Intuit Inc. (INTU)
Q1 2010 Earnings Call Transcript
November 19, 2009 4:30 p.m. ET

Executives

Jerry Natoli - Vice President, Finance and Treasurer
Brad Smith - Chief Executive Officer
Neil R. Williams - Chief Financial Officer
Scott Cook - Founder and Chairman

Analysts

Adam Holt - Morgan Stanley
Jim Macdonald - First Analysis
Heather Bellini - ISI Group
(Jamin Soni) - Banc of America/Merrill Lynch
Bryan Keane - Credit Suisse
Sara Friar - Goldman Sachs
Brad Zelnick - Macquarie
Laura Lederman - William Blair
Gil Luria - Wedbush
Scott Schneeberger - Oppenheimer
Brendan Barnicle - Pacific Crest Securities
Michael Millman - Millman Research
Sasa Zorovic - Janney Montgomery Scott
Ross MacMillan - Jeffries & Company

Presentation

Operator

Good afternoon, my name is (Pattie) and I’ll be your conference facilitator. At this time, I would like to welcome everyone to the Intuit First Quarter 2010 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period.

If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. With that, I’ll now turn the call over to Jerry Natoli, Intuit’s Vice President, Finance and Treasurer. Mr. Natoli?

Jerry Natoli

Thanks, (Pattie). Good afternoon and welcome to Intuit’s First Quarter 2010 conference call. I’m here with Brad Smith, Intuit’s President and CEO; Neil Williams, our CFO; and Scott Cook, our Founder.

Before we get started, 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 2009 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 statements. Some of the numbers in this report are presented on a non-GAAP basis. We’ve reconciled the comparable GAAP and non-GAAP number in today’s press release. 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 Smith

Thanks, Jerry. Thanks everybody out there for joining us. It’s been a busy start to our fiscal year. Let me share a couple of highlights. In our first fiscal quarter, we delivered solid growth in our core businesses. In particular, we’re pleased with the strong double-digit growth in both QuickBooks units and Payments merchants.

We’re also pleased with the continuing acceleration of revenue growth in our Financial Institutions Business. In addition, our progress in successfully integrating PayCycle is on track and we completed the acquisition of Mint.com in early November. These two acquisitions are great examples of our commitment to our connected services strategy. We’re both building and acquiring great talent, technology and products that extend our leadership position in the online space.

As I said, it’s been a busy start to the year, but the good news is, all of that activity is translating into solid financial performance. Today, we announced first quarter revenue of $493 million, which is at the top end of our guidance range. Our results per share and our operating loss were both much better than the range that we had originally guided.

Now, while this was due in part to a shift in marketing expenses from Q1 to Q2, we clearly performed well in the first quarter. Our Q1 performance enables us to absorb the impact of the Mint acquisition without adjusting our guidance for the full year. We still expect fiscal year revenue growth of 4% to 8%, operating income growth of 6% to 10% and free cash flow growth of over 15%. Said another way, we’re on track to deliver another good year for Intuit.

Now, this is in spite of the economy. I’m often asked whether we’re seeing signs of an upturn and while we do believe that we’ve seen the bottom, we haven’t seen any sustained positive trends in consumer spending or new business formations to suggest a rapid recovery. More positive indicators may come during calendar year 2010, but I don’t expect them to materially affect our results this fiscal year.