Intuit Inc. (INTU)
Q2 2010 Earnings Call Transcript
February 18, 2010 4:30 p.m. ET

Executives

Jerry Natoli – Vice President of Finance and Treasurer
Brad D. Smith – President, Director and Chief Executive Officer
R. Neil Williams – Senior Vice President and Chief Financial Officer

Analysts

Heather Bellini – ISI Group
Gil Luria – Wedbush Morgan Securities
Adam Holt – Morgan Stanley
Laura Lederman – William Blair & Company, L.L.C.
Bryan Keane – Credit Suisse
Philip Rueppel – Wells Fargo Securities
Jim Macdonald – First Analysis Venture Capital
Sarah Friar – Goldman Sachs
Kash Rangan – Bank of America/Merrill Lynch
Sasa Zorovic – Janney Montgomery Scott LLC
Scott Schneeberger – Oppenheimer & Co.
Michael Millman – Millman Research Associates
Brad Zelnick – Macquarie Research
Ross Macmillan – Jefferies & Co.
Brad Sills – Barclays Capital

Presentation

Operator

Good afternoon. My name is Patty and I will be your conference facilitator. At this time, I would like to welcome everyone to the Intuit second quarter fiscal year 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 will now turn the call over to Jerry Natoli, Intuit''s Vice President, Finance and Treasurer. Mr. Natoli?

Jerry Natoli

Thanks, Patty. Good afternoon and welcome to Intuit''s second quarter 2010 conference call. I''m here with Brad Smith, our President and CEO and Neil Williams, our CFO. Before we get started, I would 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 numbers in today''s press release.

Note also that the sale of our real estate solutions business completed in January is accounted for as a discontinued operation. That means the real estate solutions net operating results appear on the discontinued operations line. These results are excluded from the operational results, operational guidance figures and non-GAAP EPS for all periods presented. GAAP EPS includes the gain on the sale of our real estate solutions business. 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

Thanks, Jerry and thanks to all of you for joining us. We are very pleased with our fiscal second quarter results. Revenue and EPS exceeded the top end of our guidance, growing 8% and 12% respectively. And while it''s still early in the season, we feel confident in our ability to perform well in the second half. That''s why we''re raising our revenue and earnings guidance for the year.

We now expect revenue to grow 6% to 9%, up from our prior guidance of 4% to 8%. And we expect non-GAAP EPS growth of 8% to 12%, up from our prior guidance of 4% to 8% as well.

Here''s my perspective on our results. In a headline, Intuit is both uniquely advantaged and is helping drive the shift to a connected services economy. Everywhere you look services are transitioning from paper-based, human produced and brick and mortar bound to services that are produced, marketed and delivered through connected devices.

Small businesses are abandoning the shoe box for connected services, taxpayers are moving beyond the tax form at the post office or a visit to their local tax store to a much more preferred method of completing their taxes online and the same structural shift holds true for online banking, electronic payment, online payroll and yes, even the shift to electronic healthcare.

This connected services tide will only get stronger as the next generation of customers enter the market, having grown up with the web, video games and smartphones and delivering connected services makes it convenient for the customers to be served any time on any device.

This structural shift in the marketplace is providing a tailwind to our business performance. And it reinforces the viability of our three-point strategy, which remains focused on, first, driving growth in our core businesses, second, building adjacent businesses and entering new geographies and finally, continuing the acceleration of our transition to connected services.