Intuit Investor Presentation. March 2013

Transcription

1 Intuit Investor Presentation March 2013

2 Forward Looking Statements These presentation materials include forward-looking statements. There are a number of factors that could cause our results to differ materially from our expectations. Please see the section entitled Cautions About Forward- Looking Statements in the enclosed Appendix for information regarding forward-looking statements and related risks and uncertainties. You can also learn more about these risks in our Form 10-K for fiscal 2012 and our other SEC filings, which are available on the Investor Relations page of Intuit's website at We assume no obligation to update any forward-looking statement. Non-GAAP Financial Measures These presentations include certain non-gaap financial measures. Please see the section entitled About Non-GAAP Financial Measures in the enclosed Appendix for an explanation of management s use of these measures and a reconciliation to the most directly comparable GAAP financial measures.

3 Our Mission: why we exist as a company To improve our customers financial lives so profoundly they can t imagine going back to the old way We serve these end customers Consumers Small Businesses and those who serve them Accountants Financial Institutions Healthcare 3rd Party Contributors Players Better Money Outcomes Financial making & saving money, grow & profit Productivity turning drudgery into time for what matters most Compliance without even having to think about it Confidence from the wisdom & experience of others

4 What has resulted: strong, growing businesses Category Definitions Category Size, Growth & Position Customer Behavior by Market # of prospects/customers (units) Intuit NP vs. Closest Comp. (+/-) Fin. Mgmt 29M SMBs Payroll 6M SMBs Payments 29M SMBs ProTax 400K Accts Cons. Tax 146M returns $2.5B 7% CAGR #1 $4.4B 2% CAGR #1 $12B 5% CAGR #6 $1.9B 4% CAGR #1 $1.8B 5% CAGR #1 Manual/ Non-Cons. Category Competitors Non-Category Competitors +19 Desktop +30 Desktop +11 QBMAS -13 Desktop +17 Desktop +15 Online +24 Online +1 Mobile +1 Online Digital Bank 250M txn accts $9B 5% CAGR #2 +6 Financial Institutions +18 End Customers

5 Accelerating to Connected Services Intuit s Strategy: how we accelerate results To be a premier innovative growth company Intuit s Growth Strategies FY Operational Priorities Delivering Awesome Product Experiences Amazing 1 st Use Experiences: delivering the customer benefit Reimagining Mobile 1 st / Mobile Only: design and capabilities Enabling the Contributions g of Others- Network Effect Platforms Solving Multi-Sided Problems Well: creating a virtuous circle Expanding Globally: platforms localized by users and developers Using Data to Create Delight Enabling Customer Data: better products & break-through benefits

6 Small Business Group

7 SBG Vision and Offerings We improve the bottom line of small businesses by >20% Get and keep customers Manage finances Make/Accept payments Hire/Manage employees Intuit Full Service Payroll

8 SMB Market is Big and Growing 29M SMBs in the US 500M SMBs Globally $60B in US SMB Spend in Target Markets +12% +15% Growth Rate Current SMB Spend ($B) +7% $3.3 +5% $12.0 $21.0 $24.0 Acquire Customers segment growing fast Non-Consumption is biggest opportunity FMS Payments EMS Acquire Customers

9 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 The New Opportunity Our Enduring 2M Company Files in the Intuit Cloud Assets + = Our Emerging Assets 2M 5M SMBs 100K Developers 250K Accountants 1.2M Payroll SMBs >90% Retail Share 360K Payments SMBs 133K ~2B Invoices ~1.5B Bills Paid 1.6B Vendors 4.2B Customers 30M Employees $2T in Commerce

10 Continue to grow attach Lifetime Value of QBO exceeds desktop Penetrating QuickBooks ecosystem remains key Software Ecosystem Attach $978 $409 $382 $ Yr 5 Yr 1 Yr 5 Yr QB Pro QB Online $5B attach opportunity remains $1.1B Payroll Attach Opportunity Attach Opportunity Current Attach Use data for in product discovery Desktop 29% 17% Online $4B Payments Attach Opportunity Attach Opportunity Current Attach Payments as a QB Feature 5% 6% Desktop Online

11 Extending the Core: Demandforce Helping SMBs thrive in an evolving & increasingly complex, connected world Automated marketing & communications solutions Effortless Communication Use , text, social and search to grow your business and keep customers coming back Online Reputation Build, maintain and leverage your most valuable asset a good online reputation Value proposition based on generating 3x ROI each month Demandforce Network Increase exposure to your local community and maximize results

12 What: We solve small business payments needs QuickBooks Payments Retail Payments Mobile Payments Get paid anywhere, with any payment type, on any device

13 Consumer Tax

14 Lots of room for long-term growth Pros ~146M ~$20B Tax Stores Software Manual Est. FY12 Returns (Intuit Estimate) Revenue (Intuit Estimate) TurboTax has just 21% of Total Tax Returns, 7% of Revenue

15 Strategically positioned in the sweet spot Price Net Promoter 5 yr CAGR Pro / CPA $ % ~5M filers enter Franchise/Tax Store $ % Software $46* 38 7% Manual $ % FY08 FY09 FY10 FY11 FY12 ~3.5M filers exit * Software $ represents TurboTax estimated average revenue per return. Source: Intuit estimates, surveys

16 Manual is not our largest customer source Sources of FY TurboTax customers Retention of existing customers Competitive prep methods Manual New filer

17 Opportunity: reacquire & retain customers 70M+ unique visitors to TT.com ~35M unique customers over last 3 years Customer gains and losses FY10 FY11 FY12 FY10 FY11 FY12 Acquisition 1 pt conversion = $40M and 720k customers 1 pt retention= $14M and 250k customers FY10 FY11 FY12 Attrition

18 Long-term business model Growth Rate Averages: FY 09-FY 12 Long Term View Individual Federal Returns <1%/yr 1-2% TurboTax Revenue Growth ~12%/yr 8-12% SW Category ~6%/yr 4-6% TurboTax SW Share ~3%/yr 1-2% FY 13 Revenue Growth Guidance = 8% to 10% Source: Intuit estimates

19 Financial Overview

20 Financial Principles We are striving for one True North outcome for Intuit (best we can be) Grow organic revenue double digits Grow revenue faster than expenses Deploy cash to highest-yield opportunities Maintain a strong balance sheet

21 Drive Growth In Our Core Products Acquire New Users Retain Existing Users Increase Offerings/User 1 st use experiences not as easy as expected For every 100 we attract 10M+ customers leave Intuit annually Average 1.5 apps/user with low awareness Between 2-14 convert! Improve Conversion 50% = up to $1 Billion Save 1 out of 10 = $75+ Million Increase 0.5 apps/user = $500 Million $1 Billion+ Opportunity

22 Intuit Financial Model % of Revenue FY'10 FY'11 FY'12 FY 13 Long-Term Expectations Revenue Double digit organic growth, supplemented by acquisitions Gross Margin % Increasing slightly with move to SaaS S&M % Flat to down as revenue increases R&D Target 15-17% of revenue G&A % Declines over time Operating Income Improve to mid 30 s Net Income Tax rate in the 35% range; improvements in OIE as interest rates increase EPS Grow faster than operating income Note: Figures represent non-gaap measures

23 Strong Return on Investment 5-Year Revenue CAGR +10% $3,403 $3,772 $4,151 $2,978 $3, % 100% Stock Price Performance (%) Intuit 105% FY 08 FY 09 FY 10 FY 11 FY 12 GDP Growth 0% -100% Aug 2007 NASDAQ 15% July Year Operating Income CAGR 5-Year EPS CAGR $858 $ % $1,130 $1,275 $1,404 $1.60 $ % $2.18 $2.56 $2.97 FY 08 FY 09 FY 10 FY 11 FY 12 FY 08 FY 09 FY 10 FY 11 FY 12 Note: Operating Income and EPS figures represent non-gaap measures

24 FY 13 Segment Plans FY 13 Guidance $ in Millions Growth SBG $1,865M $1,900M 15-17% Consumer Tax $1,550M $1,585M 8-10% Accounting Professionals $445M - $455M 5-8% Financial Services $385M $395M 6-9% Other Businesses $305M $315M 0-4%

25 FY 13 Guidance Revenue $4,550M-$4,650M 10-12% Op Income Non-GAAP $1,570M-$1,600M 12-14% GAAP $1,315M-$1,345M 12-14% EPS Low-High Range YoY Growth Non-GAAP $3.40-$ % GAAP $2.96-$ % Cap Ex $165M-$185M

26 Appendix

27 TABLE 1: RECONCILIATIONS OF HISTORICAL NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (Dollars in millions, except per share amounts) Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal GAAP operating income from continuing operations $1,177 $1,037 $904 $703 $662 $630 Amortization of acquired technology Amortization of other acquired intangible assets Charge for historical use of technology licensing rights Goodwill and intangible asset impairment charge Professional fees for business combinations Share-based compensation expense Non-GAAP operating income $1,404 $1,275 $1,130 $941 $858 $755 GAAP net income $792 $634 $574 $447 $477 $440 Amortization of acquired technology Amortization of other acquired intangible assets Charge for historical use of technology licensing rights Goodwill and intangible asset impairment charge Professional fees for business combinations Share-based compensation expense Pre-tax (gain) loss on disposal of assets and businesses Net gains on debt securities and other investments (52) (32) (16) (2) (1) (1) (1) (2) Income tax effects of non-gaap adjustments (72) (75) (81) (86) (56) (28) Discontinued operations (25) 18 (10) 12 (20) (1) Non-GAAP net income $906 $813 $708 $610 $544 $502 GAAP diluted net income per share $2.60 $2.00 $1.77 $1.35 $1.41 $1.24 Non-GAAP diluted net income per share $2.97 $2.56 $2.18 $1.85 $1.60 $1.41 Shares used in diluted per share amounts Non-GAAP tax rate 34% 34% 35% 33% 36% 36% See "About Non-GAAP Financial Measures" immediately following Table 3 for information on these measures, the items excluded from the most directly comparable GAAP measures in arriving at non-gaap financial measures, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-gaap financial measure.

28 TABLE 2: RECONCILIATION OF SELECTED NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (Dollars in millions) Non- Non- Non- GAAP GAAP % GAAP GAAP % GAAP GAAP % Fiscal Fiscal of Fiscal Fiscal of Fiscal Fiscal of 2010 Adjmts 2010 Rev 2011 Adjmts 2011 Rev 2012 Adjmts 2012 Rev Total revenue $3,403 $- $3, % $3,772 $- $3, % $4,151 $- $4, % Cost of revenue: Cost of product revenue $144 $(1) [a] $143 $143 $(1) [a] $142 $145 $(1) [a] $144 Cost of service and other revenue 447 (7) [a] (6) [a] (6) [a] 595 Amortization of acquired technology 43 (43) [b] - 12 (12) [b] - 14 (14) [b] - Total cost of revenue $634 $(51) $ % $650 $(19) $ % $760 $(21) $ % Operating expenses: Selling and marketing $913 $(41) [a] $ % $1,040 $(46) [a] $ % $1,118 $(60) [a] $1, % Research and development 564 (41) [a] % 620 (51) [a] % 669 (52) [a] % General and administrative 346 (51) [a][c] % 352 (49) [a] % 388 (55) [a][c] % Amortization of other acquired intangible assets 42 (42) [b] - 43 (43) [b] - 39 (39) [b] - Goodwill and intangible asset impairment charge (30) [d] Total operating expenses $1,865 $(175) $1,690 $2,085 $(219) $1,866 $2,214 $(206) $2,008 Operating income $904 $226 $1, % $1,037 $238 $1, % $1,177 $227 $1, % Net income $574 $134 [e] $ % $634 $179 [e] $ % $792 $114 [e] $ % [a] Adjustments to exclude share-based compensation expense from non-gaap financial measures. [b] Adjustments to exclude amortization of acquired technology and amortization of other acquired intangible assets from non-gaap financial measures. [c] Adjustment to exclude professional fees for business combinations of approximately $7 million from non-gaap financial measures in fiscal 2010 and approximately $5 million from non-gaap financial measures in fiscal [d] Adjustment to exclude goodwill and intangible asset impairment charges from non-gaap financial measures. [e] Adjustment to exclude the effects of adjustments [a] through [d], the related income tax effects, and certain discrete income tax effects from non-gaap financial measures. See "About Non-GAAP Financial Measures" immediately following Table 3 for information on these measures, the items excluded from the most directly comparable GAAP measures in arriving at non-gaap financial measures, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-gaap financial measure.

29 TABLE 3: RECONCILIATIONS OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES TO PROJECTED GAAP REVENUE, OPERATING INCOME AND EPS (Dollars in millions, except per share amounts) Forward-Looking Guidance GAAP Range of Estimate Non-GAAP Range of Estimate From To Adjustments From To Twelve Months Ending July 31, 2013 Revenue $4,550 $4,650 $- $4,550 $4,650 Operating income $1,315 $1,345 $255 [a] $1,570 $1,600 Diluted earnings per share $2.96 $3.02 $0.44 [b] $3.40 $3.46 [a] Reflects estimated adjustments for share-based compensation expense of approximately $208 million, amortization of acquired technology of approximately $20 million, and amortization of other acquired intangible assets of approximately $27 million. [b] Reflects the estimated adjustments in item [a] and income taxes related to these adjustments. See "About Non-GAAP Financial Measures" immediately following Table 3 for information on these measures, the items excluded from the most directly comparable GAAP measures in arriving at non-gaap financial measures, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-gaap financial measure.

30 About Non-GAAP Financial Measures INTUIT INC. ABOUT NON-GAAP FINANCIAL MEASURES The accompanying presentation dated March 5, 2013 contains non-gaap financial measures. Table 1, Table 2, and Table 3 reconcile the non-gaap financial measures in that presentation to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-gaap financial measures include non-gaap operating income (loss), non-gaap net income (loss), non- GAAP net income (loss) per share, and free cash flow. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-gaap financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names, and may differ from non-gaap financial measures with the same or similar names that are used by other companies. We compute non-gaap financial measures using the same consistent method from quarter to quarter and year to year. We may consider whether other significant items that arise in the future should be excluded from our non-gaap financial measures. We exclude the following items from all of our non-gaap financial measures: Share-based compensation expense Amortization of acquired technology Amortization of other acquired intangible assets Goodwill and intangible asset impairment charges Charges for historical use of technology licensing rights Professional fees for business combinations We also exclude the following items from non-gaap net income (loss) and diluted net income (loss) per share: Gains and losses on debt securities and other investments Income tax effects of excluded items and certain discrete tax items Discontinued operations

31 About Non-GAAP Financial Measures (cont) We believe that these non-gaap financial measures provide meaningful supplemental information regarding Intuit s operating results primarily because they exclude amounts that we do not consider part of ongoing operating results when planning and forecasting and when assessing the performance of the organization, our individual operating segments, or our senior management. Segment managers are not held accountable for share-based compensation expense, amortization, or the other excluded items and, accordingly, we exclude these amounts from our measures of segment performance. We believe that our non-gaap financial measures also facilitate the comparison by management and investors of results for current periods and guidance for future periods with results for past periods. The following are descriptions of the items we exclude from our non-gaap financial measures. Share-based compensation expenses. These consist of non-cash expenses for stock options, restricted stock units and our Employee Stock Purchase Plan. When considering the impact of equity awards, we place greater emphasis on overall shareholder dilution rather than the accounting charges associated with those awards. Amortization of acquired technology and amortization of other acquired intangible assets. When we acquire an entity, we are required by GAAP to record the fair values of the intangible assets of the entity and amortize them over their useful lives. Amortization of acquired technology in cost of revenue includes amortization of software and other technology assets of acquired entities. Amortization of other acquired intangible assets in operating expenses includes amortization of assets such as customer lists, covenants not to compete and trade names. Goodwill and intangible asset impairment charges. We exclude from our non-gaap financial measures non-cash charges to adjust the carrying values of goodwill and other acquired intangible assets to their estimated fair values. Charges for historical use of technology licensing rights. We exclude from our non-gaap financial measures the portion of technology licensing fees that relates to historical use of that technology. Professional fees for business combinations. We exclude from our non-gaap financial measures the professional fees we incur to complete business combinations. These include investment banking, legal and accounting fees. Gains and losses on debt securities and other investments. We exclude from our non-gaap financial measures gains and losses that we record when we sell or impair available-for-sale debt securities and other investments. Income tax effects of excluded items and certain discrete tax items. We exclude from our non-gaap financial measures the income tax effects of the items described above, as well as income tax effects related to business combinations. In addition, the effects of one-time income tax adjustments recorded in a specific quarter for GAAP purposes are reflected on a forecasted basis in our non-gaap financial measures. This is consistent with how we plan, forecast and evaluate our operating results. Operating results and gains and losses on the sale of discontinued operations. From time to time, we sell or otherwise dispose of selected operations as we adjust our portfolio of businesses to meet our strategic goals. In accordance with GAAP, we segregate the operating results of discontinued operations as well as gains and losses on the sale of these discontinued operations from continuing operations on our GAAP statements of operations but continue to include them in GAAP net income or loss and net income or loss per share. We exclude these amounts from our non-gaap financial measures. The reconciliations of the forward-looking non-gaap financial measures to the most directly comparable GAAP financial measures in Table 3 include all information reasonably available to Intuit at the date of this press release. These tables include adjustments that we can reasonably predict. Events that could cause the reconciliation to change include acquisitions and divestitures of businesses, goodwill and other asset impairments, and sales of available-for-sale debt securities and other investments.

32 Cautions About Forward-Looking Statements This presentation includes "forward-looking statements" which are subject to safe harbors created under the U.S. federal securities laws. All statements included in this presentation that address activities, events or developments that Intuit expects, believes or anticipates will or may occur in the future are forward looking statements, including: our expected market, customer and share growth; our opportunities and strategies to grow our business; our expected revenue, operating income and earnings per share results and growth; our expectations regarding future dividends and ROIC improvements; our expectations for our product and service offerings and cross-sell opportunities; and future market trends. 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 products and services 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; our businesses 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 or declaring dividends advisable; 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 2012 and in our other SEC filings, available through our website at Fiscal 2013 guidance speaks only as of the date it was publicly issued by Intuit. Other forward-looking statements represent the judgment of the management of Intuit as of the date of this presentation. We do not undertake any duty to update any forward-looking statement or other information in this presentation.