Cover Page
Cover Page - shares | 3 Months Ended | |
Oct. 31, 2021 | Nov. 12, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-21180 | |
Entity Registrant Name | INTUIT INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0034661 | |
Entity Address, Address Line One | 2700 Coast Avenue | |
Entity Address, City or Town | Mountain View | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94043 | |
City Area Code | 650 | |
Local Phone Number | 944-6000 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | INTU | |
Security Exchange Name | NASDAQ | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 283,168,410 | |
Entity Central Index Key | 0000896878 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Net revenue: | ||
Net revenue: | $ 2,007 | $ 1,323 |
Cost of revenue: | ||
Amortization of acquired technology | 15 | 7 |
Selling and marketing | 550 | 362 |
Research and development | 530 | 325 |
General and administrative | 262 | 169 |
Amortization of other acquired intangible assets | 53 | 2 |
Total costs and expenses | 1,812 | 1,114 |
Operating income | 195 | 209 |
Interest expense | (7) | (8) |
Interest and other income, net | 50 | 9 |
Income before income taxes | 238 | 210 |
Income tax provision | 10 | 12 |
Net income | $ 228 | $ 198 |
Earnings Per Share, Basic | ||
Basic net income per share (in dollars per share) | $ 0.84 | $ 0.75 |
Shares used in basic per share calculations (in shares) | 273 | 263 |
Earnings Per Share, Diluted | ||
Diluted net income per share (in dollars per share) | $ 0.82 | $ 0.75 |
Shares used in diluted per share calculations (in shares) | 277 | 265 |
Dividends | ||
Cash dividends declared per common share (in dollars per share) | $ 0.68 | $ 0.59 |
Product | ||
Net revenue: | ||
Net revenue: | $ 397 | $ 367 |
Cost of revenue: | ||
Cost of revenue | 15 | 15 |
Service and other | ||
Net revenue: | ||
Net revenue: | 1,610 | 956 |
Cost of revenue: | ||
Cost of revenue | $ 387 | $ 234 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 228 | $ 198 |
Other comprehensive income (loss), net of income taxes: | ||
Unrealized loss on available-for-sale debt securities | (4) | (1) |
Foreign currency translation loss | (1) | (2) |
Total other comprehensive loss, net | (5) | (3) |
Comprehensive income | $ 223 | $ 195 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 2,864 | $ 2,562 |
Investments | 386 | 1,308 |
Accounts receivable, net | 411 | 391 |
Income taxes receivable | 111 | 123 |
Prepaid expenses and other current assets | 409 | 316 |
Current assets before funds held for customers | 4,181 | 4,700 |
Funds held for customers | 306 | 457 |
Total current assets | 4,487 | 5,157 |
Long-term investments | 84 | 43 |
Property and equipment, net | 789 | 780 |
Operating lease right-of-use assets | 405 | 380 |
Goodwill | 5,613 | 5,613 |
Acquired intangible assets, net | 3,195 | 3,252 |
Long-term deferred income taxes | 8 | 8 |
Other assets | 289 | 283 |
Total assets | 14,870 | 15,516 |
Current liabilities: | ||
Accounts payable | 531 | 623 |
Accrued compensation and related liabilities | 316 | 530 |
Deferred revenue | 600 | 684 |
Other current liabilities | 385 | 361 |
Current liabilities before customer fund deposits | 1,832 | 2,198 |
Customer fund deposits | 306 | 457 |
Total current liabilities | 2,138 | 2,655 |
Long-term debt | 2,037 | 2,034 |
Long-term deferred income tax liabilities | 508 | 525 |
Operating lease liabilities | 403 | 380 |
Other long-term obligations | 51 | 53 |
Total liabilities | 5,137 | 5,647 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock | 0 | 0 |
Common stock and additional paid-in capital | 10,718 | 10,548 |
Treasury stock, at cost | (13,289) | (12,951) |
Accumulated other comprehensive loss | (29) | (24) |
Retained earnings | 12,333 | 12,296 |
Total stockholders’ equity | 9,733 | 9,869 |
Total liabilities and stockholders’ equity | $ 14,870 | $ 15,516 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - 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, 2020 | 261,740 | |||||
Beginning Balance at Jul. 31, 2020 | $ 5,106 | $ 6,182 | $ (11,929) | $ (32) | $ 10,885 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income | 195 | (3) | 198 | |||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes (in shares) | 967 | |||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes | (11) | (11) | ||||
Dividends and dividend rights declared | (157) | (157) | ||||
Share-based compensation expense | 112 | 112 | ||||
Ending Balance (in shares) at Oct. 31, 2020 | 262,707 | |||||
Ending Balance at Oct. 31, 2020 | 5,245 | 6,283 | (11,929) | (35) | 10,926 | |
Beginning Balance (in shares) at Jul. 31, 2021 | 273,235 | |||||
Beginning Balance at Jul. 31, 2021 | 9,869 | 10,548 | (12,951) | (24) | 12,296 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income | 223 | (5) | 228 | |||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes (in shares) | 593 | |||||
Issuance of stock under employee stock plans, net of shares withheld for employee taxes | $ (111) | (111) | ||||
Stock repurchases under stock repurchase programs (in shares) | (606) | (606) | ||||
Stock repurchases under stock repurchase programs | $ (338) | (338) | ||||
Dividends and dividend rights declared | (191) | (191) | ||||
Share-based compensation expense | 281 | 281 | ||||
Ending Balance (in shares) at Oct. 31, 2021 | 273,222 | |||||
Ending Balance at Oct. 31, 2021 | $ 9,733 | $ 10,718 | $ (13,289) | $ (29) | $ 12,333 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.68 | $ 0.59 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 228 | $ 198 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 45 | 37 |
Amortization of acquired intangible assets | 69 | 9 |
Non-cash operating lease cost | 18 | 13 |
Share-based compensation expense | 280 | 111 |
Deferred income taxes | (16) | 17 |
Other | (35) | (16) |
Total adjustments | 361 | 171 |
Originations of loans held for sale | 0 | (43) |
Sale and principal payments of loans held for sale | 0 | 147 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (21) | 47 |
Income taxes receivable | 11 | (17) |
Prepaid expenses and other assets | (31) | (38) |
Accounts payable | (107) | (58) |
Accrued compensation and related liabilities | (212) | (248) |
Deferred revenue | (86) | (85) |
Operating lease liabilities | (18) | (12) |
Other liabilities | 20 | (17) |
Total changes in operating assets and liabilities | (444) | (428) |
Net cash provided by operating activities | 145 | 45 |
Cash flows from investing activities: | ||
Purchases of corporate and customer fund investments | (257) | (198) |
Sales of corporate and customer fund investments | 1,053 | 30 |
Maturities of corporate and customer fund investments | 123 | 156 |
Purchases of property and equipment | (42) | (38) |
Acquisitions of businesses, net of cash acquired | 0 | (85) |
Originations of term loans to small businesses | (125) | (11) |
Principal repayments of term loans from small businesses | 72 | 29 |
Other | (28) | (13) |
Net cash provided by (used in) investing activities | 796 | (130) |
Cash flows from financing activities: | ||
Repayments on borrowings under unsecured revolving credit facility | 0 | (1,000) |
Proceeds from borrowings under secured revolving credit facility | 2 | 0 |
Repayment of debt | 0 | (13) |
Proceeds from issuance of stock under employee stock plans | 55 | 88 |
Payments for employee taxes withheld upon vesting of restricted stock units | (167) | (99) |
Cash paid for purchases of treasury stock | (335) | 0 |
Dividends and dividend rights paid | (190) | (158) |
Net change in customer fund deposits | (151) | 29 |
Net cash used in financing activities | (786) | (1,153) |
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents | (2) | (1) |
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 153 | (1,239) |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period | 2,819 | 6,697 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | 2,972 | 5,458 |
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the condensed consolidated balance sheets to the total amounts reported on the condensed consolidated statements of cash flows | ||
Cash and cash equivalents | 2,864 | 5,174 |
Restricted cash and restricted cash equivalents included in funds held for customers | 108 | 284 |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | $ 2,972 | $ 5,458 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2021 | |
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 serve small business customers. Our flagship brands, TurboTax, QuickBooks and Mint help customers run their small businesses, pay employees and send invoices, separate business and personal expenses, track their money, and file income taxes. Credit Karma is a consumer technology platform that enables us to provide personalized financial offers to members including credit cards, loans, insurance, and savings and checking accounts through an FDIC member bank partner. ProSeries and Lacerte are our leading tax preparation offerings for professional accountants. Incorporated in 1984 and headquartered in Mountain View, California, we sell our products and services primarily in the United States. Basis of Presentation These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation, including amounts related to reportable segments. We acquired Credit Karma, Inc. (Credit Karma) in the second quarter of fiscal 2021. We have included the results of operations for Credit Karma in our condensed consolidated statements of operations from the date of acquisition. There have been no material adjustments to the purchase price allocation from those disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Credit Karma operates as a separate reportable segment. See Note 11, "Segment Information," for more information. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Results for the three months ended October 31, 2021 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2022 or any other future period. Seasonality Our Consumer and ProConnect 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. Typically, returns are accepted by the IRS starting in January and the tax filing deadline ends in April. This seasonal pattern results in higher net revenues during our second and third quarters ending January 31 and April 30, respectively. However, in fiscal 2021 the IRS began accepting returns on February 12, 2021 and the tax filing deadline was extended to May 17, 2021. These changes to the fiscal 2021 tax filing season impacted our second and third quarter financial results. Significant Accounting Policies We describe our significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. There have been no changes to our significant accounting policies during the first three months of fiscal 2022. Use of Estimates In preparing our condensed 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 standalone sales price (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 discount rate used to calculate lease liabilities, the amount of our worldwide tax provision, the realizability of deferred tax assets, the credit losses of available-for-sale debt securities, and the fair value of assets acquired and liabilities assumed for business combinations. 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. Additionally, in the context of the ongoing global COVID-19 pandemic, while there has been no material impact on our estimates to date, in future periods, facts and circumstances could change and impact 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, 2021 October 31, 2020 Numerator: Net income $ 228 $ 198 Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 273 263 Shares used in diluted per share amounts: Weighted average common shares outstanding 273 263 Dilutive common equivalent shares from stock options and restricted stock awards 4 2 Dilutive weighted average common shares outstanding 277 265 Basic and diluted net income per share: Basic net income per share $ 0.84 $ 0.75 Diluted net income per share $ 0.82 $ 0.75 Shares excluded from diluted net income 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 — 1 Deferred Revenue 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, 2021, we recognized revenue of $421 million that was included in deferred revenue at July 31, 2021. During the three months ended October 31, 2020, we recognized revenue of $399 million that was included in deferred revenue at July 31, 2020. Our performance obligations are generally satisfied within 12 months of the initial contract date. As of October 31, 2021 and July 31, 2021, the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $6 million and $8 million, respectively, and is included in other long-term obligations on our condensed consolidated balance sheets. Notes Receivable and Allowances for Loan Losses Notes receivable held for investment consist of term loans to small businesses and are included in prepaid expenses and other current assets and other assets on our condensed consolidated balance sheets. As of October 31, 2021 and July 31, 2021, the notes receivable balances were $190 million and $139 million, respectively, and the allowances for loan losses were not material. 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 term loan portfolio on an individual loan basis, based on a data analytics risk model that evaluates trends related to revenue, debt payments and negative events in the previous 12 months and applies a loss rate at the time of loan origination. The average is then applied against the outstanding portfolio. 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 or three months ended October 31, 2021 or October 31, 2020. No customer accounted for 10% or more of gross accounts receivable at October 31, 2021 or July 31, 2021. Accounting Standards Not Yet Adopted Business Combinations - In October 2021 the FASB issued ASU 2021-08, “ Business Combinations—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). ” This standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606 in order to align the recognition of a contract liability with the definition of a performance obligation. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We elected to early adopt this standard in the second quarter of our fiscal year that began August 1, 2021. We do not expect the adoption of ASU 2021-08 to have a material impact on our consolidated financial statements. We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Oct. 31, 2021 | |
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, 2021 July 31, 2021 (In millions) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Cash equivalents, primarily money market funds and time deposits $ 696 $ — $ 696 $ 1,660 $ — $ 1,660 Available-for-sale debt securities: Municipal bonds — — — — 38 38 Corporate notes — 544 544 — 1,400 1,400 U.S. agency securities — 40 40 — 70 70 Total available-for-sale debt securities — 584 584 — 1,508 1,508 Total assets measured at fair value on a recurring basis $ 696 $ 584 $ 1,280 $ 1,660 $ 1,508 $ 3,168 Liabilities: Senior unsecured notes (1) $ — $ 1,972 $ 1,972 $ — $ 1,986 $ 1,986 (1) Carrying value on our balance sheets at each October 31, 2021 and July 31, 2021 was $1.99 billion . See Note 6, “Long-Term Obligations and Commitments,” for more information. 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, 2021 July 31, 2021 (In millions) Level 1 Level 2 Total Level 1 Level 2 Total Cash equivalents: In cash and cash equivalents $ 696 $ — $ 696 $ 1,660 $ — $ 1,660 Available-for-sale debt securities: In investments $ — $ 386 $ 386 $ — $ 1,308 $ 1,308 In funds held for customers — 198 198 — 200 200 Total available-for-sale debt securities $ — $ 584 $ 584 $ — $ 1,508 $ 1,508 We value our Level 1 assets, consisting primarily of money market funds and time deposits, using quoted prices in active markets for identical instruments. Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of municipal bonds, corporate notes, and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying significant adjustments. Our fair value processes include controls designed to ensure that we record appropriate fair values for our Level 2 investments. These controls include comparison to pricing provided by a secondary pricing service or investment manager, validation of pricing sources and models, review of key model inputs, analysis of period-over-period price fluctuations, and independent recalculation of prices where appropriate. Financial liabilities whose fair values we measure using Level 2 inputs consist of senior unsecured notes. See Note 6, “Long-Term Obligations and Commitments,” for more information. We measure the fair value of our senior unsecured notes based on their trading prices and the interest rates we could obtain for other borrowings with similar terms. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended October 31, 2021. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis |
Cash and Cash Equivalents, Inve
Cash and Cash Equivalents, Investments, and Funds Held for Customers | 3 Months Ended |
Oct. 31, 2021 | |
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 time deposits. Investments consist primarily of investment-grade available-for-sale debt securities. 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. 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, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Classification on condensed consolidated balance sheets: Cash and cash equivalents $ 2,864 $ 2,864 $ 2,562 $ 2,562 Investments 387 386 1,305 1,308 Funds held for customers 307 306 456 457 Total cash and cash equivalents, investments, and funds $ 3,558 $ 3,556 $ 4,323 $ 4,327 The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated. October 31, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Type of issue: Total cash, cash equivalents, restricted cash, $ 2,972 $ 2,972 $ 2,819 $ 2,819 Available-for-sale debt securities: Municipal bonds — — 37 38 Corporate notes 546 544 1,397 1,400 U.S. agency securities 40 40 70 70 Total available-for-sale debt securities 586 584 1,504 1,508 Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments $ 3,558 $ 3,556 $ 4,323 $ 4,327 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 condensed consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three months ended October 31, 2021 and October 31, 2020 were not significant. We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income or loss in the stockholders’ equity section of our condensed consolidated balance sheets, except for certain unrealized losses described below. Gross unrealized gains and losses on our available-for-sale debt securities at October 31, 2021 and July 31, 2021 were not significant. For available-for sale debt securities in an unrealized loss position, we determine whether a credit loss exists. The estimate of the credit loss is determined by considering available information relevant to the collectibility of the security and information about past events, current conditions, and reasonable and supportable forecasts. The allowance for credit loss is recorded to interest and other income on our condensed consolidated statement of operations, not to exceed the amount of the unrealized loss. Any excess unrealized loss greater than the credit loss at a security level is recognized in accumulated other comprehensive income or loss in the stockholders' equity section of our condensed consolidated balance sheets. We determined there were no credit losses related to available-for-sale securities as of October 31, 2021. Unrealized losses on available-for-sale debt securities at October 31, 2021 were not significant. We do not intend to sell these investments. In addition, it is m ore likely than not that we will not be required to sell them before recovery of the amortized cost basis, 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, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Due within one year $ 154 $ 154 $ 551 $ 553 Due within two years 300 299 550 551 Due within three years 132 131 398 398 Due after three years — — 5 6 Total available-for-sale debt securities $ 586 $ 584 $ 1,504 $ 1,508 The following table summarizes our funds held for customers by investment category at the dates indicated. (In millions) October 31, 2021 July 31, Restricted cash and restricted cash equivalents $ 108 $ 257 Restricted available-for-sale debt securities 198 200 Total funds held for customers $ 306 $ 457 (In millions) October 31, 2020 July 31, Restricted cash and restricted cash equivalents $ 284 $ 255 Restricted available-for-sale debt securities 200 200 Total funds held for customers $ 484 $ 455 |
Acquired Intangible Assets
Acquired Intangible Assets | 3 Months Ended |
Oct. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Acquired Intangible Assets | 4. Acquired Intangible Assets The following table shows the cost, accumulated amortization and weighted average life in years for our acquired intangible assets at the dates indicated. The weighted average lives are calculated for assets that are not fully amortized. (Dollars in millions) Customer Purchased Trade Covenants Total At October 31, 2021: Cost $ 3,038 $ 698 $ 400 $ 42 $ 4,178 Accumulated amortization (424) (470) (48) (41) (983) Acquired intangible assets, net $ 2,614 $ 228 $ 352 $ 1 $ 3,195 Weighted average life in years 15 5 15 3 14 At July 31, 2021: Cost $ 3,038 $ 686 $ 400 $ 42 $ 4,166 Accumulated amortization (377) (455) (41) (41) (914) Acquired intangible assets, net $ 2,661 $ 231 $ 359 $ 1 $ 3,252 Weighted average life in years 15 5 15 3 14 The following table shows the expected future amortization expense for our acquired intangible assets at October 31, 2021. Amortization of purchased technology is charged to amortization of acquired technology in our consolidated statements of operations. Amortization of other acquired intangible assets such as customer lists is charged to amortization of other acquired intangible assets in our consolidated statements of operations. If impairment events occur, they could accelerate the timing of acquired intangible asset charges. (In millions) Expected Twelve months ending July 31, 2022 (excluding the three months ended October 31, 2021) $ 208 2023 268 2024 252 2025 248 2026 247 Thereafter 1,972 Total expected future amortization expense $ 3,195 |
Current Liabilities
Current Liabilities | 3 Months Ended |
Oct. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Current Liabilities | 5. Current Liabilities Short-Term Debt On May 2, 2019 we entered into an amended and restated credit agreement with certain institutional lenders with an aggregate principal amount of $1.4 billion, including a $1 billion unsecured revolving credit facility that matures on May 2, 2024 and a $400 million unsecured term loan that was due on February 1, 2021. On November 1, 2021 this agreement was terminated. See Note 12, "Subsequent Events" for more information. Unsecured Revolving Credit Facility The amended and restated credit agreement we entered into on May 2, 2019 includes a $1 billion unsecured revolving credit facility that will expire on May 2, 2024. Under this agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the unsecured 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 unsecured 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 0.1% or the London Interbank Offered Rate (LIBOR) plus a margin that ranges from 0.69% to 1.1%. Actual margins under either election will be based on our senior debt credit ratings. The amended and restated credit agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total gross 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. As of October 31, 2021 we were compliant with all required covenants. We repaid the $1 billion that was outstanding as of July 31, 2020 under this unsecured revolving credit facility during the first quarter of fiscal 2021, and at October 31, 2021 no amounts were outstanding. We paid no interest on the unsecured revolving credit facility during the three months ended October 31, 2021 and $1 million during the three months ended October 31, 2020. Term Loan On February 1, 2021, we paid the $325 million remaining balance of the term loan upon maturity and at October 31, 2021, no amount was outstanding. The term loan accrued interest at rates that were equal to, at our election, either Bank of America's alternate base rate plus a margin that ranges from 0.0% to 0.125% or LIBOR plus a margin that ranges from 0.625% to 1.125%. Interest on the term loan was payable monthly. We paid no interest on the term loan during the three months ended October 31, 2021 and $1 million during the three months ended October 31, 2020. Under the amended and restated agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the term loan in an amount not to exceed $400 million in the aggregate. Other Current Liabilities Other current liabilities were as follows at the dates indicated: (In millions) October 31, 2021 July 31, Executive deferred compensation plan liabilities $ 171 $ 153 Current portion of operating lease liabilities 67 66 Reserve for returns and credits 21 21 Amounts due for share repurchases 20 17 Accrued sales and property taxes 17 5 Merchant and consumer payments processing reserves 12 10 Reserve for promotional discounts and rebates 9 10 Current portion of dividend payable 9 9 Interest payable 7 1 Income taxes payable 3 3 Other 49 66 Total other current liabilities $ 385 $ 361 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,” for more information. |
Long-Term Obligations and Commi
Long-Term Obligations and Commitments | 3 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Obligations and Commitments | 6. Long-Term Obligations and Commitments Senior Unsecured Notes In June 2020 we issued four series of senior unsecured notes (together, the Notes) pursuant to a public debt offering. The proceeds from the issuance were $1.98 billion, net of debt discount of $2 million and debt issuance costs of $15 million. The carrying value of the Notes was as follows at the dates indicated: (In millions) October 31, 2021 July 31, Effective Senior unsecured notes issued June 2020: 0.650% notes due July 2023 $ 500 $ 500 0.837% 0.950% notes due July 2025 500 500 1.127% 1.350% notes due July 2027 500 500 1.486% 1.650% notes due July 2030 500 500 1.767% Total senior unsecured notes 2,000 2,000 Unamortized discount and debt issuance costs (13) (14) Net carrying value senior unsecured notes $ 1,987 $ 1,986 Interest is payable semiannually on January 15 and July 15 of each year. The discount and debt issuance costs are amortized to interest expense over the term of the Notes under the effective interest method. We paid no interest on the Notes during each of the three months ended October 31, 2021 and 2020. The Notes are senior unsecured obligations of Intuit and rank equally with all existing and future unsecured and unsubordinated indebtedness of Intuit and are redeemable by us at any time, subject to a make-whole premium. Upon the occurrence of change of control transactions that are accompanied by certain downgrades in the credit ratings of the Notes, we will be required to repurchase the Notes at a repurchase price equal to 101% of the aggregate outstanding principal plus any accrued and unpaid interest to but not including the date of repurchase. The indenture governing the Notes requires us to comply with certain covenants. For example, the Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As of October 31, 2021 we were compliant with all covenants governing the Notes. Secured Revolving Credit Facility On February 19, 2019 a subsidiary of Intuit entered into a $300 million secured revolving credit facility with a lender to fund a portion of our loans to qualified small businesses. The revolving credit facility is secured by cash and receivables of the subsidiary and is non-recourse to Intuit Inc. We have entered into several amendments to the secured revolving credit facility, most recently on July 16, 2021, primarily to extend the commitment term and maturity date. Under the amended agreement, $150 million of the facility is committed and $150 million is uncommitted. Advances accrue interest at LIBOR plus 1.5%. Unused portions of the committed credit facility accrue interest at a rate ranging from 0.25% to 0.75%, depending on the total unused committed balance. The commitment term is through July 17, 2023 and the final maturity date is January 17, 2024. The amended agreement allows for the transition of the benchmark interest rate used to calculate finance charges from LIBOR to the Secured Overnight Finance Rate (SOFR) plus related benchmark adjustments that represent the prevailing market convention for dollar-denominated syndicated credit facilities. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As of October 31, 2021 we were compliant with all required covenants. At October 31, 2021, $50 million was outstanding under this facility and the weighted-average interest rate was 2.63%, which includes the interest on the unused committed portion. The outstanding balance is secured by cash and receivables of the subsidiary totaling $232 million. Interest on the facility is payable monthly. We paid an immaterial amount of interest on the secured revolving credit facility during the three months ended October 31, 2021 and $1 million during the three months ended October 31, 2020. Other Long-Term Obligations Other long-term obligations were as follows at the dates indicated: (In millions) October 31, 2021 July 31, Income tax liabilities $ 24 $ 24 Dividend payable 9 8 Deferred revenue 6 8 Other 12 13 Total long-term obligations $ 51 $ 53 Unconditional Purchase Obligations We describe our purchase obligations in Note 8 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. In September 2021 we signed an agreement that includes non-cancellable commitments of $555 million through July 31, 2044 for an exclusive naming rights partnership with the Los Angeles Clippers for Intuit Dome, a new sports facility. The commitment is $1.5 million per year for the first three years and $27.5 million per year for the remainder of the agreement. There were no other significant changes in our purchase obligations during the three months ended October 31, 2021. In November 2021 we amended an existing cloud services agreement for an additional five years. Under the amended agreement, we have an annual minimum commitment of $150 million per year and a total minimum purchase commitment of $1.2 billion over the five |
Leases
Leases | 3 Months Ended |
Oct. 31, 2021 | |
Leases [Abstract] | |
Leases | 7. Leases We lease office facilities under non-cancellable operating lease arrangements. Our facility leases generally provide for periodic rent increases and may contain escalation clauses and renewal options. Our leases have remaining lease terms of up to 11 years, some of which include one or more options to extend the leases for up to 10 years per option, generally at rates to be determined in accordance with the agreements. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised. We do not have significant finance leases. We sublease certain office facilities to third parties. These subleases have remaining lease terms of up to 4 years, some of which include one or more options to extend the subleases for up to 5 years per option. The components of lease expense were as follows: Three Months Ended (In millions) October 31, 2021 October 31, 2020 Operating lease cost (1) $ 21 $ 15 Variable lease cost 3 3 Sublease income (5) (4) Total net lease cost $ 19 $ 14 (1) Includes short-term leases, which were not significant for each of the three months ended October 31, 2021 and 2020. Supplemental cash flow information related to operating leases was as follows: Three Months Ended (In millions) October 31, 2021 October 31, 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 24 $ 14 Right-of-use assets obtained in exchange for operating lease liabilities $ 43 $ 19 Other information related to operating leases was as follows at the dates indicated: October 31, 2021 July 31, Weighted-average remaining lease term for operating leases 6.9 years 6.8 years Weighted-average discount rate for operating leases 2.3 % 2.3 % Future minimum lease payments under non-cancellable operating leases as of October 31, 2021 were as follows: (In millions) Operating Leases (1) Fiscal year ending July 31, 2022 (excluding the three months ended October 31, 2021) $ 55 2023 88 2024 84 2025 68 2026 49 Thereafter 164 Total future minimum lease payments 508 Less imputed interest (38) Present value of lease liabilities $ 470 (1) Non-cancellable sublease proceeds for the remainder of the fiscal year ending July 31, 2022 and the fiscal years ending July 31, 2023, 2024, and 2025, of $13 million, $11 million, $8 million, and $4 million, respectively, are not included in the table above. Supplemental balance sheet information related to operating leases was as follows at the dates indicated: (In millions) October 31, 2021 July 31, Operating lease right-of-use assets $ 405 $ 380 Other current liabilities $ 67 $ 66 Operating lease liabilities 403 380 Total operating lease liabilities $ 470 $ 446 |
Income Taxes
Income Taxes | 3 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. 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. We recognized excess tax benefits on share-based compensation of $47 million and $52 million in our provision for income taxes for the three months ended October 31, 2021 and 2020, respectively. Our effective tax rate for the three months ended October 31, 2021 was approximately 4% . Excluding discrete tax items primarily related to share-based compensation tax benefits mentioned above, our effective tax rate was 25%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which 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, 2020 was approximately 6%. Excluding discrete tax items primarily related to share-based compensation tax benefits mentioned above, our effective tax rate was 25%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the tax benefit we received from the federal research and experimentation credit. In the current global tax policy environment, the U.S. and other domestic and foreign governments continue to consider, and in some cases enact, changes in corporate tax laws. As changes occur, we account for finalized legislation in the period of enactment. Unrecognized Tax Benefits and Other Considerations The total amount of our unrecognized tax benefits at July 31, 2021 was $190 million. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $109 million. There were no material changes to these amounts during the three months ended October 31, 2021. We do not believe that it is reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months. We have offset a $75 million long-term liability for uncertain tax positions against our long-term income tax receivable at October 31, 2021 and July 31, 2021. The long-term income tax receivable at October 31, 2021 and July 31, 2021 was primarily related to the government’s approval of a method of accounting change request for fiscal 2018 and a refund claim related to Credit Karma’s alternative minimum tax credit that was recorded as part of the acquisition. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | 9. 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 606,000 shares for $338 million under these programs during the three months ended October 31, 2021. Included in this amount were $20 million of repurchases which occurred in late October 2021 and settled in early November 2021. On August 20, 2021 our Board approved an increased authorization to purchase up to an additional $2 billion of our common stock under the existing stock repurchase program. At October 31, 2021, we had authorization from our Board of Directors to expend up to an additional $3.0 billion for stock repurchases, including the new $2 billion authorization noted above. Future stock repurchases under the current program is 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 condensed 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, 2021 we declared quarterly cash dividends that totaled $0.68 per share of outstanding common stock for a total of $191 million. In November 2021 our Board of Directors declared a quarterly cash dividend of $0.68 per share of outstanding common stock payable on January 18, 2022 to stockholders of record at the close of business on January 10, 2022. 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 income for the periods shown. Three Months Ended (In millions) October 31, 2021 October 31, 2020 Cost of revenue $ 27 $ 15 Selling and marketing 64 32 Research and development 109 38 General and administrative 80 26 Total share-based compensation expense $ 280 $ 111 We capitalized $1 million in share-based compensation related to internal-use software projects during the three months ended October 31, 2021 and $1 million during the three months ended October 31, 2020. Share-Based Awards Available for Grant A summary of share-based awards available for grant under our plans for the three months ended October 31, 2021 was as follows: (Shares in thousands) Shares Balance at July 31, 2021 16,851 Restricted stock units granted (1) (485) Options granted — Share-based awards canceled/forfeited/expired (1) (2) 1,366 Balance at October 31, 2021 17,732 (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 under the 2005 Equity Incentive Plan increase the pool by 2.3 shares for each share forfeited. Shares granted from the Credit Karma Plan reduce the pool by one share for each share granted. Shares forfeited and returned to the pool from the Credit Karma Plan increase the pool by one share for each share forfeited. (2) Stock options and RSUs canceled, expired or forfeited under our 2005 Equity Incentive Plan and Credit Karma Plan are returned to the pool of shares available for grant. Under the 2005 Equity Incentive Plan, 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. Under the Credit Karma Plan, shares withheld for income taxes are also returned to the pool of shares available for grant. Restricted Stock Unit and Restricted Stock Activity A summary of restricted stock unit (RSU) and restricted stock activity for the three months ended October 31, 2021 was as follows: (Shares in thousands) Number Weighted Nonvested at July 31, 2021 9,038 $ 345.86 Granted 271 555.65 Vested (627) 275.10 Forfeited (361) 270.71 Nonvested at October 31, 2021 8,321 $ 361.30 At October 31, 2021, there was approximately $2.6 billion of unrecognized compensation cost related to non-vested RSUs and restricted stock with a weighted average vesting period of 2.9 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur. Stock Option Activity A summary of stock option activity for the three months ended October 31, 2021 was as follows: Options Outstanding (Shares in thousands) Number Weighted Balance at July 31, 2021 2,204 $ 251.48 Granted — — Exercised (58) 210.92 Canceled or expired — — Balance at October 31, 2021 2,146 $ 252.58 Exercisable at October 31, 2021 1,364 $ 176.81 At October 31, 2021, there was approximately $68 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 3.1 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur. |
Litigation
Litigation | 3 Months Ended |
Oct. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | 10. Litigation Beginning in May 2019, various legal proceedings were filed and certain regulatory inquiries were commenced in connection with our provision and marketing of free online tax preparation programs. We believe that the allegations contained within these legal proceedings are without merit. We are vigorously defending our interests in the legal proceedings and responding to the inquiries. These proceedings include, among others, multiple putative class actions that were consolidated into a single putative class action in the Northern District of California in September 2019 (the “Intuit Free File Litigation”) and demands for arbitration that were filed beginning in October 2019. In August 2020, the Ninth Circuit Court of Appeals ordered that the putative class action claims be resolved through arbitration. Intuit entered into a proposed settlement agreement in November 2020 to resolve the putative class action, which was rejected by the court. On May 20, 2021, Intuit entered into an agreement that resolved the Intuit Free File Litigation on an individual non-class basis, without any admission of wrongdoing, for a non-material amount and, on May 26, 2021, it was dismissed on a non-class basis. In June 2021, Intuit received a demand and draft complaint from the Federal Trade Commission (“FTC”) and certain state attorneys general relating to the ongoing inquiries described above. Although we believe that the allegations contained therein are without merit, if we are not able to reach a resolution, the FTC and one or more state attorneys general may seek resolution through litigation. The defense and resolution of this matter could involve significant costs to us. As of October 31, 2021, there were approximately 123,000 individual arbitration claims pending and we could incur significant arbitration and legal fees associated with the defense of these claims. The amount of our fiscal 2022 to date and fiscal 2021 arbitration fees net of insurance proceeds and rebates is not material. The arbitration fees are unrelated to the underlying merits of the claims and are accrued for when services are rendered. We could incur additional arbitration fees of approximately $350 million in future periods. We are continuing to dispute the applicability and propriety of these fees. An immaterial number of claims have been resolved through the arbitration process to date and we expect that more claims will continue through the process. In view of the complexity and ongoing and uncertain nature of the outstanding proceedings and inquiries, at this time we are unable to estimate a reasonably possible financial loss or range of financial loss that we may incur to resolve or settle the remaining matters. To date, the legal and other fees we have incurred related to these proceedings and inquiries have not been material. The ongoing defense and any resolution or settlement of these proceedings and inquiries could involve significant costs to us. Intuit is subject to certain routine legal proceedings, including class action lawsuits, as well as demands, claims, government inquiries and threatened litigation, that arise in the normal course of our business, including assertions that we may be infringing patents or other intellectual property rights of others. Our failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims could adversely affect our business. We currently believe that, in addition to any amounts accrued, the amount of potential losses, if any, for any pending claims of any type (either alone or combined) will not have a material impact on our consolidated financial statements. The ultimate outcome of any legal proceeding is uncertain and, regardless of outcome, legal proceedings can have an adverse impact on Intuit because of defense costs, negative publicity, diversion of management resources and other factors. |
Segment Information
Segment Information | 3 Months Ended |
Oct. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | 11. Segment Information We have defined our four 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. In December 2020 we acquired Credit Karma in a business combination and it operates as a separate reportable segment. We have included the results of operations of Credit Karma in our condensed consolidated statements of operations from the date of acquisition. Segment operating income for Credit Karma includes all direct expenses, which is different from our other reportable segments where we do not fully allocate corporate expenses. Small Business & Self-Employed : This segment serves small businesses and the self-employed around the world, and the accounting professionals who assist 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 serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Our Mint offering is a personal finance offering which helps customers track their finances and daily financial behavior. Credit Karma : This segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto and personal loans, and insurance products; online savings and checking accounts through an FDIC member bank partner; and access to their credit scores and reports, credit and identity monitoring, credit report dispute, and data-driven resources. ProConnect : This segment serves 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, and ProConnect Tax Online in the U.S, and ProFile and ProTax Online in Canada. All of our segments operate primarily in the United States and sell primarily to customers in the United States. Total international net revenue was approximately 6% for the three months ended October 31, 2021 and October 31, 2020. For our Small Business & Self-Employed, Consumer, and ProConnect reportable segments, we include expenses such as corporate selling and marketing, product development, and general and administrative, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. For Credit Karma, segment expenses include all direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, 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 Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021 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, 2021 October 31, 2020 Net revenue: Small Business & Self-Employed $ 1,443 $ 1,181 Consumer 120 119 Credit Karma 418 — ProConnect 26 23 Total net revenue $ 2,007 $ 1,323 Operating income (loss): Small Business & Self-Employed $ 921 $ 767 Consumer (11) 4 Credit Karma 169 — ProConnect (11) (10) Total segment operating income 1,068 761 Unallocated corporate items: Share-based compensation expense (280) (111) Other corporate expenses (525) (432) Amortization of acquired technology (15) (7) Amortization of other acquired intangible assets (53) (2) Total unallocated corporate items (873) (552) Total operating income $ 195 $ 209 Revenue classified by significant product and service offerings was as follows: Three Months Ended (In millions) October 31, 2021 October 31, 2020 Net revenue: QuickBooks Online Accounting $ 519 $ 392 Online Services 326 229 Total Online Ecosystem 845 621 QuickBooks Desktop Accounting 267 241 Desktop Services and Supplies 331 319 Total Desktop Ecosystem 598 560 Small Business & Self-Employed 1,443 1,181 Consumer 120 119 Credit Karma 418 — ProConnect 26 23 Total net revenue $ 2,007 $ 1,323 Credit Karma revenue is primarily generated from cost-per-action transactions which are related to credit card issuances and personal loan funding. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Oct. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Event | 12. Subsequent Events Business Combinations On November 1, 2021 we acquired all of the outstanding equity of The Rocket Science Group LLC (Mailchimp), a global customer engagement and marketing platform for growing small and mid-market businesses. We acquired Mailchimp to help deliver on the vision of an innovative, end-to-end customer growth platform for small and mid-market businesses. Mailchimp is part of our Small Business & Self-Employed segment. The fair value of the purchase consideration totaled $12 billion and included $5.7 billion in cash and 10.1 million shares of Intuit common stock with a value of approximately $6.3 billion. The fair value of the stock consideration is based on the October 29, 2021 closing price of Intuit common stock of $625.99. Pursuant to the equity purchase agreement we also issued approximately 573,000 restricted stock units in substitution of outstanding equity incentive awards. These restricted stock units have a fair value of approximately $349 million and will be expensed over three years. Additionally, we will be issuing approximately $215 million of RSUs to Mailchimp employees, of which $155 million will be expensed over four years and $60 million will be expensed over six months. Credit Facilities On November 1, 2021 the existing amended and restated credit agreement described in Note 5, "Current Liabilities" was terminated. On November 1, 2021 we entered into a credit agreement with certain institutional lenders with an aggregate principal amount of $5.7 billion, which includes a $1 billion unsecured revolving credit facility that matures on November 1, 2026 and a $4.7 billion unsecured term loan that matures on November 1, 2024. Under this agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the unsecured revolving credit facility in an amount not to exceed $250 million in the aggregate and may extend the maturity date up to two times. Borrowings under the unsecured revolving credit facility and the unsecured term loan accrue interest at rates equal to, at our election, either (i) the alternate base rate, or (ii) the SOFR rate, plus an applicable margin for such loans as defined in the credit agreement. Actual margins under either election, for both the unsecured revolving credit facility and the unsecured term loan, will be based on our senior debt credit ratings. This agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total gross debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 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. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation, including amounts related to reportable segments. We acquired Credit Karma, Inc. (Credit Karma) in the second quarter of fiscal 2021. We have included the results of operations for Credit Karma in our condensed consolidated statements of operations from the date of acquisition. There have been no material adjustments to the purchase price allocation from those disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Credit Karma operates as a separate reportable segment. See Note 11, "Segment Information," for more information. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Results for the three months ended October 31, 2021 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2022 or any other future period. |
Seasonality | Seasonality Our Consumer and ProConnect 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. Typically, returns are accepted by the IRS starting in January and the tax filing deadline ends in April. This seasonal pattern results in higher net revenues during our second and third quarters ending January 31 and April 30, respectively. However, in fiscal 2021 the IRS began accepting returns on February 12, 2021 and the tax filing deadline was extended to May 17, 2021. These changes to the fiscal 2021 tax filing season impacted our second and third quarter financial results. |
Use of Estimates | Use of Estimates In preparing our condensed 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 standalone sales price (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 discount rate used to calculate lease liabilities, the amount of our worldwide tax provision, the realizability of deferred tax assets, the credit losses of available-for-sale debt securities, and the fair value of assets acquired and liabilities assumed for business combinations. 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. Additionally, in the context of the ongoing global COVID-19 pandemic, while there has been no material impact on our estimates to date, in future periods, facts and circumstances could change and impact our 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. 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. |
Deferred Revenue | Deferred Revenue 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, 2021, we recognized revenue of $421 million that was included in deferred revenue at July 31, 2021. During the three months ended October 31, 2020, we recognized revenue of $399 million that was included in deferred revenue at July 31, 2020. Our performance obligations are generally satisfied within 12 months of the initial contract date. As of October 31, 2021 and July 31, 2021, the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $6 million and $8 million, respectively, and is included in other long-term obligations on our condensed consolidated balance sheets. |
Notes Receivable and Allowances for Loan Losses | Notes Receivable and Allowances for Loan Losses |
Concentration of Credit Risk And Significant Customers | Concentration of Credit Risk and Significant Customers No customer accounted for 10% or more of total net revenue in the three or three months ended October 31, 2021 or October 31, 2020. No customer accounted for 10% or more of gross accounts receivable at October 31, 2021 or July 31, 2021. |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted Business Combinations - In October 2021 the FASB issued ASU 2021-08, “ Business Combinations—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). ” This standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606 in order to align the recognition of a contract liability with the definition of a performance obligation. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We elected to early adopt this standard in the second quarter of our fiscal year that began August 1, 2021. We do not expect the adoption of ASU 2021-08 to have a material impact on our consolidated financial statements. We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements. |
Fair Value Measurement | 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 |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
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, 2021 October 31, 2020 Numerator: Net income $ 228 $ 198 Denominator: Shares used in basic per share amounts: Weighted average common shares outstanding 273 263 Shares used in diluted per share amounts: Weighted average common shares outstanding 273 263 Dilutive common equivalent shares from stock options and restricted stock awards 4 2 Dilutive weighted average common shares outstanding 277 265 Basic and diluted net income per share: Basic net income per share $ 0.84 $ 0.75 Diluted net income per share $ 0.82 $ 0.75 Shares excluded from diluted net income 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 — 1 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
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, 2021 July 31, 2021 (In millions) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Cash equivalents, primarily money market funds and time deposits $ 696 $ — $ 696 $ 1,660 $ — $ 1,660 Available-for-sale debt securities: Municipal bonds — — — — 38 38 Corporate notes — 544 544 — 1,400 1,400 U.S. agency securities — 40 40 — 70 70 Total available-for-sale debt securities — 584 584 — 1,508 1,508 Total assets measured at fair value on a recurring basis $ 696 $ 584 $ 1,280 $ 1,660 $ 1,508 $ 3,168 Liabilities: Senior unsecured notes (1) $ — $ 1,972 $ 1,972 $ — $ 1,986 $ 1,986 (1) Carrying value on our balance sheets at each October 31, 2021 and July 31, 2021 was $1.99 billion . See Note 6, “Long-Term Obligations and Commitments,” for more information. |
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, 2021 July 31, 2021 (In millions) Level 1 Level 2 Total Level 1 Level 2 Total Cash equivalents: In cash and cash equivalents $ 696 $ — $ 696 $ 1,660 $ — $ 1,660 Available-for-sale debt securities: In investments $ — $ 386 $ 386 $ — $ 1,308 $ 1,308 In funds held for customers — 198 198 — 200 200 Total available-for-sale debt securities $ — $ 584 $ 584 $ — $ 1,508 $ 1,508 |
Cash and Cash Equivalents, In_2
Cash and Cash Equivalents, Investments, and Funds Held for Customers (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
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, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Classification on condensed consolidated balance sheets: Cash and cash equivalents $ 2,864 $ 2,864 $ 2,562 $ 2,562 Investments 387 386 1,305 1,308 Funds held for customers 307 306 456 457 Total cash and cash equivalents, investments, and funds $ 3,558 $ 3,556 $ 4,323 $ 4,327 |
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, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Type of issue: Total cash, cash equivalents, restricted cash, $ 2,972 $ 2,972 $ 2,819 $ 2,819 Available-for-sale debt securities: Municipal bonds — — 37 38 Corporate notes 546 544 1,397 1,400 U.S. agency securities 40 40 70 70 Total available-for-sale debt securities 586 584 1,504 1,508 Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments $ 3,558 $ 3,556 $ 4,323 $ 4,327 |
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, 2021 July 31, 2021 (In millions) Amortized Fair Value Amortized Fair Value Due within one year $ 154 $ 154 $ 551 $ 553 Due within two years 300 299 550 551 Due within three years 132 131 398 398 Due after three years — — 5 6 Total available-for-sale debt securities $ 586 $ 584 $ 1,504 $ 1,508 |
Schedule of funds held for customers | The following table summarizes our funds held for customers by investment category at the dates indicated. (In millions) October 31, 2021 July 31, Restricted cash and restricted cash equivalents $ 108 $ 257 Restricted available-for-sale debt securities 198 200 Total funds held for customers $ 306 $ 457 (In millions) October 31, 2020 July 31, Restricted cash and restricted cash equivalents $ 284 $ 255 Restricted available-for-sale debt securities 200 200 Total funds held for customers $ 484 $ 455 |
Acquired Intangible Assets (Tab
Acquired Intangible Assets (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets Acquired | The following table shows the cost, accumulated amortization and weighted average life in years for our acquired intangible assets at the dates indicated. The weighted average lives are calculated for assets that are not fully amortized. (Dollars in millions) Customer Purchased Trade Covenants Total At October 31, 2021: Cost $ 3,038 $ 698 $ 400 $ 42 $ 4,178 Accumulated amortization (424) (470) (48) (41) (983) Acquired intangible assets, net $ 2,614 $ 228 $ 352 $ 1 $ 3,195 Weighted average life in years 15 5 15 3 14 At July 31, 2021: Cost $ 3,038 $ 686 $ 400 $ 42 $ 4,166 Accumulated amortization (377) (455) (41) (41) (914) Acquired intangible assets, net $ 2,661 $ 231 $ 359 $ 1 $ 3,252 Weighted average life in years 15 5 15 3 14 |
Schedule of Future Amortization Expense | The following table shows the expected future amortization expense for our acquired intangible assets at October 31, 2021. Amortization of purchased technology is charged to amortization of acquired technology in our consolidated statements of operations. Amortization of other acquired intangible assets such as customer lists is charged to amortization of other acquired intangible assets in our consolidated statements of operations. If impairment events occur, they could accelerate the timing of acquired intangible asset charges. (In millions) Expected Twelve months ending July 31, 2022 (excluding the three months ended October 31, 2021) $ 208 2023 268 2024 252 2025 248 2026 247 Thereafter 1,972 Total expected future amortization expense $ 3,195 |
Current Liabilities (Tables)
Current Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other current liabilities | Other current liabilities were as follows at the dates indicated: (In millions) October 31, 2021 July 31, Executive deferred compensation plan liabilities $ 171 $ 153 Current portion of operating lease liabilities 67 66 Reserve for returns and credits 21 21 Amounts due for share repurchases 20 17 Accrued sales and property taxes 17 5 Merchant and consumer payments processing reserves 12 10 Reserve for promotional discounts and rebates 9 10 Current portion of dividend payable 9 9 Interest payable 7 1 Income taxes payable 3 3 Other 49 66 Total other current liabilities $ 385 $ 361 |
Long-Term Obligations and Com_2
Long-Term Obligations and Commitments (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
Senior unsecured notes | The carrying value of the Notes was as follows at the dates indicated: (In millions) October 31, 2021 July 31, Effective Senior unsecured notes issued June 2020: 0.650% notes due July 2023 $ 500 $ 500 0.837% 0.950% notes due July 2025 500 500 1.127% 1.350% notes due July 2027 500 500 1.486% 1.650% notes due July 2030 500 500 1.767% Total senior unsecured notes 2,000 2,000 Unamortized discount and debt issuance costs (13) (14) Net carrying value senior unsecured notes $ 1,987 $ 1,986 |
Other long-term obligations | Other long-term obligations were as follows at the dates indicated: (In millions) October 31, 2021 July 31, Income tax liabilities $ 24 $ 24 Dividend payable 9 8 Deferred revenue 6 8 Other 12 13 Total long-term obligations $ 51 $ 53 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows: Three Months Ended (In millions) October 31, 2021 October 31, 2020 Operating lease cost (1) $ 21 $ 15 Variable lease cost 3 3 Sublease income (5) (4) Total net lease cost $ 19 $ 14 (1) Includes short-term leases, which were not significant for each of the three months ended October 31, 2021 and 2020. Supplemental cash flow information related to operating leases was as follows: Three Months Ended (In millions) October 31, 2021 October 31, 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 24 $ 14 Right-of-use assets obtained in exchange for operating lease liabilities $ 43 $ 19 Other information related to operating leases was as follows at the dates indicated: October 31, 2021 July 31, Weighted-average remaining lease term for operating leases 6.9 years 6.8 years Weighted-average discount rate for operating leases 2.3 % 2.3 % Supplemental balance sheet information related to operating leases was as follows at the dates indicated: (In millions) October 31, 2021 July 31, Operating lease right-of-use assets $ 405 $ 380 Other current liabilities $ 67 $ 66 Operating lease liabilities 403 380 Total operating lease liabilities $ 470 $ 446 |
Future Minimum Lease Payments | Future minimum lease payments under non-cancellable operating leases as of October 31, 2021 were as follows: (In millions) Operating Leases (1) Fiscal year ending July 31, 2022 (excluding the three months ended October 31, 2021) $ 55 2023 88 2024 84 2025 68 2026 49 Thereafter 164 Total future minimum lease payments 508 Less imputed interest (38) Present value of lease liabilities $ 470 (1) Non-cancellable sublease proceeds for the remainder of the fiscal year ending July 31, 2022 and the fiscal years ending July 31, 2023, 2024, and 2025, of $13 million, $11 million, $8 million, and $4 million, respectively, are not included in the table above. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
Total share-based compensation expense | The following table summarizes the total share-based compensation expense that we recorded in operating income for the periods shown. Three Months Ended (In millions) October 31, 2021 October 31, 2020 Cost of revenue $ 27 $ 15 Selling and marketing 64 32 Research and development 109 38 General and administrative 80 26 Total share-based compensation expense $ 280 $ 111 |
Summary of share-based awards available for grant | A summary of share-based awards available for grant under our plans for the three months ended October 31, 2021 was as follows: (Shares in thousands) Shares Balance at July 31, 2021 16,851 Restricted stock units granted (1) (485) Options granted — Share-based awards canceled/forfeited/expired (1) (2) 1,366 Balance at October 31, 2021 17,732 (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 under the 2005 Equity Incentive Plan increase the pool by 2.3 shares for each share forfeited. Shares granted from the Credit Karma Plan reduce the pool by one share for each share granted. Shares forfeited and returned to the pool from the Credit Karma Plan increase the pool by one share for each share forfeited. (2) Stock options and RSUs canceled, expired or forfeited under our 2005 Equity Incentive Plan and Credit Karma Plan are returned to the pool of shares available for grant. Under the 2005 Equity Incentive Plan, 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. Under the Credit Karma Plan, shares withheld for income taxes are also returned to the pool of shares available for grant. |
Summary of restricted stock unit activity | A summary of restricted stock unit (RSU) and restricted stock activity for the three months ended October 31, 2021 was as follows: (Shares in thousands) Number Weighted Nonvested at July 31, 2021 9,038 $ 345.86 Granted 271 555.65 Vested (627) 275.10 Forfeited (361) 270.71 Nonvested at October 31, 2021 8,321 $ 361.30 |
Summary of stock option activity | A summary of stock option activity for the three months ended October 31, 2021 was as follows: Options Outstanding (Shares in thousands) Number Weighted Balance at July 31, 2021 2,204 $ 251.48 Granted — — Exercised (58) 210.92 Canceled or expired — — Balance at October 31, 2021 2,146 $ 252.58 Exercisable at October 31, 2021 1,364 $ 176.81 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
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, 2021 October 31, 2020 Net revenue: Small Business & Self-Employed $ 1,443 $ 1,181 Consumer 120 119 Credit Karma 418 — ProConnect 26 23 Total net revenue $ 2,007 $ 1,323 Operating income (loss): Small Business & Self-Employed $ 921 $ 767 Consumer (11) 4 Credit Karma 169 — ProConnect (11) (10) Total segment operating income 1,068 761 Unallocated corporate items: Share-based compensation expense (280) (111) Other corporate expenses (525) (432) Amortization of acquired technology (15) (7) Amortization of other acquired intangible assets (53) (2) Total unallocated corporate items (873) (552) Total operating income $ 195 $ 209 |
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, 2021 October 31, 2020 Net revenue: QuickBooks Online Accounting $ 519 $ 392 Online Services 326 229 Total Online Ecosystem 845 621 QuickBooks Desktop Accounting 267 241 Desktop Services and Supplies 331 319 Total Desktop Ecosystem 598 560 Small Business & Self-Employed 1,443 1,181 Consumer 120 119 Credit Karma 418 — ProConnect 26 23 Total net revenue $ 2,007 $ 1,323 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2021 | |
Accounting Policies [Abstract] | |||
Revenue recognized | $ 421 | $ 399 | |
Description of timing | 12 months | ||
Deferred revenue | $ 6 | $ 8 | |
Notes receivable | $ 190 | $ 139 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Accounting Policies [Abstract] | ||
Net income | $ 228 | $ 198 |
Shares used in basic per share amounts: | ||
Weighted average common shares outstanding (in shares) | 273,000,000 | 263,000,000 |
Shares used in diluted per share amounts: | ||
Weighted average common shares outstanding (in shares) | 273,000,000 | 263,000,000 |
Dilutive common equivalent shares from stock options and restricted stock awards (in shares) | 4,000,000 | 2,000,000 |
Dilutive weighted average common shares outstanding (in shares) | 277,000,000 | 265,000,000 |
Basic and diluted net income per share: | ||
Basic net income per share (in dollars per share) | $ 0.84 | $ 0.75 |
Diluted net income per share (in dollars per share) | $ 0.82 | $ 0.75 |
Shares excluded from diluted net income 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 | 1,000,000 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Assets: | ||
Cash equivalents, primarily money market funds and time deposits | $ 2,864 | $ 2,562 |
Available-for-sale debt securities: | 584 | 1,508 |
Long-term debt | 2,037 | 2,034 |
Senior Unsecured Notes | ||
Assets: | ||
Long-term debt | 1,990 | |
Fair value, measurements, recurring | ||
Assets: | ||
Cash equivalents, primarily money market funds and time deposits | 696 | 1,660 |
Available-for-sale debt securities: | 584 | 1,508 |
Total assets measured at fair value on a recurring basis | 1,280 | 3,168 |
Fair value, measurements, recurring | Senior Unsecured Notes | ||
Assets: | ||
Senior unsecured notes | 1,972 | 1,986 |
Fair value, measurements, recurring | Level 1 | ||
Assets: | ||
Cash equivalents, primarily money market funds and time deposits | 696 | 1,660 |
Available-for-sale debt securities: | 0 | 0 |
Total assets measured at fair value on a recurring basis | 696 | 1,660 |
Fair value, measurements, recurring | Level 1 | Senior Unsecured Notes | ||
Assets: | ||
Senior unsecured notes | 0 | 0 |
Fair value, measurements, recurring | Level 2 | ||
Assets: | ||
Cash equivalents, primarily money market funds and time deposits | 0 | 0 |
Available-for-sale debt securities: | 584 | 1,508 |
Total assets measured at fair value on a recurring basis | 584 | 1,508 |
Fair value, measurements, recurring | Level 2 | Senior Unsecured Notes | ||
Assets: | ||
Senior unsecured notes | 1,972 | 1,986 |
Fair value, measurements, recurring | Municipal bonds | ||
Assets: | ||
Available-for-sale debt securities: | 0 | 38 |
Fair value, measurements, recurring | Municipal bonds | Level 1 | ||
Assets: | ||
Available-for-sale debt securities: | 0 | 0 |
Fair value, measurements, recurring | Municipal bonds | Level 2 | ||
Assets: | ||
Available-for-sale debt securities: | 0 | 38 |
Fair value, measurements, recurring | Corporate notes | ||
Assets: | ||
Available-for-sale debt securities: | 544 | 1,400 |
Fair value, measurements, recurring | Corporate notes | Level 1 | ||
Assets: | ||
Available-for-sale debt securities: | 0 | 0 |
Fair value, measurements, recurring | Corporate notes | Level 2 | ||
Assets: | ||
Available-for-sale debt securities: | 544 | 1,400 |
Fair value, measurements, recurring | U.S. agency securities | ||
Assets: | ||
Available-for-sale debt securities: | 40 | 70 |
Fair value, measurements, recurring | U.S. agency securities | Level 1 | ||
Assets: | ||
Available-for-sale debt securities: | 0 | 0 |
Fair value, measurements, recurring | U.S. agency securities | Level 2 | ||
Assets: | ||
Available-for-sale debt securities: | $ 40 | $ 70 |
Fair Value Measurements - Balan
Fair Value Measurements - Balance Sheet Classification (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | $ 2,864 | $ 2,562 |
Available-for-sale debt securities: | 584 | 1,508 |
Fair value, measurements, recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 696 | 1,660 |
Available-for-sale debt securities: | 584 | 1,508 |
Fair value, measurements, recurring | In cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 696 | 1,660 |
Fair value, measurements, recurring | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities: | 386 | 1,308 |
Fair value, measurements, recurring | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities: | 198 | 200 |
Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 696 | 1,660 |
Available-for-sale debt securities: | 0 | 0 |
Fair value, measurements, recurring | Level 1 | In cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 696 | 1,660 |
Fair value, measurements, recurring | Level 1 | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities: | 0 | 0 |
Fair value, measurements, recurring | Level 1 | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
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 equivalents: | 0 | 0 |
Available-for-sale debt securities: | 584 | 1,508 |
Fair value, measurements, recurring | Level 2 | In cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 0 | 0 |
Fair value, measurements, recurring | Level 2 | Available for sale debt securities in investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities: | 386 | 1,308 |
Fair value, measurements, recurring | Level 2 | Available for sale debt securities in funds held for customers | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities: | $ 198 | $ 200 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Long-term investments | $ 84 | $ 43 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Upward adjustments to non-marketable equity securities | 46 | $ 8 | |
Cumulative upward adjustments to non-marketable equity securities | $ 63 |
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, 2021 | Jul. 31, 2021 | Oct. 31, 2020 |
Cash and Cash Equivalents Items [Line Items] | |||
Cash and cash equivalents | $ 2,864 | $ 2,562 | $ 5,174 |
Available-for-sale debt securities, amortized cost | 586 | 1,504 | |
Total cash and cash equivalents, investments, and funds held for customers, amortized cost | 3,558 | 4,323 | |
Cash equivalents: | 2,864 | 2,562 | |
Available-for-sale debt securities, fair value | 584 | 1,508 | |
Total cash and cash equivalents, investments, and funds held for customers, fair value | 3,556 | 4,327 | |
Investments | |||
Cash and Cash Equivalents Items [Line Items] | |||
Available-for-sale debt securities, amortized cost | 387 | 1,305 | |
Available-for-sale debt securities, fair value | 386 | 1,308 | |
Funds held for customers | |||
Cash and Cash Equivalents Items [Line Items] | |||
Available-for-sale debt securities, amortized cost | 307 | 456 | |
Available-for-sale debt securities, fair value | $ 306 | $ 457 |
Cash and Cash Equivalents, In_4
Cash and Cash Equivalents, Investments, and Funds Held for Customers - Type of issue (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 |
Cash and Cash Equivalents Items [Line Items] | ||||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | $ 2,972 | $ 2,819 | $ 5,458 | $ 6,697 |
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 586 | 1,504 | ||
Available-for-sale debt securities: | 584 | 1,508 | ||
Total cash and cash equivalents, investments, and funds held for customers, amortized cost | 3,558 | 4,323 | ||
Total cash and cash equivalents, investments, and funds held for customers, fair value | 3,556 | 4,327 | ||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents | ||||
Cash and Cash Equivalents Items [Line Items] | ||||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | 2,972 | 2,819 | ||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, fair value | 2,972 | 2,819 | ||
Municipal bonds | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 0 | 37 | ||
Available-for-sale debt securities: | 0 | 38 | ||
Corporate notes | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 546 | 1,397 | ||
Available-for-sale debt securities: | 544 | 1,400 | ||
U.S. agency securities | ||||
Available-for-sale securities: | ||||
Available-for-sale debt securities, amortized cost | 40 | 70 | ||
Available-for-sale debt securities: | $ 40 | $ 70 |
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, 2021 | Jul. 31, 2021 |
Amortized Cost | ||
Due within one year | $ 154 | $ 551 |
Due within two years | 300 | 550 |
Due within three years | 132 | 398 |
Due after three years | 0 | 5 |
Total available-for-sale debt securities | 586 | 1,504 |
Fair Value | ||
Due within one year | 154 | 553 |
Due within two years | 299 | 551 |
Due within three years | 131 | 398 |
Due after three years | 0 | 6 |
Total available-for-sale debt securities | $ 584 | $ 1,508 |
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, 2021 | Jul. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 |
Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract] | ||||
Restricted cash and restricted cash equivalents | $ 108 | $ 257 | $ 284 | $ 255 |
Restricted available-for-sale debt securities | 198 | 200 | 200 | 200 |
Total funds held for customers | $ 306 | $ 457 | $ 484 | $ 455 |
Acquired Intangible Assets - In
Acquired Intangible Assets - Intangible Assets Acquired (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Oct. 31, 2021 | Jul. 31, 2021 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 4,178 | $ 4,166 |
Accumulated amortization | (983) | (914) |
Acquired intangible assets, net | $ 3,195 | $ 3,252 |
Weighted average life in years | 14 years | 14 years |
Customer Lists / User Relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 3,038 | $ 3,038 |
Accumulated amortization | (424) | (377) |
Acquired intangible assets, net | $ 2,614 | $ 2,661 |
Weighted average life in years | 15 years | 15 years |
Purchased Technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 698 | $ 686 |
Accumulated amortization | (470) | (455) |
Acquired intangible assets, net | $ 228 | $ 231 |
Weighted average life in years | 5 years | 5 years |
Trade Names and Logos | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 400 | $ 400 |
Accumulated amortization | (48) | (41) |
Acquired intangible assets, net | $ 352 | $ 359 |
Weighted average life in years | 15 years | 15 years |
Covenants Not to Compete or Sue | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 42 | $ 42 |
Accumulated amortization | (41) | (41) |
Acquired intangible assets, net | $ 1 | $ 1 |
Weighted average life in years | 3 years | 3 years |
Acquired Intangible Assets - Fu
Acquired Intangible Assets - Future Amortization (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (excluding the three months ended October 31, 2021) | $ 208 | |
2023 | 268 | |
2024 | 252 | |
2025 | 248 | |
2026 | 247 | |
Thereafter | 1,972 | |
Acquired intangible assets, net | $ 3,195 | $ 3,252 |
Current Liabilities - Narrative
Current Liabilities - Narrative (Details) | Feb. 01, 2021USD ($) | May 02, 2019USD ($)extension | Oct. 31, 2021USD ($) | Oct. 31, 2020USD ($) |
Debt Instrument [Line Items] | ||||
Repayments of lines of credit | $ 0 | $ 1,000,000,000 | ||
Amendment to Master Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 1,400,000,000 | |||
Debt to EBITDA ratio (not greater than) | 3.25 | |||
EBITDA to interest payable ratio (not less than) | 3 | |||
Amendment to Master 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 | |||
Repayments of lines of credit | 1,000,000,000 | |||
Fair value of amount outstanding | 0 | |||
Interest paid | 0 | 1,000,000 | ||
Amendment to Master Credit Agreement | Line of Credit | Revolving Credit Facility | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.00% | |||
Amendment to Master Credit Agreement | Line of Credit | Revolving Credit Facility | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.10% | |||
Amendment to Master Credit Agreement | Line of Credit | Revolving Credit Facility | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.69% | |||
Amendment to Master Credit Agreement | Line of Credit | Revolving Credit Facility | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.10% | |||
Amendment to Master Credit Agreement | Line of Credit | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Payment on short-term debt | $ 325,000,000 | |||
Term loan, increase limit | $ 400,000,000 | |||
Amendment to Master Credit Agreement | Line of Credit | Term Loan | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.00% | |||
Amendment to Master Credit Agreement | Line of Credit | Term Loan | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.125% | |||
Amendment to Master Credit Agreement | Line of Credit | Term Loan | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.625% | |||
Amendment to Master Credit Agreement | Line of Credit | Term Loan | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.125% | |||
Amendment to Master Credit Agreement | Unsecured Debt | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 400,000,000 | |||
Interest paid | $ 0 | $ 1,000,000 |
Current Liabilities - Other Cur
Current Liabilities - Other Current Liabilities (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 | Oct. 31, 2020 |
Other Liabilities, Current [Abstract] | |||
Executive deferred compensation plan liabilities | $ 171 | $ 153 | |
Current portion of operating lease liabilities | 67 | 66 | |
Reserve for promotional discounts and rebates | 9 | 10 | |
Reserve for returns and credits | 21 | 21 | |
Reserve for promotional discounts and rebates | 17 | 5 | |
Merchant and consumer payments processing reserves | 12 | 10 | |
Current portion of dividend payable | 9 | 9 | |
Interest payable | 7 | 1 | |
Amounts due for share repurchases | 20 | 17 | |
Income taxes payable | 3 | $ 3 | |
Other | 49 | 66 | |
Total other current liabilities | $ 385 | $ 361 |
Long-Term Obligations and Com_3
Long-Term Obligations and Commitments - Senior Unsecured Notes (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2020 | Oct. 31, 2021 | Jul. 31, 2021 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,037 | $ 2,034 | |
Senior Unsecured Notes | The Senior Unsecured Notes Member | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance | $ 1,980 | ||
Unamortized discount | 2 | ||
Debt issuance costs | $ 15 | ||
Long-term debt, gross | 2,000 | 2,000 | |
Unamortized discount and debt issuance costs | (13) | (14) | |
Long-term debt | 1,987 | 1,986 | |
Redemption price (in percent) | 101.00% | ||
Senior Unsecured Notes | 0.650% notes due July 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500 | 500 | |
Effective Interest Rate | 0.837% | ||
Senior Unsecured Notes | 0.950% notes due July 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500 | 500 | |
Effective Interest Rate | 1.127% | ||
Senior Unsecured Notes | 1.350% notes due July 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500 | 500 | |
Effective Interest Rate | 1.486% | ||
Senior Unsecured Notes | 1.650% notes due July 2030 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500 | $ 500 | |
Effective Interest Rate | 1.767% | ||
Senior Unsecured Notes | 0.650% Notes Due July 2023 | |||
Debt Instrument [Line Items] | |||
Stated interest rate (in percent) | 0.65% | ||
Senior Unsecured Notes | 0.950% Notes Due July 2025 | |||
Debt Instrument [Line Items] | |||
Stated interest rate (in percent) | 0.95% | ||
Senior Unsecured Notes | 1.350% notes due July 2027 | |||
Debt Instrument [Line Items] | |||
Stated interest rate (in percent) | 1.35% | ||
Senior Unsecured Notes | 1.650% notes due July 2030 | |||
Debt Instrument [Line Items] | |||
Stated interest rate (in percent) | 1.65% |
Long-Term Obligations and Com_4
Long-Term Obligations and Commitments - Secured Revolving Credit Facility (Details) - Subsidiary - Revolving Credit Facility - Line of Credit - 2019 Secured Revolving Credit Facility - USD ($) | Jul. 16, 2021 | Feb. 19, 2019 | Oct. 31, 2021 | Oct. 31, 2020 |
Debt Instrument [Line Items] | ||||
Line of credit, maximum borrowing capacity | $ 300,000,000 | |||
Line of credit, current borrowing capacity | $ 150,000,000 | |||
Line of credit, remaining borrowing capacity | $ 150,000,000 | |||
Fair value of amount outstanding | $ 50,000,000 | |||
Interest rate at period end | 2.63% | |||
Secured amount | $ 232,000,000 | |||
Periodic interest payment | $ 0 | $ 1,000,000 | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate on unused portion of line of credit | 0.25% | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate on unused portion of line of credit | 0.75% | |||
LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.50% |
Long-Term Obligations and Com_5
Long-Term Obligations and Commitments - Other Long-Term Obligations (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Nov. 18, 2021 | Oct. 31, 2021 | Sep. 30, 2021 | Jul. 31, 2021 | |
Debt Instrument [Line Items] | ||||
Income tax liabilities | $ 24 | $ 24 | ||
Dividend payable | 9 | 8 | ||
Deferred revenue | 6 | 8 | ||
Other | 12 | 13 | ||
Total long-term obligations | 51 | 53 | ||
Long-term obligations due after one year | $ 51 | $ 53 | ||
Non-cancellable contractual commitments | $ 555 | |||
Purchase commitment, year one | 1.5 | |||
Purchase commitment, year two | 1.5 | |||
Purchase commitment, year three | 1.5 | |||
Purchase commitment, thereafter | $ 27.5 | |||
Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Long-term purchase commitment, period | 5 years | |||
Long-term purchase commitment, amount | $ 1,200 | |||
Long-term purchase commitment, annual purchase commitment | $ 150 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended |
Oct. 31, 2021optionsToExtend | |
Lessee, Lease, Description [Line Items] | |
Number of options to extend | 1 |
Option to extend operating leases | 10 years |
Option to extend sublease | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease terms | 11 years |
Operating sublease terms | 4 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 21 | $ 15 |
Variable lease cost | 3 | 3 |
Sublease income | (5) | (4) |
Total net lease cost | $ 19 | $ 14 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 24 | $ 14 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 43 | $ 19 |
Leases - Other Lease Informatio
Leases - Other Lease Information (Details) | Oct. 31, 2021 | Jul. 31, 2021 |
Leases [Abstract] | ||
Weighted-average remaining lease term for operating leases | 6 years 10 months 24 days | 6 years 9 months 18 days |
Weighted-average discount rate for operating leases | 2.30% | 2.30% |
Leases - Schedule of Future Pay
Leases - Schedule of Future Payments (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Operating Lease Maturity | ||
2022 (excluding the three months ended October 31, 2021) | $ 55 | |
2022 | 88 | |
2023 | 84 | |
2024 | 68 | |
2025 | 49 | |
Thereafter | 164 | |
Total future minimum lease payments | 508 | |
Less imputed interest | (38) | |
Present value of lease liabilities | 470 | $ 446 |
Sublease Income Maturity | ||
Remainder of fiscal year 2022 | 13 | |
2023 | 11 | |
2024 | 8 | |
2025 | $ 4 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 405 | $ 380 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | |
Other current liabilities | $ 67 | 66 |
Operating lease liabilities | 403 | 380 |
Total operating lease liabilities | $ 470 | $ 446 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Excess tax benefits on share-based compensation | $ 47 | $ 52 | |
Effective tax rate | 4.00% | 6.00% | |
Effective tax rate, excluding discrete tax benefits | 25.00% | 25.00% | |
Total amount of unrecognized tax benefits | $ 190 | ||
Favorable net impact to income tax expense due to recognition of tax benefits | $ 109 | ||
Noncurrent income taxes receivable | $ 75 | $ 75 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Programs, Treasury Shares, and Dividends on Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2021 | Oct. 31, 2021 | Oct. 31, 2020 | Aug. 20, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock repurchased (in shares) | 606 | |||
Stock repurchases under stock repurchase programs | $ 338,000,000 | |||
Stock repurchases under stock repurchase programs settled after period end | 20,000,000 | |||
Stock repurchase program, remaining authorized repurchase amount | $ 3,000,000,000 | $ 2,000,000,000 | ||
Common stock, dividends, per share, cash paid (in dollars per share) | $ 0.68 | |||
Dividends declared | $ 191,000,000 | $ 157,000,000 | ||
Cash dividends declared per common share (in dollars per share) | $ 0.68 | $ 0.59 | ||
Treasury Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock repurchases under stock repurchase programs | $ 338,000,000 | |||
Subsequent Event | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash dividends declared per common share (in dollars per share) | $ 0.68 |
Stockholders' Equity - Share-Ba
Stockholders' Equity - Share-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 280 | $ 111 |
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 | 27 | 15 |
Selling and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 64 | 32 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 109 | 38 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 80 | $ 26 |
Stockholders' Equity - Share-_2
Stockholders' Equity - Share-Based Awards Available for Grant (Details) shares in Thousands | 3 Months Ended |
Oct. 31, 2021shares | |
Shares Available for Grant | |
Shares available for grant, beginning balance | 16,851 |
Restricted stock units granted | (485) |
Options granted | 0 |
Share-based awards canceled/forfeited/expired | 1,366 |
Shares available for grant, ending balance | 17,732 |
Pool shares reduced for each share granted | 2.3 |
Pool shares increased for each share forfeited | 2.3 |
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 Billions | 3 Months Ended |
Oct. 31, 2021USD ($)$ / sharesshares | |
Number of Shares | |
Nonvested at beginning of period (in shares) | shares | 9,038 |
Granted (in shares) | shares | 271 |
Vested (in shares) | shares | (627) |
Forfeited (in shares) | shares | (361) |
Nonvested at end of period (in shares) | shares | 8,321 |
Weighted Average Grant Date Fair Value | |
Nonvested, weighted average grant date fair value, at beginning of period (in dollars per shares) | $ / shares | $ 345.86 |
Granted, weighted average grant date fair value (in dollars per shares) | $ / shares | 555.65 |
Vested, weighted average grant date fair value (in dollars per shares) | $ / shares | 275.10 |
Forfeited, weighted average grant date fair value (in dollars per shares) | $ / shares | 270.71 |
Nonvested, weighted average grant date fair value, at end of period (in dollars per shares) | $ / shares | $ 361.30 |
Unrecognized compensation cost related to non-vested RSUs | $ | $ 2.6 |
Weighted average vesting period, in years | 2 years 10 months 24 days |
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, 2021USD ($)$ / sharesshares | |
Number of Shares | |
Options granted, number of shares (in shares) | 0 |
Employee Stock Option | |
Number of Shares | |
Options outstanding, beginning balance (in shares) | 2,204 |
Options granted, number of shares (in shares) | 0 |
Options exercised, number of shares (in shares) | (58) |
Options canceled or expired, number of shares (in shares) | 0 |
Options outstanding, ending balance (in shares) | 2,146 |
Weighted Average Exercise Price Per Share | |
Weighted average exercise price per share, beginning balance (in dollars per share) | $ / shares | $ 251.48 |
Options granted, weighted average exercise price per share (in dollars per share) | $ / shares | 0 |
Options exercised, weighted average exercise price per share (in dollars per share) | $ / shares | 210.92 |
Options canceled or expired, weighted average exercise price per share (in dollars per share) | $ / shares | 0 |
Weighted average exercise price per share, ending balance (in dollars per share) | $ / shares | $ 252.58 |
Exercisable (in shares) | 1,364 |
Exercisable, weighted average exercise price per share (in dollars per share) | $ / shares | $ 176.81 |
Unrecognized compensation cost related to non-vested share based compensation expense | $ | $ 68 |
Expected weighted average vesting period to recognize compensation cost related to share based compensation expense, in years | 3 years 1 month 6 days |
Litigation (Details)
Litigation (Details) claim in Thousands, $ in Millions | Oct. 31, 2021USD ($)claim |
Commitments and Contingencies Disclosure [Abstract] | |
Number of pending claims | claim | 123 |
Estimate of possible loss | $ | $ 350 |
Segment Information - Narrative
Segment Information - Narrative (Details) - segment | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 4 | |
International total net revenue as a percentage of total (less than) | 6.00% | 6.00% |
Segment Information - Results b
Segment Information - Results by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Financial results by reportable segment | ||
Net revenue: | $ 2,007 | $ 1,323 |
Total operating income | 195 | 209 |
Unallocated corporate items: | ||
Share-based compensation expense | (280) | (111) |
Amortization of acquired technology | (15) | (7) |
Amortization of other acquired intangible assets | (53) | (2) |
Operating Segments | ||
Financial results by reportable segment | ||
Total operating income | 1,068 | 761 |
Segment Reconciling Items | ||
Unallocated corporate items: | ||
Share-based compensation expense | (280) | (111) |
Other corporate expenses | (525) | (432) |
Amortization of acquired technology | (15) | (7) |
Amortization of other acquired intangible assets | (53) | (2) |
Total unallocated corporate items | (873) | (552) |
Small Business & Self-Employed | ||
Financial results by reportable segment | ||
Net revenue: | 1,443 | 1,181 |
Small Business & Self-Employed | Operating Segments | ||
Financial results by reportable segment | ||
Total operating income | 921 | 767 |
Consumer | ||
Financial results by reportable segment | ||
Net revenue: | 120 | 119 |
Consumer | Operating Segments | ||
Financial results by reportable segment | ||
Total operating income | (11) | 4 |
Credit Karma | ||
Financial results by reportable segment | ||
Net revenue: | 418 | 0 |
Credit Karma | Operating Segments | ||
Financial results by reportable segment | ||
Total operating income | 169 | 0 |
ProConnect | ||
Financial results by reportable segment | ||
Net revenue: | 26 | 23 |
ProConnect | Operating Segments | ||
Financial results by reportable segment | ||
Total operating income | $ (11) | $ (10) |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Revenue from External Customer [Line Items] | ||
Net revenue: | $ 2,007 | $ 1,323 |
Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 1,443 | 1,181 |
Consumer | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 120 | 119 |
ProConnect | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 26 | 23 |
Credit Karma | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 418 | 0 |
Online Ecosystem Subsegment | Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 845 | 621 |
Online Ecosystem Subsegment | Small Business & Self-Employed | QuickBooks | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 519 | 392 |
Online Ecosystem Subsegment | Small Business & Self-Employed | Online Services | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 326 | 229 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 598 | 560 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | QuickBooks | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | 267 | 241 |
Desktop Ecosystem Subsegment | Small Business & Self-Employed | Desktop Services and Supplies | ||
Revenue from External Customer [Line Items] | ||
Net revenue: | $ 331 | $ 319 |
Subsequent Event (Details)
Subsequent Event (Details) $ / shares in Units, shares in Thousands, $ in Millions | Nov. 01, 2021USD ($)shares | Oct. 31, 2021USD ($) | Oct. 29, 2021$ / shares | Jul. 31, 2021USD ($) |
Business Acquisition [Line Items] | ||||
Restrictive covenant, ratio of total gross debt to EBIDTA | 3.25 | |||
Restrictive covenant, ratio of annual interest expense to EBIDTA | 3 | |||
Long-term debt | $ 2,037 | $ 2,034 | ||
The Rocket Science Group LLC (Mailchimp) | ||||
Business Acquisition [Line Items] | ||||
Share price (in dollars per share) | $ / shares | $ 625.99 | |||
Subsequent Event | ||||
Business Acquisition [Line Items] | ||||
Cash paid for acquisition | $ 5,700 | |||
Subsequent Event | The Rocket Science Group LLC (Mailchimp) | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 12,000 | |||
Equity interest issued (in shares) | shares | 10,100 | |||
Equity interest issued | $ 6,300 | |||
Equity awards issued for outstanding equity awards | shares | 573 | |||
Equity awards exchanged for outstanding equity incentive awards | $ 349 | |||
Period of recognition for equity awards | 3 years | |||
Subsequent Event | The Rocket Science Group LLC (Mailchimp) | Forecast | ||||
Business Acquisition [Line Items] | ||||
Assumed equity awards, restricted stock units to be issued | $ 215 | |||
Expected expense of outstanding equity incentive awards in first four years | $ 155 | |||
Period of expense recognition of outstanding equity incentive awards not yet issued, period one | 4 years | |||
Expected expense of outstanding equity incentive awards in next six months | $ 60 | |||
Period of expense recognition of outstanding equity incentive awards not yet issued, period one | 6 months | |||
Subsequent Event | Unsecured Debt | ||||
Business Acquisition [Line Items] | ||||
Aggregate principal amount | $ 5,700 | |||
Subsequent Event | Unsecured Debt | The Rocket Science Group LLC (Mailchimp) | ||||
Business Acquisition [Line Items] | ||||
Long-term debt | 4,700 | |||
Subsequent Event | Unsecured Debt | Unsecured Term Loan Due 2024 | ||||
Business Acquisition [Line Items] | ||||
Aggregate principal amount | 4,700 | |||
Subsequent Event | Revolving Credit Facility | Revolving Credit Facility Due 2026 | ||||
Business Acquisition [Line Items] | ||||
Aggregate principal amount | 1,000 | |||
Option to increase credit amount | $ 250 |