直覺電腦 (INTU) 2004 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Paul and I will be your conference facilitator today.

At this time I would like to welcome everyone to the Intuit second quarter 2004 conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer period.

If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad.

If you would like to withdraw your question, press star then the number 2 on your telephone keypad.

The presentation you will hear on this call includes forward-looking statements including statements regarding revenue and earnings guidance.

Actual results may differ materially.

Risks that could impact these statements are described in the following documents that are available on the Investor Relations page of Intuit's website at www.intuit.com; the earnings press release issued earlier this afternoon, this conference call script and Intuit's most recent forms 10-Q and 10-K and other SEC filings.

Most of the numbers in the presentation will be presented on a non GAAP basis which will be referred to in the call as pro forma.

The most directly comparable GAAP financial measures and the reconciliation of the pro forma to GAAP are provided in the earnings press release, which is posted on the Investor Relations page on Intuit's website at www.intuit.com.

Thank you.

With that I'd now like to turn the conference over to Mr. Steve Bennett;

Intuit's President and CEO.

Thanks, Paul.

Good afternoon everybody and welcome to the Intuit conference call.

With me are Brad Henske; our CFO and Scott Cook.

Intuit delivered a solid second quarter.

Revenue of 636 million was up 14% year-over-year with five of our six segment delivering within or above the guidance provided three months ago.

Pro forma diluted EPS of 77 cents was up 26% and 6 cents better than the high end of our guidance.

We're in the midst of our busy tax season and we're pleased with the early results of both the TurboTax and ProTax businesses.

Our QuickBooks revenue was lower than expected and both the Small Business Products and Services and Verticals Businesses are performing in line with expectations.

Later in the call I'll provide some additional perspective but first Brad will go into more details about the quarter.

Thanks, Steve.

Here are the highlights for the second quarter.

As Steve said, Intuit's revenue was up 14% year-over-year, driven by strong performance in five of our six business segments.

Pro forma operating income increased 24% as we continued to benefit from the volume leverage in our businesses.

Pro forma operating income was better than expected, primarily due to lower expenses than expected.

Pro forma diluted EPS was up 26%.

Other income and expenses higher than forecast.

We had lower share count due to our stock repurchase program.

Now let's look at each of our business segments.

First, TurboTax is off to a solid start for the season.

Second quarter revenue of $130 million was up 36% over Q2, 2003.

As we discussed three months ago, we had approximately $12 million in revenue shift from Q3 to Q2 as we offered nonrebated TurboTax SKUs this year.

Looking at an apples to apples basis, without that 12 million, TurboTax still had strong quarter with revenue up 24% due to strong retail sales.

Based on the best data so far we continue to hold approximately 70% retail share versus our competitors, generally consistent with the last ten years.

As you know, we've been issuing TurboTax season updates every other week this year.

Let me provide some perspective on what we've seen and are likely to see in our Desktop Business.

As we've discussed before we see a lot of shifts in our mix in terms of timing and channels depending on marketing actions we take and customer purchase dynamics.

Let me first talk about unit sell-through to customers, and then I'll talk about revenue.

Over recent years we've seen our direct sales of TurboTax shift away during the season.

This was magnified last year when we had a big spike late in the season due to our My CD program.

This year, however, we expect our direct sales to be skewed earlier in the season versus last year driven by two marketing programs.

The first was the new auto renewal program from last year that delivered sales early in the season.

The second was a decision to shift fewer My CDs this season, which will reduce direct sales at the end of the season.

With more focus on driving retail sales and a smaller My CD program we actually expect the mix of direct sales to be down year-over-year for the season even though they're up 5% to date.

Turning to retail we continue to see a shift of sell-through to later in the season.

In FY 99, for example, about 60% of the season's retail sales had occurred by the end of January.

Last year, it was about 50%, and we expect this pattern to continue.

Net-net, we think the aggregate timing of desktop sell-through unit sales as a whole will be about the same this season versus last year but expect the mix to shift from direct to retail.

This means we expect to see continued growth in retail unit sales in a fall-off in direct as the desktop mix moves from direct to retail versus where we are season to date.

Turning to revenue, as you know, retail sales produced revenue earlier since we recognized most revenue when we shift under the channel.

Therefore, because of the mix of shift from direct to retail, revenue will be earlier seasonally this year than last.

Given all of that, we expect the TurboTax revenue growth in Q3 will be approximately 2 - 12% and we're still confident in the 10 - 20% revenue growth in TurboTax in fiscal year '04 as a whole.

Our Professional Tax Business also had a solid second quarter results.

Revenue of 157 million was up 4% over the prior year period.

This continues to be a recurring and stable business for us and we're on track to meet pro tax revenue growth guidance of 7 - 12% for the year.

Turning to QuickBooks, second quarter revenue of 101 million was up 8% year-over-year, but below our guidance range.

We started the year with a down draft due to unfavorable year-over-year comparisons resulting from differences in product sunsetting.

As background, Quicken has a sunsetting policy for all products three years or older today.

In other words, customers can no longer receive support or use attached product with those older versions.

Last year we sunsetted two years of older product, which required more customers to upgrade to current versions.

This year, only one year was sunsetted, as we reached our stable state of three years, which means fewer upgrades due to sunsetting this year versus last.

Next year we will return to a consistent comparison year-over-year and sunsetting will be a contributor to growth year-over-year.

We had anticipated that the decrease in pro and basic upgrades, resulting from the difference in our sunsetting program, would be offset by stronger demand for our new higher end offerings, QuickBooks Flavors and Enterprise.

While we had 68% growth in the high-end offerings it wasn't enough to fully offset fewer upgrades in a tough year-over-year comparison.

The net of this is that we've had lower revenue growth to date and expect lower revenue growth for the year.

Looking ahead, with more information on to base our assumptions we're lowering our QuickBooks revenue growth forecast for fiscal year FY '04 to 0 - 10%.

Steve will talk more about QuickBooks later.

Our next segment, Small Business Product and Services, had second quarter revenue of $145 million, up 20% over Q2 of FY '03.

We continue to work in process and infrastructure improvements for growth in our outsource payroll and we'll have more to report when we're through with this season.

Our Do- It-Yourself Payroll had a very strong quarter with revenue up 42% year-over-year.

Our Merchant Accounts Services business is also doing very well, benefiting from the success of recent acquisitions of innovative merchant solution.

Looking ahead we continue to expect Small Business Product and Services revenue growth in the 15 - 25% range in fiscal 2004.

Our Vertical segment had revenue of 26 million in the second quarter, up 9% from the year ago.

For the first six months of fiscal 2004, revenue was up 22% over the year-ago period.

Second quarter growth was driven by strength in MRI residential real estate portfolio management products.

We also benefited from higher unit volume and license size in our IDMS distribution software business.

We remain confident in our 2004 outlook for annual revenue growth at 15 - 25% for the verticals.

Finally, Intuit's other business, which includes Quicken in Canada, had revenue of 77 million, up 4%.

That was more than we had forecasted and was due to better than expected Q2 Quicken sales.

According to NPD, Quicken unit's share in retail for fiscal year-to-date is 73%, up 4 points from a year ago.

This is a significant turnaround from the share loss trend we've seen over the past several years.

Turning to expenses, second quarter pro forma expenses of 408 million increased 9% year-over-year, but we're about 12 million below what we expected.

The savings resulted in an additional 4 cents in pro forma diluted EPS.

Other income was higher than forecast by about 2 million, due mostly to an insurance settlement payout.

Our share count was lower than expected due to a strong share buyback program, fewer than projected option exercises, and a lower average stock price in calculating option dilution.

These factors also drove higher pro forma EPS.

One additional point we've been asked about, a number of companies are benefiting today from favorable foreign exchange rates, which is driving revenue and earnings growth.

Roughly 95% of Intuit's business is U.S.-based, so there's minimal impact on our Q2 results due to foreign exchange.

Moving to the balance sheet, Intuit had about $980 million in cash and short-term investments at the end of second quarter, up more than 60 million from the end of Q1.

Due to the seasonality of our business the second and third quarters are Intuit's primary cash generation periods.

In the second quarter we generated, approximately, 260 million in cash including 208 million in operating cash and 55 million in proceeds from the exercise of employee stock options.

We also spent cash during the quarter, including 158 million for our stock buyback program and 28 million in capital expenditures.

Under our stock repurchase program, Intuit bought, approximately, 3.1 million shares in Q2 at an average price of 51.25.

We have $348 million left in our third repurchase program.

Turning to guidance, I'll first cover third quarter expectations.

As you know, while many financial analysts have provided estimates for our third quarter this is the first time that Intuit has provided Q3 '04 guidance.

For the third quarter we expect revenue of 685 - 725 million, or growth of 8 - 14% over Q3, 2003.

For our businesses, in QuickBooks we expect 55 - 65 million, Small Business Services; 125 - 140 million, TurboTax; 320 - 350 million, ProTax; 85 - 95 million and finally, Verticals; 26 - 30 million.

We expect pro forma income of 335 to 355, up 4 - 11% over Q3 '03.

We expect Q3 pro forma diluted EPS of $1.12 - $1.16, up 7 to 10% over the year earlier quarter.

Despite the softness in QuickBooks we are reaffirming the revenue and pro forma operating guidance we originally set last May.

We are raising pro forma diluted EPS guidance for the year.

Fiscal '04 guidance is revenue of 1.85 - 1.95 billion or growth of 12 to 18%.

Pro forma operating income of 480 - 510 million or growth of 20 - 28%.

And pro forma diluted EPS of $1.60 - $1.70 or growth of 15 - 22%, up 3 cents per share from previous guidance.

While we don't normally shade the guidance, given the softness in QuickBooks, we expect to come in at the lower end of revenue and pro forma operating income guidance.

To sum up we had good first and second quarters with our biggest quarter still ahead we remain positive about the outlook for the year.

With that let me turn it back to Steve.

Thanks for recapping the quarter, Brad.

I just want to cover a few points before we get to your questions.

First, we are focused on managing our business portfolio to deliver on our overall commitments.

While some of our businesses may do better than expected in any given quarter or year and some may do less the strength and diversity of the total portfolio enables us to deliver the whole.

This means we look at both revenue and expense to ensure we deliver in total.

Now let's look at two of our businesses.

TurboTax, which is done a little better than expected, and QuickBooks, which has fallen short.

As you know, the TurboTax team has done a lot of great things getting prepared for this season.

First, we've made significant improvements in the product.

We made the interview process even easier.

We've made the software smarter for returning customers and we made it easier to search for information from within the product.

The improvements have paid off in better product reviews this year.

We won the top award from PC Magazine, Washington Post, Barrens and CNET.

Even more important we're winning more customer sales than last year and continuing to grow nicely.

We've also made improvements in our marketing and promotion efforts this season.

We've run national TV ads for the first time and have executed a number of very successful retail promotions.

Again it's still early in the season but we like what we're seeing and we expect another solid year in TurboTax.

Now let's look at QuickBooks.

Brad discussed why QuickBooks is below expectations this year.

I'd like to talk about why Small Business is a good business for us and why we're optimistic about its future.

First, Small Business as a whole including Small Business Products and Services and QuickBooks are up 16% year-to-date.

Second, as Brad noted, our new higher end offerings are doing very well, producing 68% year-over-year growth in Q2.

As we've talked about before, we had a heavier emphasis in the last two-and-a-half years on higher end offerings than in the past, which is starting to bear fruit.

This year we've begun to put more emphasis on acquiring new customers into our base product.

There is more to do here to start growing this in aggregate again, but acquisition of new customers from our direct channel is up 30% year-over-year.

Third this is valuable because QuickBooks is a starting point for services that go beyond accounting like payroll.

As we attach more service we get more revenue and our Small Business Products and Services segment.

Finally, QuickBooks retail share remains strong and has actually increased year-over-year in terms of both units and dollars.

According to NPD Intellect QuickBooks retail unit share fiscal year to date is 82%, up 2 points.

Dollar share has also grown 2 points to 89%.

So bottom line, we continue to believe in Small Business as a whole and its continued growth opportunity.

Let me quickly sum up.

We had two solid quarters this year and we're on track to deliver our guidance for the total year.

Now let's open it up to your questions.

Ladies and gentlemen, as a reminder if you do have any questions or comments for today's Q and A session press star then the number 1 on your telephone keypad.

Again that's star then the number 1.

Our first response is from Adam Holt with J.P. Morgan.

Good afternoon.

My first question is about QuickBooks.

Over the last couple of years you've shown a very good revenue growth in QuickBooks, largely driven by the increase in ASPs as you've roll out more high-end products.

As you look out over the next year or two, assuming we are in an improving economy, what circumstances do you need to see unfold to see unit growth start to reaccelerate in QuickBooks?

Well, I think in simple terms, Adam, we have to continue to expand the category, we have to continue to invent new products and services to expand the category, because as you heard from our share data our popularity remains very high in this category, so one of the things we have to do in this business is to continue to invent, because we really compete with non-consumption and substitute methods.

So I think you'll see a big focus on continued innovation to help us attract more new cushion customers to the fold.

I think that's the big focus.

But I guess if you look, you know, notwithstanding the entrance into new markets, if you look at your sort of core QuickBooks market, would you expect to see a natural improvement in unit growth given an improving economy or, you know, is it more of a non-cyclical story as we've been coached over the last couple of years?

What we've been saying over the last few years is we're going to get most of our revenue growth from adding on things beyond accounting and having a lifecycle where customers can migrate up as these new higher end versions better meet their need.

We want to get them in the fold and then migrate them up and we do that by continuing to improve our core product but also by adding new product beyond accounting.

I wouldn't sit here and expect that QuickBooks unit sales over the next few years would dramatically grow in any economic environment.

As we said before in the last four years, we don't think we are dramatically impacted positively or negatively by the economy.

Okay.

Just one final question on the guidance.

Brad, I know you haven't yet given Q3 guidance.

Obviously the street is towards the high end of the guidance that did you give for the third quarter.

Given that you are maintaining guidance for the year maybe you can help us as we look into Q4 kind of push out some of the revenue from Q3 to Q4 to maintain that yearly number.

I think every year the mix of where revenue falls within some range is dependent on marketing programs and the mix of businesses.

I think, you know, Q4 at this stage is a pretty simple subtraction shun given you've got two quarters of guidance.

Great.

Thanks.

Our next question is from Glenn Greene with ThinkEquity Partners.

Thanks.

Just a couple questions on the tax business.

The first one: One of the issues you've talked about over the last couple quarters of the customer retention.

I was wondering if you could update us, give us a sense for the metrics, how that's sort of tracking early in the tax season and if that helped your results early this quarter.

We won't have that data.

We don't even collect it until after the season is over, so we'll see it if we have it at the the third quarter conference call.

If not by then, we'll certainly have it by the end of the year but we don't capture that data until the end of the year.

Second question would be: Your expectations for category unit growth at this point for the season?

I think it's too early to speculate.

As Brad said, with all of the in's and out's and the marketing program and the web, let's just wait until the end of the third quarter.

The important thing is we're doing better in TurboTax than we had planned, but the mix pattern has shifted, as we share some of the details between direct and retail, so I think there's still some degree of uncertainty and we'll know a lot more after tend of the third quarter.

Finally, any new tactics you've noticed this year regarding H&R Block, their Net to 0 program or anything else?

Nothing new.

They continue to be a strong competitor but shares are in the same range as they've been for the last ten years and also how big does that category grow and the good news is that we are off to a good start and we expect to have a reasonable tax season.

Thank you.

Our next question is from Craig Peckham with Jefferies & Company.

Good afternoon.

I just wanted to ask, really, two questions.

First on the professional accounting business, the full year guidance is a bit ahead of what we saw year-on-year in the second quarter here.

Could you talk to what may be happening seasonally with respect to year-over-year growth trends there?

Then I've got a follow-up.

Sure.

One of the things that's going on in this business is some mix shift to products where the accountant that use it pay by the use.

So, in other words, as opposed to buying the software with the ability to infinite tax returns, they pay us per return.

The result of that is relatively small shifts and that moves revenue later as opposed to buying the product in December they pay us when they do returns in March and April.

Okay.

And perhaps a higher level question on QuickBooks.

Is there anything different in the competitive dynamic that you might be seeing in the higher end market that maybe having anything to do with the sales coming in a bit below where you had expected at the high end?

In simple terms, Craig, no.

We don't see anything different in the market above us that has changed at all that impact these numbers.

QuickBooks, while it didn't grow what we expected, it still grew 8%, and the high-end units were up 68% year-over-year.

That's pretty good growth.

We had the tail wind because of sunsetting that Brad talked about, but we had a decent quarter although it was below what we expected.

Thanks.

Our next question is from Brian Keane with Prudential.

I just want to make sure I have it.

Q2 seems to be a little bit stronger than it typically has over the past couple of years, and then Q3 is weaker than it has been over the last couple of years.

Is that mostly explained by the movement of retail being stronger and direct moving off because you're recognizing those revenues a little bit earlier?

Are you're talking about TurboTax?

Yeah, or just in general.

If you look at the growth rates you're up 24% or something in operating income this quarter and you're guiding for 4 - 11, typically in the past years it's always Q3 that's got the strong growth number.

Right.

What you're seeing is the aggregate change is being driven primarily because of TurboTax and it's a result of our revenue being a little bit earlier this year, both driven by the mix to retail then on rebated SKUs.

On any given quarter most of our costs are fixed, so revenue shifts almost all fall to the bottom line.

Is there a margin difference between retail and direct in tax?

Not that's material.

Finally, on the marketing, on the sales and marketing it's about 10 million less than I expected, a little less than typically is in Q2.

Is there anything explaining that or does that crank back up in Q3?

There isn't any big thing, it's a result of what we allocated, as you imagine, a large variety of marketing programs across the quarter.

Okay.

Great.

Thanks.

Our next response is from Greg Smith with Merrill Lynch.

Hey, good afternoon.

Steve, can you comment on some of the recent management changes, how we should think about those and what progress you've made on the open recs out there?

Greg, I guess a couple things, number one, any change is individual circumstance specific and each of these have been mutual decisions.

I think the other thought is when you run a high-performance company change is natural, so I think you put those two thoughts together.

We've added a bunch of people, we've had some recs for people coming in but we're not going to pre announce those.

I think it's something we continue to work on is to make sure we have the right leaders on our team to capitalize on all the opportunities that we as a company have.

I think it's just ongoing, natural progression.

Okay.

And then the Payroll Business, now that you're through sort of the busy season and thinking more on the complete version, what maybe did you learn during the busy season as far as where your infrastructure is at today and how should we be thinking about that business maybe for ramping up into year-end and into next year?

I think it's still too early to tell this is still a very busy season for selling and fulfilling Payroll.

As we talked about before I think it will be the March/April time frame before we've really got a good assessment on where we are.

As you saw, customers went up quarter over quarter and year-over-year, but I think it's too early to tell.

Lastly, sort of ironic to be thinking about the strength in Quicken, what do you attribute that to, just a better version of the product this year or is there anything more from a marketing angle that you're doing?

Four years here, this is the first time we've talked a lot about Quicken.

I think the team last year did some pretty unique things.

They went wack to the basics.

They didn't build any new features they just made the product easier to use both for existing users and for new users, and I think the fundamental success is we went back to our roots, which is making the product simpler and easier to use, and I think the market has rewarded us very, very well from that.

I think there's something for us to learn from all of our products there and we would expect that learning to apply to all of our products as we go forward, but very, very well received by the marketplace.

To get share up to 70% in Quicken after watching it go down every year for the last few years,it's something I'm very proud of.

Thanks a lot, guys.

Our next question is from Gibboney Huske with CSFB.

Thank you.

Two relate questions.

When you look at sort of, obviously, you've got a lot of moving parts in your business and I'm sure it's a challenge to kind of do planning and forecasting.

When you look at your internal processes, to kind of take into account all these things and the various businesses, do you feel you're kind of where you need to be?

I'm obviously specifically referencing the QuickBooks than trying to understand the compare issue there.

Secondly, as you think about performance this quarter, they were kind of well into tax season, you at least had a little bit more experience on the outsource payroll and also with the Enterprise addition of QuickBooks.

How do you kind of think about sort of long-term growth, any changes?

I know you've said you sort of feel like in a normal environment 15 - 20% is a sort of reasonable goal that you'd hope to, obviously the guidance you maintain is lower than that this year.

Is sort of the line growth rate for the company probably closer to sort of what you're doing this year, you think you can accelerate from that going into next year, any color around that.

Let's start with the second part first.

Let's wait until the end of the third quarter before we comment on what we see looking forward on growth.

And one of the things that's interesting about this company is that I said around QuickBooks is we compete with non-consumption and substitute methods.

So it's a lot harder to predict growth year-over-year on some of these new businesses on new things.

And I think that's one of the challenges.

I think we continue to learn a lot, make our processes more robust.

I think Brad's brought a lot of rigor and discipline that's been helpful to the company.

Let me turn it over to Brad to see if he has any thoughts on this, but a lot of this is not tightly predictable things.

As you said, Gibboney, we have a lot of variables that are moving that sometimes make it hard to predict.

I think five out of six, right in line or a couple over in total, it all added up, and that's what our job is, to manage the total, to deliver on what we tell.

Gibboney, I think we've made a lot of progress on improving the rigor behind forecasting.

I will tell you, Gibboney, given that my financial team is probably listening to this call we're not where we need to be yet and probably never will be but we're going to keep getting better every quarter and every year.

As Steve said, because we are often trying to forecast new things as opposed to same stuff, different year, it's hard to do, but we're getting better and better every quarter.

Just this one, since you wouldn't answer my growth question, in terms of pretty strong cost controls this quarter, I know one of the plans is to steadily increase your operating margin, where do you kind of feel like you are in that process in terms of, you know what you can do with the margin structure of the company?

Well, we've been saying for the last four years that we're not solving for operating margin%, we're solving for revenue and EPS growth.

But because of the scale nature in our businesses we've been saying it's not unusual to expect that we should be approaching 30% operating margin over the next few years.

That story hasn't change at all.

If you look at our track record over the last four years every year we've increased operating margin couple hundred, 200, 300 basis points.

While we're not solving for it, that's important, we're solving for revenue growth and EPS growth.

The natural outcome, because of the scale of our businesses, is that operating margins have been improving.

I think as we get around to around 30%, I think, we start looking at should we be reinvesting more to drive faster organic growth.

I think we're getting closer to that point but not quite there yet.

Great.

Thanks.

Our next question is from Adam Waldo with Lehman Brothers.

Good afternoon.

Matthew [Jeeting] sitting in for Adam Waldo.

I was wondering if you could talk about how you are using the accountant central organization to drive growth and complete payroll and higher end versions of QuickBooks.

Well, I think you correctly recognize the leverage point on that accountants have as the most trusted recommender for small businesses.

I think we are making progress on the Payroll side but as you know we're up against challenging competitors in the field.

I think on the high end of QuickBooks side, I think we've made good progress in the premier side because of the - - as evidenced by the performance and I think accountants have played a key role in that.

On the Enterprise side I think we've had some leverage but we still have some things we need to continue to do to improve the performance of the product to get it to a place where we think we're going to start getting more traction.

We're working on that and we're starting to track, Matthew, the referral, the number of units that were purchased from referral from accountants but we don't have all that data sorted out yet so we'd expect to get that as we go forward in the future.

Thanks very much.

Next question is from Grant Jackson with First Analysis.

Hi, it's Jim Macdonald.

Could you talk a little bit about Innovative Merchant Solutions and how that's doing?

I guess you said it's doing well.

Could that be a more significant growth driver for Intuit?

I think it is.

It's clearly accretive to growth, that's why we made the acquisition in September, but it is still a relatively small portion of our total revenue.

So, while we think it's big and growing it's still a small part of our revenue.

So, it's accretive to growth, we think it has big opportunity and we're working hard to grow it as fast as we can.

We've got a great team and a great leader down there, but it's not big enough for us to think it's going to drive the growth of the whole company yet.

Would it be a platform for, you know, to add to from an acquisition point of view?

I think we look at all of our service businesses as an opportunity to leverage our brand and our customer base to be a platform for additional acquisitions if they make sense.

And so I think that is a growth market, and that's one of the reasons why we entered last ok.

There's some bigger players in there, so let's see what happens.

Jim, incrementally, as we talked about it last investor day we think there's a big opportunity there because our QuickBooks customers today spend about $600 million in the credit card space in the part of the value chain we're now in, so we'll continue to look for opportunities there.

Great.

Any other general comments on acquisitions?

Can we expect anything soon?

No comment.

Thanks very much.

Our next question is from Eric Wagner with Barrington research.

Hi, gentlemen.

Great quarter.

I believe my questions have actually been answered.

Thanks.

Thank you.

Our next question is from Dino [Diano] with UBS.

With regard to consumer tax, do you still receive higher average ASP when you sell direct, I know in some cases last year was $10 or so, and if that's so, I mean, with retail growing to be a bigger portion, do you expect ASP to decrease and if so will unit growth be kind of more one for one?

I know last year you were able to do 26% revenue growth versus 12% units.

Should we not think about it like that anymore?

You know, I think that it's an interesting question, but the mix is different direct versus retail.

So we have a higher deluxe mix direct than we do through retail.

So I think it's the products that customers choose when they buy direct are different than they choose when they buy at retail.

So, ultimately the way I think about it, Dino, we offer customers great choice, they can by either direct or through retail, last year we had direct grow faster, this year retail is going to grow faster than direct.

So ultimately, my view is we still grow revenue a bit faster than units every year just because more customers are mixing up, but I think the channel part of that is more dangerous than what it in total just because the channel mix shifts every year.

That makes sense.

On QuickBooks you might have mentioned this, I missed a portion, can you just update us on the three newer SKUs that you have versus last year?

We just launched them in December so we've only got about 30 days of revenue, I don't know, Scott, if you have any insight or knowledge on that or any comment to make.

It's just too early to tell.

It came out in the beginning of December and we can provide more color on that later in the year.

Fair enough.

Thanks.

There are no further questions at this time.

Okay.

Thanks everybody for listening.

Stay tuned, and we'll catch you on the third quarter call in May.

Thank you, ladies and gentlemen, for participating.

You may now disconnect.