Intuit's Third-Quarter 2003 Revenue Grows 29 Percent; TurboTax Growth Outpaces Category for Federal Tax Software

Business Wire, May 14, 2003

Business Editors

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--May 14, 2003

Intuit Inc. (Nasdaq:INTU) today announced results for its third fiscal quarter, which ended April 30, 2003.

-- Revenue of $634.7 million increased 29 percent from the third

quarter of fiscal 2002. Growth was driven primarily by strong

gains in Intuit's TurboTax business as an increasing portion

of consumer tax revenue shifted from the second to the third

quarter. Intuit's Small Business Products and Services

business also had strong year-over-year growth.

-- Intuit's third-quarter pro forma net income from continuing

operations was $220.3 million, up 46 percent from the

year-earlier period. Pro forma diluted earnings per share of

$1.05 was up 52 percent over the year-ago period. (See Table

B1 for a reconciliation of pro forma financial measures to the

most directly comparable GAAP financial measures.)

-- On a GAAP basis, Intuit had net income of $294.0 million, up

103 percent from $144.5 million in the year-earlier period.

This represents $1.40 per diluted share, up 109 percent from

$0.67 per share in the third quarter of fiscal 2002. This

quarter's GAAP results benefited from stronger revenue growth

as well as a $71.0 million after-tax gain on the sale of its

Japanese subsidiary.

"Intuit is a strong, growing and profitable company, as evidenced again by our solid quarterly results," said Steve Bennett, Intuit's president and chief executive officer. "We have a great portfolio of businesses with tremendous growth opportunities. And we're working to improve our execution and getting better every day."

Business Unit Revenue Growth

-- TurboTax revenue of $313.1 million was up 28 percent from the

third quarter of fiscal 2002. Year-to-date TurboTax revenue of

$414.4 million was up 24 percent.

-- Revenue from Intuit's Professional Accounting Solutions

business increased 12 percent over the third quarter of fiscal

2002 to $81.2 million.

-- Intuit's Small Business Products and Services revenue

increased 41 percent over the year-ago quarter to $114.7

million. This unit includes payroll, supplies, technical

support and information technology solutions.

-- QuickBooks revenue grew 12 percent over the third-quarter of

fiscal 2002 to $55.2 million as Intuit continues to execute

its Right for My Business strategy. Revenue has increased 18

percent year-to-date.

-- Intuit's Vertical Business Management Solutions unit

contributed $25.7 million in revenue in the third quarter, a 7

percent increase over the revenue those companies generated in

the year-earlier period.

-- Revenue from Other Businesses, which includes Quicken and

Canada, was $44.8 million, up 16 percent over third-quarter

fiscal 2002.

Intuit Completes Another Successful TurboTax Season

Intuit completed another strong tax season, with revenue up 28 percent for the quarter and 24 percent year-to-date. Total paid TurboTax federal units were 8.5 million, up 12 percent over last season. According to the IRS, individual returns prepared by software - both on the desktop and Web - grew only 8 percent, slower than Intuit's growth.

"All in all, this was a solid tax season for us," said Bennett. "We grew faster than the industry and were successful in driving customers to new, higher-end offerings, though product activation didn't perform as we'd expected. Intuit has a long heritage of doing right by customers, and some of our customers didn't have the great experience they expect from Intuit. In addition, we didn't get the revenue and profit growth we expected. Therefore, we've decided to discontinue product activation next season." Bennett noted that next year, the company would include in-product technology to unlock marketing and trial versions of TurboTax products.

Forward-Looking Guidance for Fourth-Quarter and Fiscal 2003

Intuit's guidance for the fourth quarter of fiscal 2003 is:

-- Revenue of $240 million-$250 million, or year-over-year growth

of 28-34 percent. The company expects the following revenue

ranges for its businesses:

-- QuickBooks: $53 million-$58 million.

-- Small Business Services: $112 million-$120 million.

-- TurboTax: $5 million-$8 million

-- Professional Accounting Solutions: $6 million-$8 million

-- Verticals: $24 million-$28 million

-- Other: $30 million-$33 million

-- A pro forma operating loss of $30 million-$35 million and a

GAAP operating loss of $41 million-$46 million.

-- A pro forma net loss per diluted share of $0.06-$0.09 and a

GAAP net loss per diluted share of $0.10-$0.13.

Adding fourth-quarter guidance to Intuit's actual results from the first three quarters, Intuit's guidance for fiscal 2003 is:

-- Revenue of $1.65 billion-$1.66 billion, or year-over-year

growth of 25-26 percent.

-- Pro forma operating income of $395 million-$400 million, or

growth of 44-46 percent over fiscal 2002. This corresponds to

GAAP operating income of $338 million-$343 million.

-- Pro forma EPS of $1.36-$1.39, or year-over-year growth of

48-51 percent. This corresponds to GAAP EPS of $1.61-$1.64.

Pro forma EPS guidance has been adjusted to reflect the