|
þ
|
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
For the quarterly period ended January 31, 2019
|
o
|
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
For the transition period from ____________ to ____________ .
|
Delaware
(State of incorporation)
|
|
77-0034661
(IRS employer identification no.)
|
|
2700 Coast Avenue, Mountain View, CA 94043
(Address of principal executive offices)
|
|
|
|
|
|
(650) 944-6000
(Registrant’s telephone number, including area code)
|
|
Large accelerated
filer
|
þ
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting
company
|
o
|
Emerging growth
company
|
o
|
|
INTUIT INC.
FORM 10-Q
INDEX
|
|
Page
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EX-10.01
|
|
EX-10.02
|
|
EX-10.03
|
|
EX-31.01
|
|
EX-31.02
|
|
EX-32.01
|
|
EX-32.02
|
|
EX-101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
EX-101.SCH XBRL Taxonomy Extension Schema
|
|
EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase
|
|
EX-101.LAB XBRL Taxonomy Extension Label Linkbase
|
|
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase
|
|
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
2
|
|
•
|
our expectations and beliefs regarding future conduct and growth of the business;
|
•
|
our beliefs and expectations regarding seasonality, competition and other trends that affect our business;
|
•
|
our expectation that we will continue to invest significant resources in our product development, marketing and sales capabilities;
|
•
|
our expectation that we will continue to invest significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities;
|
•
|
our expectation that we will work with the broader industry and government to protect our customers from fraud;
|
•
|
our expectation that we will generate significant cash from operations;
|
•
|
our expectation that total service and other revenue as a percentage of our total revenue will continue to grow;
|
•
|
our expectations regarding the development of future products, services, business models and technology platforms and our research and development efforts;
|
•
|
our assumptions underlying our critical accounting policies and estimates, including our judgments and estimates regarding revenue recognition; stock volatility and other assumptions used to estimate the fair value of share-based compensation; the fair value of goodwill; and expected future amortization of acquired intangible assets;
|
•
|
our intention not to sell our investments and our belief that it is more likely than not that we will not be required to sell them before recovery at par;
|
•
|
our belief that the investments we hold are not other-than-temporarily impaired;
|
•
|
our belief that we take prudent measures to mitigate investment related risks;
|
•
|
our belief that our exposure to currency exchange fluctuation risk will not be significant in the future;
|
•
|
our assessments and estimates that determine our effective tax rate;
|
•
|
our belief that it is not reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months;
|
•
|
our belief that our cash and cash equivalents, investments and cash generated from operations will be sufficient to meet our seasonal working capital needs, capital expenditure requirements, contractual obligations, debt service requirements and other liquidity requirements associated with our operations for at least the next 12 months;
|
•
|
our expectation that we will return excess cash generated by operations to our stockholders through repurchases of our common stock and the payment of cash dividends, after taking into account our operating and strategic cash needs;
|
•
|
our judgments and assumptions relating to our loan portfolio;
|
•
|
our belief that the credit facility will be available to us should we choose to borrow under it; and
|
•
|
our assessments and beliefs regarding the future outcome of pending legal proceedings and inquiries by regulatory authorities, the liability, if any, that Intuit may incur as a result of those proceedings and inquiries, and the impact of any potential losses associated with such proceedings or inquiries on our financial statements.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
3
|
|
PART I - FINANCIAL INFORMATION
|
ITEM 1 - FINANCIAL STATEMENTS
|
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share amounts)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
533
|
|
|
$
|
529
|
|
|
$
|
880
|
|
|
$
|
899
|
|
Service and other
|
969
|
|
|
810
|
|
|
1,638
|
|
|
1,350
|
|
||||
Total net revenue
|
1,502
|
|
|
1,339
|
|
|
2,518
|
|
|
2,249
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Cost of product revenue
|
26
|
|
|
27
|
|
|
41
|
|
|
45
|
|
||||
Cost of service and other revenue
|
254
|
|
|
216
|
|
|
481
|
|
|
394
|
|
||||
Amortization of acquired technology
|
5
|
|
|
3
|
|
|
10
|
|
|
5
|
|
||||
Selling and marketing
|
548
|
|
|
469
|
|
|
894
|
|
|
777
|
|
||||
Research and development
|
295
|
|
|
286
|
|
|
589
|
|
|
579
|
|
||||
General and administrative
|
140
|
|
|
143
|
|
|
277
|
|
|
288
|
|
||||
Amortization of other acquired intangible assets
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Total costs and expenses
|
1,269
|
|
|
1,145
|
|
|
2,295
|
|
|
2,090
|
|
||||
Operating income
|
233
|
|
|
194
|
|
|
223
|
|
|
159
|
|
||||
Interest expense
|
(4
|
)
|
|
(6
|
)
|
|
(8
|
)
|
|
(11
|
)
|
||||
Interest and other income, net
|
6
|
|
|
5
|
|
|
6
|
|
|
8
|
|
||||
Income before income taxes
|
235
|
|
|
193
|
|
|
221
|
|
|
156
|
|
||||
Income tax provision (benefit)
|
46
|
|
|
10
|
|
|
(2
|
)
|
|
(25
|
)
|
||||
Net income
|
$
|
189
|
|
|
$
|
183
|
|
|
$
|
223
|
|
|
$
|
181
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic net income per share
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
0.86
|
|
|
$
|
0.71
|
|
Shares used in basic per share calculations
|
260
|
|
|
256
|
|
|
260
|
|
|
256
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share
|
$
|
0.72
|
|
|
$
|
0.70
|
|
|
$
|
0.84
|
|
|
$
|
0.70
|
|
Shares used in diluted per share calculations
|
264
|
|
|
260
|
|
|
264
|
|
|
260
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
0.47
|
|
|
$
|
0.39
|
|
|
$
|
0.94
|
|
|
$
|
0.78
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
4
|
|
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
|
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
189
|
|
|
$
|
183
|
|
|
$
|
223
|
|
|
$
|
181
|
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on available-for-sale debt securities
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
||||
Foreign currency translation gain (loss)
|
3
|
|
|
10
|
|
|
(1
|
)
|
|
3
|
|
||||
Total other comprehensive income, net
|
4
|
|
|
9
|
|
|
—
|
|
|
2
|
|
||||
Comprehensive income
|
$
|
193
|
|
|
$
|
192
|
|
|
$
|
223
|
|
|
$
|
183
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
5
|
|
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
|
|||||||
|
|
|
|
||||
(In millions)
|
January 31,
2019 |
|
July 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,075
|
|
|
$
|
1,464
|
|
Investments
|
258
|
|
|
252
|
|
||
Accounts receivable, net
|
554
|
|
|
98
|
|
||
Income taxes receivable
|
70
|
|
|
39
|
|
||
Prepaid expenses and other current assets
|
253
|
|
|
202
|
|
||
Current assets before funds held for customers
|
2,210
|
|
|
2,055
|
|
||
Funds held for customers
|
434
|
|
|
367
|
|
||
Total current assets
|
2,644
|
|
|
2,422
|
|
||
Long-term investments
|
13
|
|
|
13
|
|
||
Property and equipment, net
|
810
|
|
|
812
|
|
||
Goodwill
|
1,611
|
|
|
1,611
|
|
||
Acquired intangible assets, net
|
49
|
|
|
61
|
|
||
Other assets
|
208
|
|
|
215
|
|
||
Total assets
|
$
|
5,335
|
|
|
$
|
5,134
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
50
|
|
|
$
|
50
|
|
Accounts payable
|
400
|
|
|
178
|
|
||
Accrued compensation and related liabilities
|
221
|
|
|
369
|
|
||
Deferred revenue
|
639
|
|
|
581
|
|
||
Other current liabilities
|
257
|
|
|
198
|
|
||
Current liabilities before customer fund deposits
|
1,567
|
|
|
1,376
|
|
||
Customer fund deposits
|
434
|
|
|
367
|
|
||
Total current liabilities
|
2,001
|
|
|
1,743
|
|
||
Long-term debt
|
363
|
|
|
388
|
|
||
Long-term deferred income tax liabilities
|
51
|
|
|
68
|
|
||
Other long-term obligations
|
124
|
|
|
119
|
|
||
Total liabilities
|
2,539
|
|
|
2,318
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital
|
5,623
|
|
|
5,338
|
|
||
Treasury stock, at cost
|
(11,328
|
)
|
|
(11,050
|
)
|
||
Accumulated other comprehensive loss
|
(36
|
)
|
|
(36
|
)
|
||
Retained earnings
|
8,537
|
|
|
8,564
|
|
||
Total stockholders’ equity
|
2,796
|
|
|
2,816
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,335
|
|
|
$
|
5,134
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
6
|
|
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
|
|
Three Months Ended January 31, 2019
|
|||||||||||||||||||||
(In millions, except shares in thousands)
|
Shares of
Common
Stock
|
|
Common
Stock and
Additional
Paid-In Capital
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
|||||||||||
Balance at October 31, 2018
|
259,571
|
|
|
$
|
5,501
|
|
|
$
|
(11,151
|
)
|
|
$
|
(40
|
)
|
|
$
|
8,472
|
|
|
$
|
2,782
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
189
|
|
|
193
|
|
|||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes
|
414
|
|
|
21
|
|
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
Stock repurchases under stock repurchase programs
|
(875
|
)
|
|
—
|
|
|
(177
|
)
|
|
—
|
|
|
—
|
|
|
(177
|
)
|
|||||
Dividends and dividend rights declared ($0.47 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
(124
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|||||
Balance at January 31, 2019
|
259,110
|
|
|
$
|
5,623
|
|
|
$
|
(11,328
|
)
|
|
$
|
(36
|
)
|
|
$
|
8,537
|
|
|
$
|
2,796
|
|
|
Six Months Ended January 31, 2019
|
|||||||||||||||||||||
(In millions, except shares in thousands)
|
Shares of
Common
Stock
|
|
Common
Stock and
Additional
Paid-In Capital
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
|||||||||||
Balance at July 31, 2018
|
258,616
|
|
|
$
|
5,338
|
|
|
$
|
(11,050
|
)
|
|
$
|
(36
|
)
|
|
$
|
8,564
|
|
|
$
|
2,816
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|
223
|
|
|||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes
|
1,836
|
|
|
78
|
|
|
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|||||
Stock repurchases under stock repurchase programs
|
(1,342
|
)
|
|
—
|
|
|
(278
|
)
|
|
—
|
|
|
—
|
|
|
(278
|
)
|
|||||
Dividends and dividend rights declared ($0.94 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
(250
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|||||
Balance at January 31, 2019
|
259,110
|
|
|
$
|
5,623
|
|
|
$
|
(11,328
|
)
|
|
$
|
(36
|
)
|
|
$
|
8,537
|
|
|
$
|
2,796
|
|
|
Three Months Ended January 31, 2018
|
|||||||||||||||||||||
(In millions, except shares in thousands)
|
Shares of
Common
Stock
|
|
Common
Stock and
Additional
Paid-In Capital
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
|||||||||||
Balance at October 31, 2017
|
255,667
|
|
|
$
|
4,999
|
|
|
$
|
(10,948
|
)
|
|
$
|
(29
|
)
|
|
$
|
7,540
|
|
|
$
|
1,562
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
183
|
|
|
192
|
|
|||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes
|
939
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|||||
Stock repurchases under stock repurchase programs
|
(530
|
)
|
|
—
|
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|||||
Dividends and dividend rights declared ($0.39 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|
(102
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95
|
|
|||||
Balance at January 31, 2018
|
256,076
|
|
|
$
|
5,151
|
|
|
$
|
(11,031
|
)
|
|
$
|
(20
|
)
|
|
$
|
7,621
|
|
|
$
|
1,721
|
|
|
Six Months Ended January 31, 2018
|
|||||||||||||||||||||
(In millions, except shares in thousands)
|
Shares of
Common
Stock
|
|
Common
Stock and
Additional
Paid-In Capital
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
|||||||||||
Balance at July 31, 2017
|
255,668
|
|
|
$
|
4,857
|
|
|
$
|
(10,778
|
)
|
|
$
|
(22
|
)
|
|
$
|
7,642
|
|
|
$
|
1,699
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
181
|
|
|
183
|
|
|||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes
|
2,163
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|||||
Stock repurchases under stock repurchase programs
|
(1,755
|
)
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
—
|
|
|
(253
|
)
|
|||||
Dividends and dividend rights declared ($0.78 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(202
|
)
|
|
(202
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|||||
Balance at January 31, 2018
|
256,076
|
|
|
$
|
5,151
|
|
|
$
|
(11,031
|
)
|
|
$
|
(20
|
)
|
|
$
|
7,621
|
|
|
$
|
1,721
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
7
|
|
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|||||||
|
|
|
|
||||
|
Six Months Ended
|
||||||
(In millions)
|
January 31,
2019 |
|
January 31,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
223
|
|
|
$
|
181
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
99
|
|
|
117
|
|
||
Amortization of acquired intangible assets
|
13
|
|
|
10
|
|
||
Share-based compensation expense
|
205
|
|
|
191
|
|
||
Deferred income taxes
|
(21
|
)
|
|
(25
|
)
|
||
Other
|
6
|
|
|
7
|
|
||
Total adjustments
|
302
|
|
|
300
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(456
|
)
|
|
(428
|
)
|
||
Income taxes receivable
|
(1
|
)
|
|
31
|
|
||
Prepaid expenses and other assets
|
(54
|
)
|
|
(65
|
)
|
||
Accounts payable
|
210
|
|
|
176
|
|
||
Accrued compensation and related liabilities
|
(146
|
)
|
|
(89
|
)
|
||
Deferred revenue
|
58
|
|
|
5
|
|
||
Other liabilities
|
62
|
|
|
63
|
|
||
Total changes in operating assets and liabilities
|
(327
|
)
|
|
(307
|
)
|
||
Net cash provided by operating activities
|
198
|
|
|
174
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of corporate and customer fund investments
|
(153
|
)
|
|
(137
|
)
|
||
Sales of corporate and customer fund investments
|
42
|
|
|
68
|
|
||
Maturities of corporate and customer fund investments
|
106
|
|
|
66
|
|
||
Net change in customer fund deposits
|
67
|
|
|
50
|
|
||
Purchases of property and equipment
|
(80
|
)
|
|
(77
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
(362
|
)
|
||
Originations of term loans to small businesses
|
(152
|
)
|
|
(40
|
)
|
||
Principal repayments of term loans from small businesses
|
116
|
|
|
18
|
|
||
Other
|
13
|
|
|
(22
|
)
|
||
Net cash used in investing activities
|
(41
|
)
|
|
(436
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
800
|
|
||
Repayments on borrowings under revolving credit facility
|
—
|
|
|
(160
|
)
|
||
Repayment of debt
|
(25
|
)
|
|
(25
|
)
|
||
Proceeds from issuance of stock under employee stock plans
|
154
|
|
|
150
|
|
||
Payments for employee taxes withheld upon vesting of restricted stock units
|
(76
|
)
|
|
(49
|
)
|
||
Cash paid for purchases of treasury stock
|
(274
|
)
|
|
(253
|
)
|
||
Dividends and dividend rights paid
|
(251
|
)
|
|
(205
|
)
|
||
Other
|
(5
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(477
|
)
|
|
258
|
|
||
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(2
|
)
|
|
3
|
|
||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(322
|
)
|
|
(1
|
)
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period
|
1,631
|
|
|
701
|
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period
|
$
|
1,309
|
|
|
$
|
700
|
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the consolidated balance sheets to the total amounts reported on the consolidated statements of cash flows
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,075
|
|
|
$
|
478
|
|
Restricted cash and restricted cash equivalents included in funds held for customers
|
234
|
|
|
222
|
|
||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period
|
$
|
1,309
|
|
|
$
|
700
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
8
|
|
1. Description of Business and Summary of Significant Accounting Policies
|
Description of Business
|
Basis of Presentation
|
Seasonality
|
Significant Accounting Policies
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
9
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
10
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
11
|
|
Use of Estimates
|
Computation of Net Income (Loss) Per Share
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
12
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share amounts)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
189
|
|
|
$
|
183
|
|
|
$
|
223
|
|
|
$
|
181
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Shares used in basic per share amounts:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
260
|
|
|
256
|
|
|
260
|
|
|
256
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Shares used in diluted per share amounts:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
260
|
|
|
256
|
|
|
260
|
|
|
256
|
|
||||
Dilutive common equivalent shares from stock options
|
|
|
|
|
|
|
|
||||||||
and restricted stock awards
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
||||
Dilutive weighted average common shares outstanding
|
264
|
|
|
260
|
|
|
264
|
|
|
260
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic net income per share
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
0.86
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share
|
$
|
0.72
|
|
|
$
|
0.70
|
|
|
$
|
0.84
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
||||||||
Shares excluded from diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average stock options and restricted stock units that have been excluded from dilutive common equivalent shares outstanding due to their anti-dilutive effect
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
Notes Receivable and Allowances for Loan Losses
|
Concentration of Credit Risk and Significant Customers
|
Accounting Standards Recently Adopted
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
13
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
14
|
|
|
July 31, 2018
|
||||||||||
(In millions)
|
As Reported
|
|
Topic 606 Adjustment
|
|
As Adjusted
|
||||||
Prepaid expenses and other current assets
|
$
|
184
|
|
|
$
|
18
|
|
|
$
|
202
|
|
Long-term deferred income taxes (1)
|
87
|
|
|
(85
|
)
|
|
2
|
|
|||
Other assets (1)
|
190
|
|
|
23
|
|
|
213
|
|
|||
Deferred revenue
|
961
|
|
|
(380
|
)
|
|
581
|
|
|||
Other current liabilities
|
191
|
|
|
7
|
|
|
198
|
|
|||
Long-term deferred revenue (2)
|
197
|
|
|
(194
|
)
|
|
3
|
|
|||
Other long-term obligations (2) (3)
|
123
|
|
|
61
|
|
|
184
|
|
|||
Stockholders’ equity
|
2,354
|
|
|
462
|
|
|
2,816
|
|
|
Three months ended January 31, 2018
|
||||||||||
(In millions, except per share amounts)
|
As Reported
|
|
Topic 606 Adjustment
|
|
As Adjusted
|
||||||
Net revenue
|
$
|
1,165
|
|
|
$
|
174
|
|
|
$
|
1,339
|
|
Selling and marketing expense
|
469
|
|
|
—
|
|
|
469
|
|
|||
Operating income
|
20
|
|
|
174
|
|
|
194
|
|
|||
Income tax provision
|
40
|
|
|
(30
|
)
|
|
10
|
|
|||
Net income (loss)
|
(21
|
)
|
|
204
|
|
|
183
|
|
|||
|
|
|
|
|
|
||||||
Diluted net income (loss) per share
|
$
|
(0.08
|
)
|
|
$
|
0.78
|
|
|
$
|
0.70
|
|
|
Six Months Ended January 31, 2018
|
||||||||||
(In millions, except per share amounts)
|
As Reported
|
|
Topic 606 Adjustment
|
|
As Adjusted
|
||||||
Net revenue
|
$
|
2,051
|
|
|
$
|
198
|
|
|
$
|
2,249
|
|
Selling and marketing expense
|
777
|
|
|
—
|
|
|
777
|
|
|||
Operating income (loss)
|
(37
|
)
|
|
196
|
|
|
159
|
|
|||
Income tax benefit
|
(2
|
)
|
|
(23
|
)
|
|
(25
|
)
|
|||
Net income (loss)
|
(38
|
)
|
|
219
|
|
|
181
|
|
|||
|
|
|
|
|
|
||||||
Diluted net income (loss) per share
|
$
|
(0.15
|
)
|
|
$
|
0.85
|
|
|
$
|
0.70
|
|
Accounting Standards Not Yet Adopted
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
15
|
|
2. Fair Value Measurements
|
Fair Value Hierarchy
|
•
|
Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.
|
•
|
Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 uses one or more unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
16
|
|
Assets and Liabilities Measured at Fair Value on a Recurring Basis
|
|
January 31, 2019
|
|
July 31, 2018
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents, primarily time deposits, savings deposit accounts, and money market funds
|
$
|
654
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
654
|
|
|
$
|
1,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,143
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
||||||||
Corporate notes
|
—
|
|
|
434
|
|
|
—
|
|
|
434
|
|
|
—
|
|
|
412
|
|
|
—
|
|
|
412
|
|
||||||||
U.S. agency securities
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||||||
Total available-for-sale securities
|
—
|
|
|
458
|
|
|
—
|
|
|
458
|
|
|
—
|
|
|
452
|
|
|
—
|
|
|
452
|
|
||||||||
Total assets measured at fair value on a recurring basis
|
$
|
654
|
|
|
$
|
458
|
|
|
$
|
—
|
|
|
$
|
1,112
|
|
|
$
|
1,143
|
|
|
$
|
452
|
|
|
$
|
—
|
|
|
$
|
1,595
|
|
|
January 31, 2019
|
|
July 31, 2018
|
||||||||||||||||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
In cash and cash equivalents
|
$
|
623
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
623
|
|
|
$
|
1,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,143
|
|
In funds held for customers
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total cash equivalents
|
$
|
654
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
654
|
|
|
$
|
1,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,143
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
In investments
|
$
|
—
|
|
|
$
|
258
|
|
|
$
|
—
|
|
|
$
|
258
|
|
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
—
|
|
|
$
|
252
|
|
In funds held for customers
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
||||||||
Total available-for-sale debt securities
|
$
|
—
|
|
|
$
|
458
|
|
|
$
|
—
|
|
|
$
|
458
|
|
|
$
|
—
|
|
|
$
|
452
|
|
|
$
|
—
|
|
|
$
|
452
|
|
3. Cash and Cash Equivalents, Investments, and Funds Held for Customers
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
17
|
|
|
January 31, 2019
|
|
July 31, 2018
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Classification on consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,075
|
|
|
$
|
1,075
|
|
|
$
|
1,464
|
|
|
$
|
1,464
|
|
Investments
|
259
|
|
|
258
|
|
|
253
|
|
|
252
|
|
||||
Funds held for customers
|
434
|
|
|
434
|
|
|
368
|
|
|
367
|
|
||||
Long-term investments
|
13
|
|
|
13
|
|
|
13
|
|
|
13
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
1,781
|
|
|
$
|
1,780
|
|
|
$
|
2,098
|
|
|
$
|
2,096
|
|
|
January 31, 2019
|
|
July 31, 2018
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Type of issue:
|
|
|
|
|
|
|
|
||||||||
Total cash, cash equivalents, restricted cash,
and restricted cash equivalents
|
$
|
1,309
|
|
|
$
|
1,309
|
|
|
$
|
1,631
|
|
|
$
|
1,631
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
9
|
|
|
9
|
|
|
31
|
|
|
31
|
|
||||
Corporate notes
|
435
|
|
|
434
|
|
|
414
|
|
|
412
|
|
||||
U.S. agency securities
|
15
|
|
|
15
|
|
|
9
|
|
|
9
|
|
||||
Total available-for-sale debt securities
|
459
|
|
|
458
|
|
|
454
|
|
|
452
|
|
||||
Other long-term investments
|
13
|
|
|
13
|
|
|
13
|
|
|
13
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
1,781
|
|
|
$
|
1,780
|
|
|
$
|
2,098
|
|
|
$
|
2,096
|
|
|
January 31, 2019
|
|
July 31, 2018
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Due within one year
|
$
|
285
|
|
|
$
|
284
|
|
|
$
|
250
|
|
|
$
|
250
|
|
Due within two years
|
116
|
|
|
115
|
|
|
117
|
|
|
116
|
|
||||
Due within three years
|
35
|
|
|
35
|
|
|
66
|
|
|
65
|
|
||||
Due after three years
|
23
|
|
|
24
|
|
|
21
|
|
|
21
|
|
||||
Total available-for-sale debt securities
|
$
|
459
|
|
|
$
|
458
|
|
|
$
|
454
|
|
|
$
|
452
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
18
|
|
|
January 31, 2019
|
|
July 31, 2018
|
||||
(In millions)
|
|
|
|
||||
Restricted cash and restricted cash equivalents
|
$
|
234
|
|
|
$
|
167
|
|
Available-for-sale debt securities
|
200
|
|
|
200
|
|
||
Total funds held for customers
|
$
|
434
|
|
|
$
|
367
|
|
|
January 31, 2018
|
|
July 31, 2017
|
||||
(In millions)
|
|
|
|
||||
Restricted cash and restricted cash equivalents
|
$
|
222
|
|
|
$
|
172
|
|
Available-for-sale debt securities
|
200
|
|
|
200
|
|
||
Total funds held for customers
|
$
|
422
|
|
|
$
|
372
|
|
4. Current Liabilities
|
Short-Term Debt
|
Unsecured Revolving Credit Facility
|
Secured Revolving Credit Facility
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
19
|
|
Other Current Liabilities
|
(In millions)
|
January 31,
2019 |
|
July 31,
2018 |
||||
Executive deferred compensation plan liabilities
|
$
|
100
|
|
|
$
|
97
|
|
Reserve for promotional discounts and rebates
|
39
|
|
|
10
|
|
||
Reserve for product returns
|
52
|
|
|
17
|
|
||
Current portion of license fee payable
|
10
|
|
|
9
|
|
||
Current portion of deferred rent
|
6
|
|
|
6
|
|
||
Current portion of dividend payable
|
7
|
|
|
10
|
|
||
Other
|
43
|
|
|
49
|
|
||
Total other current liabilities
|
$
|
257
|
|
|
$
|
198
|
|
5. Long-Term Obligations and Commitments
|
Long-Term Debt
|
Other Long-Term Obligations
|
(In millions)
|
January 31,
2019 |
|
July 31,
2018 |
||||
Total deferred rent
|
$
|
49
|
|
|
$
|
47
|
|
Long-term income tax liabilities
|
62
|
|
|
61
|
|
||
Total license fee payable
|
10
|
|
|
9
|
|
||
Total dividend payable
|
12
|
|
|
14
|
|
||
Other
|
15
|
|
|
15
|
|
||
Total long-term obligations
|
148
|
|
|
146
|
|
||
Less current portion (included in other current liabilities)
|
(24
|
)
|
|
(27
|
)
|
||
Long-term obligations due after one year
|
$
|
124
|
|
|
$
|
119
|
|
Operating Lease Commitments and Unconditional Purchase Obligations
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
20
|
|
6. Income Taxes
|
Effective Tax Rate
|
Unrecognized Tax Benefits and Other Considerations
|
7. Stockholders’ Equity
|
Stock Repurchase Programs and Treasury Shares
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
21
|
|
Dividends on Common Stock
|
Share-Based Compensation Expense
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
Cost of revenue
|
$
|
15
|
|
|
$
|
13
|
|
|
$
|
29
|
|
|
$
|
16
|
|
Selling and marketing
|
25
|
|
|
25
|
|
|
55
|
|
|
50
|
|
||||
Research and development
|
34
|
|
|
30
|
|
|
69
|
|
|
69
|
|
||||
General and administrative
|
26
|
|
|
26
|
|
|
52
|
|
|
56
|
|
||||
Total share-based compensation expense
|
$
|
100
|
|
|
$
|
94
|
|
|
$
|
205
|
|
|
$
|
191
|
|
Share-Based Awards Available for Grant
|
(Shares in thousands)
|
Shares
Available
for Grant
|
|
Balance at July 31, 2018
|
22,791
|
|
Options granted
|
(64
|
)
|
Restricted stock units granted (1)
|
(722
|
)
|
Share-based awards canceled/forfeited/expired (1) (2)
|
1,987
|
|
Balance at January 31, 2019
|
23,992
|
|
(1)
|
RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited.
|
(2)
|
Stock options and RSUs canceled, expired or forfeited under our 2005 Equity Incentive Plan are returned to the pool of shares available for grant. Shares withheld for income taxes upon vesting of RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options and RSUs canceled, expired or forfeited under older expired plans are not returned to the pool of shares available for grant.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
22
|
|
Stock Option Activity and Related Share-Based Compensation Expense
|
|
Options Outstanding
|
|||||
(Shares in thousands)
|
Number
of Shares
|
|
Weighted
Average
Exercise
Price
Per Share
|
|||
Balance at July 31, 2018
|
5,154
|
|
|
$
|
120.26
|
|
Granted
|
64
|
|
|
225.47
|
|
|
Exercised
|
(1,129
|
)
|
|
97.08
|
|
|
Canceled or expired
|
(214
|
)
|
|
128.23
|
|
|
Balance at January 31, 2019
|
3,875
|
|
|
$
|
128.30
|
|
|
|
|
|
|||
Exercisable at January 31, 2019
|
2,358
|
|
|
$
|
109.10
|
|
Restricted Stock Unit Activity and Related Share-Based Compensation Expense
|
|
Restricted Stock Units
|
|||||
(Shares in thousands)
|
Number
of Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Nonvested at July 31, 2018
|
7,383
|
|
|
$
|
131.50
|
|
Granted
|
314
|
|
|
211.12
|
|
|
Vested
|
(1,083
|
)
|
|
104.75
|
|
|
Forfeited
|
(657
|
)
|
|
95.18
|
|
|
Nonvested at January 31, 2019
|
5,957
|
|
|
$
|
144.57
|
|
8. Litigation
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
23
|
|
9. Segment Information
|
Small Business & Self-Employed: This segment targets small businesses and the self-employed around the world, and the accounting professionals who serve and advise them. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, merchant payment processing solutions, and financing for small businesses.
Consumer: This segment targets consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Our Mint and Turbo offerings target consumers and help them understand and improve their financial lives by offering a view of their financial health.
Strategic Partner: This segment targets professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, ProFile, and ProConnect Tax Online.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Small Business & Self-Employed
|
$
|
833
|
|
|
$
|
713
|
|
|
$
|
1,741
|
|
|
$
|
1,532
|
|
Consumer
|
461
|
|
|
416
|
|
|
551
|
|
|
490
|
|
||||
Strategic Partner
|
208
|
|
|
210
|
|
|
226
|
|
|
227
|
|
||||
Total net revenue
|
$
|
1,502
|
|
|
$
|
1,339
|
|
|
$
|
2,518
|
|
|
$
|
2,249
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income:
|
|
|
|
|
|
|
|
||||||||
Small Business & Self-Employed
|
$
|
320
|
|
|
$
|
258
|
|
|
$
|
780
|
|
|
$
|
682
|
|
Consumer
|
164
|
|
|
151
|
|
|
123
|
|
|
92
|
|
||||
Strategic Partner
|
166
|
|
|
164
|
|
|
146
|
|
|
139
|
|
||||
Total segment operating income
|
650
|
|
|
573
|
|
|
1,049
|
|
|
913
|
|
||||
Unallocated corporate items:
|
|
|
|
|
|
|
|
||||||||
Share-based compensation expense
|
(100
|
)
|
|
(94
|
)
|
|
(205
|
)
|
|
(191
|
)
|
||||
Other common expenses
|
(311
|
)
|
|
(281
|
)
|
|
(608
|
)
|
|
(556
|
)
|
||||
Amortization of acquired technology
|
(5
|
)
|
|
(3
|
)
|
|
(10
|
)
|
|
(5
|
)
|
||||
Amortization of other acquired intangible assets
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Total unallocated corporate items
|
(417
|
)
|
|
(379
|
)
|
|
(826
|
)
|
|
(754
|
)
|
||||
Total operating income
|
$
|
233
|
|
|
$
|
194
|
|
|
$
|
223
|
|
|
$
|
159
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
24
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
January 31,
2019 |
|
January 31,
2018 |
|
January 31,
2019 |
|
January 31,
2018 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
QuickBooks Online Accounting
|
$
|
231
|
|
|
$
|
168
|
|
|
$
|
448
|
|
|
$
|
317
|
|
Online Services
|
163
|
|
|
117
|
|
|
317
|
|
|
230
|
|
||||
Total Online Ecosystem
|
394
|
|
|
285
|
|
|
765
|
|
|
547
|
|
||||
QuickBooks Desktop Accounting
|
154
|
|
|
147
|
|
|
382
|
|
|
396
|
|
||||
Desktop Services and Supplies
|
285
|
|
|
281
|
|
|
594
|
|
|
589
|
|
||||
Total Desktop Ecosystem
|
439
|
|
|
428
|
|
|
976
|
|
|
985
|
|
||||
Small Business & Self-Employed
|
833
|
|
|
713
|
|
|
1,741
|
|
|
1,532
|
|
||||
Consumer
|
461
|
|
|
416
|
|
|
551
|
|
|
490
|
|
||||
Strategic Partner
|
208
|
|
|
210
|
|
|
226
|
|
|
227
|
|
||||
Total net revenue
|
$
|
1,502
|
|
|
$
|
1,339
|
|
|
$
|
2,518
|
|
|
$
|
2,249
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
25
|
|
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
• Executive Overview: High level discussion of our operating results and some of the trends that affect our business.
• Critical Accounting Policies and Estimates: Significant changes since our most recent Annual Report on Form 10-K that we believe are important to understanding the assumptions and judgments underlying our financial statements.
• Results of Operations: A more detailed discussion of our revenue and expenses.
• Liquidity and Capital Resources: Discussion of key aspects of our consolidated statements of cash flows, changes in our consolidated balance sheets, and our financial commitments.
|
EXECUTIVE OVERVIEW
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
26
|
|
About Intuit
|
Small Business & Self-Employed: This segment targets small businesses and the self-employed around the world, and the accounting professionals who serve and advise them. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, merchant payment processing solutions, and financing for small businesses.
Consumer: This segment targets consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Our Mint and Turbo offerings target consumers and help them understand and improve their financial lives by offering a view of their financial health.
Strategic Partner: This segment targets professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, ProFile, and ProConnect Tax Online.
|
Our Growth Strategy
|
At Intuit, our strategy starts with a focus on our customers. We listen to our customers, understand their challenges, and then use technology to develop innovative solutions designed to solve their problems and help them prosper. For more than three decades, we have reinvented and disrupted ourselves to better serve our customers, as we continue to transform to a global platform and product company. Our assessment of external trends – the emergence and influence of the digital generation, and the growth in the self-employed workforce – reveals significant opportunities to drive future growth. The result is a global market that is shifting from traditional services that are manual in nature to more automated, interconnected services that work on platforms and increasingly rely on artificial intelligence and machine learning.
Our strategy is built on the strength of our One Intuit Ecosystem, designed to unlock the power of many for the prosperity of each and every participant. Our evolving strategy focuses on three elements:
|
• Personalized experiences: With customer provided data and the use of artificial intelligence and machine learning, we can create increasingly valuable personalized and easy to use experiences that delight and serve our customers. For example, our TurboTax solutions use machine learning to create a customized interview, asking questions uniquely tailored to each individual situation. By delivering an amazing end-to-end experience, we offer customers the value they expect from our offerings as quickly and easily as possible.
• Trusted open platform: Our open platform allows our customers to use and share their financial data with us and third party partners to help improve their financial lives. One example of this is our QuickBooks open platform, where small businesses and accountants can install apps created by third-party developers to enhance the functionality and personalization of the QuickBooks experience.
• Indispensable connections: Within our One Intuit Ecosystem, we strive to build connections between customers, partners, and products on our platform. For example, our TurboTax Live offering connects our TurboTax customers with tax experts. Additionally, QuickBooks offers a match-making service that connects small businesses with accountants, helping small businesses succeed and accountants grow their practices.
|
As part of our strategy, we also develop relationships with strategic partners that enable us to serve consumers, the self-employed and small businesses globally. Strategic partners include financial institutions, enterprise platforms, educational institutions and accountants, and our strategy allows us to co-create indispensable connections by sharing expertise, product integrations, and new solutions to solve more customer problems.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
27
|
|
Industry Trends and Seasonality
|
Key Challenges and Risks
|
Overview of Financial Results
|
|
|
|
|
|
Revenue of
|
|
Small Business & Self-Employed revenue of
|
|
Cash, cash equivalents, and investments of
|
$2.5 B
|
|
$1.7 B
|
|
$1.3 B
|
up 12% from the same period of fiscal 2018
|
|
up 14% from same period of fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
28
|
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
RESULTS OF OPERATIONS
|
Financial Overview
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Dollars in millions, except per share amounts)
|
Q2
FY19 |
|
Q2
FY18 |
|
$
Change
|
|
%
Change
|
|
YTD
Q2 FY19 |
|
YTD
Q2 FY18 |
|
$
Change
|
|
%
Change
|
||||||||||||||
Total net revenue
|
$
|
1,502
|
|
|
$
|
1,339
|
|
|
$
|
163
|
|
|
12
|
%
|
|
$
|
2,518
|
|
|
$
|
2,249
|
|
|
$
|
269
|
|
|
12
|
%
|
Operating income
|
233
|
|
|
194
|
|
|
39
|
|
|
20
|
%
|
|
223
|
|
|
159
|
|
|
64
|
|
|
40
|
%
|
||||||
Net income
|
189
|
|
|
183
|
|
|
6
|
|
|
3
|
%
|
|
223
|
|
|
181
|
|
|
42
|
|
|
23
|
%
|
||||||
Diluted net income per share
|
$
|
0.72
|
|
|
$
|
0.70
|
|
|
$
|
0.02
|
|
|
3
|
%
|
|
$
|
0.84
|
|
|
$
|
0.70
|
|
|
$
|
0.14
|
|
|
20
|
%
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
29
|
|
Segment Results
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
30
|
|
Small Business & Self-Employed
|
|
(Dollars in millions)
|
Q2
FY19 |
|
Q2
FY18 |
|
%
Change
|
|
YTD
Q2 FY19 |
|
YTD
Q2 FY18 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
231
|
|
|
$
|
223
|
|
|
4
|
%
|
|
$
|
560
|
|
|
$
|
577
|
|
|
(3
|
)%
|
Service and other revenue
|
602
|
|
|
490
|
|
|
23
|
%
|
|
1,181
|
|
|
955
|
|
|
24
|
%
|
||||
Total segment revenue
|
$
|
833
|
|
|
$
|
713
|
|
|
17
|
%
|
|
$
|
1,741
|
|
|
$
|
1,532
|
|
|
14
|
%
|
% of total revenue
|
55
|
%
|
|
53
|
%
|
|
|
|
69
|
%
|
|
68
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
320
|
|
|
$
|
258
|
|
|
24
|
%
|
|
$
|
780
|
|
|
$
|
682
|
|
|
14
|
%
|
% of related revenue
|
38
|
%
|
|
36
|
%
|
|
|
|
45
|
%
|
|
45
|
%
|
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
31
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
32
|
|
Consumer
|
|
(Dollars in millions)
|
Q2
FY19 |
|
Q2
FY18 |
|
%
Change
|
|
YTD
Q2 FY19 |
|
YTD
Q2 FY18 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
98
|
|
|
$
|
100
|
|
|
(2
|
)%
|
|
$
|
104
|
|
|
$
|
105
|
|
|
(1
|
)%
|
Service and other revenue
|
363
|
|
|
316
|
|
|
15
|
%
|
|
447
|
|
|
385
|
|
|
16
|
%
|
||||
Total segment revenue
|
$
|
461
|
|
|
$
|
416
|
|
|
11
|
%
|
|
$
|
551
|
|
|
$
|
490
|
|
|
12
|
%
|
% of total revenue
|
31
|
%
|
|
31
|
%
|
|
|
|
22
|
%
|
|
22
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
164
|
|
|
$
|
151
|
|
|
9
|
%
|
|
$
|
123
|
|
|
$
|
92
|
|
|
34
|
%
|
% of related revenue
|
36
|
%
|
|
36
|
%
|
|
|
|
22
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
33
|
|
Strategic Partner
|
|
(Dollars in millions)
|
Q2
FY19 |
|
Q2
FY18 |
|
%
Change
|
|
YTD
Q2 FY19 |
|
YTD
Q2 FY18 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
204
|
|
|
$
|
206
|
|
|
(1
|
)%
|
|
$
|
216
|
|
|
$
|
217
|
|
|
—
|
%
|
Service and other revenue
|
4
|
|
|
4
|
|
|
—
|
%
|
|
10
|
|
|
10
|
|
|
—
|
%
|
||||
Total segment revenue
|
$
|
208
|
|
|
$
|
210
|
|
|
(1
|
)%
|
|
$
|
226
|
|
|
$
|
227
|
|
|
—
|
%
|
% of total revenue
|
14
|
%
|
|
16
|
%
|
|
|
|
9
|
%
|
|
10
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
166
|
|
|
$
|
164
|
|
|
1
|
%
|
|
$
|
146
|
|
|
$
|
139
|
|
|
5
|
%
|
% of related revenue
|
80
|
%
|
|
78
|
%
|
|
|
|
65
|
%
|
|
61
|
%
|
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
34
|
|
Cost of Revenue
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(Dollars in millions)
|
Q2
FY19 |
|
% of
Related
Revenue
|
|
Q2
FY18 |
|
% of
Related
Revenue
|
|
YTD
Q2 FY19 |
|
% of
Related
Revenue
|
|
YTD
Q2 FY18 |
|
% of
Related
Revenue
|
||||||||||||
Cost of product revenue
|
$
|
26
|
|
|
5
|
%
|
|
$
|
27
|
|
|
5
|
%
|
|
$
|
41
|
|
|
5
|
%
|
|
$
|
45
|
|
|
5
|
%
|
Cost of service and other revenue
|
254
|
|
|
26
|
%
|
|
216
|
|
|
27
|
%
|
|
481
|
|
|
29
|
%
|
|
394
|
|
|
29
|
%
|
||||
Amortization of acquired technology
|
5
|
|
|
n/a
|
|
|
3
|
|
|
n/a
|
|
|
10
|
|
|
n/a
|
|
|
5
|
|
|
n/a
|
|
||||
Total cost of revenue
|
$
|
285
|
|
|
19
|
%
|
|
$
|
246
|
|
|
18
|
%
|
|
$
|
532
|
|
|
21
|
%
|
|
$
|
444
|
|
|
20
|
%
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(Dollars in millions)
|
Q2
FY19 |
|
% of
Total
Net
Revenue
|
|
Q2
FY18 |
|
% of
Total
Net
Revenue
|
|
YTD
Q2 FY19 |
|
% of
Total
Net
Revenue
|
|
YTD
Q2 FY18 |
|
% of
Total
Net
Revenue
|
||||||||||||
Selling and marketing
|
$
|
548
|
|
|
37
|
%
|
|
$
|
469
|
|
|
35
|
%
|
|
$
|
894
|
|
|
36
|
%
|
|
$
|
777
|
|
|
34
|
%
|
Research and development
|
295
|
|
|
20
|
%
|
|
286
|
|
|
21
|
%
|
|
589
|
|
|
23
|
%
|
|
579
|
|
|
26
|
%
|
||||
General and administrative
|
140
|
|
|
9
|
%
|
|
143
|
|
|
11
|
%
|
|
277
|
|
|
11
|
%
|
|
288
|
|
|
13
|
%
|
||||
Amortization of other acquired intangible assets
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
3
|
|
|
—
|
%
|
|
2
|
|
|
—
|
%
|
||||
Total operating expenses
|
$
|
984
|
|
|
66
|
%
|
|
$
|
899
|
|
|
67
|
%
|
|
$
|
1,763
|
|
|
70
|
%
|
|
$
|
1,646
|
|
|
73
|
%
|
Non-Operating Income and Expenses
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
35
|
|
(In millions)
|
Q2
FY19 |
|
Q2
FY18 |
|
YTD
Q2 FY19 |
|
YTD
Q2 FY18 |
||||||||
Interest income
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
13
|
|
|
$
|
4
|
|
Net gain (loss) on executive deferred compensation plan assets (1)
|
1
|
|
|
5
|
|
|
(3
|
)
|
|
7
|
|
||||
Other
|
(1
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(3
|
)
|
||||
Total interest and other income, net
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
8
|
|
(1)
|
In accordance with authoritative guidance, we record gains and losses associated with executive deferred compensation plan assets in interest and other income and gains and losses associated with the related liabilities in operating expenses. The total amounts recorded in operating expenses for each period are approximately equal to the total amounts recorded in interest and other income in those periods.
|
LIQUIDITY AND CAPITAL RESOURCES
|
Overview
|
(Dollars in millions)
|
January 31,
2019 |
|
July 31,
2018 |
|
$
Change
|
|
%
Change
|
|||||||
Cash, cash equivalents, and investments
|
$
|
1,333
|
|
|
$
|
1,716
|
|
|
$
|
(383
|
)
|
|
(22
|
)%
|
Long-term investments
|
13
|
|
|
13
|
|
|
—
|
|
|
—
|
%
|
|||
Short-term debt
|
50
|
|
|
50
|
|
|
—
|
|
|
—
|
%
|
|||
Long-term debt
|
363
|
|
|
388
|
|
|
(25
|
)
|
|
(6
|
)%
|
|||
Working capital
|
643
|
|
|
679
|
|
|
(36
|
)
|
|
(5
|
)%
|
|||
Ratio of current assets to current liabilities
|
1.3 : 1
|
|
|
1.4 : 1
|
|
|
|
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
36
|
|
Statements of Cash Flows
|
|
Six Months Ended
|
||||||||||
(Dollars in millions)
|
January 31,
2019 |
|
January 31,
2018 |
|
$
Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
198
|
|
|
$
|
174
|
|
|
$
|
24
|
|
Investing activities
|
(41
|
)
|
|
(436
|
)
|
|
395
|
|
|||
Financing activities
|
(477
|
)
|
|
258
|
|
|
(735
|
)
|
|||
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(2
|
)
|
|
3
|
|
|
(5
|
)
|
|||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
$
|
(322
|
)
|
|
$
|
(1
|
)
|
|
$
|
(321
|
)
|
Our primary sources and uses of cash were as follows:
|
||
Six Months Ended
|
||
January 31, 2019
|
|
January 31, 2018
|
Sources of cash:
• Operations
• Issuance of common stock under employee stock plans
Uses of cash:
• Payment of accrued bonuses for fiscal 2018
• Repurchases of shares of our common stock
• Payment of cash dividends and dividend rights
• Capital expenditures
• Net originations of term loans to small businesses
• Repayment of debt
|
|
Sources of cash:
• Operations
• Borrowings under revolving credit facility
• Issuance of common stock under employee stock plans
Uses of cash:
• Acquisitions of businesses
• Payment of accrued bonuses for fiscal 2017
• Repurchases of shares of our common stock
• Payment of cash dividends and dividend rights
• Capital expenditures
• Repayment of debt
|
Stock Repurchase Programs, Treasury Shares, and Dividends on Common Stock
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
37
|
|
Credit Facilities
|
Cash Held by Foreign Subsidiaries
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
38
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
39
|
|
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
40
|
|
ITEM 4 - CONTROLS AND PROCEDURES
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
41
|
|
PART II - OTHER INFORMATION
|
ITEM 1 - LEGAL PROCEEDINGS
|
ITEM 1A - RISK FACTORS
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
42
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
43
|
|
•
|
inability to successfully integrate the acquired technology, data assets and operations into our business and maintain uniform standards, controls, policies, and procedures;
|
•
|
inability to realize synergies expected to result from an acquisition;
|
•
|
disruption of our ongoing business and distraction of management;
|
•
|
challenges retaining the key employees, customers, resellers and other business partners of the acquired operation;
|
•
|
the internal control environment of an acquired entity may not be consistent with our standards or with regulatory requirements, and may require significant time and resources to align or rectify;
|
•
|
unidentified issues not discovered in our due diligence process, including product or service quality issues, intellectual property issues and legal contingencies;
|
•
|
failure to successfully further develop an acquired business or technology and any resulting impairment of amounts currently capitalized as intangible assets;
|
•
|
risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; and
|
•
|
in the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries.
|
•
|
inability to find potential buyers on favorable terms;
|
•
|
failure to effectively transfer liabilities, contracts, facilities and employees to buyers;
|
•
|
requirements that we retain or indemnify buyers against certain liabilities and obligations;
|
•
|
the possibility that we will become subject to third-party claims arising out of such divestiture;
|
•
|
challenges in identifying and separating the intellectual property and data to be divested from the intellectual property and data that we wish to retain;
|
•
|
inability to reduce fixed costs previously associated with the divested assets or business;
|
•
|
challenges in collecting the proceeds from any divestiture;
|
•
|
disruption of our ongoing business and distraction of management;
|
•
|
loss of key employees who leave the Company as a result of a divestiture; and
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
44
|
|
•
|
if customers or partners of the divested business do not receive the same level of service from the new owners, our other businesses may be adversely affected, to the extent that these customers or partners also purchase other products offered by us or otherwise conduct business with our retained business.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
45
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
46
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
47
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
48
|
|
•
|
different or more restrictive privacy, data protection, data localization, and other laws that could require us to make changes to our products, services and operations, such as mandating that certain types of data collected in a particular country be stored and/or processed within that country;
|
•
|
difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural differences;
|
•
|
stringent local labor laws and regulations;
|
•
|
credit risk and higher levels of payment fraud;
|
•
|
profit repatriation restrictions, and foreign currency exchange restrictions;
|
•
|
geopolitical events, including natural disasters, acts of war and terrorism;
|
•
|
import or export regulations;
|
•
|
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to government officials;
|
•
|
antitrust and competition regulations;
|
•
|
potentially adverse tax developments;
|
•
|
economic uncertainties relating to European sovereign and other debt;
|
•
|
trade barriers and changes in trade regulations;
|
•
|
political or social unrest, economic instability, repression, or human rights issues; and
|
•
|
risks related to other government regulation or required compliance with local laws.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
49
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
50
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
51
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
52
|
|
•
|
increasing our vulnerability to downturns in our business, to competitive pressures and to adverse economic and industry conditions;
|
•
|
requiring the dedication of a portion of our expected cash from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our businesses and our industries.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
53
|
|
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares Purchased as Part of Publicly Announced
Plans
|
|
Approximate
Dollar Value of Shares That May Yet Be Purchased Under
the Plans
|
||||||
November 1, 2018 through November 30, 2018
|
|
266,800
|
|
|
$
|
205.78
|
|
|
266,800
|
|
|
$
|
3,093,241,327
|
|
December 1, 2018 through December 31, 2018
|
|
331,200
|
|
|
$
|
196.94
|
|
|
331,200
|
|
|
$
|
3,028,013,863
|
|
January 1, 2019 through January 31, 2019
|
|
277,200
|
|
|
$
|
203.79
|
|
|
277,200
|
|
|
$
|
2,971,522,678
|
|
Total
|
|
875,200
|
|
|
$
|
201.81
|
|
|
875,200
|
|
|
|
ITEM 6 - EXHIBITS
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
54
|
|
SIGNATURES
|
|
|
INTUIT INC.
(Registrant)
|
|
||
Date:
|
February 22, 2019
|
By:
|
/s/ MICHELLE M. CLATTERBUCK
|
|
|
|
|
|
Michelle M. Clatterbuck
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
55
|
|
EXHIBIT INDEX
|
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Incorporated by
Reference
|
|
|
|
|
|
|
|
10.01
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
10.02
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
10.03
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
31.01
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
31.02
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
32.01*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
32.02*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
X
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
X
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
X
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
X
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
X
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
X
|
|
|
*
|
This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Intuit Q2 Fiscal 2019 Form 10-Q
|
56
|
|
(a)
|
Purchased Restricted Stock Units. On the date that amounts subject to a Bonus Deferral Commitment hereunder would otherwise become payable (the “Purchase Date”), the Company shall withhold such payment and instead award to the Participant on the Purchase Date pursuant to Sections 7 and 8 of the Plan Restricted Stock Units (“Purchased RSUs”) covering a number of Shares having an aggregate Fair Market Value on the Purchase Date equal to the amount of the Bonus Compensation elected to be deferred (rounded down to the nearest whole Share).
|
(b)
|
Matching Restricted Stock Units. In addition to the Purchased RSUs and subject to the limitations set forth in Section 4.3(c) of this MSPP, on the Purchase Date, the Company shall also award to the Participant pursuant to the Plan Restricted Stock Units (“Matching RSUs”) covering a number of Shares equal to the number of Shares subject to the Purchased RSUs awarded to the Participant on the Purchase Date pursuant to Section 4.2(a) of this MSPP.
|
(c)
|
Vesting. Unless otherwise provided for in the terms of an Award Agreement, all Purchased RSUs shall be fully vested as of the applicable Purchase Date. Matching RSUs shall vest as described in the applicable Award Agreement. All other terms and conditions of the Purchased RSUs and the Matching RSUs shall be set forth either in an applicable Award Agreement or in the Plan.
|
(d)
|
Employment Required. Notwithstanding anything herein to the contrary, a Participant must be employed by the Company on the Purchase Date in order to receive an award of Restricted Stock Units under the MSPP.
|
(a)
|
Minimum and Maximum Deferral. The deferral amount for a Bonus Deferral Commitment must be between five percent (5%) and fifteen percent (15%) of any such Bonus Compensation to be paid or payable during the Deferral Period.
|
(b)
|
Maximum Match. In addition to the limit set forth in Section 4.3(a) above, the maximum number of Shares that may be subject to Matching RSUs that may be issued to a Participant in respect of Purchased RSUs purchased in any one calendar year shall be as follows (in each case, based on the Participant’s position on the applicable Purchase Date):
|
(1)
|
if the Participant is employed on the Purchase Date at the Director level, 300 Shares;
|
(2)
|
if the Participant is employed on the Purchase Date at the Vice President level, 750 Shares;
|
(3)
|
if the Participant is employed on the Purchase Date at the Senior Vice President level or above (other than the Company’s Chief Executive Officer), 1,500 Shares;
|
(4)
|
if the Participant is employed on the Purchase Date as the Executive Chairman of the Company’s Board of Directors, 2,500 Shares;
|
(5)
|
if the Participant is employed on the Purchase Date as the Company’s Chief Executive Officer, 3,000 Shares; and
|
(c)
|
Changes in Limits. The Committee may amend the MSPP to change the maximum limits set forth in this Section 4.3 (or implement new minimum or maximum limits) from time to time by giving written notice to all Participants. No such change may affect a Bonus Deferral Commitment made prior to the Committee’s action unless otherwise required by law.
|
(a)
|
Within sixty (60) days after receipt of the notice of the denial of a claim, such claimant or duly authorized representative may request, by mailing or delivery of such written notice to the Committee, a reconsideration by the Committee of the decision denying the claim. If the claimant or duly authorized representative fails to request such a reconsideration within such sixty (60) day period, it shall be conclusively determined for all purposes of the MSPP that the denial of such claim by the Committee is correct. If such claimant or duly authorized representative requests a reconsideration within such sixty (60) day period, the claimant or duly authorized representative shall have thirty (30) days after filing a request for reconsideration to submit additional written material in support of the claim, review pertinent documents, and submit issues and comments in writing.
|
(b)
|
After such reconsideration request, the Committee shall determine within sixty (60) days of receipt of the claimant’s request for reconsideration whether such denial of the claim was correct and shall notify such claimant in writing of its determination. The written notice of the Committee’s decision shall be in writing and shall include specific reasons for the decision, shall be written in a manner reasonably calculated to be understood by the claimant, and shall identify specific references to the pertinent Plan provisions on which the decision is based. In the event of special circumstances determined by the Committee, the time for the Committee to make a decision may be extended by an additional sixty (60) days upon written notice to the claimant prior to the commencement of the extension.
|
Number of Shares:
|
***
|
2.
|
Automatic Deferral; Issuance of Shares under this Award:
|
(a)
|
Following a Vesting Date, and subject to Section 4 of the Agreement, the Company will issue you the Shares that became vested on such Vesting Date as soon as reasonably possible after the earliest of (i) the date that is one year following the applicable Vesting Date, (ii) the date of your death or termination of employment on account of Disability, or (iii) the occurrence of a Corporate Transaction that is a 409A Change in Control (as defined below). In the event that the 409A Change in Control precedes such Vesting Date, the Company will issue you the Shares that become vested on such Vesting Date as soon as reasonably possible following such Vesting Date. For avoidance of doubt, the occurrence of a Corporate Transaction that is not a 409A Change in Control will not trigger the issuance of Shares prior to the date that is one year following the applicable Vesting Date.
|
(b)
|
Upon the occurrence of an event described in Sections 1(b), 1(c) or 1(d), any Shares that become vested on account of the application of Sections 1(b), 1(c) or 1(d) will be issued to you by the Company as soon as reasonably possible after the occurrence thereof. In addition, upon the occurrence of an event described in Sections 1(b), 1(c) or 1(d) after a Vesting Date, any Shares that previously became vested on account of the occurrence of such Vesting Date but have not yet been issued to you shall be issued by the Company as soon as reasonably possible after the occurrence of the event described in Section 1(b), 1(c) or 1(d), but in any event in compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including the provisions of Section 6(j) below.
|
(c)
|
A “409A Change in Control” shall mean a “change in the ownership or effective control” of the Company or “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Treasury Regulations §§1.409A-3(a)(5) and 1.409A-3(i).
|
(d)
|
For purposes of this Award, each date on which the shares are issued to you in respect of the Award is referred to as a “Settlement Date.” Until the date the Shares are issued to you, you will have no rights as a stockholder of the Company. You acknowledge and agree that you may be required to provide a written or electronic acknowledgement prior to the issuance of any Shares to you by the Company under this Agreement. All issuances of Shares will be subject to the requirements of Section 409A of the Code.
|
(e)
|
Notwithstanding the foregoing, upon your Termination by the Company for Cause (as defined below), any portion of the Award that has not been previously settled will terminate, be forfeited, and you will have no further right or claim to anything under this Award. “Cause” means, for purposes of this Agreement, (i) gross negligence or willful misconduct in the performance of your duties to the Company (other than as a result of a Disability) that has resulted or is likely to result in material damage to the Company, after a written demand for substantial performance is delivered to you by the Board of Directors which specifically identifies the manner in which you have not substantially performed your duties and you have been provided with a reasonable opportunity of not less than 30 days to cure any alleged gross negligence or willful misconduct; (ii) commission of any act of fraud with respect to the Company; or (iii) conviction of a felony or a crime involving moral turpitude. No act or failure to act by you will be considered “willful” if done or omitted by you in good faith with reasonable belief that your action or omission was in the best interests of the Company. If the term “Cause” is defined in a separate agreement between you and the Company setting forth the terms of your employment relationship with the Company, that definition of “Cause” shall apply in lieu of the definition set forth in this Section 2(e).
|
3.
|
Rights as a Stockholder; Dividend Equivalent Rights: You shall have no voting or other rights as a stockholder with respect to the Shares underlying the Award until such Shares have been issued to you. Notwithstanding the preceding sentence, you shall be entitled to receive payment of the equivalent of any and all dividends declared by the Company on its Common Stock on each date on which dividends are paid on and after the Date of Grant of the Award in an amount equal to the amount of such dividends multiplied by the number of Shares underlying the then outstanding portion of the Award. These dividend equivalents shall be paid upon the later of (a) the date dividends are paid to the common stockholders of the Company, or (b) the date the Restricted Stock Units with respect to which such dividend equivalents are payable become vested and the underlying Shares are issued (it being understood that no dividend equivalents will be
|
4.
|
Withholding Taxes: If you are subject to United States federal income and employment taxes, this Award is generally taxable upon a Settlement Date based on the Fair Market Value on such date; provided that this Award may become taxable for purposes of employment taxes upon vesting, if earlier than a Settlement Date. For further detail, and for information regarding taxation in other jurisdictions, you should refer to the Global Supplement, which is an attachment to and is incorporated by reference into this Agreement. To the extent required by applicable law, you shall make arrangements satisfactory to the Company for the payment and satisfaction of any income tax, employment tax, social security tax, social insurance, payroll tax, contributions, payment on account or other withholding obligations that arise under this Award and, if applicable, any sale of Shares. The Company shall not be required to issue Shares pursuant to this Award or to recognize any purported transfer of Shares until such obligations are satisfied. Subject to the Company’s discretion and in compliance with applicable laws, these obligations may be satisfied by the Company withholding a number of Shares that would otherwise be issued under this Award that the Company determines has a Fair Market Value sufficient to meet the tax withholding obligations (determined using a rate of up to the maximum statutory rate in the applicable jurisdictions), including but not limited to withholding with respect to income and/or employment taxes on this Award, including any stock-settled dividend equivalent rights paid with respect to any Shares underlying this Award. Subject to the Company’s discretion and in compliance with applicable laws, these obligations may also be satisfied by other methods including, but not limited to: (a) through a “same day sale” commitment from you and a FINRA Dealer meeting the requirements of the Company’s “same day sale” procedures, (b) having the Company withhold amounts from amounts otherwise payable to you under the Company’s payroll system, and (c) any other methods approved by the Company. Notwithstanding the foregoing, since you are a Section 16 Officer of the Company, unless otherwise agreed to by the Company and you, these obligations will be satisfied by the Company withholding a number of Shares that would otherwise be issued under this Award that the Company determines has a Fair Market Value sufficient to meet the tax withholding obligations (determined as the minimum statutory rate in the applicable jurisdictions), including but not limited to withholding with respect to income and/or employment taxes on this Award, including any stock-settled dividend equivalent rights paid with respect to any Shares underlying this Award. For purposes of this Award, “Fair Market Value” is defined in Section 30(m) of the Plan.
|
5.
|
Disputes: Any question concerning the interpretation of this Agreement, any adjustments to be made thereunder, and any controversy that may arise under this Agreement, shall be determined by the Committee in accordance with its authority under Section 4 of the Plan. Such decision by the Committee shall be final and binding.
|
6.
|
Other Matters:
|
(a)
|
The Award granted to an employee in any one year, or at any time, does not obligate the Company or any Subsidiary or other affiliate of the Company to grant an award in any future year or in any given amount and should not create an expectation that the Company (or any Subsidiary or other affiliate) might grant an award in any future year or in any given amount. Decisions regarding any future grants of an award, if any, will be at the sole discretion of the Committee.
|
(b)
|
As the grant of the Award is discretionary, the grant does not form part of your contract of employment. If you are employed by any Company in the group other than the Company, the grant of the Award will not form a contractual relationship between you and the Company and will not form part of your contract of employment with the Subsidiary which employs you.
|
(c)
|
Notwithstanding anything to the contrary in this Agreement, if you change classification from a full-time employee to a part-time employee, the Company may make unilateral changes to the terms and conditions of this Award, including reducing the number of Shares subject to this Award, in accordance with Company policy.
|
(d)
|
This Award is an extraordinary item that does not constitute compensation for services that you have rendered to the Company or any Subsidiaries (including, as applicable, your employer). Further, this Award is not part of normal or expected compensation or salary for any purpose including, but not limited to, calculating any severance, resignation, termination, payment in lieu of notice, redundancy, end of service payments, bonuses long-service awards, pension or retirement benefits or similar payments.
|
(e)
|
Your participation in the Plan is voluntary. The Company, and its officers or directors, do not guarantee or make any representation to you regarding the performance of the Common Stock. The future value of the Common Stock is unknown and cannot be predicted with any certainty.
|
(f)
|
Because this Agreement relates to terms and conditions under which you may be issued Shares and the Company is a Delaware corporation, an essential term of this Agreement is that it shall be governed by the laws of the State of Delaware, without regard to choice of law principles of Delaware or other jurisdictions. You acknowledge and agree that any action, suit, or proceeding relating to this Agreement or the Award granted hereunder shall be brought in the state or federal courts of competent jurisdiction in Santa Clara County in the State of California.
|
(g)
|
Communications regarding the Plan and this Award may be made by electronic delivery through an online or electronic system established and maintained by the Company or a third party designated by the Company. You hereby acknowledge that you have read this provision and consent to the electronic delivery of the documents.
|
(h)
|
You hereby understand and acknowledge that your personal data may be collected, used and transferred, in electronic or other form, by and among, as applicable, your employer, the Company and its Subsidiaries for the purposes of implementing, administering and managing the Plan. This may include personal data regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, your name, gender, home address, email address and telephone number, date of birth, tax file number, social security number or other identification number, salary, tax information, nationality, job title, any shares of stock or directorships held in the Company and its Subsidiaries, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor and other personal data reasonably required for the purpose of implementing, administering and managing the Plan (the “Data”). For more information about your employer’s collection and processing of your Data for this purpose, please see Intuit’s Global Employee Privacy Policy, which can be found on the Company’s Intranet or by contacting your local human resources representative.
|
(i)
|
Data Transfer for Administration of Plan.
|
(i)
|
You understand that certain Data may be transferred to the stock administrator, whose name and contact information can be found on the Company’s Intranet (the “Stock Administrator”) and other third parties as necessary to enable or assist with the implementation, administration and management of the Plan. You understand that such recipients may act as independent Data Controllers of your Data under applicable privacy laws and in such cases the third party will be responsible for the processing of the Data once it is in their possession or control. You acknowledge that such third parties may process your Data in the United States or in other countries with different, and in some cases less protective, data protection laws than in your country. You acknowledge and understand that, where any such third party is operating as a Data Controller, that third party may collect additional Data from you in order to implement, administer and manage the Plan, and that third party’s privacy policy will govern its collection, use and sharing of your Data.
|
(ii)
|
You acknowledge and understand that where any such third party is acting as an independent Data Controller, you will need to exercise your data rights under local law, as applicable, with the third party Data Controller directly.
|
(j)
|
This Agreement, and any issuance of Shares hereunder, is intended to comply and shall be interpreted in accordance with Section 409A of the Code. Upon your Separation from Service, the Company shall determine whether any Shares issued to you in accordance with this Agreement could be determined to be payments from a nonqualified deferred compensation plan and whether you are a “specified employee” as of the applicable payment date (each as defined by Section 409A of the Code). If you are determined to be a “specified employee” and any such payments are payable in connection with your Separation from Service, and are not exempt from Section 409A of the Code as a short-term deferral or otherwise, these payments, to the extent otherwise payable within six (6) months after your date of Separation from Service, will be paid in a lump sum on the earlier of: (i) the date that is six (6) months after your date of Separation from Service or (ii) the date of your death. The
|
7.
|
Miscellaneous: This Agreement (including the Plan, which is incorporated herein by reference) constitutes the entire agreement between you and the Company with respect to this Award, and supersedes all prior agreements or promises with respect to the Award. Except as provided in the Plan, this Agreement may be amended only by a written document signed by the Company and you. Subject to the terms of the Plan, the Company may assign any of its rights and obligations under this Agreement, and this Agreement shall be binding on, and inure to the benefit of, the successors and assigns of the Company. Subject to the restrictions on transfer of an Award described in Section 14 of the Plan, this Agreement shall be binding on your permitted successors and assigns (including heirs, executors, administrators and legal representatives). All notices required under this Agreement or the Plan must be mailed or hand-delivered, (1) in the case of the Company, to the Company, attn.: Stock Administration at 2535 Garcia Ave., Mountain View, CA 94043, or at such other address designated in writing by the Company to you, and (2) in the case of you, at the address recorded in the books and records of the Company as your then current home address. You acknowledge and agree that any such notices from the Company to you may also be delivered through the Company’s electronic mail system (prior to your Termination Date) or at the last email address you provided to the Company (after your Termination Date).
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|