直覺電腦 (INTU) 2007 Q1 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 Intuit first quarter 2007 conference call.

[OPERATOR INSTRUCTIONS]

With that, I'll 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 first quarter 2007 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'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 10K for fiscal 2006 and our other SEC filings.

All 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 statements.

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 in our website.

As you know, Intuit typically reports a season loss in our first quarter when revenue from the tax business is low and expenses are relatively fixed across quarters.

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

Thanks, Bob.

Hopefully we finally got everybody dialing in to the right number here today.

Sorry for that confusion, and thanks to everybody for joining us.

As you've read in our press release, Intuit just delivered another terrific quarter, with revenue up 19% year-over-year, led by strong small business performance in both the QuickBooks segment as well as the Payroll and Payments segment.

Non-GAAP EPS was a loss of $0.12, pretty much in line with our expectations.

I'm pleased with our position as we move into the next two quarters, traditionally our busiest.

We're seeing positive early results with QuickBooks 2007 and are pleased with our small business momentum.

In addition, we have a great new lineup of TurboTax products that will be available in retail stores starting November 21st and we expect another solid year in consumer tax.

Now, let me turn it over to Kiran who will walk us through the quarter in more details.

Thanks Steve.

Let me start with a summary of the first quarter's results.

Revenue up $362 million was up 19% year-over-year.

Non-GAAP loss of $0.12 per share was $0.01 better than last year's first quarter loss of $0.13 per share.

On a GAAP basis we had a loss of $0.17 per share.

Turning to the business segment results, QuickBooks had an outstanding quarter with revenue of $134 million or growth of 28%.

We estimate that about $20 million of revenue shifted from second quarter into the first quarter because of the timing of QuickBooks 2007 launch, without which revenue would have grown about 9%.

QuickBooks unit sales during the quarter were $280,000 or year-over-year growth of 8%.

Note that QuickBooks revenue growth during the quarter was driven in part by sell-in, while our reported unit sales reflect sell-through.

Included in this total, we saw continued growth in total new QuickBooks on-line addition and QuickBooks desktop subscriptions.

At the end of the quarter we had 85,000 QuickBooks on-line subscribers, up 52% versus a year ago and 160,000 QuickBooks desktop subscribers.

We also had strong growth in our Payroll and Payments business with revenues of $126 million, up 21% year-over-year.

Revenue from our Payments business grew 48% driven by 26% growth in customers and 14% growth in transaction volume per customer.

Revenue from our Payroll business grew 12% driven by a 7% increase in customers and favorable mix as more customers chose enhanced and assisted payroll.

Our consumer tax, professional tax and other business segments reported revenues of $13 million, $10 million and $80 million respectively.

Non-GAAP operating expenses increased $60 million or 16% compared to the first quarter of fiscal 2006.

We continued to invest in research and development related both to core small business and consumer tax products and to new initiatives, including health care.

We also saw increased general and administrative expenses, some of which was due to one-time events during the quarter.

Moving to the balance sheet, Intuit ended the first quarter with $1.1 billion in cash and short term investments.

Capital expenditures were $29 million during the first quarter.

We did not repurchase any stock during the first quarter.

As you know, we currently have $507 million authorized for further stock repurchases.

And we continue to view stock buyback as an efficient means of returning excess cash to our shareholders.

We are considering implementing a 10B51 plan to allow us to repurchase our stock more consistently over time.

We are reaffirming our previous revenue and earnings per share guidance and providing initial operating income guidance for our fiscal second quarter, which ends January 31, 2007.

We expect the following.

Revenue of $743 to $760 million or a year-over-year growth of 0 to 2%.

Non-GAAP operating income of $211 million to $230 million.

GAAP operating income of $185 to $204 million.

Non-GAAP valued EPS of $0.39 to $0.42.

GAAP diluted EPS of $0.34 to $0.37.

As we have previously discussed, we expect revenue growth in the second quarter to be affected by several timing related factors, including the launch of QuickBooks 2007 the first quarter, the introduction of new bundled offerings in our professional tax business which is expected to cause some revenue to be deferred until the third quarter, and expected continued rapid growth in Turbo Tax on-line would generate revenue primarily in the third quarter instead of the second quarter.

We are also reconfirming guidance for our fiscal third quarter, fourth quarter and full year which you can find in our fact sheet available on our website.

This season we are planning to change the frequency of our updates on TurboTax unit sales in order to strike a balance between transparency and relevance.

Our new plan beginning next quarter is to issue three updates through the season.

We expect to include the first update with our second quarter earnings in February, followed by a further update in March and a final update following the April 15th filing deadline.

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

Thanks, Kiran.

Before we get to your questions, I'd like to provide some thoughts about the quarter behind us and the year ahead.

We continue to execute on our growth strategy of being in good businesses and attractive new markets that have large unmet or underserved needs that we can solve well.

We then apply customer driven innovation to solve those problems with right-for-me solutions that are easier and better value than other alternatives.

We continually improve our existing offerings as well as create new offerings that solve additional customer pain points.

This is the same strategy we've been executing for the last four to five years.

And we continue to learn and get better.

There is an experience curve for an organization and we continue to learn and improve our execution of our growth strategy.

That's why we believe we're positioned for another strong year.

In small business we released QuickBooks 2007 a few weeks ago to enthusiastic reviews.

With PC magazine giving it five out of five stars and calling it a strongly recommended upgrade.

Our recent partnership with Google broadens our relationship with our small business customers, helping them on their most important task, acquiring new customers.

And we're excited about the growth we've seen in Payroll and Payments, particularly 27% customer growth in our assisted payroll customer base.

In Consumer Tax we have our strongest product lineup ever with a more differentiated right-for-me product line and greater ease of use.

We expect to continue to enjoy the tailwind of software being the fastest growing tax preparation method.

We're entering the second year of a four-year free file agreement and are pleased that the FFA is placing more emphasize on the historic philanthropic intent of the program.

While we are confident in our ability to grow our core businesses, we continue to look for important new problems that we can solve well in the areas of health care and with financial institutions so we can accelerate our long-term growth rate.

Thanks to all the Intuit employees who delivered a great quarter and to our shareholders for your support.

Now, let's open it up for your questions.

Thank you.

[OPERATOR INSTRUCTIONS]

Our first question comes from Jeff Houston of William Blair.

Hi, it's Laura Letterman.

A few quick questions.

One is, can you just give us a few high level thoughts or strategic thoughts on health care?

It's funny, I was visiting investors over the last week and every single person brought up the health care initiative.

If you'd talk about it in high level and strategic terms.

Two other things on that level is one that you had discussed or the Kiran when he was at our conference talked about that you guys might be interested more in internationally and a little discussion of that and also future type of acquisitions that you make.

I'll try.

But I want to be short and brief because this is really an earnings call not a strategy review.

Health care at a very high level is, as the world moves to more consumer driven health care, we believe that consumers are going to need tools to help them both manage the financial aspect and manage the care aspect.

And we've been working with partners to create some new solutions that we think will help solve these important customer problems.

We expect to launch sometime in the next year.

Stay tuned, and when we have more to say, we'll tell you more about that.

International, I think people way overreacted to what we said.

What we said is 37% of QuickBooks customers in the U.S., located in the U.S. actually serve companies or are companies that do business outside the U.S. and that was we need to do is first is make sure all of our existing products are supporting our existing customers located in the U.S. needs to support their customers 37% which do business outside the U.S.

I think there's no more news on that other than meeting the needs of our existing customers.

With regard to acquisitions, there's no new news there.

Anything that we would be doing would be in the big market opportunities that we've talked about, but it wouldn't be in health care because we need to get a product in the market and solve an important problem well before we would figure out where to go strategically in health care.

That's really the quick update on that.

And one quick one for Kiran.

Could you talk a little bit about cash flow, kind of a range that seems reasonable for '07?

Yes, Laura, as we have said in the past, our cash flow really attracts with the operating income and we've given you guidance for operating income.

So we should see cash flow again in line with that.

Thank you.

Our next question comes from Brent Thill of Citigroup.

Good afternoon.

You mentioned you pulled the QuickBooks shipment forward by about 30 days.

For the tax shipment, is there any changes this year relative to last year that you're making in terms of the go to market this season?

No.

Okay, so no changes in--maybe you could talk a little bit about the pricing environment for the upcoming launch?

Well, we're going to announce the pricing in the future on the web product.

Have we announced the pricing on the desktop?

I think the answer is the pricing's already in the market.

And we think self-prep software is by far the best value way for people to do their taxes, and we think that's why it's the fastest growing tax prep method over the last five years, g rowing on a compounded average double digits every year.

I think the answer is it's the best value.

As I think the industry is looking how to price for the value we deliver.

But also, we always want to balance the sensitivity to raising prices in the short term versus the long-term profitability of acquiring customers and maximizing their lifetime value.

So we're always making that tradeoff, and I feel comfortable we're at the sweet spot appropriately solving for short term revenue while at the same time acquiring new customers that really help us grow on a sustained basis over the long term.

That's a juggling act every year, and I'm pleased with where we are this year and the moves we've made to even get better than what we've been in the past.

Just a quick follow-up for Kiran on the 10D plan, do you expect to implement that in Q2 or is that second half of the fiscal year event?

Don't know yet.

We are considering implementing one.

We'll let you know when we have the exact timing.

Thank you very much.

Our next question comes from Michael Millman of Soleil Securities.

Thank you.

Couple questions.

Can you read anything into the QuickBooks being picked up by the stores early?

Secondly, can you talk about marketing and R&D expenses?

The R&D expenses look like they were up about 1%, but in fact the marketing expenses look like they were down about 5.5%, and considering you were talking about increasing marketing for QuickBooks, maybe you can discuss that as well.

Well, R&D, we--as we've said consistently for the last year, we are increasing our spending in R&D because we believe that's great product and services that are solving important customer problems.

It is how we're going to drive our long-term growth.

There's no new news there.

I think in this quarter, marketing expenses were down a little bit.

The advertising for QuickBooks starts at the end of Q2.

I think we were talking about in a full year basis, but we didn't spend a lot of money in marketing on a relative basis.

Remember, last year we had a new entrant in QuickBooks and we spent more money on marketing in the first quarter last year, and that was successful for us, so we didn't feel like we had to repeat that this year.

We're going to spend our money in marketing in QuickBooks starting in the second quarter with the--and I think the other thing is we launched 30 days earlier investors ought to understand because retailers wanted the product earlier.

They had an interesting window right after back to school and they wanted us to launch earlier so they could get set up and running and organized before TurboTax hit and before we got into the holiday season.

We thought that made sense and we're getting all sorts of operational benefits out of doing that.

What we've also learned though is that It hasn't made a big difference in the customer buying pattern, just because we shipped it earlier didn't mean a lot more customers have decided they were going to buy it 30 days earlier, so we were pleased.

We had a lot of thoughts about not being able to do very well against last year's first quarter compares on QuickBooks, and I think these numbers proved that that was not accurate that with 8% sell-through growth after a very strong quarter on units last year plus the positive mix, we think we had a great first quarter on QuickBooks.

Are you suggesting that the shipments that you made weren't really in--to answer any of the buzz or demand possibly created by all the publicity from the Google deal and much more of a logistic help to retailers?

We decided when we were going to sell QuickBooks a year ago.

You have to imagine when you build a product you pick a launch date well in advance so all the recent stuff--we haven't changed the date for I'd say at least nine months to 12 months, so we picked this date to launch to meet retailers' requests and we think from an operational basis it helps us a lot too so all of--the Google thing actually had absolutely nothing to do with the timing launch for QuickBooks.

It actually was something that we built in to QuickBooks because our engineering team did a spectacular job of delivering a great functionality for our customers within the schedule that we had originally planned.

What's the schedule for next year?

In the same range that it was this year.

Thank you.

Our next question comes from Scott Schneeberger of CIBC World Markets.

Hey guys, good afternoon.

On the Google--just to follow-up on that, are you--I guess through the Google end, you could probably track how that relationship's developing.

Any early insight you can help us out with?

It's so early to comment.

We're seeing initial takeup on so early to comment.

We're seeing initial takeup on maps and ad words, but I'd rather not give any quantity.

It's going to take a while for people to buy the product, get it installed, get it up and running, figure out the functions and features.

So I think it would be better, Scott, to give you a little bit of an insight.

My guess is it will ramp up slower, that this isn't going to be all of a sudden 1 million people are using it the second day.

That's just not the nature of a small business market, it's more slow and steady, the same as when we launch a new product as we've seen over the last 10 years, they consistently grow on nice learning curves or nice growth curves.

I think we'll see the same thing with Google.

We're getting a lot of learning, remember this is just version one.

There's probably a lot of things we can do to make it easier for customers.

We got it in the market, it's been well received and we're learning a lot, and that's really want you want out of version 1.

We're quite excited about the prospects and the opportunities and how well the relationship is working between the two companies.

Great, thanks.

I guess a question on--for Kiran.

No share repurchase in the fiscal first quarter.

Any thought process behind that or anything you guys care to share on why that strategy?

We continue to believe that buying back shares is an effective way to return cash to shareholders.

As you look at our share count guidance for the year, you can see that we're planning to use the authority that we have from the board and we're considering implementing the 10B51 plan which allows us to be in the market more consistently.

Other than that, we don't comment on any specific time in or out of the market.

I just had a couple thoughts, Scott.

We still think stock is a good value at this price, that's why, as Kiran said we have still in the share count guidance we've given in our facts sheet, we expect to sometime during the year get back in the market and second, we're pleased that the stock has had a nice run-up over the last six months and we haven't been in the market buying our shares so we think there's some positive demand and we think that's a good sign.

I'd expect us to be back in the market buying our shares sometime during the year.

That's why the share count on the facts sheet reflects what it does.

Okay, sounds good, thanks, nice work.

Our next question comes from Heather Bellini of UBS.

Thank you.

I was wondering if Kiran or Steve, if you could talk a little bit about what type of impact you expect the launch of Vista to have on your QuickBooks business this year?

I guess the follow-up question would be on the tax business.

We saw the price increase for the web products.

Could you share with us, should we expect a similar uptick in pricing?

I'm sorry, we saw a price for the desktop, but should we expect a similar uptick in pricing for the web products this year?

Let's take the last one first, Heather.

I think more and more we're seeing that these are different markets.

That the desktop market is a different market than the web market and I think if you recall what Brad Hensky went through, I think he did a very nice job at Investor Day of talking about a web based product line-up that had more differentiation in it, more right-for-me, so I think what we'll end up seeing is higher price points for more value and lower price points for less value.

That's why we're excited about the line-up on the web.

I think that will play out more on the web than in the desktop, so let's see how that all works out, but it's more of a mix than price on the web in my opinion.

With regards to Vista, I might ask Scott for his thoughts on this too.

We don't really know--I know that the accounting--some accounting publications are telling their members to delay this to upgrades for a year.

And so I think that would result in accountants telling their small business clients that it might make sense to wait for a year.

QuickBooks 2007 is Vista ready, it will run Vista, so it's hard to know.

I don't know, Scott, if you have any thoughts on will it be an accelerant?

I think--Steve's conclusion is where I come out, it's's hard to know.

There's nothing obvious that QuickBooks is improved by or hurt by Vista, nor is there anything that would obviously affect any of our rivals, so we're not prepared for any impact on our business of Vista.

I'm sure we'll see some higher support calls and we're prepared for that.

But the revenue side, if there is an upside, that would be just pure bonus.

One thought I would add, Heather, the Vista--QuickBooks prior to to 2007 will not be Vista compliant.

So if a QuickBooks user buys a new Vista computer and they are using QuickBooks 2006, it will not run on their new machine.

And so that could force them to upgrade, but that will be something that we will have to see play out.

Is that a bigger benefit then for you potentially next year?

I think the hardest thing for us is trying to really get what the end market demand is for Vista and how much upgrading there's going to be.

And so it does take a lot of resources for a company like ours to run our applications on a new operating system from Microsoft.

So let's see what happens.

I don't see much downside, if any, to Scott's point.

I could see some potential upside.

But I think it's really hard to call at that point.

Let's get it in the market at the end of January and let's see what happens.

Maybe we'll have more insight in February when we talk then.

Thank you.

Our next question comes from Phil Rueppel of Wachovia Securities.

Yes, thanks and good afternoon.

A couple of question, first can you give us--is there any flavor you can give us on the verticals and QuickBooks any outperforming or underperforming there?

And then second of all, your assessment as we get closer of any changes in the competitive environment on the tax front either from a major competitor or any of the smaller competitors starting to become more prevalent?

I think, Phil, the thing on the second one is I don't see anything dramatically different in the consumer tax competitive playing field from last year at all, and so I just see it's pretty much the same thing.

I know we've dramatically strengthened our position.

I'm sure other people have made some progress too, but we go into the season feeling on a relative competitive basis, I'd be surprised if we didn't improve greater than or at least equal to any of our competitors in terms of the new product line up and the great progress we've made on marketing.

So we'll see.

We go in feeling pretty good about the season and the great work the consumer tax team and Brad Hensky and the team have done.

The first question-- what was the first question again?

Color on the vertical flavors of QuickBooks.

They are doing very well.

And the proof point on that is that while units were up 8%, revenue was up 28% if I'm right on QuickBooks, is that right?

And so a lot of that was because of mix driven by more premier units.

So the premier product in QuickBooks continued to perform very well.

That's where most of the flavors show up, Phil.

Thanks very much.

Our next question comes from George Godfrey of CMG.

Just a question.

Did you include a balance sheet and cash flow statement in the release?

Yes.

Okay, I must have missed it.

Thanks.

Anybody else get one?

I guess they can't talk love to anybody else.

Okay, well next person, we'll ask you if you got it--next question, we'll ask them if they got it.

Our final question comes from Daniel Cummins of Banc of America Securities.

Thank you.

Just a couple questions about the tax season.

Are you assuming that the multi-year trend of delayed filing continues, is that reflected in the guidance, and then just a question about the sales and marketing spend around the tax season, my impression last year that it was a big year for the TV spend, do you think this year it's similar, of greater magnitude relative to your competitor that also spent pretty heavily on TV last year?

I wouldn't see a great change in the pattern on the ad spend, and I don't know what they're planning to spend, but I think we're going to be aggressive again with similar and a little bit greater than, equal to levels of last year because we've been testing this now for four or five years, and the paybacks have been good for us.

And we'll see the refund card again?

Yes, the refund card will be in and I think we're going to execute it better this year, and we thought for the customers that used it last year, we got very high marks, and we learned a lot in version 1 on how to make it better.

It's in the product again and we'll see how it does in year two.

With respect to--

Delayed filing?

With respect to delayed filing, the key point there is people haven't changed their filing patterns as much.

It's just that the revenue from the web all comes in the third quarter.

So the more people that use the web, the more revenue grows year-over-year.

So I think it's actually partly due to people maybe filing later, but partly due to when the revenue shows up between the quarter two and quarter three mix based on the web service model of QuickBooks on line where we only get paid when they file versus the desktop where we book part of the revenue when they buy the product and part when they file.

I think the pattern continues in the gradual, same kind evolution that we've seen recently.

Again, it's like Heather's question about Vista impact.

It's really hard for us to tell you with any degree of preciseness.

What we know for sure is that there will be about 135 Federal 1040s filed in the U.S.

We know that as fact, and how that moves between the second and third quarter is harder to predict sometimes.

Thank you.

Our next question comes from Adam Holt of J.P. Morgan.

Hi, Kiran, hi, Steve.

I did get a balance sheet and cash flow.

You did?

I did.

We tried to withhold that from you, but somehow you out foxed us again.

I had a couple questions, the first is just a follow-up on the tax pricing, understanding obviously we're just starting to look at the season now, but historically you've said that units are going to track relatively closely with your revenue guidance and I wanted to get your sense, A. what was the sort of the logic behind the increase in Deluxe and Premier and secondly does your thinking change at all about the balance between units and pricing given that price increase?

No, actually our logic is still pretty much the same as last year.

We think for the whole season we expect units and revenue to grow about in the same range.

And, remember, desktops units sold at retail this year will be somewhere in the neighborhood of only 20% of the total consumer tax revenue.

So I wouldn't overplay that price move.

That will have an impact in retail, but I don't think it will have a big impact on 80% of the revenue in that business.

So, and I think it's important to realize that we are thinking about these differently.

So to the earlier question, it just feels that we did something in one--with one product or in channel doesn't mean we would carry that behavior through across the board in a peanut butter style, we're trying to be really thoughtful about how to maximize current period and long term revenue and profits and customer base and that means sometimes we do different things in different channels based on our assessment of what's the competitive environment and what's the right thing to do.

Great, and if I could turning to the guidance for the second quarter for a minute and apologize if this is a nickel and dime question, but it looks like you called out 20 million from QuickBooks.

You obviously beat the higher end of your range of guidance for this quarter by quite a large margin, but it looked like you reiterated the 0 to 2% growth for the second quarter on the top line.

My question is were you expecting that pull forward revenue and did you have some assumption around what that would have been in the first quarter and what does that mean relative to the second quarter numbers?

Actually, it's a great question.

We actually expected as we said earlier, we planned to sell the QuickBooks product or launch it 30 days earlier.

QuickBooks performed $20 million above our expectations or performed above expectations, not $20 million.

The pull-in impact was $20 million, but it performed better than we thought.

And then as we looked at our current view of the second quarter, remember we give quarterly guidance or we gave it early on in the year, there's been some -- as always some puts and takes and ins and outs and the bottom line is from where we see today, we think the guidance we had for the second quarter is still the right guidance, even though we did beat by a nice amount in the first quarter.

Lastly on the OpEx maybe a question for Kiran.

It looked like there was a spikeup in G and A and I actually might have thought we'd see $0.01 or more of additional upside given the revenue outperformance in the quarter.

Was there anything unusual from a one time perspective in that G&A number, was there a reason it spiked up?

Yes, Adam, there were several discretionary and one time events that we did take in the first quarter.

Our expectation is that for the full year G&A growth will still be less than our revenue growth so we still continue to expect to get leverage over G&A expenses for the year.

Would those be expenses that you would typically incur in subsequent quarters to the first and you might have pulled forward into Q1?

No there were just some discretionary decisions and some one-time events.

So it's not necessary a pull forward.

Great.

Thanks for the help.

Thanks, Adam.

Our next question comes from David Joseph of Morgan Stanley.

Hi guys.

I think most of the questions have been answered.

I just have a quick question on QuickBooks.

To date just the initial signs that you are seeing, are you seeing these as mainly upgrades right now or do you think you're getting increased penetration or acquiring new customers?

And also I guess the same would be for Payroll and Payments, are these mainly attaches, or are you seeing sales to your existing QuickBooks base or you think you're able to acquire customers through those services?

I think it's the key to our continued growth is our ability to get better at both, acquiring new users and you've seen that we've also done a nice job in the last couple of years of ramping up new user growth.

We've also done a better job of attach or penetration of our existing QuickBooks customers for things like Payroll and Payments where we still have big opportunities.

I think what we're seeing as the pattern continues is continued improvement on both fronts.

And I think it's important to say that we didn't see a big rush in upgrades by launching the product earlier because people didn't change their buying behavior just because we shipped the product.

That would have been mostly upgrades versus new users, so let's see what happens as we now get back--now we're back on the same kind of schedule as last year, so the comparisons will kind of normalize.

So we'll have better insight about that in the February call after the end of the second quarter.

Great, thanks.

Our final question comes from Jim MacDonald of First Analysis.

Two quick questions.

Could you have some thoughts on now that you've broken some of the psychological price point barriers on the tax in terms of having a $40.00 barrier for Deluxe and whether that relates to your new web and retail strategy?

And second question is Payroll seemed to reaccelerate in several areas this quarter and I was wondering if there was anything behind that?

First, we'll see on psychological barriers, we'll see how that works out as the world evolves.

I think we always work every year with our retailers to make sure we're delivering great value to their customers, but also giving them advertising price points they can hit but also driving unit and volume growth, which they care about.

So I think we all work together to come up with a strategy this year, and we'll see how it plays out.

I feel particularly good about our relationships with retail this year and how well Caroline Donahue and our sales team has worked with our retail partners.

Especially after last year, where we did not perform as well in retail as we thought, still gained share or held share, but the category didn't grow as fast.

I think that was a jolt to our retail team and our retail partners, so we had to do some more creative and innovative things, and--which we're doing this year, so let's see how that works.

What was the second question, Bobby?

Momentum in Payroll.

Momentum in Payroll, what's happened, we made the business one business.

We put a new leader in charge.

We have a clear strategy.

I think it's just fundamentally better execution.

I think that we've figured the strategy out and we've been talking about this now with--it's just fundamental execution.

I would expect our payroll strength to continue in terms of us getting better.

We'll see how the numbers all come out at the end of the year in terms of revenue and profit growth, but in both our Payroll and Payments business, we have strong leaders, strong teams and we're getting better at executing.

And so I'm quite optimistic about the prospects in both of those big attached businesses and feel like we still are--we've got a lot of room to grow still within both of those business.

And I'd add, this is Scott speaking, that in our Payroll business, where we've combined it into one organization there are two Payroll business, the big Payroll business, and that includes the traditional do-it-yourself payroll and assisted payroll and that's doing quite well.

You saw the numbers that Steve described that our assisted payroll business has 27% customer growth over a year ago.

The small payroll business which is the result of acquisition years ago is not going as well.

Though we've gotten it so it's financially nice, but it's not growing as well, so within the Payroll business, that distinction is important.

That would be the full outsource product that Scott's referring to and we've talked about that in the past.

Thanks very much.

Thanks, Jim.

Gentlemen, I'm not showing any further questions.

Would you like to proceed with any further remarks?

Thanks, everybody, for your support.

It feels like we just finished the preseason and we're suited up now and ready to play the Super Bowl again this year so we go in the year feeling pretty good about the momentum we have going into the season.

Our competitors will be tough, but we're ready and tested, so let's see what happens.

We're looking forward to the second quarter and reporting how we're doing in February and giving you a first look at how TurboTax is doing.

Thanks for your support and talk to you soon.

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

This concludes the call.

Everyone have a great day.