Intuit Inc.

Good afternoon. My name is Jerome, and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit's third quarter fiscal year 2019 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask questions during this time, simply press star, then the number one on your telephone keypad. If you would like to redraw your question, press the pound key. With that, I'll now turn it over to Jeremy Natoli, Intuit's Vice President of Finance and Treasurer. Mr. Natoli, the floor is yours.

Thank you, Jerome. Good afternoon, and welcome to Intuit's third quarter fiscal 2019 conference call. I'm here with Intuit's CEO, Sasan Gadarzi, and Michelle Clatterbuck, our CFO. Before we start, I'd like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit's results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for Fiscal 2018, and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit's website at intuit.com. We assume no obligation to update any forward-looking statement. Some of the numbers in these remarks are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP numbers in today's press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period, and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. With that, I'll turn the call over to Sasan.

Thanks, Jerry, and thanks to everyone for joining us. We had a great third quarter, and we're on track to exceed the guidance we provided at the beginning of the year. We're seeing momentum across every part of the company, and as a result, we're raising our revenue, operating income, and earnings per share guidance for fiscal year 2019. During the third quarter, total revenue grew 12% overall, fueled by 10% revenue growth in the consumer group and 19% revenue growth in the small business and self-employed group. With that context, let me start with the consumer group. We had a great tax season. We grew the DIY category and grew our share within the category driven by our innovation and significantly improved customer experiences. We produced our most robust free offering yet and made significant progress in our effort to transform the assisted category. As we've communicated, there are four primary drivers in our consumer business. The first is the total number of returns filed with the IRS. The latest IRS data indicates total returns were up 0.2% through May 10th, below historical trends, and our own expectation of 1-2% growth. The second is the percentage of those returns filed using do-it-yourself software. Category share grew over a point, the fastest pace since 2016, once again outpacing the assisted tax prep category. We are very pleased with this outcome. And as a reminder, DIY category growth is our largest revenue growth driver. The third driver is our share within DIY. We estimate TurboTax online share through half a point. The fourth is our average revenue per return, which increased again this season. The growth reflects a stronger contribution by TurboTax Live. improved attach and tune product lineup adjusted for the new tax legislation. These items were partly offset by deliberate decisions we made to improve the experience for customers with simple returns, including year-over-year data transfer for no charge and extending free state filings for the entire season. This season, we had more customers than ever before paying nothing. We grew this customer group in the high teens above total unit growth of 5%. We are confident these were the right strategic decisions to drive durable growth, especially as we look for ways to help customers make ends meet going beyond taxes. Our commitment to provide a robust free offering has resulted in more than 55 million TurboTax customers who paid nothing for their TurboTax experience over the last five years. As I've shared before, our consumer group strategy is to expand our lead in the DIY category, transform the assisted tax preparation category, and disrupt traditional consumer finance by expanding beyond tax to build a consumer platform. This is all in service of helping our customers make ends meet and maximizing their tax refund. We made significant progress against these strategic objectives this season. Within DIY, we saw evidence that the bold changes we made to improve the experience for customers who filed simple returns resonated. These changes drove a six-point improvement in product recommendation scores for the free offering and contributed to higher retention. We're transforming the assisted tax customer experience by connecting people to experts on our platform with TurboTax Live. We introduced a range of price points within the product line this season to offer access to an expert for even the simplest returns. After just two years, TurboTax Live is now a meaningful contributor to our business, and this product line is among the fastest ever to reach this revenue level. The number of customers using TurboTax Live more than tripled year over year. We estimate 70% of customers who are new to Intuit this season and use TurboTax Live came from the assisted method the prior year, higher than TurboTax Online. And for the approximately 2,000 pros on our platform, we improved the onboarding experience and technology tools, resulting in lower attrition and improved operating efficiencies through the season compared to last year. TurboTax has now approximately 28% share of total individual returns, leaving us with a large addressable market. Beyond tax, our consumer platform is aimed at helping customers unlock smart money decisions by connecting them to financial products to help them make ends meet. As we learn about their financial lives, we can notify them of benefits that can save them money. We now have over 14 million customers registered for Turbo, up from 5 million last season. We have approximately 70 offers this season, focusing on four verticals, including credit cards, lending, investing, and mortgages. We continue to test benefits and monetization models. While we don't expect a significant contribution to revenue in the near term, we're making progress and continue to be excited about this opportunity. In summary, I'm very proud of what the team delivered across the consumer offerings. Now let me turn to small business. We delivered another strong quarter in our small business and self-employed group with online ecosystem revenue growth of 38%, again, exceeding our target to grow better than 30%. We continue to place an increased emphasis on online services to deliver more value for our customers by solving their biggest pain points. We're working to achieve our vision of being the center of small business growth by helping our customers get paid fast, manage capital, and pay employees with confidence. Earlier this year, we launched Next Business Day payments, allowing our customers to receive their funds much faster than previously experienced. QuickBooks Capital has funded $360 million in cumulative loans since launching about a year and a half ago. Finally, we remain encouraged by our early progress with Cookbooks Advanced Online, designed to disrupt the mid-market by addressing the needs of mid-market small business customers with 10 to 100 employees. Within our strategic partner group, our professional tax revenue is on track to grow 4% for fiscal year 2019. That's the high end of our initial range for this segment. To wrap this section up, we are very pleased with our results. Now let me shift to a different topic. You may have heard assertions that Intuit engaged in practices designed to discourage consumers from filing their taxes for free. These assertions have come in several forms and I want to address them directly. We stand behind our marketing actions as both being appropriate and consistent with our core value, integrity without compromise. In addition, any suggestion that Intuit does not support the IRS refop program is wrong. In fact, we're proud that for nearly two decades, millions of Americans have used TurboTax's free file program to file their taxes without paying. Our commitment to free dates back to 1998 when we launched a program to offer free tax preparation software and e-filing services to lower-income and active-duty military taxpayers. In 2002, the entire tax software industry and the IRS formed the IRS Free File Program, modeled after our initiative. As a founding member, we're committed to IRS Free File's shared goals of public service and providing free tax filing to those who need it most, as we have for nearly 20 years. As I mentioned earlier, we have more than 55 million TurboTax customers who paid nothing for their TurboTax experience over the last five years. Thank you, and now let me hand it over to Michelle to walk you through the financial details.