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Intuit Grows Third-quarter Revenue by 15 Percent; EPS by More Than 20 Percent

Consumer Tax Revenue Grows 13 Percent Year to Date

MOUNTAIN VIEW, Calif. – May. 19, 2011 – Intuit Inc. (Nasdaq: INTU) today announced financial results for its third fiscal quarter, which ended April 30.

Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period.

Third-quarter Highlights
  • Revenue was $1.8 billion, up 15 percent.
  • Non-GAAP diluted earnings per share were up 23 percent; GAAP diluted earnings per share grew 24 percent.
  • To reflect positive year-to-date performance, the company revised full-year guidance.
  • For the season, total TurboTax units were up 11 percent, with TurboTax Online units up 18 percent.
  • Small Business remained a key driver of overall growth, posting 13 percent revenue growth that was driven by customer acquisition in connected services and improved revenue mix.
Snapshot of Third-quarter Results
GAAP Non-GAAP
  Q3 FY11 Q3 FY10 Change Q3 FY11 Q3 FY10 Change
Revenue $ 1,848 $1,607 15% $1,848 $1,607 15%
Operating Income $1,061 $888 19% $1,115 $938 19%
EPS $2.20 $1.78 24% $2.33 $1.89 23%

Dollars in millions except EPS

CEO Perspective

"Across the company, our businesses continue to benefit from the secular shift from manual, paper-based methods to digital solutions," said Brad Smith, Intuit's president and chief executive officer. "Our high-margin core businesses are thriving.

"In a particularly competitive tax season, we finished with strong momentum, taking share and growing revenue per unit to achieve year-to-date consumer tax revenue growth of 13 percent. In small business, we now serve nearly 5 million unique customers.

"We've achieved marked success with mobile offerings such as GoPayment and SnapTax, innovative solutions that have helped us establish a leadership position in mobile – the next frontier of connected services. Across the company, we are continuing to innovate in mobile. You'll see interesting new apps from us for consumers and small businesses over the next several quarters.

"We're pleased with the quarter, we're confident in the year, and we're optimistic about the progress we're seeing across the company," Smith said.

Quarterly Business Segment Results and Highlights

Total Small Business Group revenue grew 13 percent for the quarter. Improved revenue mix led to another quarter of double-digit revenue growth.

  • Financial Management Solutions revenue grew 11 percent, driven by 42 percent growth in QuickBooks Online subscriptions and strong growth in QuickBooks Enterprise.
  • Employee Management Solutions revenue grew 12 percent, led by growth in Online and Enhanced Payroll subscribers and increased adoption of payroll direct deposit services.
  • Payment Solutions revenue grew 17 percent, or 11 percent excluding security and compliance fees passed through to customers in the quarter, roughly in line with merchant growth of 12 percent.
  • GoPayment is growing quickly, with customers processing more than $19 million a week using GoPayment and related services.

Consumer Tax

  • The Consumer Tax group generated revenue of $1 billion, up 18 percent. For the season to-date, total TurboTax units were up 11 percent and TurboTax Online units were up 18 percent.
  • SnapTax and the TurboTax iPad app generated very positive feedback this season, garnering five- and four-out-of-five stars respectively in the Apple app store.

Accounting Professionals

  • The Accounting Professionals segment generated revenue of $225 million, up 10 percent from last year. The focus remains on expanding the professional accounting and tax online offerings, including Online Tax and Tax Import services.

Financial Services

  • Financial Services revenue grew 5 percent.
  • Adjusted for the sale of the lending business in the fourth quarter of fiscal year 2010, and a nonrecurring revenue item that affected fiscal year 2010, core revenue growth would have been approximately 9 percent.
  • End-user adoption continued at a fast pace, with Internet banking users increasing by 9 percent and bill pay users by 23 percent.
  • Active users of the Financial Services mobile banking solution have doubled over the past 12 months, to more than 700,000.

Other Businesses

  • The Other Businesses segment posted 17 percent revenue growth. Adjusted for the acquisition of Medfusion and a favorable currency impact, segment revenue grew 9 percent.
  • QuickBooks Online launched in the U.K. and Singapore. Strong customer adoption continues for Mint in Canada.
CFO Perspective

"I'm pleased with the progress we are making in delivering connected services solutions to our customers," said Neil Williams, Intuit's chief financial officer.

"Subscriptions to our online solutions generate valuable recurring revenue streams and bring us closer to our customers to help us determine what other products and services will serve their needs. Approximately one-fifth of our small business customers are using connected services that generate recurring revenue. This is the fastest-growing segment of our customer base and we continue to shift our investment toward these online solutions."

Stock Repurchase Program

Intuit repurchased $250 million of its common stock in the third quarter, bringing repurchases to a total of $1.1 billion in the current fiscal year. At the end of the third quarter, the company had $890 million remaining on the current authorization.

Forward-looking Guidance

For the fourth quarter the company expects:

  • Revenue of $567 million to $587 million.  
  • GAAP operating loss of $48 million to $58 million.
  • GAAP loss per share of $0.12 to $0.16.
  • Non-GAAP operating income of $15 million to $25 million.
  • Non-GAAP diluted EPS ranging from a loss of $0.02 to income of $0.02.

The company revised its full-year guidance ranges. For fiscal year 2011 the company now expects:

  • Total company revenue of $3.825 billion to $3.845 billion, growth of 11 percent, up from the previous range of $3.74 billion to $3.84 billion.
  • GAAP operating income growth of 17 to 18 percent, narrowed from the previous range of 14 to 18 percent. 
  • GAAP diluted EPS of $2.00 to $2.05, growth of 13 to 16 percent, up from the previous range of $1.93 to $2.00. The GAAP EPS growth rates are 7 points higher when the gain from the sale of discontinued operations is excluded from the fiscal year 2010 GAAP results.
  • Non-GAAP operating income growth of 13 to 14 percent, narrowed from the previous range of 11 to 14 percent.
  • Non-GAAP diluted EPS of $2.45 to $2.50, growth of 16 to 18 percent, up from the previous range of $2.41 to $2.48.

Segment results for Small Business and Consumer Tax were also narrowed for the full year:

  • Consumer Tax segment revenue growth of 13 percent, narrowed from the previous range of 10 to 13 percent.
  • Small Business segment revenue growth of 10 to 12 percent, narrowed from the previous range of 8 to 12 percent.
  • All other revenue segment guidance ranges are unchanged.
Conference Call Information

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time today. To hear the call, dial 866-837-9780 in the United States or 703-639-1418 from international locations. No reservation or access code is needed. The conference call can also be heard live via webcast at http://investors.intuit.com/events.cfm. 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 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 1528212.

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

About Intuit Inc.

Intuit Inc. 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 $3.5 billion in its fiscal year 2010. The company has approximately 7,700 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.

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 Web site.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including forecasts of Intuit's future expected financial results; expectations regarding growth from connected services and from current or future products and services; its prospects for the business in fiscal 2011; 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; 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; we may not be able to successfully innovate and introduce new offerings and business models to meet our growth and profitability objectives, and current and future offerings may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; business interruption or failure of our information technology and communication systems may impair the availability of our products and services, which may damage our reputation and harm our future financial results; as we upgrade and consolidate our customer facing applications and supporting information technology infrastructure, any problems with these implementations could interfere with our ability to deliver our offerings; any failure to properly use and protect personal customer information and data could harm our revenue, earnings and reputation; if we are unable to develop, manage and maintain critical third party business relationships, our business may be adversely affected; increased government regulation of our businesses may harm our operating results; if we fail to process transactions effectively or fail to adequately protect against potential fraudulent activities, our revenue and earnings may be harmed; any significant offering quality problems or delays in our offerings 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; the continuing global economic downturn may continue to impact consumer and small business spending, financial institutions and tax filings, which could negatively affect our revenue and profitability; year-over-year changes in the total number of tax filings that are submitted to government agencies due to economic conditions or otherwise may result in lost revenue opportunities; 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; 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; our inability to adequately protect our intellectual property rights may weaken our competitive position and reduce our revenue and earnings; our acquisition and divestiture activities may disrupt our ongoing business, may involve increased expenses and may present risks not contemplated at the time of the transactions; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operation; 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 2010 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 May 19, 2011, and we do not undertake any duty to update any forward-looking statement or other information in these materials.

Intuit and the Intuit logo, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.

(Financial Statements follow)

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