktop solutions.

Additional details presenting restated information based on the adoption
of the new standard are in Table E, Table F1, Table F2, Table G, Table H
and Table I.

Additional information highlighting the significant changes under ASC606
can be found on Intuit's
Investor Relations
site.

Forward-looking Guidance

First quarter and full-year fiscal 2019 guidance are reported under
ASC606.

Intuit announced guidance for the first quarter of fiscal year 2019,
which ends Oct. 31. The company expects:

  • Revenue of $955 million to $975 million, growth of 5 to 7 percent.
  • GAAP operating loss of $70 million to $80 million.
  • Non-GAAP operating income of $30 million to $40 million.
  • GAAP loss per share of $0.17 to $0.19.
  • Non-GAAP diluted earnings per share of $0.09 to $0.11.

First quarter fiscal year 2019 revenue guidance would have been
approximately $30 million higher under 605 than it is under 606.

Intuit also announced guidance for full fiscal year 2019. The company
expects:

  • Revenue of $6.530 billion to $6.630 billion, growth of 8 to 10 percent.
  • GAAP operating income of $1.725 billion to $1.775 billion, growth of
    11 to 14 percent.
  • Non-GAAP operating income of $2.165 billion to $2.215 billion, growth
    of 6 to 8 percent.
  • GAAP diluted earnings per share of $5.25 to $5.35, growth of 3 to 5
    percent.
  • Non-GAAP diluted earnings per share of $6.40 to $6.50, growth of 11 to
    12 percent.

The company expects the following segment revenue results under ASC606
for fiscal year 2019:

  • Small Business and Self-Employed Group: growth of 9 to 11 percent.
  • Consumer Group: growth of 9 to 10 percent.
  • Strategic Partner Group: growth of 2 to 4 percent.

Intuit also provided fiscal 2019 guidance under ASC605 in order to
compare with the previous year. Full year fiscal 2019 guidance under the
historical ASC605 standard includes:

  • Total company revenue growth range of 10 to 12 percent,
  • GAAP diluted earnings per share of $5.35 to $5.45, and
  • Non-GAAP diluted earnings per share of $6.50 to $6.60.

Going forward, guidance will only be provided in accordance with ASC606.

Conference Call Details

Intuit executives will discuss the financial results on a conference
call at 1:30 p.m. Pacific time on Aug. 23. To hear the call, dial
844-246-4601 in the United States or 703-639-1172 from international
locations. No reservation or access code is needed. The conference call
can also be heard live at http://investors.intuit.com/Events/default.aspx.
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 855-859-2056, or 404-537-3406 from international locations. The
access code for this call is 8395535.

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

Investor Day 2018

Intuit will host its annual Investor Day at its Mountain View, Calif.,
headquarters on Sept. 27 at 8 a.m. Pacific time. The half-day event will
include presentations from Brad Smith, chairman and chief executive
officer, Michelle Clatterbuck, chief financial officer, and other
leaders.

About Intuit

Intuit's mission is to Power Prosperity Around the World. Our global
products and platforms, including TurboTax,
QuickBooksMint and Turbo, are
designed to empower consumers, self-employed and small
businesses to improve their financial lives, finding them more money
with the least amount of work, while giving them complete confidence in
their actions and decisions. Our innovative ecosystem of financial
management solutions serves approximately 50 million customers
worldwide, unleashing the power of many for the prosperity of
one. Please visit us for the latest news and in-depth information about
Intuit
and its brands and find us on social.

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, Table F1, Table F2, and Table J. 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
2019 and beyond; expectations regarding timing and growth of revenue for
each of Intuit's reportable segments, the Online Ecosystem and from
current or future products and services; expectations regarding the
impact of the One Intuit Ecosystem strategy on Intuit's business;
expectations regarding changes to our products and their impact on
Intuit's business; 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 or any
of our businesses; 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 and our business information and data; our ability to develop,
manage and maintain critical third-party business relationships; our
dependence on third party technology and services; increases in or
changes to government regulation affecting 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 fraudulent activity, even if
it does not directly involve our products or services; 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; the effect of tax reform legislation;
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 2017 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 August 23,
2018, and we do not undertake any duty to update any forward-looking
statement or other information in these materials.

 
TABLE A

INTUIT INC.

GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 
  Three Months Ended   Twelve Months Ended
July 31,   July 31, July 31,   July 31,
2018 2017 2018 2017
Net revenue:
Product $ 322 $ 313 $ 1,462 $ 1,376
Service and other 666   529   4,502   3,801  
Total net revenue 988   842   5,964   5,177  
Costs and expenses:
Cost of revenue:
Cost of product revenue 25 25 112 120
Cost of service and other revenue 201 155 850 677
Amortization of acquired technology 5 3 15 12
Selling and marketing 308 265 1,634 1,420
Research and development 311 263 1,186 998
General and administrative 217 141 664 553
Amortization of other acquired intangible assets 2     6   2  
Total costs and expenses [A] 1,069   852   4,467   3,782  
Operating income (loss) (81 ) (10 ) 1,497 1,395
Interest expense (4 ) (3 ) (20 ) (31 )
Interest and other income (expense), net 11   3   26   3  
Income (loss) before income taxes (74 ) (10 ) 1,503 1,367
Income tax provision (benefit) [B] (123 ) (34 ) 292   396  
Net income $ 49   $ 24   $ 1,211   $ 971  
 
Basic net income per share $ 0.19   $ 0.09   $ 4.72   $ 3.78  
Shares used in basic per share calculations 258   257   256   257  
 
Diluted net income per share $ 0.18   $ 0.09   $ 4.64   $ 3.72  
Shares used in diluted per share calculations 263   261   261   261  
 
Cash dividends declared per common share $ 0.39   $ 0.34   $ 1.56   $ 1.36  
 

See accompanying Notes.

 

INTUIT INC.
NOTES TO TABLE A

[A] The following table summarizes the total share-based compensation
expense that we recorded in operating income (loss) for the periods
shown.

 
  Three Months Ended   Twelve Months Ended
July 31,   July 31, July 31,   July 31,

(in millions)

2018 2017 2018 2017
Cost of revenue $ 13 $ 2 $ 43 $ 8
Selling and marketing 26 22 101 88
Research and development 34 33 133 122
General and administrative 26   28   105   108
Total share-based compensation expense $ 99   $ 85   $ 382   $ 326
 

[B] We compute our provision for or benefit from income taxes by
applying the estimated annual effective tax rate to income or loss from
recurring operations and adding the effects of any discrete income tax
items specific to the period.

The Tax Cuts and Jobs Act (2017 Tax Act) was enacted on December 22,
2017 and reduced the U.S. statutory federal corporate tax rate from 35%
to 21%. The effective date of the tax rate change was January 1, 2018.
With our fiscal year ending July 31, the change resulted in a blended
lower U.S. statutory federal rate of 26.9% for fiscal year 2018. As a
result, we adjusted our annual effective tax rate for the twelve months
ended July 31, 2018, as well as adjusted our U.S. net deferred tax asset
balance at the lower rate.

As of July 31, 2018, we have not completed our accounting for the tax
effects of enactment of the 2017 Tax Act; however, we have made a
reasonable estimate of the effects on our existing deferred tax balances
for the twelve months ended July 31, 2018. We recorded a provisional
charge of $43 million related to the re-measurement of certain deferred
tax balances.

We recognized excess tax benefits on share-based compensation of $100
million in our provision for income taxes for the twelve months ended
July 31, 2018 and $72 million for the twelve months ended July 31, 2017.

During fiscal year 2018, we completed a reorganization which resulted in
a taxable liquidation of a subsidiary. The transaction gave rise to a
capital loss that resulted in a tax benefit of approximately $35 million.

Our effective tax rate for the twelve months ended July 31, 2018 was
approximately 19%. Excluding the tax benefits related to share-based
compensation, the reorganization of a subsidiary, and the charge related
to the re-measurement of our deferred tax asset balances, our effective
tax rate was approximately 26% and did not differ significantly from the
federal statutory rate of 26.9%.

Our effective tax rate for the twelve months ended July 31, 2017 was
approximately 29%. Excluding the tax benefits related to share-based
compensations, our effective tax rate was 34% and did not differ
significantly from the federal statutory rate of 35%.

 
TABLE B1

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

 
  Fiscal 2018
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) $ (57 ) $ 20 $ 1,615 $ (81 ) $ 1,497
Amortization of acquired technology 2 3 5 5 15
Amortization of other acquired intangible assets 1 1 2 2 6
Professional fees for business combinations 2 2
Loss on sale of long-lived assets 79 79
Share-based compensation expense 97   94   92   99   382  
Non-GAAP operating income (loss) $ 43   $ 120   $ 1,714   $ 104   $ 1,981  
 
GAAP net income (loss) $ (17 ) $ (21 ) $ 1,200 $ 49 $ 1,211
Amortization of acquired technology 2 3 5 5 15
Amortization of other acquired intangible assets 1 1 2 2 6
Professional fees for business combinations 2 2
Loss on sale of long-lived assets 79 79
Share-based compensation expense 97 94 92 99 382
Net (gain) loss on debt securities and other investments 2 2 2 6
Other income from divested businesses [A] (8 ) (8 )
2017 Tax Act [B] 39 5 (1 ) 43
Other income tax effects and adjustments [C] $ (56 ) $ (29 ) $ (36 ) $ (150 ) $ (271 )
Non-GAAP net income (loss) $ 29   $ 91   $ 1,260   $ 85   $ 1,465  
 
GAAP diluted net income (loss) per share $ (0.07 ) $ (0.08 ) $ 4.59 $ 0.18 $ 4.64
Amortization of acquired technology 0.01 0.01 0.02 0.02 0.06
Amortization of other acquired intangible assets 0.01 0.01 0.02
Professional fees for business combinations 0.01 0.01
Loss on sale of long-lived assets 0.30 0.30
Share-based compensation expense 0.38 0.36 0.35 0.38 1.46
Net (gain) loss on debt securities and other investments 0.01 0.01 0.01 0.02
Other income from divested businesses [A] (0.03 ) (0.03 )
2017 Tax Act [B] 0.15 0.02 0.17
Other income tax effects and adjustments [C] (0.22 ) (0.11 ) (0.14 ) (0.58 ) (1.04 )
Non-GAAP diluted net income (loss) per share $ 0.11   $ 0.35   $ 4.82   $ 0.32   $ 5.61  
 
Shares used in GAAP diluted per share calculation 256   256   262   263   261  
 
Shares used in non-GAAP diluted per share calculation 259   260   262   263   261  
 
[A] During the three months ended April 30, 2018, we received payments
from contingent earn out provisions related to businesses we
previously divested.
[B] The 2017 Tax Act adjustments relate to the provisional tax expense
for the re-measurement of deferred tax balances at the enacted lower
tax rates.
[C] As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table J, our non-GAAP tax rate
eliminates the effects of non-recurring and period specific items.
Other income tax adjustments consist primarily of the tax impact of
the non-GAAP pre-tax adjustments, which includes the loss on the
sale of long-lived assets; the excess tax benefits on share-based
compensation; and the tax benefits on a loss from a subsidiary
reorganization.
 

See "About Non-GAAP Financial Measures" immediately following Table J
for information on these measures, the items excluded from the most
directly comparable GAAP measures in arriving at non-GAAP financial
measures, and the reasons management uses each measure and excludes the
specified amounts in arriving at each non-GAAP financial measure.

 
TABLE B2

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

 
  Fiscal 2017
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) $ (61 ) $ 22 $ 1,444 $ (10 ) $ 1,395
Amortization of acquired technology 3 3 3 3 12
Amortization of other acquired intangible assets 1 1 2
Share-based compensation expense 89   81   71   85   326  
Non-GAAP operating income (loss) $ 32   $ 106   $ 1,519   $ 78   $ 1,735  
 
GAAP net income (loss) $ (30 ) $ 13 $ 964 $ 24 $ 971
Amortization of acquired technology 3 3 3 3 12
Amortization of other acquired intangible assets 1 1 2
Share-based compensation expense 89 81 71 85 326
Net (gain) loss on debt securities and other investments 1 6 1 1 9
Income tax effects and adjustments [A] (49 ) (36 ) (25 ) (60 ) (170 )
Non-GAAP net income (loss) $ 15   $ 67   $ 1,015   $ 53   $ 1,150  
 
GAAP diluted net income (loss) per share $ (0.12 ) $ 0.05 $ 3.70 $ 0.09 $ 3.72
Amortization of acquired technology 0.01 0.01 0.01 0.01 0.05
Amortization of other acquired intangible assets 0.01 0.01 0.01
Share-based compensation expense 0.34 0.31 0.27 0.33 1.25
Net (gain) loss on debt securities and other investments 0.01 0.03 0.01 0.03
Income tax effects and adjustments [A] (0.19 ) (0.14 ) (0.10 ) (0.23 ) (0.65 )
Non-GAAP diluted net income (loss) per share $ 0.06   $ 0.26   $ 3.90   $ 0.20   $ 4.41  
 
Shares used in GAAP diluted per share calculation 258   260   260   261   261  
 
Shares used in non-GAAP diluted per share calculation 261   260   260   261   261  
 
[A]

As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table J, our long-term non-GAAP
tax rate eliminates the effects of non-recurring and period
specific items. Consequently, our non-GAAP results have been
adjusted to exclude the excess tax benefits related to share-based
compensation. See note B to Table A for more information.

 

See "About Non-GAAP Financial Measures" immediately following Table J
for information on these measures, the items excluded from the most
directly comparable GAAP measures in arriving at non-GAAP financial
measures, and the reasons management uses each measure and excludes the
specified amounts in arriving at each non-GAAP financial measure.

 
TABLE C

INTUIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 
  July 31,   July 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 1,464 $ 529
Investments 252 248
Accounts receivable, net 98 103
Income taxes receivable 39 63
Prepaid expenses and other current assets 184   100
Current assets before funds held for customers 2,037 1,043
Funds held for customers 367   372
Total current assets 2,404 1,415
 
Long-term investments 13 31
Property and equipment, net 812 1,030
Goodwill 1,611 1,295
Acquired intangible assets, net 61 22
Long-term deferred income taxes 87 132
Other assets 190   143
Total assets $ 5,178   $ 4,068
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 50 $ 50
Accounts payable 178 157
Accrued compensation and related liabilities 369 300
Deferred revenue 961 887
Other current liabilities 191   178
Current liabilities before customer fund deposits 1,749 1,572
Customer fund deposits 367   372
Total current liabilities 2,116 1,944
 
Long-term debt 388 438
Long-term deferred revenue 197 202
Other long-term obligations 123   130
Total liabilities 2,824   2,714
 
Stockholders' equity 2,354   1,354
Total liabilities and stockholders' equity $ 5,178   $ 4,068
 
 
TABLE D

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
  Twelve Months Ended
July 31,   July 31,
2018 2017
Cash flows from operating activities:
Net income $ 1,211 $ 971
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 228 214
Amortization of acquired intangible assets 25 22
Share-based compensation expense 382 326
Loss on sale of long-lived assets 79
Deferred income taxes 51 8
Other 6   13  
Total adjustments 771   583  
Changes in operating assets and liabilities:
Accounts receivable 5 5
Income taxes receivable (1 ) (44 )
Prepaid expenses and other assets (31 ) (9 )
Accounts payable 12
Accrued compensation and related liabilities 75 10
Deferred revenue 66 83
Other liabilities 4    
Total changes in operating assets and liabilities 130   45  
Net cash provided by operating activities 2,112   1,599  
Cash flows from investing activities:
Purchases of corporate and customer fund investments (407 ) (352 )
Sales of corporate and customer fund investments 128 359
Maturities of corporate and customer fund investments 286 183
Net change in cash and cash equivalents held to satisfy customer
fund obligations
5 (68 )
Net change in customer fund deposits (5 ) 68
Purchases of property and equipment (124 ) (230 )
Acquisitions of businesses, net of cash acquired (363 )
Originations of term loans to small businesses (137 )
Principal repayments of term loans from small businesses 82
Other 3   (45 )
Net cash used in investing activities (532 ) (85 )
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facilities 800 150
Repayments on borrowings under revolving credit facilities (800 ) (150 )
Repayment of debt (50 ) (512 )
Proceeds from issuance of stock under employee stock plans 295 226
Payments for employee taxes withheld upon vesting of restricted
stock units
(199 ) (153 )
Cash paid for purchases of treasury stock (272 ) (839 )
Dividends and dividend rights paid (407 ) (353 )
Other (1 ) (1 )
Net cash used in financing activities (634 ) (1,632 )
Effect of exchange rates on cash and cash equivalents (11 ) 9  
Net increase (decrease) in cash and cash equivalents 935 (109 )
Cash and cash equivalents at beginning of period 529   638  
Cash and cash equivalents at end of period $ 1,464   $ 529  
 
 
TABLE E

INTUIT INC.

GAAP CONSOLIDATED STATEMENTS OF OPERATIONS RESTATED FOR NEW
REVENUE STANDARD

(In millions, except per share amounts)

(Unaudited)

 
  Restated for New    
Revenue Standard As Reported Change
Twelve Months Ended Twelve Months Ended Twelve Months Ended
July 31, July 31, July 31,
2018   2017 2018   2017 2018   2017
Net revenue:
Product $ 1,624 $ 1,483 $ 1,462 $ 1,376 $ 162 $ 107
Service and other 4,401   3,713   4,502   3,801   (101 ) (88 )
Total net revenue 6,025   5,196   5,964   5,177   61   19  
Costs and expenses:
Cost of revenue:
Cost of product revenue 82 89 112 120 (30 ) (31 )
Cost of service and other revenue 881 709 850 677 31 32
Amortization of acquired technology 15 12 15 12
Selling and marketing 1,631 1,415 1,634 1,420 (3 ) (5 )
Research and development 1,186 998 1,186 998
General and administrative 664 553 664 553
Amortization of other acquired intangible assets 6   2   6   2      
Total costs and expenses 4,465   3,778   4,467   3,782   (2 ) (4 )
Operating income from continuing operations 1,560 1,418 1,497 1,395 63 23
Interest expense (20 ) (31 ) (20 ) (31 )
Interest and other income (expense), net 26   3   26   3      
Income before income taxes 1,566 1,390 1,503 1,367 63 23
Income tax provision 237   405   292   396   (55 ) 9  
Net income $ 1,329   $ 985   $ 1,211   $ 971   $ 118   $ 14  
 
Basic net income per share $ 5.18   $ 3.83   $ 4.72   $ 3.78   $ 0.46   $ 0.05  
Diluted net income per share $ 5.09   $ 3.78   $ 4.64   $ 3.72   $ 0.45   $ 0.06  
 
 
TABLE F1

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY

COMPARABLE GAAP FINANCIAL MEASURES RESTATED FOR NEW REVENUE
STANDARD

(In millions, except per share amounts)

(Unaudited)

 

  Fiscal 2018 (ASC 606)
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) $ (35 ) $ 194 $ 1,601 $ (200 ) $ 1,560
Amortization of acquired technology 2 3 5 5 15
Amortization of other acquired intangible assets 1 1 2 2 6
Professional fees for business combinations 2 2
Loss on sale of long-lived assets 79 79
Share-based compensation expense 97   94   92   99   382  
Non-GAAP operating income (loss) $ 65   $ 294   $ 1,700   $ (15 ) $ 2,044  
 
GAAP net income (loss) $ (2 ) $ 183 $ 1,186 $ (38 ) $ 1,329
Amortization of acquired technology 2 3 5 5 15
Amortization of other acquired intangible assets 1 1 2 2 6
Professional fees for business combinations 2 2
Loss on sale of long-lived assets 79 79
Share-based compensation expense 97 94 92 99 382
Net (gain) loss on debt securities and other investments 2 2 2 6
Other income from divested businesses [A] (8 ) (8 )
2017 Tax Act [B] (37 ) 10 (2 ) (29 )
Other income tax effects and adjustments [C] (56 ) (29 ) (36 ) (150 ) (271 )
Non-GAAP net income (loss) $ 44   $ 219   $ 1,251   $ (3 ) $ 1,511  
 
GAAP diluted net income (loss) per share $ (0.01 ) $ 0.70 $ 4.53 $ (0.15 ) $ 5.09
Amortization of acquired technology 0.01 0.01 0.02 0.02 0.06
Amortization of other acquired intangible assets 0.01 0.01 0.02
Professional fees for business combinations 0.01 0.01
Loss on sale of long-lived assets 0.31 0.30
Share-based compensation expense 0.38 0.36 0.35 0.38 1.46
Net (gain) loss on debt securities and other investments 0.01 0.01 0.01 0.02
Other income from divested businesses [A] (0.03 ) (0.03 )
2017 Tax Act [B] (0.14 ) 0.04 (0.01 ) (0.11 )
Other income tax effects and adjustments [C] (0.22 ) (0.11 ) (0.14 ) (0.58 ) (1.04 )
Non-GAAP diluted net income (loss) per share $ 0.17   $ 0.84   $ 4.78   $ (0.01 ) $ 5.78  
 
Shares used in GAAP diluted per share calculation 256   260   262   258   261  
 
Shares used in non-GAAP diluted per share calculation 259   260   262   258   261  
 
[A] During the three months ended April 30, 2018, we received payments
from contingent earn out provisions related to businesses we
previously divested.
[B] The 2017 Tax Act adjustments relate to the provisional tax benefit
for the re-measurement of our deferred tax balances at the enacted
lower tax rate. Our deferred tax balance was a net deferred tax
liability due to the acceleration of profits under the new revenue
standard.
[C] As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table J, our non-GAAP tax rate
eliminates the effects of non-recurring and period specific items.
Other income tax adjustments consist primarily of the tax impact of
the non-GAAP pre-tax adjustments, which includes the loss on the
sale of long-lived assets; the excess tax benefits on share-based
compensation; and the tax benefits on a loss from a subsidiary
reorganization.
 

See "About Non-GAAP Financial Measures" immediately following Table J
for information on these measures, the items excluded from the most
directly comparable GAAP measures in arriving at non-GAAP financial
measures, and the reasons management uses each measure and excludes the
specified amounts in arriving at each non-GAAP financial measure.

 
TABLE F2

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY

COMPARABLE GAAP FINANCIAL MEASURES RESTATED FOR NEW REVENUE
STANDARD

(In millions, except per share amounts)

(Unaudited)

 
  Fiscal 2017 (ASC 606)
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) $ (29 ) $ 201 $ 1,385 $ (139 ) $ 1,418
Amortization of acquired technology 3 3 3 3 12
Amortization of other acquired intangible assets 1 1 2
Share-based compensation expense 89   81   71   85   326  
Non-GAAP operating income (loss) $ 64   $ 285   $ 1,460   $ (51 ) $ 1,758  
 
GAAP net income (loss) $ (10 ) $ 125 $ 927 $ (57 ) $ 985
Amortization of acquired technology 3 3 3 3 12
Amortization of other acquired intangible assets 1 1 2
Share-based compensation expense 89 81 71 85 326
Net (gain) loss on debt securities and other investments 1 6 1 1 9
Income tax effects and adjustments [A] (48 ) (28 ) (27 ) (65 ) (168 )
Non-GAAP net income (loss) $ 36   $ 187   $ 976   $ (33 ) $ 1,166  
 
GAAP diluted net income (loss) per share $ (0.04 ) $ 0.48 $ 3.56 $ (0.22 ) $ 3.78
Amortization of acquired technology 0.01 0.01 0.01 0.01 0.05
Amortization of other acquired intangible assets 0.01 0.01 0.01
Share-based compensation expense 0.34 0.31 0.27 0.33 1.25
Net (gain) loss on debt securities and other investments 0.01 0.03 0.01 0.03
Income tax effects and adjustments [A] (0.19 ) (0.11 ) (0.11 ) (0.25 ) (0.65 )
Non-GAAP diluted net income (loss) per share $ 0.14   $ 0.72   $ 3.75   $ (0.13 ) $ 4.47  
 
Shares used in GAAP diluted per share calculation 258   260   260   257   261  
 
Shares used in non-GAAP diluted per share calculation 261   260   260   257   261  
 
[A]

As discussed in "About Non-GAAP Financial Measures - Income Tax
Effects and Adjustments" following Table J, our long-term non-GAAP
tax rate eliminates the effects of non-recurring and period
specific items. Consequently, our non-GAAP results have been
adjusted to exclude the excess tax benefits related to share-based
compensation. See note B to Table A for more information.

 

See "About Non-GAAP Financial Measures" immediately following Table J
for information on these measures, the items excluded from the most
directly comparable GAAP measures in arriving at non-GAAP financial
measures, and the reasons management uses each measure and excludes the
specified amounts in arriving at each non-GAAP financial measure.

 
TABLE G

INTUIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS RESTATED FOR NEW REVENUE
STANDARD

(In millions)

(Unaudited)

 
  Restated for New    
Revenue Standard As Reported Change
July 31, July 31, July 31,
2018   2017 2018   2017 2018   2017
ASSETS    
Current assets:
Cash and cash equivalents $ 1,464 $ 529 $ 1,464 $ 529 $ $
Investments 252 248 252 248
Accounts receivable, net 98 103 98 103
Income taxes receivable 39 63 39 63
Prepaid expenses and other current assets 202     118     184   100   18     18  
Current assets before funds held for customers 2,055 1,061 2,037 1,043 18 18
Funds held for customers 367     372     367   372        
Total current assets 2,422 1,433 2,404 1,415 18 18
 
Long-term investments 13 31 13 31
Property and equipment, net 812 1,030 812 1,030
Goodwill 1,611 1,295 1,611 1,295
Acquired intangible assets, net 61 22 61 22
Long-term deferred income taxes 2 2 87 132 (85 ) (130 )
Other assets 213     164   190   143   23     21  
Total assets $ 5,134     $ 3,977   $ 5,178   $ 4,068   $ (44 )   $ (91 )
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 50 $ 50 $ 50 $ 50 $ $
Accounts payable 178 157 178 157
Accrued compensation and related liabilities 369 300 369 300
Deferred revenue 581 574 961 887 (380 ) (313 )
Other current liabilities 198     185   191   178   7     7  
Current liabilities before customer fund deposits 1,376 1,266 1,749 1,572 (373 ) (306 )
Customer fund deposits 367     372   367   372        
Total current liabilities 1,743 1,638 2,116 1,944 (373 ) (306 )
 
Long-term debt 388 438 388 438
Long-term deferred revenue 3 1 197 202 (194 ) (201 )
Other long-term obligations 184     201   123   130   61     71  
Total liabilities 2,318     2,278   2,824   2,714   (506 )   (436 )
 
Stockholders' equity 2,816     1,699   2,354   1,354   462     345  
Total liabilities and stockholders' equity $ 5,134     $ 3,977   $ 5,178   $ 4,068   $ (44 )   $ (91 )
 
 
TABLE H

GAAP SEGMENT INFORMATION RESTATED FOR NEW REVENUE STANDARD

(In millions)

(Unaudited)

 
  Restated for New    
Revenue Standard As Reported Change
Twelve Months Ended Twelve Months Ended Twelve Months Ended
July 31, July 31, July 31,
2018   2017 2018   2017 2018   2017
Net revenue:
Small Business & Self-Employed $ 3,061 $ 2,574 $ 2,994 $ 2,539 $ 67 $ 35
Consumer 2,508 2,182 2,517 2,201 (9 ) (19 )
Strategic Partner 456   440   453   437   3   3  
Total net revenue $ 6,025   $ 5,196   $ 5,964   $ 5,177   $ 61   $ 19  
 
Operating income from continuing operations:
Small Business & Self-Employed $ 1,326 $ 1,111 $ 1,257 $ 1,072 $ 69 $ 39
Consumer 1,587 1,376 1,596 1,395 (9 ) (19 )
Strategic Partner 284   266   281   263   3   3  

Total segment operating income

3,197 2,753 3,134 2,730 63 23
Unallocated corporate items:
Share-based compensation expense (382 ) (326 ) (382 ) (326 )
Other common expenses (1,234 ) (995 ) (1,234 ) (995 )
Amortization of acquired technology (15 ) (12 ) (15 ) (12 )
Amortization of other acquired intangible assets (6 ) (2 ) (6 ) (2 )
Goodwill and intangible asset impairment charges            
Total unallocated corporate items (1,637 ) (1,335 ) (1,637 ) (1,335 )    
Total operating income from continuing operations $ 1,560   $ 1,418   $ 1,497   $ 1,395   $ 63   $ 23  
 
 

TABLE I

GAAP QUARTERLY INFORMATION RESTATED FOR NEW REVENUE STANDARD
(In millions, except per share amounts)
(Unaudited)
 
  Fiscal 2018 Quarter Ended
October 31   January 31   April 30   July 31
Restated   Restated   Restated   Restated  
for New for New for New for New
Revenue As Revenue As Revenue As Revenue As
Standard Reported Standard   Reported Standard   Reported Standard   Reported
Total net revenue $ 910 $ 886 $ 1,339 $ 1,165 $ 2,912 $ 2,925 $ 864 $ 988
Cost of revenue 198 196 246 246 305 304 229 231
All other costs and expenses 747 747 899 899 1,006 1,006 835 838
Operating income (loss) (35 ) (57 ) 194 20 1,601 1,615 (200 ) (81 )
Net income (loss) (2 ) (17 ) 183 (21 ) 1,186 1,200 (38 ) 49
 
Basic net income (loss) per share $ (0.01 ) $ (0.07 ) $ 0.72   $ (0.08 ) $ 4.62   $ 4.68   $ (0.15 ) $ 0.19  
 
Diluted net income (loss) per share $ (0.01 ) $ (0.07 ) $ 0.70   $ (0.08 ) $ 4.53   $ 4.59   $ (0.15 ) $ 0.18  
 
 
  Fiscal 2017 Quarter Ended
October 31   January 31   April 30   July 31
Restated   Restated   Restated   Restated  
for New for New for New for New
Revenue As Revenue As Revenue As Revenue As
Standard Reported Standard   Reported Standard   Reported Standard   Reported
Total net revenue $ 810 $ 778 $ 1,193 $ 1,016 $ 2,481 $ 2,541 $ 712 $ 842
Cost of revenue 184 183 206 206 237 237 183 183
All other costs and expenses 655 656 786 788 859 860 668 669
Operating income (loss) (29 ) (61 ) 201 22 1,385 1,444 (139 ) (10 )
Net income (loss) (10 ) (30 ) 125 13 927 964 (57 ) 24
 
Basic net income (loss) per share $ (0.04 ) $ (0.12 ) $ 0.49   $ 0.05   $ 3.61   $ 3.76   $ (0.22 ) $ 0.09  
 
Diluted net income (loss) per share $ (0.04 ) $ (0.12 ) $ 0.48   $ 0.05   $ 3.56   $ 3.70   $ (0.22 ) $ 0.09  
 
 

TABLE J

INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL
MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(In millions, except per share amounts)
(Unaudited)
 
  Forward-Looking Guidance
GAAP       Non-GAAP
Range of Estimate Range of Estimate
From   To Adjmts From   To
 
New Revenue Standard (ASC 606)
Three Months Ending October 31, 2018
Revenue $ 955 $ 975 $ $ 955 $ 975
Operating income (loss) $ (80 ) $ (70 ) $ 110 [a] $ 30 $ 40
Diluted earnings (loss) per share $ (0.19 ) $ (0.17 ) $ 0.28 [b] $ 0.09 $ 0.11
 
Twelve Months Ending July 31, 2019
Revenue $ 6,530 $ 6,630 $ $ 6,530 $ 6,630
Operating income $ 1,725 $ 1,775 $ 440 [c] $ 2,165 $ 2,215
Diluted earnings per share $ 5.25 $ 5.35 $ 1.15 [d] $ 6.40 $ 6.50
 
 
Previous Revenue Standard (ASC 605)
Twelve Months Ending July 31, 2019
Revenue $ 6,560 $ 6,660 $ $ 6,560 $ 6,660
Operating income $ 1,755 $ 1,805 $ 440 [c] $ 2,195 $ 2,245
Diluted earnings per share $ 5.35 $ 5.45 $ 1.15 [d] $ 6.50 $ 6.60
 

Note: Fiscal 2019 guidance under ASC 605 presented for
comparison with prior year. Going forward, guidance will only be
provided in accordance with ASC 606.

See "About Non-GAAP Financial Measures" immediately following this Table
J for information on these measures, the items excluded from the most
directly comparable GAAP measures in arriving at non-GAAP financial
measures, and the reasons management uses each measure and excludes the
specified amounts in arriving at each non-GAAP financial measure.

 
[a] Reflects estimated adjustments for share-based compensation expense
of approximately $104 million; amortization of acquired technology
of approximately $4 million; and amortization of other acquired
intangible assets of approximately $2 million.
 
[b] Reflects the estimated adjustments in item [a], income taxes related
to these adjustments, and other income tax effects related to the
use of the long-term non-GAAP tax rate.
 
[c] Reflects estimated adjustments for share-based compensation expense
of approximately $416 million; amortization of acquired technology
of approximately $19 million; and amortization of other acquired
intangible assets of approximately $5 million.
 
[d] Reflects the estimated adjustments in item [c], income taxes related
to these adjustments, and other income tax effects related to the
use of the long-term non-GAAP tax rate.
 

INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated August 23, 2018 contains non-GAAP
financial measures. Table B1, Table B2, Table F1, Table F2, and Table J
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
  • Gains and losses on disposals of businesses and long-lived assets
  • 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
values of goodwill and other acquired intangible assets to their
estimated fair values.

Gains and losses on disposals of businesses and long-lived assets. We
exclude from our non-GAAP financial measures gains and losses on
disposals of businesses and long-lived assets because they are unrelated
to our ongoing business operating results.

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. In fiscal 2017 and the first
quarter of fiscal 2018 we used 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 excluded the
income tax effects of the non-GAAP pre-tax adjustments described above
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 at that time we used a long-term non-GAAP tax rate of 33%.
This rate was consistent with the average of our normalized fiscal year
tax rate over a four year period that included the past three fiscal
years plus the current fiscal year forecast.

In the second quarter of our fiscal 2018, we revised our estimated
annual non-GAAP tax rate to reflect the change in the U.S. federal
statutory rate, as a result of the 2017 Tax Cuts and Jobs Act (2017 Tax
Act). The federal statutory rate change, to 21%, was effective January
1, 2018, and therefore, the change resulted in a blended U.S. federal
statutory rate of 26.9% for our fiscal year 2018. In the fourth quarter
of fiscal 2018, we adjusted our non-GAAP tax rate from 26.3% to 26.2%
based on continued analysis of the impacts from the 2017 Tax Act.
Because of the transitional impact of the 2017 Tax Act provisions, the
fiscal 2018 non-GAAP tax rate is based on our current year results only,
without reference to long-term forecasts. This non-GAAP tax rate
excludes the income tax effects of the non-GAAP pre-tax adjustments
described above and eliminates the effects of the non-recurring and
period specific items. We have applied this tax rate to year to date
pre-tax income, after the elimination of the effects of the non-GAAP
adjustments described above.

In fiscal 2019, we will fully benefit from the U.S. federal statutory
rate change and will 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 and
eliminates the effects of non-recurring and period specific items which
can vary in size and frequency. Due to the changes in the U.S. federal
statutory rate in fiscal 2018, as a result of the 2017 Tax Act, the
calculation of the fiscal 2019 long-term non-GAAP rate includes only our
current forecast considerations and is equal to the average of our
forecasted tax rates over our long term forecast period. Based on these
current projections, we are using a long-term non-GAAP tax rate of 23%
for fiscal 2019. 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. 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 rate.

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 J
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, sales of available-for-sale debt securities and other
investments, and disposals of businesses and long-lived assets.

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