Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Oct. 31, 2018 | Nov. 14, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 259,508,568 | |
Emerging Growth Company | false | |
Entity Small Business | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Net revenue: | ||
Revenues | $ 1,016 | $ 910 |
Cost of revenue: | ||
Amortization of acquired technology | 5 | 2 |
Selling and marketing | 346 | 308 |
Research and development | 294 | 293 |
General and administrative | 137 | 145 |
Amortization of other acquired intangible assets | 2 | 1 |
Total costs and expenses | 1,026 | 945 |
Operating loss | (10) | (35) |
Interest expense | (4) | (5) |
Interest and other income, net | 0 | 3 |
Loss before income taxes | (14) | (37) |
Income tax provision (benefit) | (48) | (35) |
Net income (loss) | $ 34 | $ (2) |
Earnings Per Share, Basic | ||
Basic net income (loss) per share (in dollars per share) | $ 0.13 | $ (0.01) |
Shares used in basic per share calculations (in shares) | 260 | 256 |
Earnings Per Share, Diluted | ||
Diluted net income (loss) per share (in dollars per share) | $ 0.13 | $ (0.01) |
Shares used in diluted per share calculations (in shares) | 264 | 256 |
Dividends | ||
Cash dividends declared per common share (in dollars per share) | $ 0.47 | $ 0.39 |
Product | ||
Net revenue: | ||
Revenues | $ 347 | $ 370 |
Cost of revenue: | ||
Cost of revenue | 15 | 18 |
Service | ||
Net revenue: | ||
Revenues | 669 | 540 |
Cost of revenue: | ||
Cost of revenue | $ 227 | $ 178 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 34 | $ (2) |
Other comprehensive loss, net of income taxes: | ||
Foreign currency translation loss | (4) | (7) |
Total other comprehensive income (loss), net | (4) | (7) |
Comprehensive income (loss) | $ 30 | $ (9) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,084 | $ 1,464 |
Investments | 248 | 252 |
Accounts receivable, net | 77 | 98 |
Income taxes receivable | 116 | 39 |
Prepaid expenses and other current assets | 269 | 202 |
Current assets before funds held for customers | 1,794 | 2,055 |
Funds held for customers | 438 | 367 |
Total current assets | 2,232 | 2,422 |
Long-term investments | 13 | 13 |
Property and equipment, net | 805 | 812 |
Goodwill | 1,610 | 1,611 |
Acquired intangible assets, net | 55 | 61 |
Other assets | 213 | 215 |
Total assets | 4,928 | 5,134 |
Current liabilities: | ||
Short-term debt | 50 | 50 |
Accounts payable | 209 | 178 |
Accrued compensation and related liabilities | 174 | 369 |
Deferred revenue | 513 | 581 |
Other current liabilities | 202 | 198 |
Current liabilities before customer fund deposits | 1,148 | 1,376 |
Customer fund deposits | 438 | 367 |
Total current liabilities | 1,586 | 1,743 |
Long-term debt | 375 | 388 |
Long-term deferred income tax liabilities | 65 | 68 |
Other long-term obligations | 120 | 119 |
Total liabilities | 2,146 | 2,318 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock | 0 | 0 |
Common stock and additional paid-in capital | 5,501 | 5,338 |
Treasury stock, at cost | (11,151) | (11,050) |
Accumulated other comprehensive loss | (40) | (36) |
Retained earnings | 8,472 | 8,564 |
Total stockholders’ equity | 2,782 | 2,816 |
Total liabilities and stockholders’ equity | $ 4,928 | $ 5,134 |
Condensed Consolidated Statem_3
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 |
Beginning Balance (in shares) at Jul. 31, 2017 | 255,668 | |||||
Beginning Balance at Jul. 31, 2017 | $ 1,699 | $ 4,857 | $ (10,778) | $ (22) | $ 7,642 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income (loss) | (9) | (7) | (2) | |||
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) | (1,225) | |||||
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 | 1,562 | 4,999 | (10,948) | (29) | 7,540 | |
Beginning Balance (in shares) at Jul. 31, 2018 | 258,616 | |||||
Beginning Balance at Jul. 31, 2018 | 2,816 | 5,338 | (11,050) | (36) | 8,564 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income (loss) | 30 | (4) | 34 | |||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes (in shares) | 1,422 | |||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes | $ 57 | 57 | ||||
Stock repurchases under stock repurchase programs (in shares) | (467) | (467) | ||||
Stock repurchases under stock repurchase programs | $ (101) | (101) | ||||
Dividends and dividend rights declared | (126) | (126) | ||||
Share-based compensation expense | 106 | 106 | ||||
Ending Balance (in shares) at Oct. 31, 2018 | 259,571 | |||||
Ending Balance at Oct. 31, 2018 | $ 2,782 | $ 5,501 | $ (11,151) | $ (40) | $ 8,472 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.47 | $ 0.39 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 34 | $ (2) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation | 51 | 60 |
Amortization of acquired intangible assets | 6 | 5 |
Share-based compensation expense | 105 | 97 |
Deferred income taxes | (9) | (4) |
Other | 2 | 2 |
Total adjustments | 155 | 160 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 21 | (14) |
Income taxes receivable | (47) | 2 |
Prepaid expenses and other assets | (72) | (25) |
Accounts payable | 24 | 61 |
Accrued compensation and related liabilities | (191) | (147) |
Deferred revenue | (69) | (120) |
Other liabilities | 2 | 7 |
Total changes in operating assets and liabilities | (332) | (236) |
Net cash used in operating activities | (143) | (78) |
Cash flows from investing activities: | ||
Purchases of corporate and customer fund investments | (70) | (86) |
Sales of corporate and customer fund investments | 33 | 38 |
Maturities of corporate and customer fund investments | 41 | 46 |
Net change in customer fund deposits | 71 | (53) |
Purchases of property and equipment | (35) | (50) |
Originations of term loans to small businesses | (76) | (12) |
Principal repayments of term loans from small businesses | 52 | 4 |
Other | 4 | (15) |
Net cash provided by (used in) investing activities | 20 | (128) |
Cash flows from financing activities: | ||
Proceeds from borrowings under revolving credit facility | 0 | 400 |
Repayment of debt | (13) | (13) |
Proceeds from issuance of stock under employee stock plans | 120 | 83 |
Payments for employee taxes withheld upon vesting of restricted stock units | (63) | (39) |
Cash paid for purchases of treasury stock | (95) | (168) |
Dividends and dividend rights paid | (129) | (105) |
Other | (2) | 0 |
Net cash provided by (used in) financing activities | (182) | 158 |
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents | (4) | (5) |
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | (309) | (53) |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period | 1,631 | 701 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | $ 1,322 | $ 648 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows (Unaudited) Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 |
Statement of Cash Flows [Abstract] | ||||
Cash and cash equivalents | $ 1,084 | $ 1,464 | $ 529 | |
Restricted cash and restricted cash equivalents included in funds held for customers | 238 | 167 | 119 | $ 172 |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | $ 1,322 | $ 1,631 | $ 648 | $ 701 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2018 | |
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 send invoices, 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 acquired TSheets.com LLC, Exactor, Inc., and Applatix, Inc. in the second quarter of fiscal 2018. We have included the results of operations for these companies in our consolidated statements of operations from the dates of acquisition. Effective August 1, 2018, we adopted the requirements of Accounting Standards Update (ASU) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” and ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash .” All prior period amounts and disclosures set forth in this Quarterly Report on Form 10-Q have been restated to comply with these standards. 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, 2018 . Results for the three months ended October 31, 2018 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2019 or any other future period. Seasonality Our Consumer and Strategic Partner offerings have a significant and distinct seasonal pattern as sales and revenue from our income tax preparation products and services are heavily concentrated in the period from November through April. This seasonal pattern results in higher net revenues during our second and third quarters ending January 31 and April 30, respectively. 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, 2018 . See the discussion of changes to our revenue recognition policy for the adoption of Topic 606, the new revenue recognition standard, below. There have been no other changes to our significant accounting policies during the first three months of fiscal 2019. Revenue Recognition We derive revenue from the sale of packaged software products, software subscriptions, hosted services, payroll services, merchant payment processing services, financial supplies and hardware. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. Nature of Products and Services Desktop Offerings Our desktop offerings consist of our QuickBooks Desktop products, which include both packaged software products and software subscriptions, our consumer and professional tax desktop products, which include TurboTax, Lacerte and ProSeries, our desktop payroll products, and merchant payment processing services for small businesses who use our desktop offerings. Our QuickBooks Desktop packaged software products include a perpetual software license as well as enhancements and connected services. We recognize revenue for our QuickBooks Desktop packaged software products at the time the software license is delivered. We have determined that the enhancements and connected services included in our QuickBooks Desktop packaged software products are immaterial within the context of the contract. Our QuickBooks Desktop software subscriptions include a term software license, version protection, enhancements, support and various connected services. We recognize revenue for the software license and version protection at the time they are delivered and recognize revenue for support and connected services over the subscription term as the services are provided. We have determined that the enhancements included in our QuickBooks Desktop software subscriptions are immaterial within the context of the contract. Our consumer and professional tax desktop products include an on-premise tax software license, related tax form updates, electronic filing service and connected services. We recognize revenue for the software license and related tax form updates, as one performance obligation, over the period the forms and updates are delivered. We recognize revenue for our electronic filings service and connected services as those services are provided. We also sell some of our QuickBooks Desktop products and consumer tax desktop products in non-consignment and consignment arrangements to certain retailers. For non-consignment retailers, we begin recognizing revenue when control has transferred to the retailer. For consignment retailers, we begin recognizing revenue when control has transferred to the customer, at the time the end-user sale has occurred. Our desktop payroll products are sold as software subscriptions and include a term software license with a stand-ready obligation to maintain compliance with current payroll tax laws, support and connected services. The term software license and stand-ready obligation to maintain compliance with current payroll tax laws is considered one performance obligation. Each of the performance obligations is considered distinct and control is transferred to the customer over the subscription term. As a result, revenue is recognized ratably over the subscription term as services are provided. We offer merchant payment processing services as a separately paid connected service for our QuickBooks Desktop packaged software products and software subscriptions, and revenue is recognized as the services are provided to the customers. Online Offerings Our online offerings include our TurboTax Online products, ProConnect Tax Online products, QuickBooks Online products, online payroll products, and merchant payment processing services for small businesses who use our online offerings. These online offerings provide customers with the right to use the hosted software over the contract period without taking possession of the software and are billed on either a subscription or consumption basis. Revenue related to our online offerings that are billed on a subscription basis is recognized ratably over the contract period. Revenue related to online offerings that are billed on a consumption basis, is recognized when the customer consumes the related service. Other Solutions Revenue from the sale of our financial supplies, such as printed check stock, and hardware, such as retail point-of-sale equipment and credit card readers for mobile phones, is recognized when control is transferred to the customer which is generally when the products are shipped. We also have revenue-sharing and royalty arrangements with third-party partners and recognize this revenue as earned based upon reporting provided to us by our partners. In instances where we do not have reporting from our partners, we estimate revenue based on information available to us at the time. Product Revenue and Service and Other Revenue Product revenue includes revenue from: QuickBooks Desktop software licenses and version protection; consumer and professional tax desktop licenses and the related form updates; desktop payroll licenses and related updates; and financial supplies. Service and other revenue includes revenue from: our online offerings discussed above; support, electronic filing services and connected services included with our desktop offerings; merchant payment processing services for our desktop offerings; and revenue-sharing and royalty arrangements. We record revenue net of sales tax obligations. For payroll services, we generally require customers to remit payroll tax funds to us in advance of the payroll date via electronic funds transfer. We include in total net revenue the interest earned on these funds between the time that we collect them from customers and the time that we remit them to outside parties. Revenue for electronic payment processing services that we provide to merchants is recorded net of interchange fees charged by credit card associations. Significant Judgments Our contracts with customers often include promises to transfer multiple products and services to a customer. In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates. These judgments and estimates include identifying performance obligations in the contract, determining whether the performance obligations are distinct, determining the standalone sales price (SSP) for each distinct performance obligation, determining the timing of revenue recognition for distinct performance obligations and estimating the amount of variable consideration to include in the transaction price. The functionality of the software licenses included in our consumer and professional tax and payroll desktop offerings is dependent on the related enhancements and updates included in these offerings. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the related updates and recognized over time. Our contracts with customers include promises to transfer various products and services, which are generally capable of being distinct performance obligations. In many cases SSPs for distinct performance obligations are based on directly observable pricing. In instances where the SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. Our consumer and professional tax desktop products include an on-premise tax software license and related tax form updates that are recognized as the forms and updates are delivered. We measure progress towards complete satisfaction of the software license and related tax form updates using an output method based on the timing of when the tax forms are delivered. We generally provide refunds to customers for product returns and subscription cancellations. We also provide promotional discounts and incentive rebates on retail and distribution sales. These refunds, discounts and incentive rebates are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated based on historical experience and current business and economic indicators and updated at the end of each reporting period as additional information becomes available to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Discounts and incentive rebates are estimated based on distributors' and retailers' performance against the terms and conditions of the rebate programs. Deferred Revenue Generally, we receive payment at the time we enter into a contract with a customer. We record deferred revenue when we have entered into a contract with a customer and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation. During the three months ended October 31, 2018 , we recognized revenue of $327 million that was included in deferred revenue at July 31, 2018 . During the three months ended October 31, 2017 , we recognized revenue of $339 million that was included in deferred revenue at July 31, 2017 . Our performance obligations are generally satisfied within 12 months of the initial contract date. As of October 31, 2018 and July 31, 2018 , the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $2 million and $3 million , respectively, and is included in other long-term obligations on our consolidated balance sheets. Assets Recognized from the Costs to Obtain a Contract with a Customer Our internal sales commissions are considered incremental costs of obtaining the contract with a customer. Internal sales commissions for subscription offerings where we expect the benefit of those costs to continue longer than one year are capitalized and amortized ratably over the period of benefit, which ranges from three to four years. Total capitalized costs to obtain a contract are included in prepaid expenses and other current assets and other assets on our consolidated balance sheets. We apply a practical expedient to expense costs incurred to obtain a contract with a customer when the period of benefit is less than one year. These costs primarily include internal and external sales commissions for our consumer and professional tax offerings. Use of Estimates In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP), we make certain judgments, estimates, and assumptions that affect the amounts reported in our financial statements and the disclosures made in the accompanying notes. For example, we use judgments and estimates in determining how revenue should be recognized. These judgments and estimates include identifying performance obligations, determining if the performance obligations are distinct, determining the SSP and timing of revenue recognition for each distinct performance obligation, and estimating variable consideration to be included in the transaction price. We use estimates in determining the collectibility of accounts receivable and notes 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 income per share for the periods indicated. Three Months Ended (In millions, except per share amounts) October 31, October 31, Numerator: Net income (loss) $ 34 $ (2 ) Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 260 256 Shares used in diluted per share amounts: Weighted average common shares outstanding 260 256 Dilutive common equivalent shares from stock options and restricted stock awards 4 — Dilutive weighted average common shares outstanding 264 256 Basic and diluted net income (loss) per share: Basic net income (loss) per share $ 0.13 $ (0.01 ) Diluted net income (loss) per share $ 0.13 $ (0.01 ) Shares excluded from diluted net income (loss) per share: Weighted average stock options and restricted stock units that have been excluded from dilutive common equivalent shares outstanding due to their anti-dilutive effect — 14 Notes Receivable and Allowances for Loan Losses Notes receivable consist of term loans to small businesses and are included in prepaid expenses and other current assets on our consolidated balance sheets. As of October 31, 2018 and July 31, 2018, the notes receivable balance was $79 million and $55 million , respectively, and the allowance for loan losses were not significant. The term loans are not secured and are recorded at amortized cost, net of allowances for loan losses. We maintain an allowance for loan losses to reserve for potentially uncollectible notes receivable. We evaluate the creditworthiness of our loan portfolio on a pooled basis due to its composition of small, homogeneous loans with similar general credit risk and characteristics and apply a loss rate at the time of loan origination. The loss rate and underlying model are updated periodically to reflect actual loan performance and changes in assumptions. We make judgments about the known and inherent risks in the loan portfolio, adverse situations that may affect borrowers’ ability to repay and current economic conditions. When we determine that amounts are uncollectible, we write them off against the allowance. 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, 2018 or October 31, 2017 . No customer accounted for 10% or more of gross accounts receivable at October 31, 2018 or July 31, 2018 . Accounting Standards Recently Adopted Business Combinations - In January 2017 the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business . ” This 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. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2017-01 on our consolidated financial statements is not material. 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 standard makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2016-15 on our consolidated financial statements is not material. Income Taxes - In October 2016, the FASB issued ASU 2016-16, “ Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs, as opposed to historical GAAP guidance which prohibited the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset had been sold to an outside party. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2016-16 on our consolidated financial statements is not material. Statement of Cash Flows - In November 2016 the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash .” This standard provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. We have modified our consolidated statements of cash flows to include restricted cash and restricted cash equivalents. The adoption of ASU 2016-18 impacted our previously reported consolidated statement of cash flows as follows: Three Months Ended October 31, 2017 (Dollars in millions) As Reported ASU 2016-18 Adjustment As Adjusted Net cash provided by (used in): Operating activities $ (78 ) $ — $ (78 ) Investing activities (75 ) (53 ) (128 ) Financing activities 158 — 158 Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents (5 ) — (5 ) Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents $ — $ (53 ) $ (53 ) Revenue from Contracts with Customers - In May 2014 the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606). ” This standard superseded nearly all existing revenue recognition guidance under U.S. GAAP. Under this standard, revenue is recognized 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. This 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. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018 using the full retrospective method, which requires us to restate each prior reporting period presented. We have implemented internal controls and processes to enable the preparation of financial information on adoption. The most significant impact of the standard relates to the timing and amount of revenue recognized for our QuickBooks Desktop solutions and our consumer and professional tax desktop solutions. Our QuickBooks Desktop solutions include both packaged software products and software subscriptions. Our QuickBooks Desktop packaged software products include a software license as well as enhancements and connected services. Under the new standard, we recognize revenue for the QuickBooks Desktop packaged software products at the time the software license is delivered rather than ratably over the period that enhancements and connected services are provided, which was approximately three years. We have determined that the enhancements and connected services included in our QuickBooks Desktop packaged software products are immaterial within the context of the contract. Our QuickBooks Desktop software subscriptions include a software license, version protection, enhancements, support and various connected services. We recognize revenue for the software license and version protection at the time they are delivered and recognize revenue for support and connected services over the subscription term as the services are provided. Previously, we recognized revenue for our QuickBooks Desktop software subscriptions ratably over the subscription term, which is generally one year. We have determined that the enhancements included in our QuickBooks Desktop software subscriptions are immaterial within the context of the contract. Our consumer and professional tax desktop solutions include a desktop tax preparation software license, tax form updates, electronic filing and connected services. We recognize revenue for the desktop tax preparation software license and related tax form updates as the forms and updates are delivered and recognize revenue for our electronic filing and connected services as those services are provided. Previously, we recognized all revenue related to tax desktop solutions as services were provided. We capitalize the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year, which include internal sales commissions related to our subscription offerings. The adoption of this standard resulted in a decrease in deferred revenue and long-term deferred income taxes, primarily due to the change in revenue recognition for our QuickBooks Desktop and professional tax desktop solutions. Additionally, the adoption of the standard resulted in the recognition of additional revenue and a decrease in the income tax benefit, primarily due to the net change in revenue recognition for our QuickBooks Desktop and professional tax desktop solutions. Our prepaid expenses and other current assets and other assets balances increased due to the capitalized costs to obtain a contract. Adoption of ASU 2014-09 impacted our previously reported results as follows: July 31, 2018 (In millions) As Reported Topic 606 Adjustment As Adjusted Prepaid expenses and other current assets $ 184 $ 18 $ 202 Long-term deferred income taxes (1) 87 (85 ) 2 Other assets (1) 190 23 213 Deferred revenue 961 (380 ) 581 Other current liabilities 191 7 198 Long-term deferred revenue (2) 197 (194 ) 3 Other long-term obligations (2) 123 61 184 Stockholders’ equity 2,354 462 2,816 (1) Long-term deferred income taxes is included in other assets on our consolidated balance sheets. (2) Long-term deferred revenue is included in other long-term obligations on our consolidated balance sheets. Three Months Ended October 31, 2017 (In millions, except per share amounts) As Reported Topic 606 Adjustment As Adjusted Net revenue $ 886 $ 24 $ 910 Selling and marketing expense 308 — 308 Operating loss (57 ) 22 (35 ) Income tax benefit (42 ) 7 (35 ) Net loss (17 ) 15 (2 ) Diluted net loss per share (0.07 ) 0.06 (0.01 ) Adoption of Topic 606 had no impact to cash from or used in operating, financing, or investing on our consolidated statements of cash flows. Accounting Standards Not Yet Adopted Internal-Use Software - In August 2018 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, “ Intangibles—Goodwill and Other (Topic 350): Internal-Use Software.” This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. 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. We are currently evaluating the impact of our pending adoption of ASU 2018-15 on our consolidated financial statements. Goodwill Impairment - In January 2017 the FASB issued ASU 2017-04, “ Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This 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. Financial Instruments - In June 2016 the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326). ” This 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 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 expect to elect certain available transitional practical expedients. In July 2018 the FASB issued ASU 2018-11, “ Leases (Topic 842) Targeted Improvements," which allows for the adoption of this standard to be applied at the beginning of the most recent fiscal year as opposed to at the beginning of the earliest year presented. We plan to adopt under the provisions allowed under ASU 2018-11. While we continue to evaluate the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements, we expect that the real estate and equipment leases designated as operating leases as discussed in Note 9 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 will be recognized as right-of-use assets and corresponding lease liabilities on our consolidated balance sheets upon adoption. We do not expect the adoption of ASU 2016-02 to have a material impact on our consolidated statements of operations. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Oct. 31, 2018 | |
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, 2018 July 31, 2018 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Assets: Cash equivalents, primarily money market funds and savings deposit accounts $ 512 $ — $ — $ 512 $ 1,143 $ — $ — $ 1,143 Available-for-sale debt securities: Municipal bonds — 13 — 13 — 31 — 31 Corporate notes — 420 — 420 — 412 — 412 U.S. agency securities — 15 — 15 — 9 — 9 Total available-for-sale securities — 448 — 448 — 452 — 452 Total assets measured at fair value on a recurring basis $ 512 $ 448 $ — $ 960 $ 1,143 $ 452 $ — $ 1,595 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, 2018 July 31, 2018 (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 $ 512 $ — $ — $ 512 $ 1,143 $ — $ — $ 1,143 Available-for-sale debt securities: In investments $ — $ 248 $ — $ 248 $ — $ 252 $ — $ 252 In funds held for customers — 200 — 200 — 200 — 200 Total available-for-sale debt securities $ — $ 448 $ — $ 448 $ — $ 452 $ — $ 452 We value our Level 1 assets, consisting primarily of money market funds and savings deposit accounts, 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. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended October 31, 2018 |
Cash and Cash Equivalents, Inve
Cash and Cash Equivalents, Investments, and Funds Held for Customers | 3 Months Ended |
Oct. 31, 2018 | |
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. In all periods presented, cash equivalents consist primarily of money market funds and savings deposit accounts, investments consist primarily of investment-grade available-for-sale debt securities, and funds held for customers consist of cash and cash equivalents and investment-grade available-for-sale debt securities. 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, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Classification on consolidated balance sheets: Cash and cash equivalents $ 1,084 $ 1,084 $ 1,464 $ 1,464 Investments 250 248 253 252 Funds held for customers 438 438 368 367 Long-term investments 13 13 13 13 Total cash and cash equivalents, investments, and funds held for customers $ 1,785 $ 1,783 $ 2,098 $ 2,096 The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated. October 31, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Type of issue: Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 1,322 $ 1,322 $ 1,631 $ 1,631 Available-for-sale debt securities: Municipal bonds 13 13 31 31 Corporate notes 422 420 414 412 U.S. agency securities 15 15 9 9 Total available-for-sale debt securities 450 448 454 452 Other long-term investments 13 13 13 13 Total cash and cash equivalents, investments, and funds held for customers $ 1,785 $ 1,783 $ 2,098 $ 2,096 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 on our consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three months ended October 31, 2018 and October 31, 2017 were no t significant. We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive loss in the stockholders’ equity section of our consolidated balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at October 31, 2018 and July 31, 2018 were no t 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, 2018 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at October 31, 2018 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, included in investments and funds held for customers, classified by the stated maturity date of the security at the dates indicated. October 31, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 262 $ 261 $ 250 $ 250 Due within two years 119 118 117 116 Due within three years 47 47 66 65 Due after three years 22 22 21 21 Total available-for-sale debt securities $ 450 $ 448 $ 454 $ 452 Funds held for customers represent cash held on behalf of our customers that is invested in cash and cash equivalents and investment grade available-for-sale securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers, such as direct deposit payroll funds and payroll taxes. The following table summarizes our funds held for customers by investment category at the dates indicated. October 31, 2018 July 31, 2018 (In millions) Restricted cash and restricted cash equivalents $ 238 $ 167 Available-for-sale debt securities 200 200 Total funds held for customers $ 438 $ 367 October 31, 2017 July 31, 2017 (In millions) Restricted cash and restricted cash equivalents $ 119 $ 172 Available-for-sale debt securities 200 200 Total funds held for customers $ 319 $ 372 |
Current Liabilities
Current Liabilities | 3 Months Ended |
Oct. 31, 2018 | |
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, 2018 , $425 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, 2018 . At October 31, 2018 no amounts were outstanding under this revolving credit facility. We paid no amount for interest on the revolving credit facility during the three months ended October 31, 2018 and $1 million during the three months ended October 31, 2017 . Other Current Liabilities Other current liabilities were as follows at the dates indicated: (In millions) October 31, July 31, Executive deferred compensation plan liabilities $ 103 $ 97 Reserve for promotional discounts and rebates 10 10 Reserve for product returns 16 17 Current portion of license fee payable 10 9 Current portion of deferred rent 5 6 Current portion of dividend payable 7 10 Other 51 49 Total other current liabilities $ 202 $ 198 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, 2018 | |
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, 2018 , $425 million was outstanding under the term loan, of which $50 million was classified as short-term debt. The carrying value of the term loan approximates its fair value. Interest on the term loan is payable monthly. We paid $4 million for interest on the term loan during the three months ended October 31, 2018 and $3 million during the three months ended October 31, 2017 . 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 $ 47 Long-term income tax liabilities 61 61 Total license fee payable 10 9 Total dividend payable 10 14 Other 14 15 Total long-term obligations 143 146 Less current portion (included in other current liabilities) (23 ) (27 ) Long-term obligations due after one year $ 120 $ 119 Operating Lease Commitments and Unconditional Purchase Obligations We describe our operating lease commitments and purchase obligations in Note 9 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 . There were no significant changes in our operating lease commitments or purchase obligations during the three months ended October 31, 2018 |
Income Taxes
Income Taxes | 3 Months Ended |
Oct. 31, 2018 | |
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. Our effective tax rate for the three months ended October 31, 2017 has been restated to reflect the full retrospective application of ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606). ” See Note 1, “Description of Business and Summary of Significant Accounting Policies – Accounting Standards Recently Adopted,” for more information. The Tax Cuts and Jobs Act (2017 Tax Act) was enacted on December 22, 2017 and reduced the U.S. statutory federal corporate tax rate from 35% to 21% . The effective date of the tax rate change was January 1, 2018. The change resulted in a blended lower U.S. statutory federal rate of 26.9% for fiscal 2018. Our first quarter of fiscal 2018 reflects tax effects at the pre-enactment U.S. statutory federal rate of 35%. In fiscal 2019, we fully benefit from the enacted lower tax rate of 21% . On December 22, 2017 the SEC issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Act in the period of enactment. The guidance allows us to record provisional amounts to the extent a reasonable estimate can be made and provides us with up to one year from enactment date to finalize accounting for the impacts of the 2017 Tax Act. Since the 2017 Tax Act was passed in our second quarter of fiscal 2018, the deferred tax re-measurements and other items are considered provisional due to the forthcoming guidance and ongoing analysis of the final year-end data and tax positions. As of October 31, 2018, we have not fully completed our accounting for the tax effects of enactment of the 2017 Tax Act. We did not record any significant adjustments to prior period estimates during the three months ended October 31, 2018. We expect to complete our analysis within the 12-month measurement period in accordance with SAB 118. We recognized excess tax benefits on share-based compensation of $41 million and $25 million in our provision for income taxes for the three months ended October 31, 2018 and 2017, respectively. We recorded a $48 million tax benefit on a pretax loss of $14 million for the three months ended October 31, 2018 . Excluding discrete tax items primarily related to share-based compensation tax benefits, our effective tax rate for the period was 23% and did not differ significantly from the federal statutory rate of 21% . The tax expense related to state income taxes and nondeductible share-based compensation were partially offset by the tax benefit we received from the federal research and experimentation credit. Our effective tax rate for the three months ended October 31, 2017 was approximately 95% . Excluding discrete tax items primarily related to share-based compensation tax benefits, 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. Unrecognized Tax Benefits and Other Considerations The total amount of our unrecognized tax benefits at July 31, 2018 was $90 million. Net of related deferred tax assets, unrecognized tax benefits were $57 million at that date. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $57 million. There were no material changes to these amounts during the three months ended October 31, 2018 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Oct. 31, 2018 | |
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 467,000 shares for $101 million under these programs during the three months ended October 31, 2018 . Included in this amount were $6 million of repurchases which occurred in late October 2018 and were settled in early November 2018. At October 31, 2018 , we had authorization from our Board of Directors to expend up to an additional $3.1 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 consolidated 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, 2018 we declared and paid a quarterly cash dividend of $0.47 per share of outstanding common stock for a total of $129 million . In November 2018 our Board of Directors declared a quarterly cash dividend of $0.47 per share of outstanding common stock payable on January 18, 2019 to stockholders of record at the close of business on January 10, 2019 . 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 $ 14 $ 3 Selling and marketing 30 25 Research and development 35 39 General and administrative 26 30 Total share-based compensation expense $ 105 $ 97 We capitalized $1 million in share-based compensation related to internal use software projects during the three months ended October 31, 2018 and $1 million during the three months ended October 31, 2017 . 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, 2018 was as follows: (Shares in thousands) Shares Available for Grant Balance at July 31, 2018 22,791 Options granted (64 ) Restricted stock units granted (1) (340 ) Share-based awards canceled/forfeited/expired (1) (2) 1,441 Balance at October 31, 2018 23,828 (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, 2018 was as follows: Options Outstanding (Shares in thousands) Number of Shares Weighted Average Exercise Price Per Share Balance at July 31, 2018 5,154 $ 120.26 Granted 64 225.47 Exercised (890 ) 97.90 Canceled or expired (169 ) 128.19 Balance at October 31, 2018 4,159 $ 126.33 Exercisable at October 31, 2018 2,331 $ 105.63 At October 31, 2018 , there was approximately $54 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.4 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, 2018 was as follows: Restricted Stock Units (Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Nonvested at July 31, 2018 7,383 $ 131.50 Granted 148 214.57 Vested (825 ) 94.49 Forfeited (494 ) 74.75 Nonvested at October 31, 2018 6,212 $ 142.90 At October 31, 2018 , there was approximately $712 million of unrecognized compensation cost related to non-vested RSUs with a weighted average vesting period of 2.6 |
Litigation
Litigation | 3 Months Ended |
Oct. 31, 2018 | |
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 and now believes those inquiries are resolved. A consolidated putative class action lawsuit was filed by individuals who claim to have suffered damages in connection with the 2015 events. On May 23, 2018, the parties reached a settlement in principle of this matter. The settlement has been preliminarily approved and remains subject to final approval by the court. The terms of the settlement are not material to our consolidated financial statements. In the event the settlement does not receive final approval by the court, the litigation may resume and we may not be able to predict the outcome of such lawsuit. We continue to believe that the allegations in this lawsuit are without merit. |
Segment Information
Segment Information | 3 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 9. Segment Information 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 and the self-employed around the world, and the accounting professionals who serve and advise them. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, merchant payment processing solutions, and financing for small businesses. Consumer : This segment targets consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Our Mint and Turbo offerings target consumers and help them understand and improve their financial lives by offering a view of their financial health. 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, and share-based compensation, 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, 2018 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. Three Months Ended (In millions) October 31, October 31, Net revenue: Small Business & Self-Employed $ 908 $ 819 Consumer 90 74 Strategic Partner 18 17 Total net revenue $ 1,016 $ 910 Operating income (loss): Small Business & Self-Employed $ 460 $ 424 Consumer (41 ) (59 ) Strategic Partner (20 ) (25 ) Total segment operating income 399 340 Unallocated corporate items: Share-based compensation expense (105 ) (97 ) Other common expenses (297 ) (275 ) Amortization of acquired technology (5 ) (2 ) Amortization of other acquired intangible assets (2 ) (1 ) Total unallocated corporate items (409 ) (375 ) Total operating loss $ (10 ) $ (35 ) Revenue classified by significant product and service offerings was as follows: Three Months Ended (In millions) October 31, October 31, Net revenue: QuickBooks Online Accounting $ 217 $ 149 Online Services 154 113 Total Online Ecosystem 371 262 QuickBooks Desktop Accounting 228 249 Desktop Services and Supplies 309 308 Total Desktop Ecosystem 537 557 Small Business & Self-Employed 908 819 Consumer 90 74 Strategic Partner 18 17 Total net revenue $ 1,016 $ 910 Revenue from our QuickBooks Desktop packaged software products was $29 million and $30 million during the three months ended October 31, 2018 and 2017 |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2018 | |
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 acquired TSheets.com LLC, Exactor, Inc., and Applatix, Inc. in the second quarter of fiscal 2018. We have included the results of operations for these companies in our consolidated statements of operations from the dates of acquisition. Effective August 1, 2018, we adopted the requirements of Accounting Standards Update (ASU) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” and ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash .” All prior period amounts and disclosures set forth in this Quarterly Report on Form 10-Q have been restated to comply with these standards. 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, 2018 . Results for the three months ended October 31, 2018 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2019 |
Seasonality | Seasonality |
Revenue Recognition | Revenue Recognition We derive revenue from the sale of packaged software products, software subscriptions, hosted services, payroll services, merchant payment processing services, financial supplies and hardware. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. Nature of Products and Services Desktop Offerings Our desktop offerings consist of our QuickBooks Desktop products, which include both packaged software products and software subscriptions, our consumer and professional tax desktop products, which include TurboTax, Lacerte and ProSeries, our desktop payroll products, and merchant payment processing services for small businesses who use our desktop offerings. Our QuickBooks Desktop packaged software products include a perpetual software license as well as enhancements and connected services. We recognize revenue for our QuickBooks Desktop packaged software products at the time the software license is delivered. We have determined that the enhancements and connected services included in our QuickBooks Desktop packaged software products are immaterial within the context of the contract. Our QuickBooks Desktop software subscriptions include a term software license, version protection, enhancements, support and various connected services. We recognize revenue for the software license and version protection at the time they are delivered and recognize revenue for support and connected services over the subscription term as the services are provided. We have determined that the enhancements included in our QuickBooks Desktop software subscriptions are immaterial within the context of the contract. Our consumer and professional tax desktop products include an on-premise tax software license, related tax form updates, electronic filing service and connected services. We recognize revenue for the software license and related tax form updates, as one performance obligation, over the period the forms and updates are delivered. We recognize revenue for our electronic filings service and connected services as those services are provided. We also sell some of our QuickBooks Desktop products and consumer tax desktop products in non-consignment and consignment arrangements to certain retailers. For non-consignment retailers, we begin recognizing revenue when control has transferred to the retailer. For consignment retailers, we begin recognizing revenue when control has transferred to the customer, at the time the end-user sale has occurred. Our desktop payroll products are sold as software subscriptions and include a term software license with a stand-ready obligation to maintain compliance with current payroll tax laws, support and connected services. The term software license and stand-ready obligation to maintain compliance with current payroll tax laws is considered one performance obligation. Each of the performance obligations is considered distinct and control is transferred to the customer over the subscription term. As a result, revenue is recognized ratably over the subscription term as services are provided. We offer merchant payment processing services as a separately paid connected service for our QuickBooks Desktop packaged software products and software subscriptions, and revenue is recognized as the services are provided to the customers. Online Offerings Our online offerings include our TurboTax Online products, ProConnect Tax Online products, QuickBooks Online products, online payroll products, and merchant payment processing services for small businesses who use our online offerings. These online offerings provide customers with the right to use the hosted software over the contract period without taking possession of the software and are billed on either a subscription or consumption basis. Revenue related to our online offerings that are billed on a subscription basis is recognized ratably over the contract period. Revenue related to online offerings that are billed on a consumption basis, is recognized when the customer consumes the related service. Other Solutions Revenue from the sale of our financial supplies, such as printed check stock, and hardware, such as retail point-of-sale equipment and credit card readers for mobile phones, is recognized when control is transferred to the customer which is generally when the products are shipped. We also have revenue-sharing and royalty arrangements with third-party partners and recognize this revenue as earned based upon reporting provided to us by our partners. In instances where we do not have reporting from our partners, we estimate revenue based on information available to us at the time. Product Revenue and Service and Other Revenue Product revenue includes revenue from: QuickBooks Desktop software licenses and version protection; consumer and professional tax desktop licenses and the related form updates; desktop payroll licenses and related updates; and financial supplies. Service and other revenue includes revenue from: our online offerings discussed above; support, electronic filing services and connected services included with our desktop offerings; merchant payment processing services for our desktop offerings; and revenue-sharing and royalty arrangements. We record revenue net of sales tax obligations. For payroll services, we generally require customers to remit payroll tax funds to us in advance of the payroll date via electronic funds transfer. We include in total net revenue the interest earned on these funds between the time that we collect them from customers and the time that we remit them to outside parties. Revenue for electronic payment processing services that we provide to merchants is recorded net of interchange fees charged by credit card associations. Significant Judgments Our contracts with customers often include promises to transfer multiple products and services to a customer. In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates. These judgments and estimates include identifying performance obligations in the contract, determining whether the performance obligations are distinct, determining the standalone sales price (SSP) for each distinct performance obligation, determining the timing of revenue recognition for distinct performance obligations and estimating the amount of variable consideration to include in the transaction price. The functionality of the software licenses included in our consumer and professional tax and payroll desktop offerings is dependent on the related enhancements and updates included in these offerings. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the related updates and recognized over time. Our contracts with customers include promises to transfer various products and services, which are generally capable of being distinct performance obligations. In many cases SSPs for distinct performance obligations are based on directly observable pricing. In instances where the SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. Our consumer and professional tax desktop products include an on-premise tax software license and related tax form updates that are recognized as the forms and updates are delivered. We measure progress towards complete satisfaction of the software license and related tax form updates using an output method based on the timing of when the tax forms are delivered. We generally provide refunds to customers for product returns and subscription cancellations. We also provide promotional discounts and incentive rebates on retail and distribution sales. These refunds, discounts and incentive rebates are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated based on historical experience and current business and economic indicators and updated at the end of each reporting period as additional information becomes available to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Discounts and incentive rebates are estimated based on distributors' and retailers' performance against the terms and conditions of the rebate programs. Deferred Revenue Generally, we receive payment at the time we enter into a contract with a customer. We record deferred revenue when we have entered into a contract with a customer and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation. During the three months ended October 31, 2018 , we recognized revenue of $327 million that was included in deferred revenue at July 31, 2018 . During the three months ended October 31, 2017 , we recognized revenue of $339 million that was included in deferred revenue at July 31, 2017 . Our performance obligations are generally satisfied within 12 months of the initial contract date. As of October 31, 2018 and July 31, 2018 , the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $2 million and $3 million , respectively, and is included in other long-term obligations on our consolidated balance sheets. Assets Recognized from the Costs to Obtain a Contract with a Customer Our internal sales commissions are considered incremental costs of obtaining the contract with a customer. Internal sales commissions for subscription offerings where we expect the benefit of those costs to continue longer than one year are capitalized and amortized ratably over the period of benefit, which ranges from three to four years. Total capitalized costs to obtain a contract are included in prepaid expenses and other current assets and other assets on our consolidated balance sheets. |
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. |
Notes Receivable and Allowances for Loan Losses | Notes Receivable and Allowances for Loan Losses Notes receivable consist of term loans to small businesses and are included in prepaid expenses and other current assets on our consolidated balance sheets. As of October 31, 2018 and July 31, 2018, the notes receivable balance was $79 million and $55 million |
Accounting Standards Recently Adopted and Accounting Standards Not Yet Adopted | Accounting Standards Recently Adopted Business Combinations - In January 2017 the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business . ” This 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. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2017-01 on our consolidated financial statements is not material. 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 standard makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2016-15 on our consolidated financial statements is not material. Income Taxes - In October 2016, the FASB issued ASU 2016-16, “ Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs, as opposed to historical GAAP guidance which prohibited the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset had been sold to an outside party. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. The impact of the adoption of ASU 2016-16 on our consolidated financial statements is not material. Statement of Cash Flows - In November 2016 the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash .” This standard provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018. We have modified our consolidated statements of cash flows to include restricted cash and restricted cash equivalents. The adoption of ASU 2016-18 impacted our previously reported consolidated statement of cash flows as follows: Three Months Ended October 31, 2017 (Dollars in millions) As Reported ASU 2016-18 Adjustment As Adjusted Net cash provided by (used in): Operating activities $ (78 ) $ — $ (78 ) Investing activities (75 ) (53 ) (128 ) Financing activities 158 — 158 Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents (5 ) — (5 ) Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents $ — $ (53 ) $ (53 ) Revenue from Contracts with Customers - In May 2014 the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606). ” This standard superseded nearly all existing revenue recognition guidance under U.S. GAAP. Under this standard, revenue is recognized 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. This 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. We adopted this standard in the first quarter of our fiscal year beginning August 1, 2018 using the full retrospective method, which requires us to restate each prior reporting period presented. We have implemented internal controls and processes to enable the preparation of financial information on adoption. The most significant impact of the standard relates to the timing and amount of revenue recognized for our QuickBooks Desktop solutions and our consumer and professional tax desktop solutions. Our QuickBooks Desktop solutions include both packaged software products and software subscriptions. Our QuickBooks Desktop packaged software products include a software license as well as enhancements and connected services. Under the new standard, we recognize revenue for the QuickBooks Desktop packaged software products at the time the software license is delivered rather than ratably over the period that enhancements and connected services are provided, which was approximately three years. We have determined that the enhancements and connected services included in our QuickBooks Desktop packaged software products are immaterial within the context of the contract. Our QuickBooks Desktop software subscriptions include a software license, version protection, enhancements, support and various connected services. We recognize revenue for the software license and version protection at the time they are delivered and recognize revenue for support and connected services over the subscription term as the services are provided. Previously, we recognized revenue for our QuickBooks Desktop software subscriptions ratably over the subscription term, which is generally one year. We have determined that the enhancements included in our QuickBooks Desktop software subscriptions are immaterial within the context of the contract. Our consumer and professional tax desktop solutions include a desktop tax preparation software license, tax form updates, electronic filing and connected services. We recognize revenue for the desktop tax preparation software license and related tax form updates as the forms and updates are delivered and recognize revenue for our electronic filing and connected services as those services are provided. Previously, we recognized all revenue related to tax desktop solutions as services were provided. We capitalize the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year, which include internal sales commissions related to our subscription offerings. The adoption of this standard resulted in a decrease in deferred revenue and long-term deferred income taxes, primarily due to the change in revenue recognition for our QuickBooks Desktop and professional tax desktop solutions. Additionally, the adoption of the standard resulted in the recognition of additional revenue and a decrease in the income tax benefit, primarily due to the net change in revenue recognition for our QuickBooks Desktop and professional tax desktop solutions. Our prepaid expenses and other current assets and other assets balances increased due to the capitalized costs to obtain a contract. Adoption of ASU 2014-09 impacted our previously reported results as follows: July 31, 2018 (In millions) As Reported Topic 606 Adjustment As Adjusted Prepaid expenses and other current assets $ 184 $ 18 $ 202 Long-term deferred income taxes (1) 87 (85 ) 2 Other assets (1) 190 23 213 Deferred revenue 961 (380 ) 581 Other current liabilities 191 7 198 Long-term deferred revenue (2) 197 (194 ) 3 Other long-term obligations (2) 123 61 184 Stockholders’ equity 2,354 462 2,816 (1) Long-term deferred income taxes is included in other assets on our consolidated balance sheets. (2) Long-term deferred revenue is included in other long-term obligations on our consolidated balance sheets. Three Months Ended October 31, 2017 (In millions, except per share amounts) As Reported Topic 606 Adjustment As Adjusted Net revenue $ 886 $ 24 $ 910 Selling and marketing expense 308 — 308 Operating loss (57 ) 22 (35 ) Income tax benefit (42 ) 7 (35 ) Net loss (17 ) 15 (2 ) Diluted net loss per share (0.07 ) 0.06 (0.01 ) Adoption of Topic 606 had no impact to cash from or used in operating, financing, or investing on our consolidated statements of cash flows. Accounting Standards Not Yet Adopted Internal-Use Software - In August 2018 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, “ Intangibles—Goodwill and Other (Topic 350): Internal-Use Software.” This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. 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. We are currently evaluating the impact of our pending adoption of ASU 2018-15 on our consolidated financial statements. Goodwill Impairment - In January 2017 the FASB issued ASU 2017-04, “ Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This 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. Financial Instruments - In June 2016 the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326). ” This 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 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 expect to elect certain available transitional practical expedients. In July 2018 the FASB issued ASU 2018-11, “ Leases (Topic 842) Targeted Improvements," which allows for the adoption of this standard to be applied at the beginning of the most recent fiscal year as opposed to at the beginning of the earliest year presented. We plan to adopt under the provisions allowed under ASU 2018-11. While we continue to evaluate the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements, we expect that the real estate and equipment leases designated as operating leases as discussed in Note 9 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 will be recognized as right-of-use assets and corresponding lease liabilities on our consolidated balance sheets upon adoption. We do not expect the adoption of ASU 2016-02 to have a material impact on our consolidated statements of operations. |
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 S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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 income per share for the periods indicated. Three Months Ended (In millions, except per share amounts) October 31, October 31, Numerator: Net income (loss) $ 34 $ (2 ) Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 260 256 Shares used in diluted per share amounts: Weighted average common shares outstanding 260 256 Dilutive common equivalent shares from stock options and restricted stock awards 4 — Dilutive weighted average common shares outstanding 264 256 Basic and diluted net income (loss) per share: Basic net income (loss) per share $ 0.13 $ (0.01 ) Diluted net income (loss) per share $ 0.13 $ (0.01 ) Shares excluded from diluted net income (loss) per share: Weighted average stock options and restricted stock units that have been excluded from dilutive common equivalent shares outstanding due to their anti-dilutive effect — 14 |
Schedule of effect of new accounting pronouncements | The adoption of ASU 2016-18 impacted our previously reported consolidated statement of cash flows as follows: Three Months Ended October 31, 2017 (Dollars in millions) As Reported ASU 2016-18 Adjustment As Adjusted Net cash provided by (used in): Operating activities $ (78 ) $ — $ (78 ) Investing activities (75 ) (53 ) (128 ) Financing activities 158 — 158 Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents (5 ) — (5 ) Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents $ — $ (53 ) $ (53 ) July 31, 2018 (In millions) As Reported Topic 606 Adjustment As Adjusted Prepaid expenses and other current assets $ 184 $ 18 $ 202 Long-term deferred income taxes (1) 87 (85 ) 2 Other assets (1) 190 23 213 Deferred revenue 961 (380 ) 581 Other current liabilities 191 7 198 Long-term deferred revenue (2) 197 (194 ) 3 Other long-term obligations (2) 123 61 184 Stockholders’ equity 2,354 462 2,816 (1) Long-term deferred income taxes is included in other assets on our consolidated balance sheets. (2) Long-term deferred revenue is included in other long-term obligations on our consolidated balance sheets. Three Months Ended October 31, 2017 (In millions, except per share amounts) As Reported Topic 606 Adjustment As Adjusted Net revenue $ 886 $ 24 $ 910 Selling and marketing expense 308 — 308 Operating loss (57 ) 22 (35 ) Income tax benefit (42 ) 7 (35 ) Net loss (17 ) 15 (2 ) Diluted net loss per share (0.07 ) 0.06 (0.01 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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, 2018 July 31, 2018 (In millions) Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Assets: Cash equivalents, primarily money market funds and savings deposit accounts $ 512 $ — $ — $ 512 $ 1,143 $ — $ — $ 1,143 Available-for-sale debt securities: Municipal bonds — 13 — 13 — 31 — 31 Corporate notes — 420 — 420 — 412 — 412 U.S. agency securities — 15 — 15 — 9 — 9 Total available-for-sale securities — 448 — 448 — 452 — 452 Total assets measured at fair value on a recurring basis $ 512 $ 448 $ — $ 960 $ 1,143 $ 452 $ — $ 1,595 |
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, 2018 July 31, 2018 (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 $ 512 $ — $ — $ 512 $ 1,143 $ — $ — $ 1,143 Available-for-sale debt securities: In investments $ — $ 248 $ — $ 248 $ — $ 252 $ — $ 252 In funds held for customers — 200 — 200 — 200 — 200 Total available-for-sale debt securities $ — $ 448 $ — $ 448 $ — $ 452 $ — $ 452 |
Cash and Cash Equivalents, In_2
Cash and Cash Equivalents, Investments, and Funds Held for Customers (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Classification on consolidated balance sheets: Cash and cash equivalents $ 1,084 $ 1,084 $ 1,464 $ 1,464 Investments 250 248 253 252 Funds held for customers 438 438 368 367 Long-term investments 13 13 13 13 Total cash and cash equivalents, investments, and funds held for customers $ 1,785 $ 1,783 $ 2,098 $ 2,096 |
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, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Type of issue: Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 1,322 $ 1,322 $ 1,631 $ 1,631 Available-for-sale debt securities: Municipal bonds 13 13 31 31 Corporate notes 422 420 414 412 U.S. agency securities 15 15 9 9 Total available-for-sale debt securities 450 448 454 452 Other long-term investments 13 13 13 13 Total cash and cash equivalents, investments, and funds held for customers $ 1,785 $ 1,783 $ 2,098 $ 2,096 |
Available-for-sale debt securities classified by the stated maturity date of the security | The following table summarizes our available-for-sale debt securities, included in investments and funds held for customers, classified by the stated maturity date of the security at the dates indicated. October 31, 2018 July 31, 2018 (In millions) Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 262 $ 261 $ 250 $ 250 Due within two years 119 118 117 116 Due within three years 47 47 66 65 Due after three years 22 22 21 21 Total available-for-sale debt securities $ 450 $ 448 $ 454 $ 452 |
Schedule of funds held for customers | The following table summarizes our funds held for customers by investment category at the dates indicated. October 31, 2018 July 31, 2018 (In millions) Restricted cash and restricted cash equivalents $ 238 $ 167 Available-for-sale debt securities 200 200 Total funds held for customers $ 438 $ 367 October 31, 2017 July 31, 2017 (In millions) Restricted cash and restricted cash equivalents $ 119 $ 172 Available-for-sale debt securities 200 200 Total funds held for customers $ 319 $ 372 |
Current Liabilities (Tables)
Current Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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 $ 103 $ 97 Reserve for promotional discounts and rebates 10 10 Reserve for product returns 16 17 Current portion of license fee payable 10 9 Current portion of deferred rent 5 6 Current portion of dividend payable 7 10 Other 51 49 Total other current liabilities $ 202 $ 198 |
Long-Term Obligations and Com_2
Long-Term Obligations and Commitments (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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 $ 47 Long-term income tax liabilities 61 61 Total license fee payable 10 9 Total dividend payable 10 14 Other 14 15 Total long-term obligations 143 146 Less current portion (included in other current liabilities) (23 ) (27 ) Long-term obligations due after one year $ 120 $ 119 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
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 $ 14 $ 3 Selling and marketing 30 25 Research and development 35 39 General and administrative 26 30 Total share-based compensation expense $ 105 $ 97 |
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, 2018 was as follows: (Shares in thousands) Shares Available for Grant Balance at July 31, 2018 22,791 Options granted (64 ) Restricted stock units granted (1) (340 ) Share-based awards canceled/forfeited/expired (1) (2) 1,441 Balance at October 31, 2018 23,828 (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, 2018 was as follows: Options Outstanding (Shares in thousands) Number of Shares Weighted Average Exercise Price Per Share Balance at July 31, 2018 5,154 $ 120.26 Granted 64 225.47 Exercised (890 ) 97.90 Canceled or expired (169 ) 128.19 Balance at October 31, 2018 4,159 $ 126.33 Exercisable at October 31, 2018 2,331 $ 105.63 |
Summary of restricted stock unit activity | A summary of restricted stock unit (RSU) activity for the three months ended October 31, 2018 was as follows: Restricted Stock Units (Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Nonvested at July 31, 2018 7,383 $ 131.50 Granted 148 214.57 Vested (825 ) 94.49 Forfeited (494 ) 74.75 Nonvested at October 31, 2018 6,212 $ 142.90 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
Financial results by reportable segment | The following table shows our financial results by reportable segment for the periods indicated. Three Months Ended (In millions) October 31, October 31, Net revenue: Small Business & Self-Employed $ 908 $ 819 Consumer 90 74 Strategic Partner 18 17 Total net revenue $ 1,016 $ 910 Operating income (loss): Small Business & Self-Employed $ 460 $ 424 Consumer (41 ) (59 ) Strategic Partner (20 ) (25 ) Total segment operating income 399 340 Unallocated corporate items: Share-based compensation expense (105 ) (97 ) Other common expenses (297 ) (275 ) Amortization of acquired technology (5 ) (2 ) Amortization of other acquired intangible assets (2 ) (1 ) Total unallocated corporate items (409 ) (375 ) Total operating loss $ (10 ) $ (35 ) |
Revenue classified by significant product and service offerings | Revenue classified by significant product and service offerings was as follows: Three Months Ended (In millions) October 31, October 31, Net revenue: QuickBooks Online Accounting $ 217 $ 149 Online Services 154 113 Total Online Ecosystem 371 262 QuickBooks Desktop Accounting 228 249 Desktop Services and Supplies 309 308 Total Desktop Ecosystem 537 557 Small Business & Self-Employed 908 819 Consumer 90 74 Strategic Partner 18 17 Total net revenue $ 1,016 $ 910 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 | |
Accounting Policies [Abstract] | |||
Deferred revenue, revenue recognized | $ 327 | $ 339 | |
Revenue, performance obligation, description of timing | 12 months | ||
Long-term deferred revenue | $ 2 | $ 3 | |
Capitalized Contract Cost [Line Items] | |||
Notes receivable | $ 79 | $ 55 | |
Period of revenue recognition for software product enhancements and connected services | 3 years | ||
Minimum | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract cost, period of benefit | 3 years | ||
Maximum | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract cost, period of benefit | 4 years |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Composition of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Accounting Policies [Abstract] | ||
Net income (loss) | $ 34 | $ (2) |
Shares used in basic per share amounts: | ||
Weighted average common shares outstanding (in shares) | 260 | 256 |
Shares used in diluted per share amounts: | ||
Weighted average common shares outstanding (in shares) | 260 | 256 |
Dilutive common equivalent shares from stock options and restricted stock awards (in shares) | 4 | 0 |
Dilutive weighted average common shares outstanding (in shares) | 264 | 256 |
Basic and diluted net income (loss) per share: | ||
Basic net income (loss) per share (in dollars per share) | $ 0.13 | $ (0.01) |
Diluted net income (loss) per share (in dollars per share) | $ 0.13 | $ (0.01) |
Shares excluded from diluted net income (loss) per share: | ||
Weighted average stock options and restricted stock units that have been excluded from dilutive common equivalent shares outstanding due to their anti-dilutive effect (in shares) | 0 | 14 |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Schedule of Impact of ASU 2016-18 and ASU 2014-09 (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 | Jul. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating activities | $ (143) | $ (78) | ||
Investing activities | 20 | (128) | ||
Financing activities | (182) | 158 | ||
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents | (4) | (5) | ||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | (309) | (53) | ||
Prepaid expenses and other current assets | 269 | $ 202 | ||
Long-term deferred income taxes | 2 | |||
Other assets | 213 | |||
Deferred revenue | 513 | 581 | ||
Other current liabilities | 202 | 198 | ||
Long-term deferred revenue | 2 | 3 | ||
Other long-term obligations | 184 | |||
Stockholders’ equity | 2,782 | 1,562 | 2,816 | $ 1,699 |
Net revenue | 1,016 | 910 | ||
Selling and marketing | 346 | 308 | ||
Operating loss | (10) | (35) | ||
Income tax provision (benefit) | $ (48) | (35) | ||
Net loss | $ (2) | |||
Diluted net loss per share (in dollars per share) | $ 0.13 | $ (0.01) | ||
Previously Reported | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating activities | $ (78) | |||
Investing activities | (75) | |||
Financing activities | 158 | |||
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents | (5) | |||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | 0 | |||
Prepaid expenses and other current assets | 184 | |||
Long-term deferred income taxes | 87 | |||
Other assets | 190 | |||
Deferred revenue | 961 | |||
Other current liabilities | 191 | |||
Long-term deferred revenue | 197 | |||
Other long-term obligations | 123 | |||
Stockholders’ equity | 2,354 | |||
Net revenue | 886 | |||
Selling and marketing | 308 | |||
Operating loss | (57) | |||
Income tax provision (benefit) | (42) | |||
Net loss | $ (17) | |||
Diluted net loss per share (in dollars per share) | $ (0.07) | |||
Restatement Adjustment | Accounting Standards Update 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating activities | $ 0 | |||
Investing activities | (53) | |||
Financing activities | 0 | |||
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents | 0 | |||
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | (53) | |||
Restatement Adjustment | Accounting Standards Update 2014-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Prepaid expenses and other current assets | 18 | |||
Long-term deferred income taxes | (85) | |||
Other assets | 23 | |||
Deferred revenue | (380) | |||
Other current liabilities | 7 | |||
Long-term deferred revenue | (194) | |||
Other long-term obligations | 61 | |||
Stockholders’ equity | $ 462 | |||
Net revenue | 24 | |||
Selling and marketing | 0 | |||
Operating loss | 22 | |||
Income tax provision (benefit) | 7 | |||
Net loss | $ 15 | |||
Diluted net loss per share (in dollars per share) | $ 0.06 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Assets: | ||
Cash equivalents, primarily money market funds and savings deposit accounts | $ 1,084 | $ 1,464 |
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 448 | 452 |
Fair value, measurements, recurring | ||
Assets: | ||
Cash equivalents, primarily money market funds and savings deposit accounts | 512 | 1,143 |
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 448 | 452 |
Assets, Fair Value Disclosure | 960 | 1,595 |
Fair value, measurements, recurring | Level 1 | ||
Assets: | ||
Cash equivalents, primarily money market funds and savings deposit accounts | 512 | 1,143 |
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
Assets, Fair Value Disclosure | 512 | 1,143 |
Fair value, measurements, recurring | Level 2 | ||
Assets: | ||
Cash equivalents, primarily money market funds and savings deposit accounts | 0 | 0 |
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 448 | 452 |
Assets, Fair Value Disclosure | 448 | 452 |
Fair value, measurements, recurring | Level 3 | ||
Assets: | ||
Cash equivalents, primarily money market funds and savings deposit accounts | 0 | 0 |
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
Assets, Fair Value Disclosure | 0 | 0 |
Municipal bonds | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 13 | 31 |
Municipal bonds | Fair value, measurements, recurring | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 13 | 31 |
Municipal bonds | Fair value, measurements, recurring | Level 1 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
Municipal bonds | Fair value, measurements, recurring | Level 2 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 13 | 31 |
Municipal bonds | Fair value, measurements, recurring | Level 3 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
Corporate notes | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 420 | 412 |
Corporate notes | Fair value, measurements, recurring | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 420 | 412 |
Corporate notes | Fair value, measurements, recurring | Level 1 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
Corporate notes | Fair value, measurements, recurring | Level 2 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 420 | 412 |
Corporate notes | Fair value, measurements, recurring | Level 3 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
U.S. agency securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 15 | 9 |
U.S. agency securities | Fair value, measurements, recurring | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 15 | 9 |
U.S. agency securities | Fair value, measurements, recurring | Level 1 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0 | 0 |
U.S. agency securities | Fair value, measurements, recurring | Level 2 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 15 | 9 |
U.S. agency securities | Fair value, measurements, recurring | Level 3 | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | $ 0 | $ 0 |
Fair Value Measurements - Balan
Fair Value Measurements - Balance Sheet Classification (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | $ 1,084 | $ 1,464 |
Available-for-sale debt securities | 448 | 452 |
Fair value, measurements, recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 512 | 1,143 |
Available-for-sale debt securities | 448 | 452 |
Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 512 | 1,143 |
Available-for-sale debt securities | 0 | 0 |
Fair value, measurements, recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 0 | 0 |
Available-for-sale debt securities | 448 | 452 |
Fair value, measurements, recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 0 | 0 |
Available-for-sale debt securities | 0 | 0 |
Available for sale debt securities in investments | Fair value, measurements, recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 248 | 252 |
Available for sale debt securities in investments | Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 0 | 0 |
Available for sale debt securities in investments | Fair value, measurements, recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 248 | 252 |
Available for sale debt securities in investments | Fair value, measurements, recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 0 | 0 |
Available for sale debt securities in funds held for customers | Fair value, measurements, recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 200 | 200 |
Available for sale debt securities in funds held for customers | Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 0 | 0 |
Available for sale debt securities in funds held for customers | Fair value, measurements, recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 200 | 200 |
Available for sale debt securities in funds held for customers | Fair value, measurements, recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | $ 0 | $ 0 |
Cash and Cash Equivalents, In_3
Cash and Cash Equivalents, Investments, and Funds Held for Customers - Classification on Balance Sheets (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 | Oct. 31, 2017 |
Cash and Cash Equivalents Items [Line Items] | |||
Cash and cash equivalents | $ 1,084 | $ 1,464 | $ 529 |
Cash and cash equivalents, fair value | 1,084 | 1,464 | |
Available-for-sale debt securities, amortized cost | 450 | 454 | |
Available-for-sale debt securities | 448 | 452 | |
Total cash and cash equivalents, investments, and funds held for customers, Amortized Cost | 1,785 | 2,098 | |
Total cash and cash equivalents, investments, and funds held for customers, Fair Value | 1,783 | 2,096 | |
Investments | |||
Cash and Cash Equivalents Items [Line Items] | |||
Available-for-sale debt securities, amortized cost | 250 | 253 | |
Available-for-sale debt securities | 248 | 252 | |
Funds held for customers | |||
Cash and Cash Equivalents Items [Line Items] | |||
Available-for-sale debt securities, amortized cost | 438 | 368 | |
Available-for-sale debt securities | 438 | 367 | |
Long-term investments | |||
Cash and Cash Equivalents Items [Line Items] | |||
Available-for-sale debt securities, amortized cost | 13 | 13 | |
Available-for-sale debt securities | $ 13 | $ 13 |
Cash and Cash Equivalents, In_4
Cash and Cash Equivalents, Investments, and Funds Held for Customers - Type of issue (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 | Jul. 31, 2017 | |
Cash and Cash Equivalents Items [Line Items] | ||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents | $ 1,322 | $ 648 | $ 1,631 | $ 701 |
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 450 | 454 | ||
Available-for-sale debt securities | 448 | 452 | ||
Total cash and cash equivalents, investments, and funds held for customers, Amortized Cost | 1,785 | 2,098 | ||
Total cash and cash equivalents, investments, and funds held for customers, Fair Value | 1,783 | 2,096 | ||
Gross realized gains (losses) on available for sale debt securities | 0 | $ 0 | ||
Unrealized gain (loss) on available for sale debt securities | 0 | 0 | ||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents | 1,322 | 1,631 | ||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, fair value | 1,322 | 1,631 | ||
Municipal bonds | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 13 | 31 | ||
Available-for-sale debt securities | 13 | 31 | ||
Corporate notes | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 422 | 414 | ||
Available-for-sale debt securities | 420 | 412 | ||
U.S. agency securities | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 15 | 9 | ||
Available-for-sale debt securities | 15 | 9 | ||
Other long-term investments | ||||
Available-for-sale securities: | ||||
Other long-term investments, amortized cost | 13 | 13 | ||
Estimate of Fair Value Measurement | Other long-term investments | ||||
Available-for-sale securities: | ||||
Other long-term investments, amortized cost | $ 13 | $ 13 |
Cash and Cash Equivalents, In_5
Cash and Cash Equivalents, Investments, and Funds Held for Customers - Classified by the stated maturity date (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Amortized Cost | ||
Due within one year | $ 262 | $ 250 |
Due within two years | 119 | 117 |
Due within three years | 47 | 66 |
Due after three years | 22 | 21 |
Total available-for-sale debt securities | 450 | 454 |
Fair Value | ||
Due within one year | 261 | 250 |
Due within two years | 118 | 116 |
Due within three years | 47 | 65 |
Due after three years | 22 | 21 |
Total available-for-sale debt securities | $ 448 | $ 452 |
Cash and Cash Equivalents, In_6
Cash and Cash Equivalents, Investments, and Funds Held for Customers - Investments in Funds Held for Customers (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 |
Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract] | ||||
Restricted cash and restricted cash equivalents | $ 238 | $ 167 | $ 119 | $ 172 |
Available-for-sale debt securities | 200 | 200 | 200 | 200 |
Total funds held for customers | $ 438 | $ 367 | $ 319 | $ 372 |
Current Liabilities - Narrative
Current Liabilities - Narrative (Details) | Feb. 01, 2016USD ($)extension | Oct. 31, 2018USD ($) | Oct. 31, 2017USD ($) | Jul. 31, 2018USD ($) |
Debt Instrument [Line Items] | ||||
Short-term debt | $ 50,000,000 | $ 50,000,000 | ||
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 | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Interest paid | 4,000,000 | $ 3,000,000 | ||
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 | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Unsecured term loan | $ 500,000,000 | 425,000,000 | ||
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% | |||
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 | 0 | |||
Interest paid | $ 0 | $ 1,000,000 | ||
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% |
Current Liabilities - Other Cur
Current Liabilities - Other Current Liabilities (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Other Liabilities, Current [Abstract] | ||
Executive deferred compensation plan liabilities | $ 103 | $ 97 |
Reserve for promotional discounts and rebates | 10 | 10 |
Reserve for product returns | 16 | 17 |
Current portion of license fee payable | 10 | 9 |
Current portion of deferred rent | 5 | 6 |
Current portion of dividend payable | 7 | 10 |
Other | 51 | 49 |
Total other current liabilities | $ 202 | $ 198 |
Long-Term Obligations and Com_3
Long-Term Obligations and Commitments - Narrative (Details) - USD ($) | Feb. 01, 2016 | Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2018 |
Debt Instrument [Line Items] | ||||
Short-term debt | $ 50,000,000 | $ 50,000,000 | ||
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 | ||||
Debt Instrument [Line Items] | ||||
Interest paid | 4,000,000 | $ 3,000,000 | ||
February 1, 2016 Credit Agreement | Term Loan | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Unsecured term loan | $ 500,000,000 | 425,000,000 | ||
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 Com_4
Long-Term Obligations and Commitments - Other Long-Term Obligations (Details) - USD ($) $ in Millions | Oct. 31, 2018 | Jul. 31, 2018 |
Long-Term Obligations [Abstract] | ||
Total deferred rent | $ 48 | $ 47 |
Long-term income tax liabilities | 61 | 61 |
Total license fee payable | 10 | 9 |
Total dividend payable | 10 | 14 |
Other | 14 | 15 |
Total long-term obligations | 143 | 146 |
Less current portion (included in other current liabilities) | (23) | (27) |
Long-term obligations due after one year | 184 | |
Other long-term obligations | $ 120 | $ 119 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2019 | Jul. 31, 2018 | |
Income Tax [Line Items] | ||||
Federal statutory income tax rate | 21.00% | 26.90% | ||
Share-based compensation, excess tax benefit, amount | $ 41 | $ 25 | ||
Income tax benefit | 48 | 35 | ||
Pretax loss | $ 14 | $ 37 | ||
Effective income tax rate reconciliation, excluding discrete tax benefits, percent | 23.00% | 33.00% | ||
Effective income tax rate | 95.00% | |||
Total amount of unrecognized tax benefits | $ 90 | |||
Unrecognized tax benefits, net of related deferred tax assets | 57 | |||
Favorable net impact to income tax expense due to recognition of tax benefits | $ 57 | |||
Changes in unrecognized tax benefits | $ 0 | |||
Forecast | ||||
Income Tax [Line Items] | ||||
Federal statutory income tax rate | 21.00% |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Programs, Treasury Shares, and Dividends on Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | ||
Nov. 20, 2018 | Oct. 31, 2018 | Oct. 31, 2018 | Oct. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 105 | $ 97 | ||
Common stock repurchased (in shares) | 467 | |||
Common stock repurchased, value | $ 6 | $ 101 | 170 | |
Common stock, dividends, per share, cash paid (in dollars per share) | $ 0.47 | |||
Payments of dividends | $ 129 | $ 105 | ||
Cash dividends declared per common share (in dollars per share) | $ 0.47 | $ 0.39 | ||
Subsequent event | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash dividends declared per common share (in dollars per share) | $ 0.47 | |||
New Program | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 3,100 | $ 3,100 |
Stockholders' Equity - Share-Ba
Stockholders' Equity - Share-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 105 | $ 97 |
Software and Software Development Costs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Capitalized computer software, gross | 1 | 1 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 14 | 3 |
Selling and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 30 | 25 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 35 | 39 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 26 | $ 30 |
Stockholders' Equity - Share-_2
Stockholders' Equity - Share-Based Awards Available for Grant (Details) | 3 Months Ended | |
Oct. 31, 2018shares | ||
Shares Available for Grant | ||
Shares available for grant, beginning balance (in shares) | 22,791,000 | |
Options granted (in shares) | (64,000) | |
Restricted stock units granted (in shares) | (340,000) | [1] |
Share-based awards canceled/forfeited/expired (in shares) | 1,441,000 | [1],[2] |
Shares available for grant, ending balance (in shares) | 23,828,000 | |
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, 2018USD ($)$ / sharesshares | |
Number of Shares | |
Options outstanding, beginning balance (in shares) | shares | 5,154 |
Options granted, number of shares (in shares) | shares | 64 |
Options exercised, number of shares (in shares) | shares | (890) |
Options canceled or expired, number of shares (in shares) | shares | (169) |
Options outstanding, ending balance (in shares) | shares | 4,159 |
Weighted Average Exercise Price Per Share | |
Weighted average exercise price per share, Beginning Balance (in dollars per share) | $ / shares | $ 120.26 |
Options granted, weighted average exercise price per share (in dollars per share) | $ / shares | 225.47 |
Options exercised, weighted average exercise price per share (in dollars per share) | $ / shares | 97.90 |
Options canceled or expired, weighted average exercise price per share (in dollars per share) | $ / shares | 128.19 |
Weighted average exercise price per share, Ending Balance (in dollars per share) | $ / shares | $ 126.33 |
Exercisable (in shares) | shares | 2,331 |
Exercisable, Weighted average exercise price per share (in dollars per share) | $ / shares | $ 105.63 |
Employee Stock Option | |
Weighted Average Exercise Price Per Share | |
Unrecognized compensation cost related to non-vested share based compensation expense | $ | $ 54 |
Expected weighted average vesting period to recognize compensation cost related to share based compensation expense, in years | 2 years 4 months 24 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Unit Activity and Related Share-Based Compensation Expense (Details) - Restricted Stock Units (RSUs) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended |
Oct. 31, 2018USD ($)$ / sharesshares | |
Number of Shares | |
Nonvested at beginning of period (in shares) | shares | 7,383 |
Granted (in shares) | shares | 148 |
Vested (in shares) | shares | (825) |
Forfeited (in shares) | shares | (494) |
Nonvested at end of period (in shares) | shares | 6,212 |
Weighted Average Grant Date Fair Value | |
Nonvested, Weighted Average Grant Date Fair Value, at beginning of period (in dollars per shares) | $ / shares | $ 131.50 |
Granted, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 214.57 |
Vested, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 94.49 |
Forfeited, Weighted Average Grant Date Fair Value (in dollars per shares) | $ / shares | 74.75 |
Nonvested, Weighted Average Grant Date Fair Value, at end of period (in dollars per shares) | $ / shares | $ 142.90 |
Unrecognized compensation cost related to non-vested RSUs | $ | $ 712 |
Weighted average vesting period, in years | 2 years 7 months 6 days |
Segment Information - Results b
Segment Information - Results by Reportable Segment (Details) $ in Millions | 3 Months Ended | |
Oct. 31, 2018USD ($)segment | Oct. 31, 2017USD ($) | |
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 | ||
Revenues | $ 1,016 | $ 910 |
Total operating loss | (10) | (35) |
Unallocated corporate items: | ||
Share-based compensation expense | (105) | (97) |
Amortization of acquired technology | (5) | (2) |
Amortization of other acquired intangible assets | (2) | (1) |
Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | 399 | 340 |
Segment Reconciling Items | ||
Unallocated corporate items: | ||
Share-based compensation expense | (105) | (97) |
Other common expenses | (297) | (275) |
Amortization of acquired technology | (5) | (2) |
Amortization of other acquired intangible assets | (2) | (1) |
Total unallocated corporate items | (409) | (375) |
Small Business & Self-Employed | ||
Financial results by reportable segment | ||
Revenues | 908 | 819 |
Small Business & Self-Employed | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | 460 | 424 |
Consumer | ||
Financial results by reportable segment | ||
Revenues | 90 | 74 |
Consumer | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | (41) | (59) |
Strategic Partner | ||
Financial results by reportable segment | ||
Revenues | 18 | 17 |
Strategic Partner | Operating Segments | ||
Financial results by reportable segment | ||
Total operating loss | $ (20) | $ (25) |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Revenue from External Customer [Line Items] | ||
Revenues | $ 1,016 | $ 910 |
Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Revenues | 908 | 819 |
Consumer | ||
Revenue from External Customer [Line Items] | ||
Revenues | 90 | 74 |
Strategic Partner | ||
Revenue from External Customer [Line Items] | ||
Revenues | 18 | 17 |
Online Ecosystem Subsegment | Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Revenues | 371 | 262 |
Online Ecosystem Subsegment | Small Business & Self-Employed | QuickBooks | ||
Revenue from External Customer [Line Items] | ||
Revenues | 217 | 149 |
Online Ecosystem Subsegment | Small Business & Self-Employed | Online Services | ||
Revenue from External Customer [Line Items] | ||
Revenues | 154 | 113 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Revenues | 537 | 557 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | QuickBooks | ||
Revenue from External Customer [Line Items] | ||
Revenues | 228 | 249 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | Desktop Services And Supplies | ||
Revenue from External Customer [Line Items] | ||
Revenues | 309 | 308 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | QuickBooks Packaged Software | ||
Revenue from External Customer [Line Items] | ||
Revenues | $ 29 | $ 30 |