Intuit Earnings Call Nuggets: Consumer Tax and Current Portfolio
Sterling Auty – JPMorgan: So, specific to the consumer tax, I am just curious in hindsight looking at the results for the tax year just passed. Any final thoughts in terms of competitively – what happened in terms of market share. And then on the go-forward outlook in consumer tax you mentioned the conservative assumption on tax filing. Can you give us a range or is there you will go into detail at the Analyst Day?
Brad Smith – President and CEO: Sterling, it is Brad. Happy to try to take both now and then we will provide more detail at Investor Day. As we look back there is still a lot of unanswered questions around what happened with total tax returns. The latest update we have from the IRS is in May. It still looks like the total returns are down about (0.7 or 0.8) and everyone had anticipated it would be up between 0.5% to 1%. So, that’s a pretty decent delta in terms of 140 million total returns as percentages matter. In terms of competitive share, we held share overall. We gained about two points in the retail desktop software segment which is still about 25% of our total unit, but we lost a little less than 0.5 in online. I would tell you that our diagnosis is our product has an opportunity to get much more simple, but we are laser focused as we look ahead. It is not anything to do with investment in advertising or marketing, in fact, we spent about 20% more this past season and at the end of the day, we didn’t get the results we wanted. So, you’re going to hear us talk a lot more about the product focus as head into next year primarily on new users as well as improving the experience for returning users; you are going to hear us talk about a shift to the cloud in our ProTax business, which helps us with CPAs. And we’re also going to be talking about the way to leverage both sets of assets to help customers who may need little help on the process and we’ll share more of those details coming September 24th at Investor Day.
Sterling Auty – JPMorgan: Maybe one follow-up in QuickBooks on international side. You mentioned U.K., Australia, India, Canada et cetera, can you go into maybe a little bit more color as to what was it about those markets that you decided to focus on them? And what kind of investment will be necessary to drive the business?
Brad Smith – President and CEO: Again, we plan to share a lot more at Investor Day in about 30 days, but we selected each country’s for the following reasons. We are already in Canada and the U.K. We have a strong presence there and we have been shifting to the cloud and so we want to continue to expand our presence and gain market share in those two countries. In terms of Australia, we had a multiyear partnership with the distributor that we’ve announced that’s coming to a close the distributor was reckon and so we are moving into that market because we feel that market is fundamentals and not only understand how to win there, but as a launching pad into Asia. We’ve also chosen India for two reasons; one, we have a very significant presence there with over 600 engineers with our developmental center; secondly, it’s a great test pad for developing a go-to-market model for emerging markets and we have very promising early results in India. So, Canada and the U.K. is already a position that we’re in and we want to continue to develop. We’ve picked Australia as the distributor relationship winds down and we’ve also picked India as a great test bed for the emerging markets.
Brent Thill – UBS: Brad, you aspirations to grow 10% plus and I’m just curious with some of the changes and now with slowdown on the consumer tax. Do you feel that that aspiration is still out there or do you have to turn to M&A or some other strategy to help reinvigorate that growth?
Brad Smith – President and CEO: Brent, we do believe this capability exist in our current portfolio. Neil just provided a few minutes ago our outlook beyond fiscal year ’14, whereas we look at our three year plans and actually our five aspirations and we signed up for those numbers with our Board. We believe we can deliver revenue in the 8% to 12% range. We can grow our operating income faster and we believe we can deliver our earnings per share in the mid-teens. Now, what we’re going to have to do to do that is we have an opportunity to continue to accelerate in small business, it’s primarily around continuing to accelerate our performance in the U.S. with this new harmonized product that we’ll showcase in September, it’s about global expansion into these four countries, while testing other markets. And it’s about going after these 12 million plus prospects that aren’t big enough for accounting with some of these lateral weight mobile solutions that we’re going to share a little more about the coming season. On the tax side, we do not believe the outlook as a 4% growth business. We think the fundamentals are there and the secular opportunities are there for us to accelerate to do-it-yourself category and we also think with the shift to the cloud that the CPA prepared segment is going to have a lot of decisions up for consideration and we have a three year head-start on our competition with the hosted version of tax prep for the accountants. So, we think there is a lot of fundamental opportunities in our core business to get us to double digits, and of course we will look at acquisitions as a way to supplement that…
Brent Thill – UBS: Just a quick follow-up on consumer, I think, Neil have said it is a multi-year change that you are trying to incent in their behavior. It just seems like this is a longer term roadmap versus something even near-term that you can stimulate. And maybe if you could just dive a little deeper into that why you chose the word multi-year?
Brad Smith – President and CEO: Well, I think it’s a two part process; one is we have some very interesting learnings coming out of last season and some exciting experiments we’ve been doing over the summer, that we think basically reshaped the paradigm of how taxes get done. With that being said, there’s a lot of work to demonstrate and improve that in the market to our customers, to ourselves and to you, and we don’t think we’ll get all the way there in the next 12 months. And so, what we do believe and actually what we plan to share with you little closer to tax season is a big step forward this year. but we don’t believe that will be enough for us to get to double digits this season in tax, but we do believe that it gives us the foundation that if we execute well, we can continue to grow that business and get it back to double digits in the out years. So it’s a multiyear effort, and for us, it’s basically redefining how tax preparation gets done, and we’ll share a little more on with detail as we get closer to the season.
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