Intuit Inc. (INTU)
Q1 2012 Earnings Call Transcript
November 17, 2011 4:30 p.m. ET

Executives

R. Neil Williams - Chief Financial Officer and Senior Vice President
Brad D. Smith - Chief Executive Officer, President and Director
Matthew Rhodes - Director of Investor Relations
Scott D. Cook - Co-Founder, Director and Chairman of Executive Committee

Analysts

Peter L. Goldmacher - Cowen and Company, LLC
Brent Thill - UBS Investment Bank
Laura Lederman - William Blair & Company L.L.C.
Kenneth Wong - Citi
Jennifer A. Swanson - Morgan Stanley
Philip C. Rueppel - Wells Fargo Securities, LLC
Gil B. Luria - Wedbush Securities Inc.
Michael Millman - Millman Research Associates
James Macdonald - First Analysis Securities Corporation
Sonya Banerjee - Jefferies & Company, Inc.
Scott A. Schneeberger - Oppenheimer & Co. Inc.

Operator

Good afternoon. My name is Sayeed, and I will be your conference facilitator. At this time, I''d like to welcome everyone to Intuit''s First Quarter Fiscal 2012 Conference Call. All lines have been placed on mute to prevent any background noise. During the question and answer session you may ask a question by pressing star then the number one on your telephone key pad. If you would to withdraw your question, press the pound key. With that, I''d like to turn the call over to Mr. Matt Rhodes, Intuit''s Director of Investor Relations. Sir, you may begin.


Matthew Rhodes

Thank you very much. Good afternoon, and welcome to Intuit''s First Quarter 2012 Conference Call. I''m here with Brad Smith, our President and CEO; Neil Williams, our CFO; and Scott Cook, our Founder.

Before we start, I''d like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit''s results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2011 and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit''s website at intuit.com. We assume no obligation to update any forward-looking statement.

Some of the numbers in this report are presented on a non-GAAP basis. We''ve reconciled the comparable GAAP and non-GAAP numbers in today''s press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends.

With that, I''ll turn the call over to Brad Smith.

Brad D. Smith

Okay. Thanks, Matt, and thanks to all of you for joining us. I''m pleased to share that we''re off to another strong start in fiscal 2012. First quarter revenue was $594 million, representing an increase of 12% versus last year. Our Small Business Group led the way in the quarter, growing revenue 13%, making it the seventh consecutive quarter of double-digit revenue growth in Small Business. Across-the-board, our results are in line with our expectations and give us confidence to reiterate our guidance for fiscal 2012.

As you know, we typically report a loss in the first quarter of each fiscal year. The good news is our operating loss this quarter narrowed significantly compared to the first quarter last year, reinforcing the strengthening benefit of our ongoing shift to more recurring, reliable Connected Services revenue.

We''re often asked how we continue to produce the kind of growth we''ve been delivering despite a volatile macroeconomic environment. The answer is simple, secular tailwinds, they''re overpowering any cyclical uncertainty. We are well-positioned in capitalizing on the long-term structural shift in Connected Services.

We''re seeing the impact of this structural shift in each of our businesses. For example, in Consumer Tax. The software category has grown 6% on average over the past 5 years, far outpacing any other tax prep method. Professional tax preparers grew a modest 1% and tax stores and manuals declined during the same time period.

In Small Business, our online and mobile solutions are our fastest-growing services. We now have 300,000 QuickBooks Online customers, 300,000 Website customers, 200,000 Online Payroll customers and over 100,000 customers using our newer mobile solutions.

And in Financial Services, our mobile banking customer base has tripled over the last 12 months, now totaling 1.2 million end users. Intuit has another strategic advantage, 15 million installed customers. As the old adage goes, it''s easiest to sell to the customer that you already have. And we''re doing just that. We''re enriching the mix as our customers rapidly adopt Connected Services. This generates the recurring revenue stream that I mentioned earlier, as well as favorable lifetime value economics for Intuit.