Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Oct. 31, 2017 | Nov. 14, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | INTUIT INC | |
Entity Central Index Key | 896,878 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 31, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 255,649,800 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Net revenue: | ||
Product | $ 319 | $ 297 |
Service and other | 567 | 481 |
Total net revenue | 886 | 778 |
Cost of revenue: | ||
Cost of product revenue | 24 | 29 |
Cost of service and other revenue | 170 | 151 |
Amortization of acquired technology | 2 | 3 |
Selling and marketing | 308 | 283 |
Research and development | 293 | 246 |
General and administrative | 145 | 126 |
Amortization of other acquired intangible assets | 1 | 1 |
Total costs and expenses | 943 | 839 |
Operating loss | (57) | (61) |
Interest expense | (5) | (9) |
Interest and other income (expense), net | 3 | (2) |
Loss before income taxes | (59) | (72) |
Income tax benefit | (42) | (42) |
Net loss | $ (17) | $ (30) |
Earnings Per Share, Basic | ||
Basic net loss per share (in dollars per share) | $ (0.07) | $ (0.12) |
Shares used in basic per share calculations (in shares) | 256 | 258 |
Earnings Per Share, Diluted | ||
Diluted net loss per share (in dollars per share) | $ (0.07) | $ (0.12) |
Shares used in diluted per share calculations (in shares) | 256 | 258 |
Dividends | ||
Cash dividends declared per common share (in dollars per share) | $ 0.39 | $ 0.34 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (17) | $ (30) |
Other comprehensive income (loss), net of income taxes: | ||
Unrealized losses on available-for-sale debt securities | 0 | (1) |
Foreign currency translation losses | (6) | (4) |
Total other comprehensive income (loss), net | (6) | (5) |
Comprehensive loss | $ (23) | $ (35) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 529 | $ 529 |
Investments | 248 | 248 |
Accounts receivable, net | 116 | 103 |
Income taxes receivable | 61 | 63 |
Prepaid expenses and other current assets | 142 | 100 |
Current assets before funds held for customers | 1,096 | 1,043 |
Funds held for customers | 319 | 372 |
Total current assets | 1,415 | 1,415 |
Long-term investments | 31 | 31 |
Property and equipment, net | 1,016 | 1,030 |
Goodwill | 1,294 | 1,295 |
Acquired intangible assets, net | 18 | 22 |
Long-term deferred income taxes | 144 | 132 |
Other assets | 146 | 143 |
Total assets | 4,064 | 4,068 |
Current liabilities: | ||
Short-term debt | 450 | 50 |
Accounts payable | 220 | 157 |
Accrued compensation and related liabilities | 146 | 300 |
Deferred revenue | 799 | 887 |
Other current liabilities | 183 | 178 |
Current liabilities before customer fund deposits | 1,798 | 1,572 |
Customer fund deposits | 319 | 372 |
Total current liabilities | 2,117 | 1,944 |
Long-term debt | 425 | 438 |
Long-term deferred revenue | 191 | 202 |
Other long-term obligations | 128 | 130 |
Total liabilities | 2,861 | 2,714 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock | 0 | 0 |
Common stock and additional paid-in capital | 4,999 | 4,857 |
Treasury stock, at cost | (10,948) | (10,778) |
Accumulated other comprehensive loss | (28) | (22) |
Retained earnings | 7,180 | 7,297 |
Total stockholders’ equity | 1,203 | 1,354 |
Total liabilities and stockholders’ equity | $ 4,064 | $ 4,068 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Millions | Total | Shares of Common Stock | Common Stock and Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 2 | $ 6 | $ (4) | |||
Beginning Balance, in shares at Jul. 31, 2016 | 257,853 | |||||
Beginning Balance at Jul. 31, 2016 | 1,161 | 4,445 | $ (9,939) | $ (32) | 6,687 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive loss | (35) | (5) | (30) | |||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes (in shares) | 975 | |||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes | (2) | (2) | ||||
Stock repurchases under stock repurchase programs (in shares) | (1,760) | |||||
Stock repurchases under stock repurchase programs | (192) | (192) | ||||
Dividends and dividend rights declared | (89) | (89) | ||||
Share-based compensation expense | 91 | 91 | ||||
Ending Balance, in shares at Oct. 31, 2016 | 257,068 | |||||
Ending Balance at Oct. 31, 2016 | 936 | 4,540 | (10,131) | (37) | 6,564 | |
Beginning Balance, in shares at Jul. 31, 2017 | 255,668 | |||||
Beginning Balance at Jul. 31, 2017 | 1,354 | 4,857 | (10,778) | (22) | 7,297 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive loss | (23) | (6) | (17) | |||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes (in shares) | 1,224 | |||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes | $ 44 | 44 | ||||
Stock repurchases under stock repurchase programs (in shares) | (1,200) | (1,225) | ||||
Stock repurchases under stock repurchase programs | $ (170) | (170) | ||||
Dividends and dividend rights declared | (100) | (100) | ||||
Share-based compensation expense | 98 | 98 | ||||
Ending Balance, in shares at Oct. 31, 2017 | 255,667 | |||||
Ending Balance at Oct. 31, 2017 | $ 1,203 | $ 4,999 | $ (10,948) | $ (28) | $ 7,180 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.39 | $ 0.34 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (17) | $ (30) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 60 | 49 |
Amortization of acquired intangible assets | 5 | 6 |
Share-based compensation expense | 97 | 89 |
Deferred income taxes | (11) | (9) |
Other | 2 | 1 |
Total adjustments | 153 | 136 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (14) | (14) |
Income taxes receivable | 2 | (38) |
Prepaid expenses and other assets | (25) | (50) |
Accounts payable | 61 | (2) |
Accrued compensation and related liabilities | (147) | (148) |
Deferred revenue | (99) | (67) |
Other liabilities | 8 | 8 |
Total changes in operating assets and liabilities | (214) | (311) |
Net cash used in operating activities | (78) | (205) |
Cash flows from investing activities: | ||
Purchases of corporate and customer fund investments | (86) | (125) |
Sales of corporate and customer fund investments | 38 | 298 |
Maturities of corporate and customer fund investments | 46 | 22 |
Net change in cash and cash equivalents held to satisfy customer fund obligations | 53 | (22) |
Net change in customer fund deposits | (53) | 22 |
Purchases of property and equipment | (50) | (86) |
Other | (23) | (11) |
Net cash provided by (used in) investing activities | (75) | 98 |
Cash flows from financing activities: | ||
Proceeds from borrowings under revolving credit facility | 400 | 100 |
Repayment of debt | (13) | 0 |
Proceeds from issuance of stock under employee stock plans | 83 | 43 |
Payments for employee taxes withheld upon vesting of restricted stock units | (39) | (45) |
Cash paid for purchases of treasury stock | (168) | (175) |
Dividends and dividend rights paid | (105) | (89) |
Net cash provided by (used in) financing activities | 158 | (166) |
Effect of exchange rates on cash and cash equivalents | (5) | (5) |
Net decrease in cash and cash equivalents | 0 | (278) |
Cash and cash equivalents at beginning of period | 529 | 638 |
Cash and cash equivalents at end of period | $ 529 | $ 360 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Description of Business Intuit helps consumers, small businesses, and the self-employed prosper by delivering financial management and compliance products and services. We also provide specialized tax products to accounting professionals, who are key partners that help us reach small business customers. Our flagship brands, QuickBooks and TurboTax, help customers run their small businesses, pay employees and bills, separate business and personal expenses, track their money, and file income taxes. ProSeries and Lacerte are our leading tax preparation offerings for professional accountants. Incorporated in 1984 and headquartered in Mountain View, California, we sell our products and services primarily in the United States. Basis of Presentation These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation, including amounts related to reportable segments. See Note 9, “ Segment Information ,” for more information. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2017 . Results for the three months ended October 31, 2017 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2018 or any other future period. Seasonality Our Consumer offerings have significant seasonal patterns and revenue from those income tax preparation products and services is heavily concentrated in our third fiscal quarter ending April 30. Significant Accounting Policies We describe our significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2017 . There have been no changes to our significant accounting policies during the first three months of fiscal 2018 . Use of Estimates In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP), we make certain estimates and assumptions that affect the amounts reported in our financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the appropriate levels of reserves for product returns, promotional discounts and rebates, the collectibility of accounts receivable, the appropriate levels of various accruals including accruals for litigation contingencies, the amount of our worldwide tax provision, and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and fair values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates. Computation of Net Income (Loss) Per Share We compute basic net income or loss per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of the shares issuable upon the exercise of stock options and upon the vesting of restricted stock units (RSUs) under the treasury stock method. We include stock options with combined exercise prices and unrecognized compensation expense that are less than the average market price for our common stock, and RSUs with unrecognized compensation expense that is less than the average market price for our common stock, in the calculation of diluted net income per share. We exclude stock options with combined exercise prices and unrecognized compensation expense that are greater than the average market price for our common stock, and RSUs with unrecognized compensation expense that is greater than the average market price for our common stock, from the calculation of diluted net income per share because their effect is anti-dilutive. Under the treasury stock method, the amount that must be paid to exercise stock options and the amount of compensation expense for future service that we have not yet recognized for stock options and RSUs are assumed to be used to repurchase shares. All of the RSUs we grant have dividend rights. Dividend rights are accumulated and paid when the underlying RSUs vest. Since the dividend rights are subject to the same vesting requirements as the underlying equity awards they are considered a contingent transfer of value. Consequently, the RSUs are not considered participating securities and we do not present them separately in earnings per share. In loss periods, basic net loss per share and diluted net loss per share are the same since the effect of potential common shares is anti-dilutive and therefore excluded. The following table presents the composition of shares used in the computation of basic and diluted net loss per share for the periods indicated. Three Months Ended (In millions, except per share amounts) October 31, October 31, Numerator: Net loss $ (17 ) $ (30 ) Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 256 258 Shares used in diluted per share amounts: Weighted average common shares outstanding 256 258 Dilutive common equivalent shares from stock options and restricted stock awards — — Dilutive weighted average common shares outstanding 256 258 Basic and diluted net loss per share: Basic net loss per share $ (0.07 ) $ (0.12 ) Diluted net loss per share $ (0.07 ) $ (0.12 ) Shares excluded from computation of diluted net loss per share: Weighted average stock options and restricted stock units that would have been included in the computation of dilutive common equivalent shares outstanding if net income had been reported in the period 12 12 Weighted average stock options and restricted stock units that would have been excluded from the computation of dilutive common equivalent shares outstanding if net income had been reported in the period due to their anti-dilutive effect 2 4 Concentration of Credit Risk and Significant Customers No customer accounted for 10% or more of total net revenue in the three months ended October 31, 2017 or October 31, 2016 . No customer accounted for 10% or more of gross accounts receivable at October 31, 2017 or July 31, 2017 . Accounting Standards Not Yet Adopted Goodwill Impairment - In January 2017 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, “ Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This new standard eliminates Step 2 from the goodwill impairment test. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2020. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017-04 on our consolidated financial statements. Business Combinations - In January 2017 the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business . ” This new standard clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017-01 on our consolidated financial statements. Statement of Cash Flows - In August 2016 the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. Financial Instruments - In June 2016 the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326). ” This new standard requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2020. Earlier adoption is permitted in the first quarter of our fiscal year beginning August 1, 2019. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements. Leases - In February 2016 the FASB issued ASU 2016-02, “ Leases (Topic 842). ” This new standard amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2019. Early adoption is permitted. This standard is required to be adopted using a modified retrospective approach. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements. Revenue Recognition - In May 2014 the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),”and in August 2015 the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year. This new standard supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the new standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible that more judgment and estimates may be required within the revenue recognition process than is required under present U.S. GAAP. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. The new standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new standard is effective for reporting periods beginning after December 15, 2017, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. We plan to adopt Topic 606 utilizing the full retrospective transition method when it becomes effective for us in the first fiscal quarter beginning August 1, 2018. We have completed our preliminary assessment of the new standard and are continuing to assess all potential impacts of the standard. We currently believe the most significant changes will be the timing of revenue recognition related to our QuickBooks desktop solutions and our consumer and professional tax desktop solutions. Under the current standard, we recognize substantially all of the revenue for QuickBooks desktop solutions ratably over the period that enhancements and connected services are provided, which is approximately three years. Under the new standard, we will recognize software license revenue for QuickBooks desktop solutions at the time the license is delivered. Due to the upfront recognition of Quickbooks desktop solutions, upon adoption, we will remove deferred revenue from our liabilities through a cumulative adjustment to retained earnings. We expect the timing of QuickBooks desktop revenue in our Small Business & Self-Employed reporting segment to shift to earlier quarters within each fiscal year as a result of these changes. With respect to our consumer and professional tax desktop solutions, under the current standard, we recognize all revenue related to the desktop solutions as services are provided. Under the new standard, we will recognize revenue for the desktop tax preparation software license and related tax form updates as they are delivered. We will recognize revenue for our electronic filing and connected services as those services are provided. As sales and delivery of desktop tax preparation software solutions are concentrated from November through April, we expect the timing of the related desktop revenue for our Consumer and Strategic Partner reporting segments to shift to earlier quarters within each fiscal year as a result of these changes. Under Topic 606 we do not expect our annual total and reporting segment revenue growth rates to be significantly different as compared to growth rates under the current standard. Accounting for commissions under the new standard will result in the deferral of incremental commission costs for obtaining contracts, which we do not expect to be material. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 2. Fair Value Measurements Fair Value Hierarchy The authoritative guidance defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, we consider the principal or most advantageous market for an asset or liability and assumptions that market participants would use when pricing the asset or liability. In addition, we consider and use all valuation methods that are appropriate in estimating the fair value of an asset or liability. The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows: • Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. • Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities. • Level 3 uses one or more unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes financial assets and financial liabilities that we measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above. October 31, 2017 July 31, 2017 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Assets: Cash equivalents, primarily time deposits $ 28 $ — $ — $ 28 $ 181 $ — $ — $ 181 Available-for-sale debt securities: Municipal bonds — 55 — 55 — 63 — 63 Corporate notes — 383 — 383 — 382 — 382 U.S. agency securities — 10 — 10 — 3 — 3 Municipal auction rate securities — — 15 15 — — 15 15 Total available-for-sale securities — 448 15 463 — 448 15 463 Total assets measured at fair value on a recurring basis $ 28 $ 448 $ 15 $ 491 $ 181 $ 448 $ 15 $ 644 The following table summarizes our cash equivalents and available-for-sale debt securities by balance sheet classification and level in the fair value hierarchy at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: In cash and cash equivalents $ 28 $ — $ — $ 28 $ 181 $ — $ — $ 181 Available-for-sale securities: In investments $ — $ 248 $ — $ 248 $ — $ 248 $ — $ 248 In funds held for customers — 200 — 200 — 200 — 200 In long-term investments — — 15 15 — — 15 15 Total available-for-sale securities $ — $ 448 $ 15 $ 463 $ — $ 448 $ 15 $ 463 We value our Level 1 assets, consisting primarily of time deposits, using quoted prices in active markets for identical instruments. Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of municipal bonds, corporate notes, and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying significant adjustments. Our fair value processes include controls that are designed to ensure that we record appropriate fair values for our Level 2 investments. These controls include comparison to pricing provided by a secondary pricing service or investment manager, validation of pricing sources and models, review of key model inputs, analysis of period-over-period price fluctuations, and independent recalculation of prices where appropriate. Financial assets whose fair values we measure using significant unobservable (Level 3) inputs consist of municipal auction rate securities that are no longer liquid. We estimate the fair values of the auction rate securities using a discounted cash flow model. We continue to classify them as long-term investments based on the maturities of the underlying securities at that date. We do not intend to sell our municipal auction rate securities. In addition, it is more likely than not that we will not be required to sell them before recovery at par, which may be at maturity. There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the three months ended October 31, 2017 |
Cash and Cash Equivalents, Inve
Cash and Cash Equivalents, Investments and Funds Held for Customers | 3 Months Ended |
Oct. 31, 2017 | |
Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract] | |
Cash and Cash Equivalents, Investments and Funds Held for Customers | 3. Cash and Cash Equivalents, Investments, and Funds Held for Customers We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of time deposits in all periods presented. Investments at October 31, 2017 consisted of available-for-sale investment-grade debt securities that we carried at fair value. Funds held for customers consist of cash and cash equivalents and investment grade available-for-sale debt securities in all periods presented. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments in debt securities by limiting our holdings with any individual issuer. The following table summarizes our cash and cash equivalents, investments, and funds held for customers by balance sheet classification at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Classification on balance sheets: Cash and cash equivalents $ 529 $ 529 $ 529 $ 529 Investments 248 248 247 248 Funds held for customers 319 319 372 372 Long-term investments 31 31 31 31 Total cash and cash equivalents, investments, and funds held for customers $ 1,127 $ 1,127 $ 1,179 $ 1,180 The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Type of issue: Total cash and cash equivalents $ 648 $ 648 $ 701 $ 701 Available-for-sale debt securities: Municipal bonds 55 55 63 63 Corporate notes 383 383 381 382 U.S. agency securities 10 10 3 3 Municipal auction rate securities 15 15 15 15 Total available-for-sale debt securities 463 463 462 463 Other long-term investments 16 16 16 16 Total cash and cash equivalents, investments, and funds held for customers $ 1,127 $ 1,127 $ 1,179 $ 1,180 We use the specific identification method to compute gains and losses on investments. We include realized gains and losses on our available-for-sale debt securities in interest and other income or expense on our statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three months ended October 31, 2017 and October 31, 2016 were not significant. We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income or loss in the stockholders’ equity section of our balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at October 31, 2017 and July 31, 2017 were not significant. We periodically review our investment portfolios to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. We believe that the investments we held at October 31, 2017 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at October 31, 2017 were not significant and were due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. We do not intend to sell these investments. In addition, it is more likely than not that we will not be required to sell them before recovery at par, which may be at maturity. The following table summarizes our available-for-sale debt securities classified by the stated maturity date of the security at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 197 $ 197 $ 209 $ 209 Due within two years 162 162 164 164 Due within three years 70 70 59 60 Due after three years 34 34 30 30 Total available-for-sale debt securities $ 463 $ 463 $ 462 $ 463 |
Current Liabilities
Current Liabilities | 3 Months Ended |
Oct. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Current Liabilities | 4. Current Liabilities Short-Term Debt On February 1, 2016 we entered into a master credit agreement with certain institutional lenders for a five -year credit facility in an aggregate principal amount of $1.5 billion . The master credit agreement includes a $500 million unsecured term loan and a $1 billion unsecured revolving credit facility. At October 31, 2017 , $475 million was outstanding under the term loan, of which $50 million was classified as short-term debt. See Note 5, “ Long-Term Obligations and Commitments – Long-Term Debt,” for more information regarding the term loan. Unsecured Revolving Credit Facility The master credit agreement we entered into on February 1, 2016 includes a $1 billion unsecured revolving credit facility that will expire on February 1, 2021. Under the master credit agreement we may, subject to certain customary conditions, on one or more occasions increase commitments under the revolving credit facility in an amount not to exceed $250 million in the aggregate and may extend the maturity date up to two times. Advances under the revolving credit facility accrue interest at rates that are equal to, at our election, either Bank of America's alternate base rate plus a margin that ranges from 0.0% to 0.5% or the London Interbank Offered Rate (LIBOR) plus a margin that ranges from 0.9% to 1.5% . Actual margins under either election will be based on our senior debt credit ratings. The master credit agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 as of any date and a ratio of annual EBITDA to annual interest expense of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. We remained in compliance with these covenants at all times during the quarter ended October 31, 2017 . During the three months ended October 31, 2017 we borrowed $400 million under this revolving credit facility and at October 31, 2017 $400 million was outstanding. We paid $1 million in cash for interest on the revolving credit facility during the three months ended October 31, 2017 . Cash paid for interest on the revolving credit facility during the three months ended October 31, 2016 was not significant. Other Current Liabilities Other current liabilities were as follows at the dates indicated: (In millions) October 31, July 31, Executive deferred compensation plan liabilities $ 95 $ 83 Reserve for promotional discounts and rebates 18 19 Reserve for product returns 7 7 Current portion of license fee payable 10 10 Current portion of deferred rent 5 6 Current portion of dividend payable 5 9 Other 43 44 Total other current liabilities $ 183 $ 178 The balances of several of our other current liabilities, particularly our reserves for product returns and promotional discounts and rebates, are affected by the seasonality of our business. See Note 1, “Description of Business and Summary of Significant Accounting Policies – Seasonality,” |
Long-Term Obligations and Commi
Long-Term Obligations and Commitments | 3 Months Ended |
Oct. 31, 2017 | |
Long-Term Obligations [Abstract] | |
Long-Term Obligations and Commitments | 5. Long-Term Obligations and Commitments Long-Term Debt On February 1, 2016 we entered into a master credit agreement with certain institutional lenders for a five-year credit facility in an aggregate principal amount of $1.5 billion , which includes a $500 million unsecured term loan. Under the master credit agreement we may, subject to certain customary conditions, on one or more occasions increase commitments under the term loan in an amount not to exceed $500 million in the aggregate. The term loan accrues interest at rates that are equal to, at our election, either Bank of America's alternate base rate plus a margin that ranges from 0.125% to 0.875% or LIBOR plus a margin that ranges from 1.125% to 1.875% . Actual margins under either election will be based on our senior debt credit ratings. The master credit agreement includes customary affirmative and negative covenants. See Note 4, “ Current Liabilities – Unsecured Revolving Credit Facility,” for more information. The term loan is subject to quarterly principal payments, which began in July 2017, of 2.5% of the original loan amount, with the balance payable on February 1, 2021. At October 31, 2017 , $475 million was outstanding under the term loan, of which $50 million was classified as short-term debt. Interest on the term loan is payable monthly. We paid $3 million and $2 million in cash for interest on the term loan during the three months ended October 31, 2017 and October 31, 2016 respectively. Other Long-Term Obligations Other long-term obligations were as follows at the dates indicated: (In millions) October 31, July 31, Total deferred rent $ 48 $ 49 Long-term income tax liabilities 54 53 Total license fee payable 18 18 Total dividend payable 9 13 Long-term deferred income tax liabilities 7 7 Other 15 16 Total long-term obligations 151 156 Less current portion (included in other current liabilities) (23 ) (26 ) Long-term obligations due after one year $ 128 $ 130 Operating Lease Commitments and Unconditional Purchase Obligations We describe our operating lease commitments and purchase obligations in Note 8 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2017 . On September 13, 2017 we signed an agreement that includes a minimum purchase commitment of $450 million through August 31, 2022. There were no other significant changes in our operating lease commitments or purchase obligations during the three months ended October 31, 2017 |
Income Taxes
Income Taxes | 3 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes Effective Tax Rate We compute our provision for or benefit from income taxes by applying the estimated annual effective tax rate to income or loss from recurring operations and adding the effects of any discrete income tax items specific to the period. In the first quarter of fiscal 2017 we adopted ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” As a result, we recognized excess tax benefits on share-based compensation of $25 million and $19 million in our provision for income taxes for the three months ended October 31, 2017 and 2016 respectively. Our effective tax rate for the three months ended October 31, 2017 was approximately 72% . Excluding discrete tax items primarily related to share-based compensation tax benefits resulting from the adoption of ASU 2016-09, our effective tax rate for the period was 33% and did not differ significantly from the federal statutory rate of 35% . The tax benefit we received from the domestic production activities deduction and the federal research and experimentation credit were partially offset by the tax expense related to state income taxes and nondeductible share-based compensation. Our effective tax rate for the three months ended October 31, 2016 was approximately 58% . Excluding discrete tax items primarily related to share-based compensation tax benefits resulting from the adoption of ASU 2016-09, our effective tax rate for the period was 34% and did not differ significantly from the federal statutory rate of 35% . The tax benefit we received from the domestic production activities deduction and the federal research and experimentation credit were partially offset by the tax expense related to state income taxes and nondeductible share-based compensation. Unrecognized Tax Benefits and Other Considerations The total amount of our unrecognized tax benefits at July 31, 2017 was $61 million. Net of related deferred tax assets, unrecognized tax benefits were $38 million at that date. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $38 million. There were no material changes to these amounts during the three months ended October 31, 2017 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Oct. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity Stock Repurchase Programs and Treasury Shares Intuit’s Board of Directors has authorized a series of common stock repurchase programs. Shares of common stock repurchased under these programs become treasury shares. We repurchased 1.2 million shares for $170 million under these programs during the three months ended October 31, 2017 . Included in this amount were $2 million of repurchases which occurred in late October 2017 and were settled in early November 2017. At October 31, 2017 , we had authorization from our Board of Directors to expend up to an additional $1.4 billion for stock repurchases. Future stock repurchases under the current programs are at the discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors. Our treasury shares are repurchased at the market price on the trade date; accordingly, all amounts paid to reacquire these shares have been recorded as treasury stock on our balance sheets. Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount. In the past we have satisfied option exercises and restricted stock unit vesting under our employee equity incentive plans by reissuing treasury shares, and we may do so again in the future. During the second quarter of fiscal 2014 we began issuing new shares of common stock to satisfy option exercises and RSU vesting under our 2005 Equity Incentive Plan. We have not yet determined the ultimate disposition of the shares that we have repurchased in the past, and consequently we continue to hold them as treasury shares. Dividends on Common Stock During the three months ended October 31, 2017 we declared and paid quarterly cash dividends that totaled $0.39 per share of outstanding common stock or $105 million. In November 2017 our Board of Directors declared a quarterly cash dividend of $0.39 per share of outstanding common stock payable on January 18, 2018 to stockholders of record at the close of business on January 10, 2018 . Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors. Share-Based Compensation Expense The following table summarizes the total share-based compensation expense that we recorded in operating loss for the periods shown. Three Months Ended (In millions) October 31, October 31, Cost of revenue $ 3 $ 2 Selling and marketing 25 25 Research and development 39 36 General and administrative 30 26 Total share-based compensation expense $ 97 $ 89 We capitalized $1 million in share-based compensation related to internal use software projects during the three months ended October 31, 2017 and $2 million during the three months ended October 31, 2016 . Share-Based Awards Available for Grant A summary of share-based awards available for grant under our 2005 Equity Incentive Plan for the three months ended October 31, 2017 was as follows: (Shares in thousands) Shares Available for Grant Balance at July 31, 2017 25,164 Options granted — Restricted stock units granted (1) (521 ) Share-based awards canceled/forfeited/expired (1)(2) 1,536 Balance at October 31, 2017 26,179 ____________________________________________________ (1) RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited. (2) Stock options and RSUs canceled, expired or forfeited under our 2005 Equity Incentive Plan are returned to the pool of shares available for grant. Shares withheld for income taxes upon vesting of RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options and RSUs canceled, expired or forfeited under older expired plans are not returned to the pool of shares available for grant. Stock Option Activity and Related Share-Based Compensation Expense A summary of stock option activity for the three months ended October 31, 2017 was as follows: Options Outstanding (Shares in thousands) Number of Shares Weighted Average Exercise Price Per Share Balance at July 31, 2017 7,488 $ 104.50 Granted — — Exercised (671 ) 80.33 Canceled or expired (109 ) 115.17 Balance at October 31, 2017 6,708 $ 106.74 Exercisable at October 31, 2017 3,262 $ 88.83 At October 31, 2017 , there was approximately $73 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.2 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur. Restricted Stock Unit Activity and Related Share-Based Compensation Expense A summary of restricted stock unit (RSU) activity for the three months ended October 31, 2017 was as follows: Restricted Stock Units (Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Nonvested at July 31, 2017 8,636 $ 98.76 Granted 226 140.80 Vested (681 ) 65.30 Forfeited (568 ) 76.70 Nonvested at October 31, 2017 7,613 $ 104.65 At October 31, 2017 , there was approximately $626 million of unrecognized compensation cost related to non-vested RSUs with a weighted average vesting period of 2.2 |
Litigation
Litigation | 3 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | 8. Litigation In fiscal 2015 Intuit was contacted by certain state and federal regulatory authorities in connection with inquiries regarding an increase during the 2015 tax season in attempts by criminals using stolen identity information to file fraudulent tax returns and claim refunds. Intuit provided information in response to those inquiries. A consolidated putative class action lawsuit was filed by individuals who claim to have suffered damages in connection with the 2015 events. We believe that the allegations in that lawsuit are without merit, and we intend to vigorously defend against them. |
Segment Information
Segment Information | 3 Months Ended |
Oct. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 9. Segment Information In August 2017, we aligned our segment reporting for fiscal 2018 with our core customers and business partners. The Consumer Ecosystem offering moved from the Small Business segment into the Consumer Tax segment. The company also renamed the Small Business, Consumer Tax, and ProConnect segments as the Small Business & Self-Employed, Consumer, and Strategic Partner segments. The Strategic Partner segment will continue to manage our professional tax offerings while now focusing on partners instrumental to the success of Intuit’s ecosystem. We have defined our three reportable segments, described below, based on factors such as how we manage our operations and how our chief operating decision maker views results. We define the chief operating decision maker as our Chief Executive Officer and our Chief Financial Officer. Our chief operating decision maker organizes and manages our business primarily on the basis of product and service offerings. Small Business & Self-Employed : This segment targets small businesses, the self-employed, and the accounting professionals who serve and advise them around the globe. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, and payment processing solutions. Consumer : This segment targets consumers and includes TurboTax income tax preparation products and services sold in the U.S. and Canada. Strategic Partner : This segment targets professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, ProFile, and ProConnect Tax Online. All of our segments operate primarily in the United States and sell primarily to customers in the United States. International total net revenue was less than 5% of consolidated total net revenue for all periods presented. We include expenses such as corporate selling and marketing, product development, general and administrative expenses and share-based compensation expenses, which are not allocated to specific segments, in unallocated corporate items. Unallocated corporate items also include amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges. The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2017 and in Note 1, "Description of Business and Summary of Significant Accounting Policies – Significant Accounting Policies" in this Quarterly Report on Form 10-Q. Except for goodwill and purchased intangible assets, we do not generally track assets by reportable segment and, consequently, we do not disclose total assets by reportable segment. The following table shows our financial results by reportable segment for the periods indicated. Segment results for fiscal 2017 have been reclassified to conform to the fiscal 2018 segment presentation, as described earlier in this footnote. Three Months Ended (In millions) October 31, October 31, Net revenue: Small Business & Self-Employed $ 694 $ 593 Consumer 78 73 Strategic Partner 114 112 Total net revenue $ 886 $ 778 Operating income (loss): Small Business & Self-Employed $ 301 $ 239 Consumer (55 ) (38 ) Strategic Partner 72 70 Total segment operating income 318 271 Unallocated corporate items: Share-based compensation expense (97 ) (89 ) Other common expenses (275 ) (239 ) Amortization of acquired technology (2 ) (3 ) Amortization of other acquired intangible assets (1 ) (1 ) Total unallocated corporate items (375 ) (332 ) Total operating loss $ (57 ) $ (61 ) |
Description of Business and S17
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation, including amounts related to reportable segments. See Note 9, “ Segment Information ,” for more information. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2017 . Results for the three months ended October 31, 2017 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2018 |
Seasonality | Seasonality |
Use of Estimates | Use of Estimates |
Computation of Net Income (Loss) Per Share | Computation of Net Income (Loss) Per Share We compute basic net income or loss per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of the shares issuable upon the exercise of stock options and upon the vesting of restricted stock units (RSUs) under the treasury stock method. We include stock options with combined exercise prices and unrecognized compensation expense that are less than the average market price for our common stock, and RSUs with unrecognized compensation expense that is less than the average market price for our common stock, in the calculation of diluted net income per share. We exclude stock options with combined exercise prices and unrecognized compensation expense that are greater than the average market price for our common stock, and RSUs with unrecognized compensation expense that is greater than the average market price for our common stock, from the calculation of diluted net income per share because their effect is anti-dilutive. Under the treasury stock method, the amount that must be paid to exercise stock options and the amount of compensation expense for future service that we have not yet recognized for stock options and RSUs are assumed to be used to repurchase shares. All of the RSUs we grant have dividend rights. Dividend rights are accumulated and paid when the underlying RSUs vest. Since the dividend rights are subject to the same vesting requirements as the underlying equity awards they are considered a contingent transfer of value. Consequently, the RSUs are not considered participating securities and we do not present them separately in earnings per share. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers No customer accounted for 10% or more of total net revenue in the three months ended October 31, 2017 or October 31, 2016 . No customer accounted for 10% or more of gross accounts receivable at October 31, 2017 or July 31, 2017 |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted Goodwill Impairment - In January 2017 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, “ Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This new standard eliminates Step 2 from the goodwill impairment test. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2020. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017-04 on our consolidated financial statements. Business Combinations - In January 2017 the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business . ” This new standard clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017-01 on our consolidated financial statements. Statement of Cash Flows - In August 2016 the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. Financial Instruments - In June 2016 the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326). ” This new standard requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2020. Earlier adoption is permitted in the first quarter of our fiscal year beginning August 1, 2019. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements. Leases - In February 2016 the FASB issued ASU 2016-02, “ Leases (Topic 842). ” This new standard amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2019. Early adoption is permitted. This standard is required to be adopted using a modified retrospective approach. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements. Revenue Recognition - In May 2014 the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),”and in August 2015 the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year. This new standard supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the new standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible that more judgment and estimates may be required within the revenue recognition process than is required under present U.S. GAAP. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. The new standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new standard is effective for reporting periods beginning after December 15, 2017, which means that it will be effective for us in the first quarter of our fiscal year beginning August 1, 2018. We plan to adopt Topic 606 utilizing the full retrospective transition method when it becomes effective for us in the first fiscal quarter beginning August 1, 2018. We have completed our preliminary assessment of the new standard and are continuing to assess all potential impacts of the standard. We currently believe the most significant changes will be the timing of revenue recognition related to our QuickBooks desktop solutions and our consumer and professional tax desktop solutions. Under the current standard, we recognize substantially all of the revenue for QuickBooks desktop solutions ratably over the period that enhancements and connected services are provided, which is approximately three years. Under the new standard, we will recognize software license revenue for QuickBooks desktop solutions at the time the license is delivered. Due to the upfront recognition of Quickbooks desktop solutions, upon adoption, we will remove deferred revenue from our liabilities through a cumulative adjustment to retained earnings. We expect the timing of QuickBooks desktop revenue in our Small Business & Self-Employed reporting segment to shift to earlier quarters within each fiscal year as a result of these changes. With respect to our consumer and professional tax desktop solutions, under the current standard, we recognize all revenue related to the desktop solutions as services are provided. Under the new standard, we will recognize revenue for the desktop tax preparation software license and related tax form updates as they are delivered. We will recognize revenue for our electronic filing and connected services as those services are provided. As sales and delivery of desktop tax preparation software solutions are concentrated from November through April, we expect the timing of the related desktop revenue for our Consumer and Strategic Partner reporting segments to shift to earlier quarters within each fiscal year as a result of these changes. Under Topic 606 we do not expect our annual total and reporting segment revenue growth rates to be significantly different as compared to growth rates under the current standard. Accounting for commissions under the new standard will result in the deferral of incremental commission costs for obtaining contracts, which we do not expect to be material. |
Fair Value Measurement | The authoritative guidance defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, we consider the principal or most advantageous market for an asset or liability and assumptions that market participants would use when pricing the asset or liability. In addition, we consider and use all valuation methods that are appropriate in estimating the fair value of an asset or liability. The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows: • Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. • Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities. • Level 3 |
Description of Business and S18
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Composition of shares used in the computation of basic and diluted net income per share | The following table presents the composition of shares used in the computation of basic and diluted net loss per share for the periods indicated. Three Months Ended (In millions, except per share amounts) October 31, October 31, Numerator: Net loss $ (17 ) $ (30 ) Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 256 258 Shares used in diluted per share amounts: Weighted average common shares outstanding 256 258 Dilutive common equivalent shares from stock options and restricted stock awards — — Dilutive weighted average common shares outstanding 256 258 Basic and diluted net loss per share: Basic net loss per share $ (0.07 ) $ (0.12 ) Diluted net loss per share $ (0.07 ) $ (0.12 ) Shares excluded from computation of diluted net loss per share: Weighted average stock options and restricted stock units that would have been included in the computation of dilutive common equivalent shares outstanding if net income had been reported in the period 12 12 Weighted average stock options and restricted stock units that would have been excluded from the computation of dilutive common equivalent shares outstanding if net income had been reported in the period due to their anti-dilutive effect 2 4 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities measured at fair value on recurring basis | The following table summarizes financial assets and financial liabilities that we measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above. October 31, 2017 July 31, 2017 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Assets: Cash equivalents, primarily time deposits $ 28 $ — $ — $ 28 $ 181 $ — $ — $ 181 Available-for-sale debt securities: Municipal bonds — 55 — 55 — 63 — 63 Corporate notes — 383 — 383 — 382 — 382 U.S. agency securities — 10 — 10 — 3 — 3 Municipal auction rate securities — — 15 15 — — 15 15 Total available-for-sale securities — 448 15 463 — 448 15 463 Total assets measured at fair value on a recurring basis $ 28 $ 448 $ 15 $ 491 $ 181 $ 448 $ 15 $ 644 |
Cash equivalents and available-for-sale debt and equity securities by balance sheet classification and level in the fair value hierarchy | The following table summarizes our cash equivalents and available-for-sale debt securities by balance sheet classification and level in the fair value hierarchy at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: In cash and cash equivalents $ 28 $ — $ — $ 28 $ 181 $ — $ — $ 181 Available-for-sale securities: In investments $ — $ 248 $ — $ 248 $ — $ 248 $ — $ 248 In funds held for customers — 200 — 200 — 200 — 200 In long-term investments — — 15 15 — — 15 15 Total available-for-sale securities $ — $ 448 $ 15 $ 463 $ — $ 448 $ 15 $ 463 |
Cash and Cash Equivalents, In20
Cash and Cash Equivalents, Investments and Funds Held for Customers (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract] | |
Cash and cash equivalents, investments and funds held for customers by balance sheet classification | The following table summarizes our cash and cash equivalents, investments, and funds held for customers by balance sheet classification at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Classification on balance sheets: Cash and cash equivalents $ 529 $ 529 $ 529 $ 529 Investments 248 248 247 248 Funds held for customers 319 319 372 372 Long-term investments 31 31 31 31 Total cash and cash equivalents, investments, and funds held for customers $ 1,127 $ 1,127 $ 1,179 $ 1,180 |
Cash and cash equivalents, investments and funds held for customers by investment category | The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Type of issue: Total cash and cash equivalents $ 648 $ 648 $ 701 $ 701 Available-for-sale debt securities: Municipal bonds 55 55 63 63 Corporate notes 383 383 381 382 U.S. agency securities 10 10 3 3 Municipal auction rate securities 15 15 15 15 Total available-for-sale debt securities 463 463 462 463 Other long-term investments 16 16 16 16 Total cash and cash equivalents, investments, and funds held for customers $ 1,127 $ 1,127 $ 1,179 $ 1,180 |
Available-for-sale debt securities classified by the stated maturity date of the security | The following table summarizes our available-for-sale debt securities classified by the stated maturity date of the security at the dates indicated. October 31, 2017 July 31, 2017 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 197 $ 197 $ 209 $ 209 Due within two years 162 162 164 164 Due within three years 70 70 59 60 Due after three years 34 34 30 30 Total available-for-sale debt securities $ 463 $ 463 $ 462 $ 463 |
Current Liabilities (Tables)
Current Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other current liabilities | Other current liabilities were as follows at the dates indicated: (In millions) October 31, July 31, Executive deferred compensation plan liabilities $ 95 $ 83 Reserve for promotional discounts and rebates 18 19 Reserve for product returns 7 7 Current portion of license fee payable 10 10 Current portion of deferred rent 5 6 Current portion of dividend payable 5 9 Other 43 44 Total other current liabilities $ 183 $ 178 |
Long-Term Obligations and Com22
Long-Term Obligations and Commitments (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Long-Term Obligations [Abstract] | |
Other long-term obligations | Other long-term obligations were as follows at the dates indicated: (In millions) October 31, July 31, Total deferred rent $ 48 $ 49 Long-term income tax liabilities 54 53 Total license fee payable 18 18 Total dividend payable 9 13 Long-term deferred income tax liabilities 7 7 Other 15 16 Total long-term obligations 151 156 Less current portion (included in other current liabilities) (23 ) (26 ) Long-term obligations due after one year $ 128 $ 130 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Equity [Abstract] | |
Total share-based compensation expense | The following table summarizes the total share-based compensation expense that we recorded in operating loss for the periods shown. Three Months Ended (In millions) October 31, October 31, Cost of revenue $ 3 $ 2 Selling and marketing 25 25 Research and development 39 36 General and administrative 30 26 Total share-based compensation expense $ 97 $ 89 |
Summary of share-based awards available for grant | A summary of share-based awards available for grant under our 2005 Equity Incentive Plan for the three months ended October 31, 2017 was as follows: (Shares in thousands) Shares Available for Grant Balance at July 31, 2017 25,164 Options granted — Restricted stock units granted (1) (521 ) Share-based awards canceled/forfeited/expired (1)(2) 1,536 Balance at October 31, 2017 26,179 ____________________________________________________ (1) RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited. (2) |
Summary of stock option activity | A summary of stock option activity for the three months ended October 31, 2017 was as follows: Options Outstanding (Shares in thousands) Number of Shares Weighted Average Exercise Price Per Share Balance at July 31, 2017 7,488 $ 104.50 Granted — — Exercised (671 ) 80.33 Canceled or expired (109 ) 115.17 Balance at October 31, 2017 6,708 $ 106.74 Exercisable at October 31, 2017 3,262 $ 88.83 |
Summary of restricted stock unit activity | A summary of restricted stock unit (RSU) activity for the three months ended October 31, 2017 was as follows: Restricted Stock Units (Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Nonvested at July 31, 2017 8,636 $ 98.76 Granted 226 140.80 Vested (681 ) 65.30 Forfeited (568 ) 76.70 Nonvested at October 31, 2017 7,613 $ 104.65 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Segment Reporting [Abstract] | |
Financial results by reportable segment | The following table shows our financial results by reportable segment for the periods indicated. Segment results for fiscal 2017 have been reclassified to conform to the fiscal 2018 segment presentation, as described earlier in this footnote. Three Months Ended (In millions) October 31, October 31, Net revenue: Small Business & Self-Employed $ 694 $ 593 Consumer 78 73 Strategic Partner 114 112 Total net revenue $ 886 $ 778 Operating income (loss): Small Business & Self-Employed $ 301 $ 239 Consumer (55 ) (38 ) Strategic Partner 72 70 Total segment operating income 318 271 Unallocated corporate items: Share-based compensation expense (97 ) (89 ) Other common expenses (275 ) (239 ) Amortization of acquired technology (2 ) (3 ) Amortization of other acquired intangible assets (1 ) (1 ) Total unallocated corporate items (375 ) (332 ) Total operating loss $ (57 ) $ (61 ) |
Description of Business and S25
Description of Business and Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Numerator: | ||
Net loss | $ (17) | $ (30) |
Shares used in basic per share amounts: | ||
Weighted average common shares outstanding (in shares) | 256 | 258 |
Shares used in diluted per share amounts: | ||
Weighted average common shares outstanding (in shares) | 256 | 258 |
Dilutive common equivalent shares from stock options and restricted stock awards (in shares) | 0 | 0 |
Dilutive weighted average common shares outstanding (in shares) | 256 | 258 |
Basic and diluted net loss per share: | ||
Basic net loss per share (in dollars per share) | $ (0.07) | $ (0.12) |
Diluted net loss per share (in dollars per share) | $ (0.07) | $ (0.12) |
Shares excluded from computation of diluted net loss per share: | ||
Weighted average stock options and restricted stock units that would have been included in the computation of dilutive common equivalent shares outstanding if net income had been reported in the period (in shares) | 12 | 12 |
Weighted average stock options and restricted stock units that would have been excluded from the computation of dilutive common equivalent shares outstanding if net income had been reported in the period due to their anti-dilutive effect (in shares) | 2 | 4 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements on Recurring Basis (Details) - Fair value, measurements, recurring - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Estimate of fair value measurement | ||
Assets: | ||
Total cash equivalents | $ 28 | $ 181 |
Available-for-sale debt securities: | ||
Total assets measured at fair value on a recurring basis | 491 | 644 |
Estimate of fair value measurement | Municipal bonds | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 55 | 63 |
Estimate of fair value measurement | Corporate notes | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 383 | 382 |
Estimate of fair value measurement | U.S. agency securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 10 | 3 |
Estimate of fair value measurement | Municipal auction rate securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 15 | 15 |
Estimate of fair value measurement | Available-for-sale corporate equity securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 463 | 463 |
Level 1 | ||
Assets: | ||
Total cash equivalents | 28 | 181 |
Available-for-sale debt securities: | ||
Total assets measured at fair value on a recurring basis | 28 | 181 |
Level 1 | Municipal bonds | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 1 | Corporate notes | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 1 | U.S. agency securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 1 | Municipal auction rate securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 1 | Available-for-sale corporate equity securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 2 | ||
Assets: | ||
Total cash equivalents | 0 | 0 |
Available-for-sale debt securities: | ||
Total assets measured at fair value on a recurring basis | 448 | 448 |
Level 2 | Municipal bonds | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 55 | 63 |
Level 2 | Corporate notes | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 383 | 382 |
Level 2 | U.S. agency securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 10 | 3 |
Level 2 | Municipal auction rate securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 2 | Available-for-sale corporate equity securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 448 | 448 |
Level 3 | ||
Assets: | ||
Total cash equivalents | 0 | 0 |
Available-for-sale debt securities: | ||
Total assets measured at fair value on a recurring basis | 15 | 15 |
Level 3 | Municipal bonds | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 3 | Corporate notes | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 3 | U.S. agency securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 0 | 0 |
Level 3 | Municipal auction rate securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | 15 | 15 |
Level 3 | Available-for-sale corporate equity securities | ||
Available-for-sale debt securities: | ||
Total available-for-sale securities | $ 15 | $ 15 |
Fair Value Measurements - Balan
Fair Value Measurements - Balance Sheet Classification (Details ) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | $ 529 | $ 529 |
Fair value, measurements, recurring | Estimate of fair value measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 28 | 181 |
Total available-for-sale securities | 463 | 463 |
Fair value, measurements, recurring | Estimate of fair value measurement | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 28 | 181 |
Fair value, measurements, recurring | Estimate of fair value measurement | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 248 | 248 |
Fair value, measurements, recurring | Estimate of fair value measurement | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 200 | 200 |
Fair value, measurements, recurring | Estimate of fair value measurement | Available for sale debt securities in long term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 15 | 15 |
Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 28 | 181 |
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 1 | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 28 | 181 |
Fair value, measurements, recurring | Level 1 | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 1 | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 1 | Available for sale debt securities in long term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 0 | 0 |
Total available-for-sale securities | 448 | 448 |
Fair value, measurements, recurring | Level 2 | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 0 | 0 |
Fair value, measurements, recurring | Level 2 | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 248 | 248 |
Fair value, measurements, recurring | Level 2 | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 200 | 200 |
Fair value, measurements, recurring | Level 2 | Available for sale debt securities in long term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 0 | 0 |
Total available-for-sale securities | 15 | 15 |
Fair value, measurements, recurring | Level 3 | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total cash equivalents | 0 | 0 |
Fair value, measurements, recurring | Level 3 | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 3 | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | 0 | 0 |
Fair value, measurements, recurring | Level 3 | Available for sale debt securities in long term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total available-for-sale securities | $ 15 | $ 15 |
Cash and Cash Equivalents, In28
Cash and Cash Equivalents, Investments and Funds Held for Customers - Classification on Balance Sheets (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 |
Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents, amortized cost | $ 529 | $ 529 | $ 360 | $ 638 |
Total cash and cash equivalents, investments, and funds held for customers, Amortized Cost | 1,127 | 1,179 | ||
Total cash and cash equivalents, investments, and funds held for customers, Fair Value | 1,127 | 1,180 | ||
Cash and cash equivalents | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents, amortized cost | 529 | 529 | ||
Cash and cash equivalents, fair value disclosure | 529 | 529 | ||
Investments | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Investments and funds, amortized cost | 248 | 247 | ||
Investments and funds, fair value | 248 | 248 | ||
Funds held for customers | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Investments and funds, amortized cost | 319 | 372 | ||
Investments and funds, fair value | 319 | 372 | ||
Long-term investments | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Investments and funds, amortized cost | 31 | 31 | ||
Investments and funds, fair value | $ 31 | $ 31 |
Cash and Cash Equivalents, In29
Cash and Cash Equivalents, Investments and Funds Held for Customers - Type of issue (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 |
Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents, amortized cost | $ 529 | $ 529 | $ 360 | $ 638 |
Available-for-sale securities: | ||||
Total cash and cash equivalents, investments, and funds held for customers, Amortized Cost | 1,127 | 1,179 | ||
Total cash and cash equivalents, investments, and funds held for customers, Fair Value | 1,127 | 1,180 | ||
Total cash and cash equivalents | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents, amortized cost | 648 | 701 | ||
Cash and cash equivalents, fair value disclosure | 648 | 701 | ||
Municipal bonds | ||||
Available-for-sale securities: | ||||
Investments and funds, amortized cost | 55 | 63 | ||
Investments and funds, fair value | 55 | 63 | ||
Corporate notes | ||||
Available-for-sale securities: | ||||
Investments and funds, amortized cost | 383 | 381 | ||
Investments and funds, fair value | 383 | 382 | ||
U.S. agency securities | ||||
Available-for-sale securities: | ||||
Investments and funds, amortized cost | 10 | 3 | ||
Investments and funds, fair value | 10 | 3 | ||
Municipal auction rate securities | ||||
Available-for-sale securities: | ||||
Investments and funds, amortized cost | 15 | 15 | ||
Investments and funds, fair value | 15 | 15 | ||
Total available-for-sale debt securities | ||||
Available-for-sale securities: | ||||
Investments and funds, amortized cost | 463 | 462 | ||
Investments and funds, fair value | 463 | 463 | ||
Other long-term investments | ||||
Available-for-sale securities: | ||||
Other long-term investments, amortized cost | 16 | 16 | ||
Investments and funds, fair value | $ 16 | $ 16 |
Cash and Cash Equivalents, In30
Cash and Cash Equivalents, Investments and Funds Held for Customers - Classified by the stated maturity date (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Available-for-sale Securities, Debt Maturities | ||
Due within one year, amortized cost | $ 197 | $ 209 |
Due within one year, fair value | 197 | 209 |
Due within two years, amortized cost | 162 | 164 |
Due within two years, fair value | 162 | 164 |
Due within three years, amortized cost | 70 | 59 |
Due within three years, fair value | 70 | 60 |
Due after three years, amortized cost | 34 | 30 |
Due after three years, fair value | 34 | 30 |
Total available-for-sale debt securities, amortized cost | 463 | 462 |
Total available-for-sale debt securities, fair value | $ 463 | $ 463 |
Current Liabilities - Additiona
Current Liabilities - Additional Information (Details) | Feb. 01, 2016USD ($)extension | Oct. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Jul. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||
Short-term debt | $ 450,000,000 | $ 50,000,000 | ||
Proceeds from borrowings under revolving credit facility | 400,000,000 | $ 100,000,000 | ||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Interest Paid | 3,000,000 | 2,000,000 | ||
February 1, 2016 Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, term | 5 years | |||
Master credit agreement | $ 1,500,000,000 | |||
February 1, 2016 Credit Agreement | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Proceeds from borrowings under revolving credit facility | 400,000,000 | |||
February 1, 2016 Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt to EBITDA ratio (not greater than) | 3.25 | |||
EBITDA to interest payable ratio (not less than) | 3 | |||
February 1, 2016 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Unsecured revolving credit facility | $ 1,000,000,000 | |||
Revolving credit facility, increase limit | $ 250,000,000 | |||
Unsecured revolving credit facility extension | extension | 2 | |||
Fair value of amount outstanding | 400,000,000 | |||
Interest Paid | 1,000,000 | $ 0 | ||
February 1, 2016 Credit Agreement | Line of Credit | Revolving Credit Facility | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.00% | |||
February 1, 2016 Credit Agreement | Line of Credit | Revolving Credit Facility | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
February 1, 2016 Credit Agreement | Line of Credit | Revolving Credit Facility | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.90% | |||
February 1, 2016 Credit Agreement | Line of Credit | Revolving Credit Facility | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
February 1, 2016 Credit Agreement | Line of Credit | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Unsecured term loan | $ 500,000,000 | 475,000,000 | ||
Short-term debt | $ 50,000,000 | |||
February 1, 2016 Credit Agreement | Line of Credit | Term Loan | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.125% | |||
February 1, 2016 Credit Agreement | Line of Credit | Term Loan | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.875% | |||
February 1, 2016 Credit Agreement | Line of Credit | Term Loan | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.125% | |||
February 1, 2016 Credit Agreement | Line of Credit | Term Loan | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.875% |
Current Liabilities - Other Cur
Current Liabilities - Other Current Liabilities (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Other Liabilities, Current [Abstract] | ||
Executive deferred compensation plan liabilities | $ 95 | $ 83 |
Reserve for promotional discounts and rebates | 18 | 19 |
Reserve for product returns | 7 | 7 |
Current portion of license fee payable | 10 | 10 |
Current portion of deferred rent | 5 | 6 |
Current portion of dividend payable | 5 | 9 |
Other | 43 | 44 |
Total other current liabilities | $ 183 | $ 178 |
Long-Term Obligations and Com33
Long-Term Obligations and Commitments - Additional Information (Details) - USD ($) | Feb. 01, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Sep. 13, 2017 | Jul. 31, 2017 |
Debt Instrument [Line Items] | |||||
Short-term debt | $ 450,000,000 | $ 50,000,000 | |||
Minimum purchase commitment | $ 450,000,000 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Interest Paid | 3,000,000 | $ 2,000,000 | |||
February 1, 2016 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, term | 5 years | ||||
Master credit agreement | $ 1,500,000,000 | ||||
February 1, 2016 Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Periodic payment, principal, percent | 2.50% | ||||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Unsecured term loan | $ 500,000,000 | 475,000,000 | |||
Term Loan, increase limit | $ 500,000,000 | ||||
Short-term debt | $ 50,000,000 | ||||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.125% | ||||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.875% | ||||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.125% | ||||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.875% |
Long-Term Obligations and Com34
Long-Term Obligations and Commitments - Other Long-Term Obligations (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Long-Term Obligations [Abstract] | ||
Total deferred rent | $ 48 | $ 49 |
Long-term income tax liabilities | 54 | 53 |
Total license fee payable | 18 | 18 |
Total dividend payable | 9 | 13 |
Long-term deferred income tax liabilities | 7 | 7 |
Other | 15 | 16 |
Total long-term obligations | 151 | 156 |
Less current portion (included in other current liabilities) | (23) | (26) |
Long-term obligations due after one year | $ 128 | $ 130 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Excess tax benefits for provision for income taxes | $ 25 | $ 19 | |
Effective tax rate | 72.00% | 58.00% | |
Effective income tax rate reconciliation, excluding discrete tax benefits, percent | 33.00% | 34.00% | |
Federal statutory income tax rate | 35.00% | 35.00% | |
Total amount of unrecognized tax benefits | $ 61 | ||
Unrecognized tax benefits, net of related deferred tax assets | 38 | ||
Favorable net impact to income tax expense due to recognition of tax benefits | $ 38 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Programs, Treasury Shares, and Dividends on Common Stock(Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | |
Nov. 20, 2017 | Oct. 31, 2017 | Oct. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock repurchased (in shares) | 1.2 | ||
Common stock repurchased, value | $ 170 | $ 192 | |
Amounts due for share repurchases | $ 2 | ||
Common stock, dividends, per share, cash paid (in dollars per share) | $ 0.39 | ||
Payments of dividends | $ 105 | ||
Cash dividends declared per common share (in dollars per share) | $ 0.39 | $ 0.34 | |
Subsequent event | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Cash dividends declared per common share (in dollars per share) | $ 0.39 | ||
New Program | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchase program, remaining authorized repurchase amount | $ 1,400 |
Stockholders' Equity - Share-Ba
Stockholders' Equity - Share-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 97 | $ 89 |
Software and Software Development Costs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Capitalized computer software, gross | 1 | 2 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 3 | 2 |
Selling and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 25 | 25 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 39 | 36 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 30 | $ 26 |
Stockholders' Equity - Share-38
Stockholders' Equity - Share-Based Awards Available for Grant (Details) | 3 Months Ended | |
Oct. 31, 2017shares | ||
Shares Available for Grant | ||
Shares available for grant, beginning balance (in shares) | 25,164,000 | |
Options granted (in shares) | 0 | |
Restricted stock units granted (in shares) | (521,000) | [1] |
Share-based awards canceled/forfeited/expired (in shares) | 1,536,000 | [1],[2] |
Shares available for grant, ending balance (in shares) | 26,179,000 | |
Pool shares reduced for each share granted (in shares) | 2.3 | |
Pool shares increased for each share forfeited (in shares) | 2.3 | |
[1] | RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 | |
[2] | Stock options and RSUs canceled, expired or forfeited under our 2005 Equity Incentive Plan are returned to the pool of shares available for grant. Shares withheld for income taxes upon vesting of RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options and RSUs canceled, expired or forfeited under older expired plans are not returned to the pool of shares available for grant. Stock Option Activity and Related Share-Based Compensation Expense |
Stockholders' Equity - Stock-Op
Stockholders' Equity - Stock-Option Activity and Related Share-Based Compensation Expense (Details) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended |
Oct. 31, 2017USD ($)$ / sharesshares | |
Number of Shares | |
Options outstanding, beginning balance (in shares) | shares | 7,488 |
Options granted, number of shares (in shares) | shares | 0 |
Options exercised, number of shares (in shares) | shares | (671) |
Options canceled or expired, number of shares (in shares) | shares | (109) |
Options outstanding, ending balance (in shares) | shares | 6,708 |
Weighted Average Exercise Price Per Share | |
Weighted average exercise price per share, Beginning Balance (in dollars per share) | $ / shares | $ 104.50 |
Options granted, weighted average exercise price per share (in dollars per share) | $ / shares | 0 |
Options exercised, weighted average exercise price per share (in dollars per share) | $ / shares | 80.33 |
Options canceled or expired, weighted average exercise price per share (in dollars per share) | $ / shares | 115.17 |
Weighted average exercise price per share, Ending Balance (in dollars per share) | $ / shares | $ 106.74 |
Exercisable (in shares) | shares | 3,262 |
Exercisable, Weighted average exercise price per share (in dollars per share) | $ / shares | $ 88.83 |
Employee Stock Option | |
Weighted Average Exercise Price Per Share | |
Unrecognized compensation cost related to non-vested share based compensation expense | $ | $ 73 |
Expected weighted average vesting period to recognize compensation cost related to share based compensation expense, in years | 2 years 2 months 12 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Unit Activity and Related Share-Based Compensation Expense (Details) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended |
Oct. 31, 2017USD ($)$ / sharesshares | |
Number of Shares | |
Nonvested at beginning of period (in shares) | shares | 8,636 |
Granted, Number of shares (in shares) | shares | 226 |
Vested, Number of Shares (in shares) | shares | (681) |
Forfeited, Number of Shares (in shares) | shares | (568) |
Nonvested at end of period (in shares) | shares | 7,613 |
Weighted Average Grant Date Fair Value | |
Nonvested, Weighted Average Grant Date Fair Value, at beginning of period (in dollars per shares) | $ / shares | $ 98.76 |
Granted, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 140.80 |
Vested, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 65.30 |
Forfeited, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 76.70 |
Nonvested, Weighted Average Grant Date Fair Value, at end of period (in dollars per shares) | $ / shares | $ 104.65 |
Restricted Stock Units (RSUs) [Member] | |
Weighted Average Grant Date Fair Value | |
Unrecognized compensation cost related to non-vested RSUs | $ | $ 626 |
Weighted average vesting period, in years | 2 years 2 months 12 days |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | |
Oct. 31, 2017USD ($)segment | Oct. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
International total net revenue as a percentage of total (less than) | 5.00% | 5.00% |
Financial results by reportable segment | ||
Total net revenue | $ 886 | $ 778 |
Total operating loss | (57) | (61) |
Unallocated corporate items: | ||
Share-based compensation expense | (97) | (89) |
Amortization of other acquired intangible assets | (1) | (1) |
Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | 318 | 271 |
Corporate, Non-Segment | ||
Financial results by reportable segment | ||
Total operating loss | (375) | (332) |
Unallocated corporate items: | ||
Share-based compensation expense | (97) | (89) |
Other common expenses | (275) | (239) |
Corporate, Non-Segment | Technology-Based Intangible Assets | ||
Unallocated corporate items: | ||
Amortization of other acquired intangible assets | (2) | (3) |
Corporate, Non-Segment | Other Intangible Assets | ||
Unallocated corporate items: | ||
Amortization of other acquired intangible assets | (1) | (1) |
Small Business & Self-Employed | ||
Financial results by reportable segment | ||
Total net revenue | 694 | 593 |
Small Business & Self-Employed | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | 301 | 239 |
Consumer | ||
Financial results by reportable segment | ||
Total net revenue | 78 | 73 |
Consumer | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | (55) | (38) |
Strategic Partner | ||
Financial results by reportable segment | ||
Total net revenue | 114 | 112 |
Strategic Partner | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | $ 72 | $ 70 |