Intuit Inc. (INTU) Q4 2012 Earnings Report, Transcript and Summary

Good afternoon. My name is Sayid, and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit's Fourth Quarter and Fiscal 2012 Conference Call. [Operator Instructions] With that, I will now turn the conference over to Matt Rhodes, Intuit's Director of Investor Relations. Mr. Rhodes, you may begin.

Thank you, Sayid. Good afternoon, and welcome to Intuit's Fourth Quarter 2012 Conference Call. I'm here with Brad Smith, our President and CEO; and Neil Williams, CFO. 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 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. 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.

All right. Thanks, Matt. And thanks to all of you for joining us this afternoon. Fiscal 2012 was another solid year for Intuit. For the year, we grew revenue 10% and non-GAAP earnings per share 16%. The consistency of our performance is reinforced when you put these results in the context of the past 5 fiscal years where we delivered average annual revenue growth of 10% and non-GAAP earnings per share growth of 16%. Our fiscal 2012 results and our guidance for next year reflect the strength of our core businesses and Intuit's resilience against ongoing fluctuations in the macroeconomic environment. The uncertainties in the economy are certainly not lost on us. The fact is, our customers need our products most when times are tough. We save our customers time and money on the things they need to manage their businesses and their financial lives. As consumers and small businesses continue to benefit from Intuit's broad portfolio of offerings, we remain confident in our ability to deliver double-digit revenue growth with margin expansion. This confidence was driven by our durable and proven growth strategy, which is first, to drive growth in our core businesses; second, to build adjacent businesses and enter new geographies; and third, to accelerate our company's transition to Connected Services. Our core businesses continue to lead the way. Our Consumer Tax business grew double digits, posting 11% revenue growth in fiscal 2012, even though the do-it-yourself category growth and our share performance did not meet our expectations. Our Small Business Group grew 14%, as we continued to benefit from an ongoing shift to Connected Services and improving revenue per customer. For example, QuickBooks Online subscribers grew 28% for the year. Online Payroll customers grew 19%. And Payments customers grew 13%, driven by mobile. GoPayment, our mobile payment offering, quadrupled the number of customers acquired over the last year. Across the company, our Connected Services and mobile offerings enable us to deliver powerful benefits to new customers around the globe, while increasing our mix of recurring revenue streams. Five years ago, Connected Services represented less than half of Intuit's total revenue. This year, it's 64%, and we estimate it will be around 75% by the year 2015. These revenue streams are predictable, and they provide transparency into our future growth performance as well. When you combine revenue from Connected Services with other highly predictable sales such as financial supplies and tax desktop software, more than 80% of Intuit's revenue is recurring. Our market-leading products, which are benefiting from the tailwind of secular shifts to digital, are also complemented by our disciplined operational rigor. Throughout fiscal 2012, we made adjustments to deploy our resources to the highest-impact initiatives, keeping us lean and focused on our biggest growth opportunities. These decisions enabled us to continue to reshape our portfolio. As you know, we sold our corporate banking business to Bottomline Technologies in March. We did this to sharpen our financial service group's focus on consumers and small businesses. We've also signed an agreement to sell Intuit Websites to Endurance International Group, the industry leader in hosting, domain and Web services. In this case, the emergence of social media and new competition shifted how small businesses think about their Web presence, and we believe our customers will be better served by a company whose core business is in these areas. This decision has also enabled us to concentrate our resources on providing services that help small businesses attract and retain customers, which is one of the top challenges small businesses face each day. We entered this large and growing market through the acquisition of Demandforce in May. In addition to reshaping our portfolio, we continuously assess strategic opportunities as we look to invest in new user experiences and to deepen our focus on technology. For example, we're going to change our approach to the consumer money card business, which allows TurboTax customers to get their refunds on a debit card. We believe debit cards benefit our customers, and we plan to offer cards through a partner next tax season, which is more profitable for us than managing the business in-house. Beginning in the first quarter of fiscal 2013, we're combining the Mint business with Intuit Financial Services to accelerate our journey towards delighting millions of personal finance users. Both IFS and Mint have chartered a course to deliver compelling platforms to transform the financial lives of consumers and small businesses, and we think this combination is a win-win for our teams and our customers. All of these decisions reflect our ongoing discipline and our rigor around capital allocation. And on that note, I'll hand it over to Neil to walk you through the financial details.

Thanks, Brad. Our results reflect several transactions near year-end to execute the strategic realignments that Brad just mentioned. The fourth quarter reflects the acquisition of Demandforce and the decision to sell Intuit Websites, which is characterized as discontinued operations in our year-end results. It's therefore excluded from all metrics except GAAP EPS. We also included a charge of $15 million or about $0.03 per share for a staff realignment implemented in July and our decision to terminate certain agreements related to our consumer money card. So with that, moving to the actual results. For fiscal year 2012, we delivered revenue of $4.15 billion, up 10%. Non-GAAP operating income of $1.4 billion, up 10%. GAAP operating income of $1.18 billion, up 14%. Non-GAAP diluted earnings per share of $2.97, up 16%. GAAP diluted earnings per share of $2.60, up 30%. As a reminder, the fourth quarter of fiscal 2011 included an impairment charge of $30 million or $0.09 per share. For the fourth quarter, we delivered revenue of $651 million, up 14%, non-GAAP operating income of $19 million, a GAAP operating loss of $45 million, non-GAAP diluted earnings per share of $0.03 and GAAP diluted earnings per share of $0.01. Turning to the business segments. Total Small Business Group revenue grew 19% for the quarter and 14% for the year. Total Small Business segment operating margin expanded by 170 basis points in fiscal 2012 to more than 42%. Looking ahead, we're focused on driving customer growth in addition to improving revenue per customer. For fiscal 2013, we expect total Small Business Group revenue growth of 15% to 17%. Within Small Business, Financial Management Solutions revenue grew 17% for the quarter and 11% for the year, including the acquisition of Demandforce. Excluding Demandforce, revenue was up 9% for the quarter and the year. Employee Management Solutions revenue grew 13% for the quarter and 12% for the year, driven by improved retention, price and mix. Payment Solution revenue grew 31% for the quarter and 20% for the year. Merchants grew 13% in the fourth quarter and fiscal 2012, driven by customer acquisition in our mobile solution, GoPayment. Adjustments in rates and fees made up the balance of the revenue growth. Consumer Tax revenue grew 16% for the quarter and 11% for the year. As Brad mentioned, we're changing our approach to the consumer money card business, the majority of which rolled through our Consumer Tax revenue line. Our TurboTax debit card business generated $19 million in revenue in fiscal 2012. We'll continue to deliver the debit card through a partner next season, as we refocus our resources to accelerate category growth and take share. For fiscal 2013, we expect Consumer Tax revenue growth of 8% to 10%. Moving the debit card business to a partner will lower revenue growth by about 1.5 point next year, but it will improve segment profitability. Accounting Professionals revenue grew 8% for the quarter and 6% for the year. Segment operating margin expanded by 180 points over last year. For fiscal 2013, we expect Accounting Professionals revenue growth of 5% to 8%. Financial Services revenue was down slightly in the fourth quarter and grew 5% for the year. Adjusting for the sale of our corporate banking business, Financial Services revenue grew approximately 8% in the fourth quarter and 9% in fiscal 2012. New sales and strong adoption of online and mobile banking continue to drive revenue growth for IFS. For fiscal 2013, we expect Financial Services revenue growth of 6% to 9%, which includes the addition of Mint revenue, offset by the sale of the corporate banking business. Other Businesses revenues grew 5% for the quarter and 1% for the year. Global Small Business revenue grew double digits for the year, but Canada tax grew single digits, resulting in Global revenue growth of 7% or 9% excluding the currency impact. For the year, Intuit Health group grew fast off a small base, and Quicken revenue declined. For fiscal 2013, we expect Other Businesses revenue growth of 0% to 4% after moving Mint to IFS. Turning to the balance sheet. Our financial principles and capital allocation strategy have not changed. We target double-digit organic revenue growth, while growing revenue faster than expenses. We also take a disciplined approach to capital management, investing the cash we generate in opportunities that yield 15-plus percent ROI. When it meets our criteria, we'll return cash to shareholders via share repurchases. We repurchased $107 million of shares in the fourth quarter for a total of about $900 million for fiscal 2012. We have $1.7 billion remaining on our authorization, and we expect our share count for fiscal 2013 to be roughly flat year-over-year. In addition, our board approved a cash dividend of $0.17 per share for fiscal first quarter, up 13% from last year, payable on October 18. Turning to our guidance. Our fiscal 2013 guidance is: Revenue of $4.55 billion to $4.65 billion, growth of 10% to 12%; non-GAAP operating income of $1.57 billion to $1.60 billion, growth of 12% to 14%; GAAP operating income of $1.315 billion to $1.345 billion, growth of 12% to 14%; non-GAAP diluted EPS of $3.32 to $3.38, for growth of 12% to 14%; GAAP diluted EPS of $2.76 to $2.82, for growth of 6% to 8%; and capital expenditures of $165 million to $185 million. You'll find a summary of our segment guidance for the year in our press release and on our fact sheet. For the first quarter of fiscal 2013, we expect revenue of $630 million to $640 million, for growth of 10% to 11%; a non-GAAP operating loss of $20 million to $25 million; a GAAP operating loss of $85 million to $90 million; non-GAAP loss per share of $0.06 to $0.07; and a GAAP loss per share of $0.20 to $0.21. There are a number of moving parts in our guidance, so we've included a table in our fact sheet to help you understand. I'll share a few notes here. As we've said, Demandforce will add 1 to 2 points to growth in fiscal 2013. The change we discussed in our consumer money card offering will reduce Consumer Tax revenue growth by 1.5 points in fiscal 2013. Intuit Websites revenue was $76 million and Intuit Financial Services corporate banking revenue was $21 million in fiscal 2012. Of course, neither will be in next year's results. Past results have been reclassified to exclude Intuit Websites, which was reported in Financial Management Solutions. Past results have not been adjusted for the sale of Corporate Banking. And starting next quarter, we'll report Mint revenue in Financial Services rather than Other Businesses, but we do not plan to reclassify past quarters. Also, with the expiration of the R&D tax credit, our tax rate will increase by 1% in fiscal 2013, which has a $0.05 per share impact on FY '13 EPS. One last thought on seasonality. The table is set for late tax legislation, which could impact from -- which could impact form availability and push Consumer Tax and Accounting Professionals revenue from our second fiscal quarter to our third fiscal quarter. We've seen this happen in the past, and we're preparing for a number of scenarios to ensure we deliver the best experience for all of our tax customers. And with that, I'll turn it back to Brad to wrap up.

All right, Neil, thanks a lot. Fiscal 2012 was a good one for Intuit coming on the heels of 2 years of strong growth. We once again grew revenue double digits despite a tax season that was not the best that we can be. These outcomes demonstrate the power of a balanced portfolio. I'm proud of our team and their determination to deliver high-caliber financial results in any environment. As I look ahead, I remain optimistic about our long-term growth opportunities because Intuit is benefiting from a secular shift to digital solutions. I'll talk more about the opportunities that we see ahead of us and our strategy to execute against them at our Investor Day, which we'll hold on our campus in Mountain View on September 18. I hope to see all of you there. As always, I want to thank our employees for their hard work and their ongoing focus. And with that, we'll turn it over to you for your questions.

[Operator Instructions] Our first question comes from Peter Goldmacher from Cowen and Company.

Lots of moving parts in the quarter. Lots of divestitures. I think it takes a little while to work through all the numbers, but what's clear is you're sacrificing revenue for margin, and that clearly shows up in the implied margins for next year. What I wanted to ask you a little bit more about was your -- how you guys feel like you're doing on your cross-selling and some of the efforts to improve conversion. Last year at Analyst Day, you talked about improving your conversion rate by 50% across all products and the impact that would have on the top line. Now clearly, that would also have an outsized impact on the bottom line. Give yourselves a report card on that. Where are you? And how far along are you?

Yes, Peter, it's Brad. Thanks for the question. And I agree, there are a lot of moving parts in this quarter, and we're trying to lay that out, both in the commentary and fact sheet. And I suspect it will take a while to process that, so we're looking forward to the questions and hopefully, providing more transparency. On your specific question around cross-selling and conversion, it remains a multi-year focus effort for us. I just went through the process of looking at how we've been improving our cross-selling across our businesses in both consumer and Small Business, and we are making traction. I'm very pleased with the progress that we're seeing around cross-selling and getting more seamless attach rates to our existing products. In terms of conversion, we're still very early in the journey. We've seen some significant improvements in some of our products like our Payments offerings. You see really strong growth in payments. One of the single biggest things the team implemented this year was a simplified sign-up process. And that enabled us to get faster attach rates and people through an application process, and you saw the business grew 31% in the quarter. We also had similar changes coming in things like Online Payroll. The early tests suggest that we've seen a nice increase in Online Payroll conversion as well. So I would tell you that if I had to give ourselves a score, I would give us a B right now, and that's off of a score that a year ago, I'll say, it was probably a C-. We're certainly not all the way to bright, but we're making really good progress, and I like the momentum.

Great. Brad, one last -- one quick question. That tax guidance, I think, threw everyone for a loop when they first read it. Certainly, the sentimental detail is divesting that. The Green Dot business, I think, calms people down a little bit. But one of the things investors really talk about a lot is the 700 accountants that were supposed to help with tax this year. When we asked last quarter, you said, "Give us a quarter to figure out what happened. " So here we are a quarter later. What happened? And what can we expect next year?

Yes. So Peter, let me start by saying, I understand the tax guidance does have moving parts in it. If you put it into context, and as you heard Neil say, somewhere in the neighborhood of 1.5 point of what we would have had in growth if we had kept the consumer money card project management in-house is out of the guidance. So when you look at that guidance of 8% to 10%, if you adjust it, it's really more like a 9% to 11.5%. The other thing I would say is we've also tried to factor in the potential impact of late legislation. And so we want to make sure that we're being fiscally conservative in terms of how we're looking at the tax season. So we've tried to provide our best guidance overall for tax looking into next year with those moving parts. In terms of free tax advice, which is the 700 agents, we saw a lot of things we liked as we sat down and did the postmortem. We saw a 9-point improvement in Net Promoter Scores for customers that have gone to a tax store last year and used our software this year with free tax advice. There is very few things we've been able to do in our 20 years to get a 9-point improvement in Net Promoter. The other thing we liked is, it increased our percent of first-time filers by 34% year-over-year. So people who were doing taxes for the first time, maybe had their parents doing it for them, seemed to get increased confidence from knowing they could have someone they could call. Now what I don't believe that we did as well and we're working hard at, is it was lost in the message. It was sort of a one-size-fits-all. We believe that free tax advice resonates better with some customers than others, so you'll hear us talk a little more about how we get more specific going into the year. I also would say that in addition to messaging and positioning, we also have some learning around how we can do a better job of getting that service delivered more cost-effectively, which I think you'll see show up as we look at margins going into next tax season. So when you put it together, we liked the focus of having software and available service to answer questions, but I think we're going to be much more specific about how we execute that as we go into the next season. And if you'll let me stop there, we'll save the rest of it, so we don't give out too much of our competitive information at this point.

Our next question comes from Walter Pritchard from Citi.

Neil, I'm wondering if you could just, on the margins, help us understand -- as you look at the core margins, you guys have, I think in the past, looked for kind of 50 to 100 basis points of margin expansion into the outyear. And I'm just wondering, given all the moving parts here, how we kind of think about the underlying margin expansion that you're expecting into fiscal '13 given all the moving pieces?

Walter, thanks for the question. We think we're right in the sweet spot of what we target in terms of our margin expansion for next year if you adjust out the things that are changing, some of the businesses that are going away, where the past results have not been restated. So that's why we put the table in the fact sheet. And as you work through that, I think you'll come to the conclusion that we're right in the sweet spot of that range in terms of expansion for next year on an organic apples-to-apples basis, if you pull out the things that we've sold and the things that we kept going forward. We think there's plenty of opportunity there going forward.

Great. And then just on the Payments side, you had a pretty significant contribution from rates and fees in the quarter, above and beyond what you saw from merchant growth. And I'm wondering, if you think about fiscal year '13 in Payment, are you thinking about a similar tailwind from those types of sources of revenue? Or are you thinking about mostly payments growth coming from Merchants?

So Walter, I think it will be a mix in FY '13, and I'm not predicting another quarter like Q4. It's probably going to be more like the full year revenue growth that you saw for Payments. We think there's lots of opportunity there. But across the board, our goal is to grow the business by growing customers first, and let mix and price increases and things like that come on, on a secondary basis. So I think what you'll see in payments for FY '13 is a more balanced approach, still strong revenue growth, but more balanced between the amount of volume we process, the number of customers we add, and fees and prices.

Our next question comes from Adam Holt from Morgan Stanley.

This is actually Jen Swanson Lowe calling on behalf of Adam. And just following up on Walter's question, there are a lot of moving parts in the guidance around the Small Business segment. It seems like the real changes are mostly located around the Financial Management Solutions business with divesting a slower growth business, and then bringing in Demandforce. Is that sort of the right way to characterize the 15% to 17% versus the historical growth rates in that business closer to 11% to 10%? Or are there also things that we should thinking about around Payroll and Payments that might be different next year versus what we saw historically?

Jen, I think you've hit the nail on the head. The biggest change would be the Demandforce coming in and Intuit Websites going out. The growth rate is very different for those businesses. As you know, Demandforce is growing very, very fast. The profitability dynamics is also different for those businesses. And so while we've made some improvements in the profitability of the Websites business over the most recent years, the growth was really not what we had expected to see going forward. And we were happy to have Demandforce join the portfolio, which is growing very, very fast. And we intend to feed that growth in our plans for FY '13 and going forward. But those are the 2 big changes in the revenue growth line, and there's some impact on the margin component as well. But we had great expansion in the Small Business Group margins in FY '13 -- FY '12, and expect to see continued good margins in that business going forward.

And then just sort of a follow-up on that with regard to Demandforce and also with a partnership with Salesforce.com that you announced a while back. It does seem like there is more focus around the front office at Intuit than there had been historically. Do you feel like between Salesforce and Demandforce, you have the pieces you need at this point to be comprehensive on the front-end side, or is there more work that you still think you have to do there strategically?

Yes, Jen, it's Brad. I think they're good steps in the right direction. There's still plenty of opportunity to help small businesses in that front office area. Their #1 challenge is attracting and retaining customers. Demandforce is the most compelling offering we've seen in the market because not only does it do that, but it's also highly quantifiable. You can measure the return on investment. And they come in with a guarantee to deliver those kinds of customers. Obviously, our partnership with Salesforce touches a different group of customers for us. They tend to be slightly larger with a sales force that they need to manage their prospects. And there's other things in that space that we're going to continue to run experiments on and look at partnerships. And I think you'll see us continue to test things in this front office area.

Our next question comes from Brent Thill from UBS.

Just a follow-up in the Small Business side. Your -- the guidance, excluding Demandforce, is very upbeat. Can you maybe just share with us what else is underpinning that confidence in your outlook? And just -- I don't think you spoke to retention rates historically, but if you could maybe just update some of the underpinnings of why that underpins your confidence?

Yes, Brent, this is Brad. First of all, there is confidence in the Small Business sector overall. We can't tell you that it's anything to do with the macro economy. We're actually seeing sluggish employment rates in Small Business. They're hiring at a rate of about 2% annually right now. And we're seeing charge volume be at about 9% in total, which is down a little bit from where it was a couple quarters ago, and that's pretty much consistent with what we're hearing from the other vendors. So what this really is coming from is that our products are getting tremendous traction in the market, particularly the online versions. QuickBooks Online this year grew 28%. It continued to have a strong adoption rate. We're seeing improved retention rates in QuickBooks Online. We haven't revealed the specific numbers in terms of the details on QuickBooks Online, but the other products in the portfolio like Payroll actually have retention rates in the high-80%, which is a good 7 or 8 points higher than we understand competitive benchmarks are. So what you see is the cloud-based versions of our products are getting rapidly adopted by small businesses, and that's fueling the growth. And we see that continuing into fiscal year '13 and beyond.

Our next question comes from Laura Lederman from William Blair & Company.

This is actually Justin Furby in for Laura. Brad, on the Websites business, I know one of your initiatives has always been, or at least lately, around new customer acquisition. I was thinking from your Analyst Day last year that the Websites business, while it's sort of slow growth, if any growth, was a big driver for bringing new customers into the franchise. So just curious with this divestiture, how does that impact your new customer acquisition plans? I guess how do you plug that gap going forward?

Yes, the good news is, for us -- you're correct. New customers is our primary focus. We have a razor and razor blade model, we get you to come in and use our product. We've been able to prove a 3x lift in revenue over a 5-year period. But that is not the only source of new customers for us. In fact, you'll see the Small Business portfolio continuing to use things like Demandforce, QuickBooks Online, our expansion into global markets with the new version of QuickBooks Online we call the United Nations version, which is actually going after new markets. You're going to see us also announcing pretty quickly some new products targeted at what we call the non-consumption market, the people using spreadsheets. And we think we have a pretty strong portfolio of offerings to help, as you said, plug that gap of what the Website business was doing in terms of bringing in new customers. But what I like about these other offerings that I just mentioned, too, is they're proven to have the ability to attach to other products inside the ecosystem, and that's really what we're looking as a razor that will actually lead to a razor blade. So at Investor Day, we'll share little more details, but we do have a game plan in place, and that's the #1 focus you'll hear coming out of the Small Business Group is new customer acquisition.

Okay. And have you guys -- I mean, are there other areas of your -- within the SMB segment or anywhere else within the business that you're looking at as potentially things that you might look to shed over the next year, couple years, other businesses that aren't maybe as strategic as others?

Yes, Justin, as you might imagine, we're always assessing the portfolio. And what we look at is 2 things. One, are there any businesses that are no longer strategically aligned with our areas of focus? For example, commercial banking tended to serve larger customers, and we're a consumer and Small Business company, so we divested that business in March to Bottomline Technologies. The other thing we look at is there -- are there any businesses that there have been structural shifts in the market, that no matter how well we execute, we're just not going to be able to win at a losing game. And we've made some decisions like that along the way. For example, our Websites business is a great business if it's the company's core competency. But as you start to see all the substitute methods that have come in with social and other mediums, we didn't feel that we were going to be able to add differentiated value. We thought that company would be better served being moved over to Endurance. So we do take that sort of a rigorous assessment every year. As you might imagine, at this point, we don't have anything to announce. But we continuously look at the portfolio and make sure it either remains strategically aligned, or there aren't any structural shifts in the market that execution can't overcome.

Okay. And then, Neil, for you on the -- on Q4, it looks like you showed the breakout of the full year impact for the Websites business. What was the actual Q4 contribution that you excluded from revenue and reclassified as discontinued?

For Q4 specifically?

Yes.

It's just under $20 million.

Okay. And then I guess one more, if I may. On the guidance for the tax business, what are just kind of -- can you walk through just sort of the very high-level assumptions in terms of overall market share expectations, overall category and overall filers?

Yes, we're actually going to talk to that in a little more detail at Investor Day. I think what you'll hear is pretty consistent in terms of our primary focus being to grow the category and grow users. And then from there, to be able to capitalize on favorable mix like free-to-pay conversion to make up the rest. But if you let us save that, we'll talk to you about that when we get together for Investor Day.

Our next question comes from Gil Luria from Wedbush.

First, another quick clarification on Consumer Tax guidance. Obviously, a topic of focus. The prepaid business, you didn't have 2 years ago in-house. And so is it fair to say that you got -- that the 11% growth for fiscal '12 includes 1.5% from that, meaning, your guidance for fiscal '13 actually represents either flat or accelerating growth?

Yes, I think that's a fair way to look at it, Gil. And you need to look at both sides of the equation, too. You're right, we didn't have it going into FY '12, and that business led to some of the margin compression that you saw in the Consumer Tax business. And if you look at the growth in our G&A line where some of our Reg E losses show up, that was an impact that due to the regulation changes going into that business that we hadn't accounted for, and that we think you need a lot more scale, scope and investment, then we're -- think it's wise for us to make in that segment of the business. But your assumption is right on the revenue side. And there are some unintended consequences with regulatory changes in Reg E that caused us some losses that showed up in G&A.

Got it. And then in terms of share count, last year this time, you guided to share count being down over the year. This year, you're guiding to it being flat. Is that a change to your approach of -- in share buybacks, or is that a change to your approach of how you guide?

Gil, I think it's more a recognition that in FY '12, we spent $0.5 billion paying down some of our long-term debt. We spent $400 million in May to acquire Demandforce, and so we had some other pretty significant uses of cash in FY '12. And we'd like to let our balance recover a bit. It's -- I don't think it's a difference, change in our philosophy or guidance at all. It just kind of reflects more where our cash position is at the end of FY '12 versus where we'd like it to be going forward.

And our next question comes from Greg Dunham from Goldman Sachs.

I guess first, a quick clarification. Is the Websites business, has that been classified already as discontinued ops? From the call -- the transcript, I thought that, that wasn't yet. So that'd be my first question.

Greg, this is Neil. It was classified as discontinued operations in our year-end results, so in what you're seeing today for FY '12.

Okay. But did you -- and you restated the previous periods as well?

That's correct.

Okay, perfect. And then back to the tax question. Actually, adjusting to that 9.5%, 11.5% number, and then you mentioned in the earlier question that, that would imply accelerated growth as you go forward. What -- this early in the year, after last season, what gives you the confidence that you can accelerate?

Yes, so we fundamentally see similar shifts in the market continuing to occur. The digital category is growing 5% to 8% over the last 10 years. We have data that suggests and now results from this tax season that suggest that there's in the neighborhood of 40 million filers out of those that go to tax stores and to certain groups of CPAs that would be willing to file taxes using a do-it-yourself solution if they were assured that they also had somebody there to answer questions if they needed them. And then we think we took some pretty important lessons from our execution this year that we think we can carry forward and improve next year. So we'll talk more about the specifics, but net-net, nothing has changed in the market overall. The digital category continues to outperform, even this year, it outgrew all other methods by 2.5% to 3% -- I mean, 2.5x to 3x. So it's a good category to be in. We like our position in the market. We like the fact that we've got some lessons this year that we can improve upon, and that's what leads us to the guidance we've provided.

Our next question comes from Scott Schneeberger from Oppenheimer. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: I believe you mentioned a staff realignment in the Consumer Tax segment. Was that more broad? Or was that specifically the tax segment? And maybe a follow-up on that.

Yes, Scott, it's Brad. We had in the neighborhood of just over 200 employees that, as a part of some resource reallocation and refocusing, were impacted. The majority of them were in the Consumer Group and associated with the decision around the consumer money card. There were a few other areas where in the classic fitting and trimming that you do every year when you try to prioritize new initiatives, you end up impacting a few jobs. But net-net, this was primarily in the Consumer Group. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: Okay. And then 2 more scattered, I'll ask them both upfront. Could you address just Quicken and continuous moves there to progress? Also, the development on the Global front? And then lastly, for Neil, just curious on longer-term where you think the tax rate goes and why?

Okay, Scott. So I'll start with the first 2, and give Neil the last one on the tax rate. Quicken, overall, is a great franchise with an extremely loyal customer base. At the same time, it's a product that was rooted in desktop, and the world has now moved to the cloud and mobile devices. So one of the most fundamental things we have to do is bring that product and that customer base into the next chapter of its journey. You'll hear more about that as we talk about the upcoming release of Quicken. We've got some plans in place that we think will continue to drive the viability of that brand. So, stay tuned on that front. On Global, I mentioned that we had an exciting announcement on July 19. After a 1.5 years of pretty concerted development effort in QuickBooks Online, we released a version called QuickBooks Online United Nations. What it basically is, is a global platform that local end users and third-party developers in any country can actually click on certain buttons and have the language translated into their native language, and they can even go in and correct any semantics if they want to do that. And they can also select, by clicking on the flag, it selects the right tax jurisdictions. So far, we've put it out there without any marketing effort, and it's now in over 78 countries. And so while it's very early days, and treat that as a couple of people downloading it here and there, we'll talk more about what we plan to do to use that as an accelerant for our global expansion. And now I'll hand it over to Neil, and he can talk to your long-term tax model.

Scott, the best external advice we get around the R&D tax credit tells us that it's not a controversial item, and that it's likely to be reinstated at some point. The question is when. And there's not a lot of certainty or not nearly as much probability around when that is. So we've excluded it from our plans and from our guidance for FY '13. Longer-term, depending on what happens, we're one of those few companies that benefits or would benefit significantly from a lower corporate tax rate without any detrimental harm from any type of restrictions or taxes on bringing offshore cash back into the U.S. Since most of our operations are domestic and most of our revenue and cash is in the U.S., any type of long-term tax program that reduce the corporate tax rate for domestic earned -- domestic earnings at the -- with some incentive to bring dollars back from abroad would help us significantly. But that's way out here. No one that we follow or have a lot of confidence in is predicting that necessarily. So we're pretty focused on getting our nickel back from the R&D tax credit, and we'll see what happens beyond that.

Our next question comes from Jim Macdonald from First Analysis.

Could you talk a little bit more about the fee structure change that led to the big growth in payments this quarter?

Yes, Jim, this is Neil. A couple of things. As you well know, the card networks introduced their new fee schedules in April and October. And so what you saw in our Q4 was the impact of a new pricing schedule that we put out. It's on the website so you can see it. And we're trying to move more of our fees away from things for inactive accounts and make them more transparent and more clear and more tied to usage of the actual account and customer base. So you can go see those. It's going to average out. I mean, you've got a little bit of an extra impact in Q4 because it was in effect for a couple of months, the new pricing structures. It's going to even out over the full year, and so that's why we're predicting a more muted impact, still a double-digit one though, over full FY '13. But there's nothing radical, or no one change accounted for a huge part of the increase, just some ongoing structural changes we made largely to reflect the increase in our costs coming out of the card network interchange structures.

And then switching gears, if you're going to have Mint in one group and Quicken in another, does that mean they're going to managed separately again? Weren't they put together at one point?

Yes, Jim, this is Brad. They are going to be managed separately. The Quicken business is remaining with our Consumer Group, which also manages TurboTax. That's a business unit that has successfully migrated from a desktop software to an online or cloud-based version of software over the years, as you know. The Mint business was born digital and in the cloud. And having them under one management team, we found was either slowing down the Mint progress to let Quicken catch up, or the other way around. Things have focused on Mint. We didn't really put the energy into Quicken. The other thing that really led to this is as we worked with Quicken, we found a huge, and when I say huge, I don't mean to make it sound like it's a hyperbole, but a very large number of people using Online Banking that wanted Mint-like capabilities. And as we work with our Mint team -- I mean, our IFS team, the banks were asking for Mint-like capabilities as well. So we believe bringing these business units together will not only provide better functionality for banks, but will also have an offline outside-the-bank offering, as Mint does today, that will get advances from working with the banking business as well. So we think the strategy is aligned. We think the synergies of the business model was better aligned the way we've moved it. And I think you'll see progress in both of those businesses accelerate as a result.

Our next question comes from Ross MacMillan from Jefferies & Company. Ross MacMillan - Jefferies & Company, Inc., Research Division: Brad, just back on the Payments business. Obviously, there was a big premium in revenue growth versus merchant growth this quarter. And I think Neil just talked about that. I had a bigger question just on your fee structure. As you think about your traditional merchant services business and your GoPayments business, are those already aligned? Or is there alignment still to happen? And as you make that alignment, what is the implications for the fee structure across the entire business?

Ross, this is Neil. The business is already aligned. We continue to learn from the way customers interact and use the service. So we have offerings on one end of the spectrum where you only pay an interchange fee when you use or when you process a transaction. And then we have structures as you move up and process more, you can move to more of a blend of a standard monthly fee and a lower interchange rate. But we make it really clear, and it's easy for customers to see where those breakeven points and where the crossovers are between our standard merchant service business and our mobile GoPayment application. And we allow customers to pick and choose the right fee structure for them. Customers who only use a payment device on the weekends at a craft fair are typically more comfortable paying a high interchange rate at the point of transaction if they don't have any monthly fees or any inactivity fees. And conversely, somebody who has a lot of volume is going to opt for the lower-interchange rate. But we try to set those out very clearly so that the customer can pick and choose what's right for them, both on the merchant service side and then GoPayments. And it's all in one unit. Ross MacMillan - Jefferies & Company, Inc., Research Division: And just one follow-up, just so I'm clear, the merchant volume that you quote, is that a blended rate between GoPayment and the traditional merchant services rate?

Yes, it is.

Yes.

It's all in one. Ross MacMillan - Jefferies & Company, Inc., Research Division: Okay, that's helpful. And then I was just curious, just there's a lot of moving pieces here. But on the Mint business, did you actually help us understand what that revenue rate coming out of Other going into FI is?

Yes, it's about $20 million. Ross MacMillan - Jefferies & Company, Inc., Research Division: Annualized.

Yes. And I will say one other piece that I didn't mention earlier, Ross, that's worth noting on the alliance with Mint and the Financial Services business is, as Mint business moves more to mobile, the monetization rates, obviously, as you know, others are moving to mobile, is actually very well tuned in the banking business. The banks are looking for mobile banking capabilities to offer their customers, and so we actually think there's a business model -- nice synergy there in terms of moving Mint into the IFS business that brings with it a proven monetization model as well. Ross MacMillan - Jefferies & Company, Inc., Research Division: That's helpful. And then just one last one for me. Just as you think about the growth in QuickBooks Online and the notion of higher attach of Payments or of Payroll services, are you starting to see that happen? And are there any kind of metrics or evidence points you could help us with?

Yes, we are starting to see it happen. We still are not at the levels we are in the QuickBooks version, so we have a lot of untapped opportunity. In fact, when we do our Investor Day presentation, the leader of the Financial Management Services business will actually be presenting, or from Financial Management Solutions Business, Dan Wernikoff, and he'll talk to you specifically about that. The good news is, it is easier for us and more seamless for a customer to sign on to an additional product in an online version than desktop. And so the momentum is moving very quickly in that direction, but we still have a lot of untapped opportunity ahead of us.

Our next question comes from Raimo Lenschow from Barclays.

A quick question on the QuickBooks Online Edition subscription -- subscribers numbers. If you look at the growth rates there, I mean last year, so in the 2011 year we kind of were in the 40% rate. It started to slow down the last couple of quarters. Is there anything -- is that kind of just the law of large numbers? Is there anything that you're kind of working on or are happy with?

Yes, it's -- basically, one of the things we've done in the last year is we moved to a no credit card-required model. And what that has done for us is it has allowed us to basically open up the funnel for people to try before they buy. The good news is, it's paying off in higher retention down the road because customers get a chance to basically kick the tires on the product and then sign up. That's had some impact on the comparison year-over-year to subscriber growth. But I think what you're going to see is over the next 3 to 6 months, that's going to start to normalize out. And I think net-net, you're going to see very strong growth continue in QuickBooks Online, but you are working with the second piece of that, which is the numbers are getting bigger. And so big percentages on bigger numbers are often harder to get. But there is a little bit of an apples and an oranges comparison in terms of how we sold the product a year ago and what we're doing now with it with the no credit card required.

Our next question comes from Yun Kim from ThinkEquity.

So just quickly on the GoPayment side of the business. Obviously, that given the high profile of that space and with a lot of competition out there, some of the new pricing strategy being introduced, I think one of the pure play player is now offering an unlimited transaction for a fixed fee. Is there a chance that this business could impact your margin expansion plan in the near term, or your Payment business overall? And also, how sticky are these GoPayment customers? And is there a high switching cost? Or is this something that a merchant can switch easily between vendors based on pricing?

Yes, thank you for the question. Let me start by saying, this is a very exciting space to be in. And it's not a zero-sum game. The data that's been produced is about 55% of small businesses today do not accept credit cards, and they're giving up quite a bit of opportunity in terms of sales by not doing that. And so what's happening with us, with PayPal, with Square, with Google Wallet, with everyone else who's in the space, is it's raising awareness of the category and all boats are rising as the tide rises. We had a very strong year in Payments, and we're guiding to another very strong year next year. And so I think, overall, what you see is a very healthy and robust Payments category. In terms of the margins, we do not see that margin compression occurring. We think that in our particular business, we have a way of differentiating our product. It's not only a payments mechanism. It's a payments mechanism that flows seamlessly into your accounting product. It works seamlessly with your bank accounts, and it makes sure that your accountant and anyone else who's working with you as a Small Business owner has access to all your transactions. And so it's more of an integrated solution, which allows us to differentiate. And then that kind of leads to the second part of your question, which is switching costs. We fundamentally believe we have a product that is unique enough and different enough that when someone is using our QuickBooks product and they use GoPayment or vice versa, that gives us a differentiation versus others, and it's harder to replace that. So we like the Payments business. We're going to continue to learn where are some other places in Payments, so we can build a durable advantage. But right now, everybody is enjoying great growth. I think Small Businesses are getting a great deal. And in terms of our margin compression and our switching costs, I think we've got a unique and differentiated product that allows us to compete effectively.

Okay, great. And switching gear to the Demandforce side of the business. Just can you give us any early signs of how well the Demandforce acquisition is doing, especially from a cross-selling effort into your QuickBooks installed base? And with the Demandforce acquisition, will there be any front-loading or back-loading of sales and marketing costs during the year given that I think the Demandforce acquisition probably can leverage your marketing expertise?

Yes. So I'll start by saying, obviously, all those are reflected in the guidance we've given for our business unit overall. I will -- it's a quarter end of the game for us. And we really like the progress that Demandforce is making. We had a very simple integration principle coming on board, which is, do no harm, basically help them get on board, get assimilated in the culture, begin to learn best practices from them that we could adopt inside of Intuit and begin to introduce some best practices we have that they could learn from. In terms of where we are with cross-selling, we are early stages on that. We do have a team working on it and saying, "What is the opportunity, we want to make sure we don't distract the core execution. " So you'll hear more about that down the road. And in terms of the ability to get synergies between sales and marketing, we're in the early stages of that as well. But what we do like is this is the asset we've been looking for, for some time, and that is helping small businesses attract and retain customers and to be able to prove to a Small Business owner through ROI that it is the result of these efforts. And so we're pretty bullish on this company.

Our next question comes from Sterling Auty from JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: I apologize if you answered this. The transcript hasn't caught up, and I got cut off from the call. But on the Consumer Tax side, can you give us a sense in the 8% to 10% growth, how much of that you expect to be share gain and what your prospects for, I guess, the overall growth? I heard some of the comments about digital still outgrowing/

Yes, Sterling. We would be happy to do that. And also let you know we'll go deeper on this at Investor Day. What we basically said is that we continue to see the category growth at digital growing between 5% and 8%, which it has for the last decade. We, of course, still have a game plan in place to go after that do-it-yourself category and also move into the do-it-with-some-help category. There's about 40 million customers out there who've expressed a willingness to do taxes on their own if they have the assistance of someone or the confidence that you would back them up if they had a question. And so we fundamentally believe that it will continue to be a focus on category growth and unit growth which comes with share, and that we'll also benefit from favorable mix as an output of that. But we'll share a little more detail around that when we get to Investor Day, but that's pretty much the same levers we've been talking to you about for the last couple years. Sterling P. Auty - JP Morgan Chase & Co, Research Division: And have you already identified this partner for next year for debit cards? And one other question in a different area, given all the changes you're making with divestitures, has there been a change in terms of the management ranks in terms of who's focusing on each of these areas?

Okay, so do you want talk a little bit about the debit card? And I'll take rest...

Sterling, this is Neil. We are in the final throes of picking a partner for the debit card business, and we're far enough along to know that we have some good alternatives for next tax season, but we haven't decided on the ultimate one yet and made that announcement.

Yes. On the second question, I just want to test for clarification, when you said any management changes, is that the result of having sold the business and management going with it, or was there another point in the question? Sterling P. Auty - JP Morgan Chase & Co, Research Division: I was leaving it open-ended to you to kind of address it from both ways, both from management going with, or as you talk about even Quicken and Mint going in different areas, different changes if you've actually made some management changes along with all this kind of reorganization?

I see. Well, yes, first of all, on the divestitures of businesses, we're in the process of helping transition the asset to the new acquirer. And with that, there are a couple of key leaders that will be coming back into the company after that transition occurs. So we will be working through that with our Websites business and Endurance. When you get to the internal changes that we talked about, Mint moving into the Financial Services business is now under the leadership of CeCe Morken, who leads the IFS business, and she has a business unit leader under her who will be leading Mint. His name is Greg Wright, and he had been one of our stars in the QuickBooks business for several years, and he's been in that business unit now for about a year. Aaron Patzer remains with the company. He has not been leading Mint for the last 18 months. Aaron has actually been working at a broader capacity across the entire company, helping us with QuickBooks Online and other first-time use experiences of all of our products. He's having a significant impact across company, so there's no change to his responsibility. This is basically moving in under CeCe Morken and this gentleman by the name of Greg Wright. And then Quicken remains under management in the Consumer business, as I said earlier, with Dan Maurer as the General Manager.

And our final question for today comes from Michael Millman from Millman research.

I guess Consumer Tax questions. On your guidance, what percent of the gain is from price? Also, in -- on the taxes, what percent or what share of returns took RT last year? And what do you expect that to be this -- or in 2013? And what changes in 2013 are you planning on account phishing?

I'm sorry, the last part of the question, Michael?

What percent -- what are some of your plans or changes that you plan for 2013 on tax to try to mitigate phishing problems?

I see, okay. Well first of all, Michael, I appreciate the questions. And unfortunately, I'm going to say upfront, I'm not going to be able to give you the level of specificity you would like to have because it's too early in the season for us, and to give up some of this information now would tip our hand competitively. I think on the CG guidance, we'll talk more at Investor Day about what the assumptions are around category growth, share and sort of mix as a part of our overall long-term outlook. And so we'll talk about that one on Investor Day. In terms of share of returns taking RT, we don't break that out as a percent of mix in the tax business. I will tell you that the refund transfer product continues to be a product that is very much enjoyed by our customers. It's a great way for them to be able to get access to a service and do it with basically not having a lot of money out-of-pocket up front, they're being able to leverage their refund. And so we continue to see that as a key growth driver for us as a part of our mix going forward. And in terms of our plans to handle phishing, that is a part of a larger conversation around fraud, in general, that many of us have, obviously, been involved in working with the IRS, working with the Department of Justice, working with the industry overall. And collectively, the industry and the IRS are trying to put together best practices that will minimize any of those kinds of occurrences happening. And we're at the table. We're having regular conversations, and we have it as a top priority, and we're certainly working in concert with all the other key stakeholders, too.

I'm showing no further questions at this time. I would like to hand the conference back over for any closing remarks.

All right. I'll keep it brief by thanking you for the questions today. We really appreciate it. We know there's a lot of moving parts. Hopefully, between the fact sheet and the commentary, we've helped sort some of that out. If not, we'll look forward to the after-call here and the one-on-ones. I will tell you, we are looking forward to fiscal year '13. We think we're coming out with some good momentum. We also have some good lessons learned in some of our key businesses, and so we're looking forward to getting into the game and, hopefully, we'll see you all at Investor Day as well. So thanks for your time, and we we'll talk to you soon.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.