直覺電腦 (INTU) 2006 Q3 法說會逐字稿

Good afternoon.

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

At this time, I would like to welcome everyone to the Inuit third quarter 2006 conference call.

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

After the speakers’ remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS] With that, I will now turn the call over to Bob Lawson, Intuit's Vice President of Investor Relations and Financial Planning and Analysis.

Mr. Lawson?

Good afternoon, everyone.

Welcome to the Intuit third quarter 2006 conference call.

I'm here with Steve Bennett, Intuit's President and CEO, Kiran Patel, our CFO, and Scott Cook, our Founder.

Before we get started, I would 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 2005, 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 this presentation will be presented on a non-GAAP basis.

The most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to GAAP are provided in today's press release.

After this call concludes, a copy of our prepared remarks and supplemental financial information will be available on our website.

With that, I'll turn the call over to Steve Bennett.

Thanks, Bob, and thanks to everyone for joining us today.

As you read in our press release, Intuit just delivered another terrific quarter, with revenue of $953 million, up 14% year-over-year, driven by an outstanding consumer tax season and continued strength in QuickBooks.

Non-GAAP diluted EPS was $1.79, up 16%, despite an $0.08 negative impact from a higher effective tax rate.

On a GAAP basis, diluted EPS was $1.68.

Consumer tax had an outstanding quarter, with revenue up 19% year-over-year.

And for the season, revenue was up 23% versus last year, on the strength of 20% federal unit growth, excluding Free File.

We're delighted with this performance.

With great performance in both consumer tax and QuickBooks this year, we're on track to deliver 13% to 14% revenue growth, continuing our track record of double-digit revenue growth.

With that, I'll turn the call over to Kiran to walk us through the segment results.

Thanks, Steve.

Let's start with consumer tax.

Third quarter consumer tax revenue of $499 million was up 19% over the same quarter last year.

As Steve said, consumer tax had another terrific year.

TurboTax federal units, excluding Free File, were up 20% year-over-year, driven by a 58% increase in TurboTax online units.

And at retail, we maintained a 79% unit share, retaining the 7 point share gain we made last tax season.

We also saw a lift from last year's FFA customers, which contributed approximately 3 points of revenue growth for the season.

Our ProTax business was in line with expectations, with third quarter revenue of $105 million, up 5% year-over-year.

The QuickBooks-related segment had another strong quarter, with revenue of $212 million, up 8% year-over-year.

Total QuickBook units were up 8% over the same period last year.

QuickBooks Simple Start, Basic, and Pro units were up 5%.

Premier units increased 24%.

QuickBooks Enterprise Edition was up 16%.

QuickBooks Online Edition customer base increased 76%.

We had continued strong year-over-year growth in QuickBooks add-on solutions.

Revenue from our Payments business was up 40%, driven by a 29% increase in the customer base, and a 15% increase in transaction volume per customer.

Revenue from QuickBooks Standard and Enhanced Payroll increased 20%.

The Intuit-branded small business segment had revenue of $63 million, up 12% year-over-year.

Our complete and assisted outsource payroll offerings continued to perform well, with customers up 13%.

Last week, we announced an agreement to sell our Master Builder construction management software and solutions business.

The transaction is expected to close during the fourth quarter.

We'll continue to serve the construction industry through our line of QuickBooks offerings, including our QuickBooks Contractor Editions.

Finally, the Other Businesses segment had revenue of $74 million, up 17% year-over-year, led by strong results in Canada.

Moving to the balance sheet, Intuit had $1.3 billion in cash and short term investments at the end of the third quarter, up $448 million from the end of the second quarter.

In the quarter, we generated $659 million in cash from operations, and received $70 million in proceeds from the exercise of employee stock options.

We used $285 million to purchase 5.5 million shares of Intuit stock during the quarter.

Today we announced a new stock repurchase program for up to $500 million over the next 3 years.

As Steve mentioned, we had an $0.08 impact on non-GAAP EPS from an increase in our effective tax rate.

This is the result of higher pre-tax income, a higher state tax rate, and a true-up of provisions as we've completed our 2005 tax return.

Additionally, on a GAAP basis, we expect to book a tax liability associated with the sale of our Master Builder business, which is expected to close in the fourth quarter.

Now let me share our guidance.

We're updating our full year revenue and EPS guidance.

We now expect revenue of $2.31 billion to $2.33 billion, which is an annual growth of 13% to 14%.

Prior guidance was $2.295 billion to $2.315 billion.

GAAP diluted EPS of $2.20 to $2.22 as a result of a higher GAAP tax rate primarily related to the sale of our Master Builder business.

This is an annual growth of 8% to 9%.

Previous guidance was $2.26 to $2.29.

Non-GAAP diluted EPS of $2.40 to $2.42, which is an annual growth of 19% to 20%.

Prior guidance was $2.37 to $2.40.

We're updating our fourth quarter guidance.

We now expect revenue of $310 million to $330 million, or year-over-year growth of 3% to 9%.

GAAP diluted EPS of a loss of $0.24 to a loss of $0.22, due to the tax liabilities arising from the sale of our Master Builder business.

Previous guidance was a loss of $0.17 to a loss of $0.15.

Non-GAAP diluted EPS of a loss of $0.09 to a loss of $0.07.

With that, I'll turn the call back to Steve.

Thanks, Kiran.

With the better part of the year now under our belt, I would like to share my perspective on why we've been successful, and why we're confident about our future growth.

First, think back to where we were just a year ago.

We were getting ready to take on a major new competitor in QuickBooks, and coming off 16% revenue growth in consumer tax, creating a tough year-over-year comparison, combined with immediate uncertainty about the future of the Free File Alliance in fiscal 2006.

Flash forward to today.

We've just completed a record tax season.

And once again, we have proven there is lots of room to grow the do-it-yourself software category.

We're acquiring new customers from both non-consumption, i.e. pencil and paper, and by disrupting higher priced alternatives, like storefront tax preparers.

So let's take a second to put some strategic perspective around what's going on, and why we believe we will continue to grow in consumer tax.

Through last tax season, based on IRS data, we estimate that do-it-yourself software on the Web and desktop has grown at a compound annual rate of 10% a year over the last 5 years, which makes it the fastest-growing tax preparation method in a total market that's grown about 1% each year.

Over the same 5 years, we estimate that pro-prepared returns have grown about 3% per year, storefront tax preparer returns have grown about 1% per year, and pencil and paper returns have declined about 12% per year.

Preliminary market data from this year suggests that the historical trend has continued.

We believe the market is evolving this way because do-it-yourself software is the best value proposition, as evidenced by the highest net promoter score of any tax prep method.

And we still see significant opportunities to continue to expand the self prep software category.

In the 2004 tax year, only 32 million of 132 million consumer federal tax returns were prepared using do-it-yourself software.

We think that creates an ongoing growth opportunity for Intuit.

We believe we will continue to grow the self prep software category through our net promoter efforts to create delighted customers and positive word-of-mouth, as we have been doing for the last few seasons.

We also see longer term potential to move up market and drive additional growth by disrupting higher priced storefront operations with alternatives like TurboTax Personal Pro.

We like the consumer tax business, and still see lots of reasons to be optimistic about future growth.

Switching to small business, we have had a great year in QuickBooks, as we again brought many new customers into the QuickBooks franchise and better monetized them by selling upgrades and add-on solutions, such as payroll and payment services.

Our QuickBooks software unit and dollar share at retail has grown, despite the entry of Microsoft.

The QuickBooks ecosystem of right-for-me products and services, more than 3 million QuickBooks users, 250,000 accounts that use and recommend QuickBooks, 40,000 developers, and hundreds of educational institutions around the country teaching QuickBooks, gives us a powerful advantage in what drives sales; word of mouth.

And as we continue to refine our right-for-me strategy to uncover additional growth opportunities, we have learned that roughly 26 million small businesses in the U.S. fall into 3 fundamental groups.

First, what we call small and simple.

Typically Quicken or QuickBooks Simple Start customers or prospects.

Second, Main Street, or our traditional QuickBooks Pro and Premier customers or prospects.

And third, mid-market.

Larger businesses who today use QuickBooks Enterprise or competing higher priced alternatives.

From our numerous follow-me-homes and other learnings, small businesses in each of these groups have many unmet and underserved needs that we can solve well.

And while many of these needs are the same, there are an awful lot of differences between the groups.

So we're excited about the growth opportunities in all 3 groups.

Small and simple, which is the largest, has an estimated 21 million small businesses, with the lowest penetration of Inuit accounting and business management products, estimated at about 25%.

We also continue to see opportunity in the other segments, where we estimate our penetration in Main Street at about 55%, and mid-market at about 30%.

We also have a great growth opportunity in our attached service businesses.

We have barely scratched the surface in our Payroll and Payments businesses, which continue to be among Intuit's fastest growing businesses.

We estimate we have currently penetrated approximately 40% of the Payroll opportunity within the existing QuickBooks base, and approximately 10% of the Payments opportunity.

So where is Intuit today?

A strong and vibrant Company, getting better at executing a winning strategy in the small business and tax markets, with an interesting and exciting new white space opportunity in healthcare.

And additionally, unlike most software companies, we estimate that approximately 80% of our revenue comes from recurring or highly predictable sources.

First, from subscriptions, in businesses like Payroll and Payments.

Second, from tax renewals, customers who reliably buy our consumer and pro tax products each year.

And third, from upgrades of Quicken and QuickBooks and consumables, like supplies.

In combination, these revenue sources create a strong, stable revenue base from which to grow.

So to sum up, I'm thrilled with where we sit today.

We've had strong performance across our businesses in fiscal year '06, with outstanding results in consumer tax and QuickBooks.

Our long-term goals remain revenue growth greater than 10% annually, and EPS growth greater than 15%.

As a sign of our confidence in the future, we announced a new $500 million share buyback program, and a 2-for-1 stock split to broaden the share pool for our investors and employees.

I'd like to thank all the Intuit employees for all they have done over the quarter and year, and for our shareholders for your continued support.

Now let's get to your questions.

Thank you. [OPERATOR INSTRUCTIONS] Bryan Keane, Prudential.

Those do-it-yourself numbers, growth numbers, that you were quoting there Steve, I think it was 10%.

Is that just the software market, or does that include the online Web market?

For -- I'm still missing.

I think you're asking about consumer tax?

Yes, the do-it-yourself soft -- you said do-it-yourself software grew 10%.

And you talked about Pro, and then storefront.

I'm just trying a clarification question, trying to figure out if the Web stuff, the online Web prep includes -- is in that 10% number?

Yes, I think the term I used is self prep software, which is both desktop and Web, Bryan.

And that has grown on average 10% a year over the last 5 years, according to IRS data.

Okay.

And then just with that, the 58% number that you guys put up in online was obviously way past mine, and I think everybody's expectations.

Do you guys know exactly what grew that number so large?

To be honest, it grew past our expectations, too.

I think there's just a fundamental sea shift happening in the way people do their taxes, with 5 million new people coming in every year, a lot of them are choosing the Web because they've found it's a better way to do your taxes.

More convenient, more accessible, accessible from home.

And I think it's important to remember that our desktop business still grew this year, and gained share of tax prep total methods.

But the Web has grown much faster.

I think the game in the future is on the Web, because I think it's a better value and -- for people to do their taxes, for those that are self-directed.

Obviously, but the pro prepared still grows, but not as fast as the self-directed software driven by the Web.

I don't see that trend changing.

And I think the good news for us, there's 135 roughly million returns done this year.

We think this still creates a lot of opportunity for us to grow by winning on the Web.

So you don't see any major onetime event, so that online growth -- it just grew -- I think last year it only grew like 13%.

So the fact that it grew 58% going forward, it's probably going to grow in that 50-plus-percent range?

Well I think you look backward, you see the facts are that the self prep category, desktop and Web, has grown 10% a year, with obviously the Web growing faster.

It's hard to predict the future.

The way we think about it, the way I think about it, the better job we do of making it simpler and easier for customers, the more -- the faster it's going to grow.

And so I think a lot of it is just because of the positive word of mouth that comes from us delivering a better taxpayer experience.

And as you know, we have been working on this for multiple years.

In the last 2 years, we have delivered results better than we expected, which says we must be making some progress.

Right.

The FFA, 3 points of revenue growth for the season, those FFA revenue points probably went into the online side?

Yes, that would be my hypothesis.

We don't know all the -- we haven't done all the final matching yet, but I think that's a safe assumption.

And TeleFile didn't really show up much?

We, again, wouldn't know that.

But our guess is it would have gone into the Free File program.

Okay, great.

Well, solid results.

Thank you.

Heather Bellini, UBS.

Heather, your line is open.

Did you have a question?

Please check your mute button.

We'll move ahead.

Greg Smith, Merrill Lynch.

Steve or Kiran, just as we look at the operating margin, continue to see nice expansion, can we expect similar type of operating margin expansion as we look into '07 and '08?

Is that a fair assumption?

I think, Greg -- this is Steve.

I think for 7 years in a row now, we've seen significant margin -- operating margin expansion because the number one driver in our Company of margin expansion is volume leverage.

And the nature of every business that we're in is high fixed, low variable costs.

So as we drive unit growth, we get a nice operating profit leverage.

At the same time, we continue to work diligently on managing expenses, managing price, managing mix.

All of the levers that help us grow the financial health of our -- the operating performance of our Company.

So I think it's safe to say that we will -- may in the future, not grow operating profit as fast, relative to revenue, as we have in the past, where we were growing 1.5 to 2 times, because we're finding more new good things to invest in to grow revenue faster.

So we're pleased with the operating margin expansion again this year, and it's the seventh year in a row where we've delivered, I think, over 100 basis points of profit leverage.

So, but it's the nature of the businesses were in.

Yes, okay.

And then just looking at the Professional Tax business and Quicken, both real nice cash cows for you.

But is there any reason for us to expect anything more than just kind of modest mid single-digit growth, or something like that, in those businesses?

Well, I think that the reason -- and we've talked about this the before.

The reason that we're quite excited about Quicken these days is because there are 3 million small businesses that use Quicken to run their business.

And we've been doing a lot of work in the small and simple category that says that Quicken, for many customers, is better than QuickBooks, even Simple Start.

So we think Quicken plays an important role, and has a big growth opportunity that we've not really focused on in growing in the small business area.

And so I think we will see better performance from Quicken going forward if we can capture the small business opportunity.

With regards to ProTax, there is nothing new to talk about.

We've made some changes there.

I'm encouraged by some of the early signs, but I think this is a business that has been growing 3% to 5% a year for a while.

We're focused on making it better, but we don't have anything new to talk about at this point.

Okay.

And then just real quickly, on the tax rate for pro forma EPS, what should we be thinking about for '07?

We will have more insight into that at the end of August when we have our full plans completed.

But we do expect the tax rate to come down from where it has been for this year, as some of the discrete items.

So we don't expect that to reoccur next year.

Okay, great.

Thanks a lot, guys.

Adam Holt, JPMorgan.

The first question is on consumer tax.

It looked like for the season, consumer tax revenue grew a couple hundred basis points faster than paid units.

I know you had said all throughout the season that tax revenue growth would be in line with units.

I was wondering if you could talk a little bit about maybe some of the puts and takes there.

And also some of the newer programs and the influences they might have had this year, particularly maybe comment on the gift card program, some of the paid, sort of higher end assisted programs, and maybe a few other things that went into the mix?

We said the whole season that we were going to grow revenue and units about the same, and nobody believed us, given the competitive pressures in the marketplace.

I don't think there's anything special and unique about 20% unit growth and 23% growth.

The gift card program, which we liked, had less of an attach -- the customers that used it really liked it.

And you should expect to see that again next year.

I think we can do better at execution on that, but we love the concept.

But it was not -- it didn't have a significant impact on contributing to revenue growing faster than units.

I think it was just the way the season played out.

The mix the customers picked, and how it worked out.

Nothing magical that I'm aware of.

I mean, I don't know if Kiran or Bob or Scott, do you know anything different?

The only thing I'd say, is it shows that when customers choose to do taxes through the methods we provide, they tend to pick a reasonably rich mix of higher end versions and add-on services.

So that's what you can see working in the numbers you cite.

Yes, and I would and on to that, there is an interesting phenomenon that happens.

That these are people's taxes, and they want the best to do their taxes.

They don't want the low end, down and dirty.

They want the best.

And a lot of customers have a brand preference to buy the best, as opposed to buy the down and dirty cheapest.

And I think we benefit from people wanting to buy the premium brand.

One more question on consumer tax.

You obviously made some changes to your strategies surrounding rebates this year.

With the benefit of hindsight, do you expect to have the same strategy for next year?

Or should we look for any changes?

I think we will always look every year.

I think the changes we made this year were very, very well received by customers, because rebates were the number one sense -- source of negative energy.

I think Brad Henske and the team will be looking holistically about what do we do to continue to expand the category and grow our share, on both the desktop and the Web.

I think we have some interesting ideas, and my guess is that we will probably share some of those in September at our Investor Day.

But too early to -- I don't think we've made a lot of decisions at this point.

And just lastly, if I could, a question on Payroll.

The 40% penetration number would apply, if my math is right, a total sort of aggregate market that is smaller than your QuickBooks base.

I was wondering if you could talk about how you view the addressable market there, and where you think penetration can go in that business line?

Thanks.

Yes, I think we tried this year for the first time some scope of the size of opportunity that we see.

And I think the point you make is a good one, because that's only of the existing QuickBooks base.

And as you realize, we've -- our QuickBooks units year-to-date are up 18% this year.

So we continue to grow both the opportunity to attach Payroll to new customers, and then to execute better at attaching to existing customers.

So the basis is basically QuickBooks customers that do payroll.

And we have roughly 40% of those that are buying one of our payroll products.

Terrific.

Thank you.

Jim McDonald, First Analysis.

Hi, good quarter, guys.

Thanks, Jim.

Just to follow-up on that last question, in terms of the tax revenue being higher than units, was there -- do you know if there was a significant price increase component?

Or was it all mix?

Or do you have that data?

We know -- there was a lot of variables, a lot of small things that added up that we know that it -- that it was.

But we know that it was not a price increase.

We were, as we said all year, we said the prices on an apples-to-apples basis were roughly the same.

So it was purely mix, and maybe a slight attached change on a few of the different things we attach.

Want to make any comments on which ones changed there?

No.

Okay.

And could you talk a little bit about the Personal Pro test this year?

The people that did it -- I don't know how many -- like 2,000 or 2,500 units, something like that.

The feedback from the people that did it, had a very high net promoter score.

A net promoter score in the neighborhood of 60%, which is really, really strong.

And I think the challenges that we have in this business -- I mean, we've got the customer experience right, and we've got the value equation price within spectrum.

The challenge we will have will be how do you ramp up the supply of the pros to deliver the advice when people are doing it?

So that's why I believe this is a big long-term opportunity, and Brad Henske and the team will be working hard to figure out how to scale this.

And the thing we won't do is scale it beyond our ability to deliver a good customer experience.

And that's how we will have to manage it over the next few years.

We think this is a big long-term opportunity to both deliver a better experience to customers, and gain more revenue per customers, to the segment of customers that we call, many of you have heard us talk about, self-directed with some assistance.

And so we think this is the same opportunity we have in Payroll, and the reason Payroll is growing, that we are able to take people that in between full outsourced and do-it-yourself, and serve them with our QuickBooks Assisted Payroll product, which is the same do-it-yourself with assisted model, Jim.

So we're very excited about the long-term prospects of this.

But I don't think there will be any huge short-term hits next year or the following.

It will be a slow and steady ramp.

Thanks very much.

Michael Millman, Soleil Securities.

I have a couple of questions.

First, can you talk more about your long-term thinking on some of the existing verticals, or what used to be called the verticals.

And that connection also outsourced payroll -- and what drives the outsourced payroll?

And it does seem to have a different model than you suggested of great leverage on volume.

And then I have a couple of other unrelated.

First, with respect to the verticals.

I think for the last couple years, I said, and I told investors, that buying the two small verticals was a mistake.

And so nobody should be surprised.

They just weren't of the scale and size that was worth the time and energy we had to put to kind of grow the businesses.

The two large verticals are both in the $40 million to $50 million range.

They are growing nicely.

We have got strong teams and big market opportunities.

But the bottom line is there is not much synergy between those businesses and our core.

There's no adjacency.

So they're really not in the core of the Company.

There stand alone.

And their performance, as long as they are accretive to the portfolio, will stay in those businesses.

And if they're not, and we don't believe they're going to be, then we'll make a different decision.

With respect to outsourced payroll, I think over time -- we'll probably talk more about this at Investor Day, but at a high level, we think our opportunity is the do-it-yourself customer and the do-it-yourself with assistance.

And we think those are both really big opportunities for us.

And over time it is likely we will migrate away from a full outsourced offering to a do-it-yourself with assistance and do-it-yourself model.

Okay.

In the fourth quarter, your selling and marketing was up 19%.

Your research and development was up 24%.

More on the selling and marketing.

Can understand earlier in the year when you had Microsoft.

Where is it going now?

And should we expect to see that kind of rate continue of spending, both for selling and marketing and R&D, continuing?

Yes, I think this actually should be great news for investors that we are performing at a high enough level that we are able to reinvest more than we originally planned on new products and services that are going to accelerate long-term growth.

And on the marketing spend, frankly it's going -- getting better at marketing on the Web.

I think the Web is becoming much more important, much more strategic, and we have dramatically ramped up our spending to win on the Web.

And I think that's another strategic investment that will help us accelerate long-term revenue growth.

And finally, on the healthcare, could you tell us the progress you might be having in signing up insurance -- health insurance companies to, I guess, parallel your banks to Quicken, health insurance companies to your medical -- ?

Yes, I think it's a great question, Michael.

It's a little bit early.

I will tell you I have got my first Board meeting with the folks at Ingenix in a couple of weeks, and I'm pleased with the progress.

But again, I would say this is a long-term game.

We just made the first announcement with some of the partnerships we started with.

But it's too early to release more details.

We don't expect to have our first offering in the market until early next year.

So there will be a little bit of a lag here between a lot of new news.

We will probably have an updated Investor Day in September or October.

Thank you.

Scott Schneeberger.

Nice work.

And I guess, covered a lot here, but question on Free File lines.

There has been a lot of -- well, a little bit of talk going on from some political officials saying they're not happy with how the new Free File Alliance has been renegotiated.

We know we have a 4 year agreement in place.

Does this have you concerned?

Do you think there's a chance that that may -- the agreement may break?

I just want to get your comments on that.

I met with Commissioner Everson about a month ago in Washington.

This is a political year.

And it's funny, I've been in this job now for seven seasons.

It's interesting how the rhetoric and noise level goes up dramatically in an election year.

And so I think you have a lot of that going on.

I feel very good about the program and where it's going.

I think that the IRS has to continue to work to tighten the program.

We've been on the leading edge of trying to make it philanthropic.

I think others -- I think the program is a good program that continues to require to be managed to be more -- to be pro-consumer.

But I think the fundamental concept is solid, and we feel good about it.

Great, thanks.

Excellent news on the share repurchase.

I guess just the question that you guys are often asked, and I want to ask it again here, a thought to a dividend, and your views on whether that's a possibility in the future, and how that might be perceived by investors?

Yes, I think the answer on that is pretty straightforward.

Since May of 2001, this is a technology Company that has returned excess cash to its shareholders.

We have no religious position on dividend versus share repurchase.

But at this stock price, and our view of the future growth prospects of the Company, and with interest rates where they are, we feel like the -- by far the best use of the excess cash is to do share repurchase.

And that's why we announced another $500 million authorization.

So, we're open-minded.

We continue to talk to investors to see what they think.

But this is still the path we're on now at this point in our journey.

I think the important point is we are returning excess cash to shareholders.

Great.

Thanks.

That's all for me.

[OPERATOR INSTRUCTIONS] Glenn Greene, ThinkEquity Partners.

The first question, I was just wondering if you could give us an update on SBA and their success, and what kind of market share they have, and just some color on what Microsoft is doing in terms of sort of promoting that product?

Well, the data we show -- that we see shows less than 5% share on a stand-alone basis and/or in a bundled fashion, in the bundled unit.

And so we've seen all sorts of different price moves.

We've seen $39 at Amazon, and all sorts of low prices.

It hasn't really moved the needle.

I think we're quite pleased with our performance.

We've actually gained share at retail since they've entered.

And all of their share, which has been, as I said, less than 5%, has come at the expense of our competitors.

So I think round one, we're real pleased with round one.

But, look, this is a long -- many rounds in this battle.

And I think that we're prepared to fight for a long time here to maintain our leadership and continue to grow this market.

Okay.

And then just quickly on the TurboTax side.

Just sort of directionally, if you have a sense at this point on client retention?

Or is it sort of too early to tell?

Too early to tell.

But that's data that we will have and share at Investor Day, like we have in previous years.

Okay.

Thank you.

Gentlemen, I'm not showing any further questions.

Would you like to proceed with any further remarks?

I'd just like to say to everybody, I think this is the second year in a row that by focusing back on our core business of small business, QuickBooks, and consumer tax, we have delivered results beyond what we expected.

And I think that formula is working.

I think the important thing to realize, though, is we have high shares as we've traditionally defined the market.

But as you define the market, the way we're thinking about it now, we have actually high share and very low penetration.

And that gives us comfort that as we continue to get better at executing our formula for success, we have an opportunity to continue to deliver double-digit revenue growth with operating profit and EPS leverage.

So thanks for your support.

We're excited about the things we're working on for next year, some really cool things, and we're looking forward to sharing some of those with you, both in August and at Investor Day.

Thanks again for your support, and good-bye.

Ladies and gentlemen, thank you for participating in today's conference call.

This concludes the call.

You may all disconnect.