直覺電腦 (INTU) 2011 Q4 法說會逐字稿

Good afternoon my name is Siad, and I will be your conference facilitator.

At this time I would like to welcome everyone to the Intuit fourth-quarter and fiscal 2011 conference call.

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

After the speaker's remarks there will be a question and answer period.

(Operator Instructions).

With that I will now turn the conference over to Matt Rhodes, Intuit's Director of Investor Relations.

Mr Rhodes, you may begin.

Thanks Siad.

Good afternoon, everyone, and welcome to Intuit's fourth-quarter 2011 conference call.

I am here with Brad Smith, our President and CEO; Neil Williams, our CFO; and Scott Cook, our Founder.

Before we start, 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 2010, 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 statements.

Some of the numbers in this report are presented on a non-GAAP basis.

We have reconciled the comparable GAAP and non-GAAP numbers in today's press release.

Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period.

A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends.

With that I will turn the call over to Brad Smith.

Thanks, Matt, and thanks to all of you for joining us.

We just completed another strong quarter, which capped off a really strong fiscal year.

Our results continue to demonstrate that our strategy is working and our execution is on track.

In fiscal year 2011 we delivered 11% revenue growth and 19% non-GAAP EPS growth.

We continue to expand operating margins while investing for the long term growth of our Company.

And in the fourth quarter we turned a profit in non-GAAP earnings per share for the first time in recent history.

We are proud of our ability to deliver our best results when year-over-year comparisons, external market conditions and the competition are the toughest, plus simply it motivates us.

Looking forward to fiscal 2012 we feel confident about our game plan to deliver strong performance once again.

Now I will tell you that this confidence comes with a complete acknowledgment that the economic environment remains a challenge, and our competitors continue to sharpen their strategies as well.

But that is nothing new to us, these conditions simply put a premium on execution.

If history or the past several years of this economic slowdown have proven anything, it is that our portfolio of offerings, combined with our focus on execution, has enabled us to remain resilient in the most challenging environment.

And through it all we continue to benefit from the secular shift of customers moving to Connected Services, which provides a tailwind at our backs as we look ahead.

That is why we remain laser-focused on continuing to execute against our three-point strategy of growing our core businesses, expanding into adjacent businesses and new geographies, and accelerating our transition to Connected Services.

Reflecting on our core businesses, the two that typically come to mind are our Small Business Group and our Consumer Tax business.

They represent the majority of the Company's revenue and operating income, so our ability to continue driving strong growth in these two segments is critical.

The good news is we have managed to do just that.

Despite the recession, Small Business revenue has grown at a compounded annual growth rate of 9% over the last five years.

And we are exiting fiscal 2011 growing at 12% year-over-year.

In Consumer Tax we have grown at 13% compounded annually over the same five-year period.

The success of our Small Business Group comes from a tried and true focus, expanding our categories, converting nonconsumption, and increasing the revenue per customer over time.

Our teams are innovating in exciting ways to attract new customers and increase the lifetime value.

In fiscal 2011 we grew Small Business revenue double-digits, and we expect another year of double-digit growth in fiscal 2012.

There is a unifying theme across Small Business that gives us confidence this performance is sustainable without any help from the economy or across-the-board price increases.

That theme is a favorable mix.

Despite slower-than-expected customer growth.

And why?

Because our core customers, especially those that are new to the Intuit franchise, continue to demand and adopt Connected Services that are more valuable to them, while delivering better, long-term economics to Intuit.

Let me illustrate a few examples to make this point clear.

In Financial Management Solutions, or QuickBooks, we are rapidly growing customers and revenue in QuickBooks Online and our QuickBooks Enterprise products.

A typical QuickBooks Online customer who only purchases the Financial Management Services pays us $24.95 a month.

By comparison an average QuickBooks Pro desktop customer pays about $200 for the software every two to three years.

So the mix shift to QuickBooks Online, as well as QuickBooks Enterprise which carries an even higher price point, is quite favorable.

In Employee Management Solutions, or Payroll, the same holds true, as our average revenue per customer continues to increase.

This is driven by stronger direct deposit attach, and the ongoing mix shift to our Online Payroll services, and to more advanced Payroll Solutions that carry higher lifetime values.

In Payment, overall customer growth has been driven by the rapid adoption of our popular mobile solution, GoPayment.

Overall merchant growth is now being complemented by improving charge volume per merchant as well.

So while the economic environment for small businesses isn't getting better any time soon, the reality is [it] hadn't really gotten better since 2008, we simply found ways to serve our customers and grow in this challenging environment.

If you look at our other core business, Consumer Tax, we remain focused on the key levers for revenue growth that you know so well -- expanding the tax software category, taking share, and improving revenue per filing.

We had another great tax season, growing units 12% and revenue 13%.

This came despite a tough comparison versus fiscal 2010, as well as shift in our competitors' strategies throughout the tax season.

Looking ahead, some of you have asked about our ability to grow tax customers as the manual tax filer bucket quickly drains.

That is a fair question, and it is one I'm eager to address, so I will put it out there proactively today.

For years we have been intensely focused on both creating and demonstrating a superior value proposition for digital tax products versus the tax stores.

The Net Promoter scores for digital tax solutions are higher in tax stores, and the price is about 75% less expensive.

So in our mind there are tens of millions of tax filers who spend too much money to be inconvenienced by going to a tax store.

Long story short, we seek to earn these customers over time.

In addition, the digital tax category is naturally advantaged.

It is advantaged by the demographic and the technological shifts in the market.

This has driven average software category growth of 6% to 8% for the past five years, and we don't see it slowing down.

This outpaces the growth rate for all other tax prep methods.

And each year millions of new taxpayers come into the system, usually younger filers who have grown up in an online world with technology as their tools of choice.

When it comes time to file their taxes they are most likely to choose online solutions.

And as their technology tools of choice increasingly become mobile devices and tablets, we are committed to maintaining our leadership position through innovative new offerings like SnapTax and other products that you will learn more about at our upcoming Investor Day in September.

So while we continue to see double-digit growth potential and our two core businesses, we are pleased to say that our newer adjacencies are also starting to make a contribution.

Many of our adjacent businesses are smaller, but as we said, we expect them to contribute a few points to growth over the next several years.

For example, our Small Business offerings in the United Kingdom and Canada are performing very well.

And while it is still early, we are excited about the opportunity to expand other Small Business products, such as our QuickBooks Online.

And to select developed economies, like Canada, the UK and Singapore, while continuing our longer-term efforts in the emerging markets.

Intuit Health is also growing very fast in terms of new providers, patient utilization and year-over-year revenue growth.

With that said, we have made some investment choices and we had a few execution misses, and that has led us to a decision to record a non-cash impairment charge this quarter.

We still believe there is a big unmet need here, and we are taking the necessary steps to align our focus and investments to capitalize on this business opportunity.

Finally, the third element of our growth strategy is accelerating our transition to Connected Services.

These digital services are driving customer acquisition and revenue growth in all of our businesses.

For example, QuickBooks Online subscribers grew 41% year-over-year.

TurboTax Online subscribers grew 20%, and our Online Payroll subscriber base grew 13%.

The adoption of mobile services is simply accelerating these trends.

In our Financial Services business the number of subscribers using our mobile banking solutions tripled over the past year.

And in our Mint business the number of end users accessing Mint through their mobile device now exceeds 50%.

So putting it all together, Connected Services are the jet stream for our Company's future potential, while already playing a significant role in our present performance.

We now have more than 35 million end users on our hosted products and services, and the adoption of mobile is only going to push it faster.

Revenue from our Software as a Service offering now totals nearly $1.5 billion, and it has grown at a compounded annual growth rate of more than 35% over the past five years.

When you add in other recurring revenue services that are advantaged by working with our software -- think of Payroll and Payments -- our total Connected Services now represent 62% of our Company's revenue, which is up from 59% in fiscal 2010.

So as you can hear, our strategy is working.

But as I often say, strategies alone don't move mountains, bulldozers do.

And that is where execution and a set of rigorous financial principles also come into play.

I feel good about the guidance for fiscal 2012 that we are announcing today, with growth opportunities on the horizon, a strong cash position, and consistent operating results.

We are also pleased to announce that for the first time in our history Intuit will pay a cash dividend beginning in fiscal 2012.

This is in addition to our existing share repurchase program, including an additional $2 billion repurchase authorization that was just approved by our Board.

Neil is going to share a few more details in a minute, but let me be very clear, this dividend reinforces our confidence in our ability to deliver double-digit revenue growth and expand margins over the long term, while also continuing our commitment to return cash to our shareholders along the way.

So with that let me turn the call over to Neil.

Thank you, Brad.

We will start with total Company performance for fiscal 2011.

Our financial results included revenue of $3.85 billion, up 11%; non-GAAP operating income of $1.25 billion, up 14%; GAAP operating income of $1 billion, up 17%; non-GAAP diluted earnings per share of $2.51, up 19%; and GAAP diluted EPS of $2, up 13%.

As Brad mentioned, our GAAP EPS includes an after-tax non-cash goodwill and intangible asset impairment charge of $0.09 per share.

Fourth-quarter results included revenue of $593 million, up 10%; non-GAAP operating income of $25 million; a GAAP operating loss of $61 million; non-GAAP diluted EPS of $0.02; and GAAP loss per share of $0.19, which again, includes the after-tax non-cash goodwill and intangible asset impairment charge of $0.09 per share.

Turning to business segment highlights, total Small Business Group revenue grew 10% for the quarter and 12% for the year, with all three divisions growing revenue double digits for fiscal 2011.

We improved our operating margin in Small Business by nearly 200 basis points in fiscal 2011, demonstrating the leverage in our model as we acquire more customers via our Connected Services businesses, and existing customers choose additional services.

Looking ahead, the focus in fiscal 2012 is on customer growth.

Adding new customers to our franchise and increasing offerings of revenue per customer over time is our best path to financial success in Small Business.

For fiscal 2012 we expect total Small Business Group revenue growth of 10% to 12%.

Within Small Business, Financial Management Solutions revenue grew 12% for the quarter and 15% for the year.

QuickBooks Online and Enterprise Solutions contributed to an improved mix, driving revenue growth.

We also grew revenue in QuickBooks desktop.

This came despite a decline in units, as we have offered fewer discounts and raised the price of the Pro product in fiscal 2011.

Employee Management Solutions revenue grew 5% for the quarter, and finished the year with growth of 10%.

In the fourth quarter of fiscal 2010 we benefited from a few nonrecurring items.

Excluding the impact of these items, growth in the fourth quarter would have been approximately 10%.

Customer growth is encouraging, and as Brad stated, the average revenue per customer is growing because of better mix and attach.

Payment Solutions revenue grew 12% for the quarter and 11% for the year.

The number of merchants grew by 11% for the quarter and for the year, with 1% growth in volume per merchant in the fourth quarter.

Our Consumer Tax business had another great year, with revenue growth of 13% for the year on unit growth of 12%.

Software category growth accelerated in tax year 2010, and we took share within the category.

We are already deep into planning for next season, with the same focus of demonstrating the superior ease and value of TurboTax versus tax stores and manual methods.

It is our job to effectively reach customers and demonstrate that our products are drop-dead easy to use and deliver the highest possible refund.

We believe the software category will continue to grow faster than any other category, and that we will take share.

For fiscal 2012 we expect Consumer Tax revenue growth of 10% to 13%.

The Accounting Professionals segment grew revenue by 7% for the year, finishing at the high end of our guidance, and producing nearly 100 basis points of margin expansion, a result of excellent execution.

We are creating some innovative online and mobile solutions that enable accounts to benefit from Connected Services.

Looking ahead, we expect revenue growth of 3% to 8%(Sic-see press release) in fiscal 2012.

The Financial Services segment grew revenue by 8% in the fourth quarter and 4% for the year.

Excluding the fiscal 2010 divestiture of the lending business, growth for fiscal 2011 would have been 6%.

We expect revenue growth of 7% to 10% in fiscal 2012.

The Other Businesses segment, which includes our Global, Personal Finance, and Healthcare businesses, grew at 14% for the quarter and 15% for the year.

Revenue growth benefited from a positive currency impact of 5 percentage points in the fourth quarter and 3 percentage points for fiscal 2011.

We also got a few points of growth in fiscal 2011 from our acquisition of Medfusion.

As stated in our press release, we took a non-cash charge of $0.09 per share on the write-down of our Healthcare goodwill and intangible assets.

While this business isn't yet performing to our original expectations, we still believe there is a nice opportunity here.

We expect Intuit Health will grow revenue 50% off a small base in FY12, and we see a very large addressable market and customer pain points that we believe we can solve over time.

For fiscal 2012 we expect revenue growth in our Other Businesses segment of 3% to 7%.

In Personal Financial Management rapid growth in online isn't enough to offset the decline in desktop.

We expect continued strong growth in Global and our Healthcare business.

We will provide more details for all of our business segments at Investor Day, and hope to see you all here on September 21.

Shifting to the balance sheet, sound financial principles and operating discipline underpin our growth strategy.

We continue to generate strong cash flows in-line with our operating income and maintain a strong balance sheet.

Over the long term we expect double-digit organic revenue growth, and we expect to grow revenue faster than expenses.

Our target is to average $500 million to $700 million of cash on our balance sheet, net of total debt.

This balance will go up and down during the year, depending on seasonality and our expected cash flow needs.

We always seek to deploy the cash we generate to the highest yield opportunities and we target risk-adjusted returns of greater than 15%.

When businesses do not perform to our expectations, we also take action, either looking for new ways to improve returns or by exiting the business.

As we have shared today regarding Intuit Health, we believe this business still represents an excellent growth opportunity over the longer term.

We evaluate all investment opportunities within our capital allocation framework.

We first look internally for growth investments, including R&D, marketing and infrastructure.

Each business unit's road map also includes M&A opportunities.

We then consider strategic acquisitions and partnerships.

Beyond that we consistently return cash to shareholders, and historically this has been in the form of a share repurchase.

As Brad mentioned, beginning in the first quarter of fiscal 2012 we will pay a cash dividend to shareholders.

We will continue to repurchase shares as well.

Our Board just approved an incremental $2 billion authorization over three years on top of the remaining $640 million on our current authorization.

We are continuing our rigorous approach to capital discipline.

We gradually reduced our share count over time.

In fact, we reduced it by about 2% in fiscal 2011 alone.

Here are a few additional data points that demonstrate that discipline.

Since fiscal year 2001 we have repurchased more than 250 million shares at an average price of $28 per share, returning $7 billion to shareholders.

We have repurchased nearly double the amount of shares issued under employee stock plans over that same time period.

In addition, our return on invested capital increased by 600 basis points in fiscal 2011.

Shares repurchased totaled $250 million in the fourth quarter, which brings the total to nearly $1.4 billion in fiscal 2011.

Buybacks remain an important tool in our capital allocation strategy, and we expect to be in the market.

Our cash balance at year-end was $1.4 billion.

We will pay our first quarterly cash dividend on October 18 to shareholders of record at the close of business on October 10.

The dividend will be $0.15 per share.

We currently expect to continue paying comparable cash dividends on a quarterly basis.

Of course, future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.

So, finally, turning to our guidance.

Our fiscal 2012 guidance is revenue of $4.185 billion to $4.285 billion, or growth of 9% to 11%; non-GAAP operating income of $1.4 billion to $1.425 billion, growth of 12% to 14%; GAAP operating income of $1.185 billion to $1.21 billion, growth of 18% to 20%; non-GAAP diluted earnings per share of $2.85 to $2.94, growth of 14% to 17%; GAAP diluted EPS of $2.38 to $2.47, growth of 19% to 24%; and capital expenditures of $190 million to $210 million.

You will find a summary of our segment guidance for the year in our press release.

For the first quarter of fiscal 2010(Sic-see press release) we expect revenue of $575 million to $585 million, growth of 8% to 10%; non-GAAP operating loss of $40 million to $50 million compared to a loss of $53 million in the year ago quarter; GAAP operating loss of $95 million to $105 million compared to a loss of $104 million in the year ago quarter; non-GAAP net loss per share of $0.11 to $0.13 compared to a loss of $0.12 in the year ago quarter; GAAP net loss per share of $0.24 to $0.26 compared to a loss of $0.22 in the year ago quarter.

Let me make a point here about our share count.

We may see a non-GAAP loss per share roughly commensurate with our non-GAAP loss per share in the first quarter of fiscal 2011 despite a smaller operating loss, due to the lower share count in the first quarter of fiscal 2012.

Our guidance reflects confidence in our ability to grow, but also acknowledges a wide array of macroeconomics variables.

It does not assume improvement in the macroeconomic environment.

And one last thing on guidance.

As in the past, we will provide quarterly guidance of the next quarter as we move through the year.

I will point out that the seasonality of our revenue and operating income for fiscal 2012 is likely to be different than fiscal 2011 due to the late filing issues with the IRS in fiscal 2011 and our expected continued improvement in our fourth-quarter revenue and operating income.

With that I will turn the call back over to Brad.

Okay, Neil, thanks a lot.

Look, we understand that there are questions about the macroenvironment and whether our outlook has factored this uncertainty into our guidance.

The short answer is yes.

Our plans have assumed no improvement to the economic conditions in the coming year.

Like other companies, we are not immune to the macro conditions, but we have proven to be pretty resilient.

That is why we are going to continue to apply the same decision principles that have served us so well as we have navigated this downturn along the way.

These include, first, to prioritize topline revenue and customer growth to continue to grow our categories and take share.

Second, to adjust our spending as necessary to deliver any bottom-line commitments.

Third, to protect and nurture innovation to ensure a strong pipeline for the future.

And, fourth, to continue to capitalize on a strong and conservative balance sheet in alignment with the financial principles that Neil just communicated a few minutes ago.

So when you hear us discuss our outlook for fiscal 2012, what should resonate is that our core businesses have momentum and they're healthier than ever, producing double-digit growth in fiscal year 2011 on top of double-digit growth in fiscal 2010.

And we expect that trajectory to continue in fiscal 2012.

The long-term story is the same.

There is a secular shift to digital services, and we have a strategy to continue to grow our categories and our share.

We are not getting distracted by quarterly shifts and market dynamics or volatility in the broader economy.

We continue to be an innovative growth company.

And we are pleased to be issuing a dividend to return additional value to our shareholders.

We don't believe that being a growth company and issuing a dividend are mutually exclusive concepts.

Our financial principles are unchanged.

And we remain confident in our operating results and our ability to share profits with our shareholders as we grow.

So in closing I want to thank our employees for another strong year.

Their ongoing dedication and hard work continues to make Intuit a great place to work.

And with that, let's turn it back to you to hear what is on your mind.

(Operator Instructions).

Kash Rangan, Bank of America Merrill Lynch.

Good to see the results in the middle of the questions on Wall Street regarding the economy economic outlook.

I won't ask you much about the economy, Brad, you have already spent a lot of time dissecting.

But my question would be on your assumptions that are driving the Consumer Tax growth rate for the next year.

I guess you have talked in the past -- if you break that apart between filing growth, category growth, share growth, I'm wondering what are your assumptions that are built into the Consumer Tax projections?

And also for the Small and Medium Business segment growth rate, how should we -- rather a broader strategic question, it looks like the lifetime value of a subscriber is significantly higher with the shift to online.

What is the right way to think about the longer-term operating margin consequence of this shift to your business model?

That is it.

Thank you.

Great, thanks, Kash.

Let me start with the assumptions.

We will break this out in further detail at the Investor Day on September 21.

But in Tax our assumptions are that there will be modest growth in the number of people filing taxes with the IRS, somewhere in that 0% to 1% range, which is pretty much where it has been through the downturn.

We expect to continue to see soft core category growth in that 6% to 8% range.

That is the secular shift of people adopting technology as a way to solve this problem.

We plan to continue to take share.

We will talk about that a little more on Investor Day.

And we also continue to seek to improve our revenue per filing.

And we are will talk about what sort of assumptions we have around how much we look to get next year.

But ultimately, as you can see in our guidance, the 10% to 13%, we are looking forward to another very exciting tax season.

If I shift over to Small Business, you are absolutely correct.

As this mix shift moves more to Connected Services, we are getting a benefit and the ability for us to not only solve problems in better ways for customers -- so they can actually have automatic backup, anytime anywhere access, they can use their mobile phone to check on customer information or send an invoice.

But it benefits us economically too.

There is a better lifetime value.

It is easier for customers to discover an additional solution online, because it is a blue hyperlink as opposed to a disruptive ad in a desktop product.

And it also gives us the ability to continue to work with customers over time to look for additional problems that we can solve.

So that plays out very favorably for us.

You saw the math a few minutes ago that I just went through.

A desktop software customer in QuickBooks gives us $200 every two or three years, and online customers about $25 a month.

So we do see it to be favorable for us long-term.

In terms of the margins, I think you can see the margin expansion in our Small Business space this year.

That is on top of the margin expansion last year, so this is only going to continue to benefit us as we get more reliable revenue streams, as well as the ability for us to expand our operating margin.

Great, thank you very much.

Peter Goldmacher, Cowen.

So, Brad, I think this completes your third full fiscal year running Intuit.

And the business has changed quite a bit -- you're moving more towards Connected Services.

We have seen a couple of themes really emerge on the move to Connected Services, and one is the applicability of your relationships with financial institutions across your lines of business.

We have also seen mobile emerge as a more relevant line of business across -- relevant opportunity across every line of business that you guys have.

When you think about the strategy going out over the next couple of years, and the move to Connected Services continues to get adoption, how do you think about, one, an appropriate timeframe for investors to think about really starting to get traction of cross-selling more products back into your existing customer base for every customer regardless of product.

And, also, what are the other emerging themes that you think are relevant for your market segment, which I -- even though it is consumer and small business, I tend to characterize small business behavior more along the line of consumer behavior.

So what are the trends you guys are seeing that you think you can continue to work back into the business to drive that incremental product adoption?

Yes, I got it, Peter.

Thanks for the question.

Let me start first with when you can start to see more effective cross-sell.

I think the answer is now.

Kiran Patel will talk about this when he goes over the Small Business products at the Investor Day presentation on September 21.

But it is just easier for us to look for ways to add additional services to a customer that is online, because you can kind of discover what the problem is they are stuck on, and we can help them with a solution at that moment in need.

And that is not as easy to see when they are using a desktop product in a disconnected state.

So you see things like our attach to direct deposit going up.

And a big reason for that is our Online Payroll product that we bought a couple of years ago.

We also are starting to see more effective cross-sell of things like Payments with our website product.

So you're going to continue to see that get -- be more and more of an opportunity for us.

And we will start to talk about the number of products per customers as we continue to make progress.

In terms of themes, we really do believe that we have a pretty comprehensive strategy now that is durable, but you are going to start to see some other things emerge that are already captured on that strategy slide that you're going to hear us talk more about.

One is our platforms -- our technology that we use to serve our customers are increasingly becoming a great place for others to come in and help solve additional problems for our customers.

Think about our Intuit Partner Platform.

The ability for a third-party software developer to be able to have a single sign-on, a common navigation, integrated data with QuickBooks, and one common bill.

And that is one of the reasons why salesforce.com and we are excited to have them going on the Intuit Partner Platform to help us solve important customer problems.

So you'll hear more about this platform as a service concept.

Another one is the power of data.

Data to create (inaudible).

The ability for us to do more work on behalf of the customer so they don't have to key the information in.

The ability for us to take some of the customer data they generated on their own and give them some relevant comparisons about how they're doing versus others.

And, quite frankly, the opportunity for us to look for new monetization models that trust and protect the customer's data, but also finds a way for us to create value that they are willing to pay for.

Think about the Mint ways to save engine.

So those are going to increasingly become more important parts of our Connected Services strategy.

They are in our slide today, but you're going to see us have more proof points over the coming years.

Would you expect -- I think you made the point in a number of your lines of business on this call that unit growth lags revenue growth.

You're able to monetize customers beyond the unit price is growing.

Would that be -- in three years what would that ratio look like?

Is that even how you guys are thinking about it or are you thinking about it more in the lines of products per customer?

How should we think about it?

You know, it is interesting.

The good news about our business model is that for whatever reason we have difficulty with unit growth, we have been able to show double-digit growth because we can increase lifetime value like we did right now in Small Business.

But our strategy remains the same.

Our number one priority is to get more customers into the franchise, because we have shown we can increase the revenue per customer 5 X over a five-year period.

So bar none, the thing we wake up every morning thinking about is growing the category, convert nonconsumption, get people in here, and then find a way to increase revenue per customer over time.

So I would hope to see units outpace revenue in all the businesses, if there is a way for us to come up with the right solution to make that happen.

But the good news is that for whatever reason we run into a tough patch in the economy, we've got a great business model that will still deliver good topline growth until we can find other ways to crack that unit code.

Great, thank you.

Adam Holt, Morgan Stanley.

Terrific, thank you.

I had a couple of follow-up questions on the SMB side.

As you look into the fiscal 2012 numbers, you had a tremendous amount of success driving ASPs higher this year.

How should we think about the relationship between units and average selling prices as we look into next year in the SMB business, in particular around QuickBooks and QuickBooks Online?

I would say that first of all, as Neil said in his talking point, our focus in fiscal year 2012 is to acquire as many new customers and new franchises as we can.

The good news is that no longer just has to ride on the back of QuickBooks.

If you look at all the new front doors -- GoPayment, Online Payroll, website, and you count the total number of small businesses we are adding to the franchise, QuickBooks units may be soft, but overall we are holding our own with small businesses in total.

And that really remains our focus.

In terms of ASPs, you know, for us it is less about price and it is more about more applications per customer, or moving them up the product line.

It is a lifetime value gain.

So what we have to do is first get them in and get them delighted on one product and then immediately help them know that we can solve other problems.

What you should see in fiscal year 2012 is not only a heightened focus on customer growth, but an increasing improvement in lifetime value as they move more to the Connected Services, and we get better at helping them buy the second or third product.

That is really our game plan as we look to next year.

Terrific.

Then if I could just shift down to the Financial Institutions Group, the Bill Pay and the Internet banking customers were down on a quarter-on-quarter basis, which looks like it may be a little bit of an anomaly.

Could you just give us an update on where you are from a backlog perspective there in terms of banks coming online, and what, if any, reason there is for that downtick?

Thank you.

Yes, Adam, you know, it is a little bit of an anomaly.

What we had last year in the fourth quarter is we brought in a pretty large bank that gave us a big group of users, and we are lapping that this quarter.

At the same time, we had a couple of smaller banks that had let us know last year they are going to be rolling off our platform.

So growing over a big new one last year and having a couple come off gave us a 6% online banking increase and about a 13% Bill Pay increase.

I would tell you that our pipeline remains very healthy in terms of banks interested in our solutions.

Our Mobile Banking Suite, that we have through Financial Services is literally on a tear.

We have tripled the number of users in the last 12 months.

And while right now we are guiding 7% to 10%, we think this business model is durable.

We've got some unique things we can offer customers, and we see it being a double-digit grower over the long term.

That's helpful, thank you.

Brent Thill, UBS.

Brad, just back on the macro, since it is on everyone's mind.

You mentioned no real improvement, but you gave pretty strong growth for the full fiscal year.

So can you get just give us a sense -- I think everyone -- no one is worried about things improving right now, they are worried about things deteriorating and how the recent events have played into that.

Yes, we can.

I will start first by saying that, Neil mentioned briefly in his talking point that in our guidance we tried to assume a range of potential macroeconomic outcomes.

There are some things that can break more ugly, not a whole lot that can break better, and we have done our best to reflect that in our guidance.

I think what is really most important -- and the reason why you hear the confidence in us today is our products are never needed more than when times are tough.

We basically help people manage their financial lives and help them save time to be more productive.

An interesting stat that just came out of our Small Business Employment Index -- and these are in companies with fewer than 20 employees, is while they're actually gradually increasing the number of new employees -- it is about a 3% annualized increase -- the number of hours that each employee is working is up about 9%.

So they're having to work harder.

And they need things that help them be more productive and save time.

So that is really what is helping us continue to persevere through a tough time is when they are solving problems they need solved when the economy gets ugly.

And that is why at the end of the day our guidance assumes nothing getting better.

Our ranges kind of assume it could get a little worse.

So we also are banking on the fact that regardless of what happens we got to make sure we are there for customers and helping them navigate through these tough times, and we think that will help us deliver the outlook we have given you.

Thank you.

Laura Lederman, William Blair.

It is Laura Lederman.

Can you talk a little bit about, if we go into another full-on recession, which hopefully we won't, would the business units this time perform as it did in the last time, or which ones would perform better do you think than the last go-round if we do end up in a recession?

I hate to ask the R question, but it kind of needs to be asked.

And, separately, if you can talk about the healthcare execution issue?

Alright, happy to do that.

Let me start with the first one.

I would say, first of all, every one of our business units and certainly we are smarter than we were when the downturn hit us the first time.

We have learned what discounts work, what discounts don't work.

We have learned how to be there and help customers find our solutions easier.

And so I would tell you that we expect our performance to be even better than when the recession hit us the first time, because we are wiser.

We have more scars are back and more lessons learned.

And so really to be honest with you, our guidance right now reflects for each of the business units what we think is going to happen over the next 12 months.

The second piece on healthcare.

It is really pretty simple.

Let me first start by saying the healthcare business is the best performing business in the Company right now.

When you have got a growth rate of over 50%, and you have gone in the last year from about 2.5 million patients to now 4 million patients served, that is a rocketship trajectory.

Unfortunately, we had even bigger plans in mind.

We had banked on meaningful use, the legislation that came out, to drive even more doctors' decisions toward the patient [core] than what happened.

And we also decided that since it was growing so quickly we better shore up the infrastructure and make sure we have it in two data centers, so we don't have any outages that impact the doctor or a patient.

So we put a little more investment in.

So you can really write this one off to just a little bit of our eyes being bigger than our bellies when we put a business case together.

And we thought it was prudent now to go in and get the thing lined up correctly.

And in terms of execution misses, we learned some lessons here and we will be smarter next time.

Does that answer your question, Laura?

Yes, thank you.

Walter Pritchard, Citi.

This is Ken Wong for Walter Pritchard.

Just a quick question on Global.

Beyond UK and Canada, can you guys perhaps give us some progress on some of the other regions you guys are focused on?

Yes, right now obviously in the UK and Canada we are very excited.

We had convinced ourselves that we were going to focus primarily in India and some of the emerging economies, because we weren't sure we could go into an established economy where other competitors were there.

And our team has proven us wrong.

We have actually been able to take share in retail.

We are now the marketshare leader in QuickBooks and retail in both the UK and Canada.

And we are excited to be bringing other solutions like QuickBooks Online into those markets.

You heard me mention Singapore.

Singapore is a wonderful market for us because it not only has more of a developed economy feel to it, but it is also is a learning bed for us as we move into Asia.

So you hear us talking a little bit more about QuickBooks Online and other solutions there as well.

Let me tell you about India.

We have got several things that continue to perform well in India and are accelerating.

One of them is one we have mentioned to you before.

It is called Mobile Bazaar, or what we refer to as Agrinova.

It is basically a mobile solution that allows farmers to find out where they can get the best prices on their produce at one of the farmers markets.

And we are able to demonstrate that 95% of the farmers using the product are actually getting over a 20% price increase for their produce.

And it is virally growing.

When I say virally, it is like a Mint product.

They are telling two or three other farmers and it is growing.

Now we don't yet have a good business model which [they happily] monetize it over time.

But we do like the adoption of the customers.

And we do like the fact it is helping us learn more in the market.

So so far what I would tell you on our global strategy is we're taking a handful of developed economies to go into with our Small Business offerings.

We are learning in Singapore and we were continuing to plow ground and get new lessons in India.

And we will continue to update you on that progress in a little more detail at our Investor Day in September.

Got it, got it.

Neil, you guys had more pronounced marketing spend last year ahead of tax season.

How should we think about that this year without the tax delay and all the issues from last year?

I think if you look at the full year, our sales and marketing expense should grow pretty well in line with our topline revenue growth; no acceleration on a full-year basis.

But I do think you will see continued acceleration and pull-in into the first half of the year.

Brad has a saying when he talks about playing all four quarters.

And we think it is important to get out and win early in the season.

As you know, we have many of our products launch or have their really busy time at the beginning of the calendar year.

And so I think you would expect to see some pull-in of some of those marketing cost into Q1 and Q2.

Kind of like the same pattern you saw last year, maybe even a little more pronounced.

Got it, thanks, guys.

Gil Luria, Wedbush.

Thank you for taking my question.

It seems to me like the last few years the Intuit story has been more about secular trends, technology, execution, not really macro.

So let me try a couple of micro-questions.

You talked about the GoPayments product for payments.

How much of your merchant growth is coming from that?

What kind of penetration do you have within your merchant base with this product now?

Actually, we are looking at each other just to decide what we have and we haven't disclosed at this point.

Let me tell you that it is the fastest growing by far.

It has introduced a whole new group of customers that we weren't going after in our traditional merchant services.

As you know, we give a free swipe -- a credit card swiper away.

There is no monthly subscription fee.

There is a flat fee on transactions.

And we are literally getting a smaller, earlier stage customer than we would have gotten traditionally.

And but we're seeing them ramp up very nicely, and they are coming in large volume.

So in terms of what percent of our total merchants we have right now, we haven't broken that out.

We will talk a little bit more in September.

The one thing I will say is it is expanding the category for us and bringing new potential paying customers in.

Let me just add.

This is Scott speaking.

Your question might be what percentage penetration are things like GoPayment and Payments of our QuickBooks space?

This is part of what we look at as Brad talks about getting a customer who has one of our offerings to buy and use a second and a third.

And our Payments penetration is still quite low.

We've gotten a lot of upside on Payments.

And GoPayment just adds reasons for our large QuickBooks space to switch to our Payment system and to our Online Payment system.

Thank you, Scott, well said.

Then as a follow up on that, one of the emerging trends, a very large emerging trend around Payments has to do not just with mobile payment acceptance, but also with mobile payment deployment, the consumer side of this.

Is there a way you can leverage the capabilities you have with Mint and the mobile penetration you have within Mint that you just mentioned in order to help facilitate that mobile wallet concept and tie those two things together?

You have the merchant acceptance side with GoPayment.

You have the consumer.

You are helping the consumer wallet with Mint.

Can that help you become part of that very large emerging opportunity?

It is a great question.

We have been actually running several small experiments inside the Company, and we are testing various models with Mint as well as just the mobile wallet in general.

We have nothing right now that we're ready to announce.

We have shown a few concepts at our Innovation Gallery Wall.

But I think your question is absolutely the same sort of strategic question we're asking ourselves right now as P2P becomes a little more prevalent, or the ability for us to leverage a network of a large base of consumers and a large base of small businesses and see if we can actually enable that transaction.

So nothing I can tell you today is definitive, but something that is absolutely on the radar screen.

And we are testing to see if there is a way we can build a business model and durable advantage around it.

Great, thank you.

This is Scott again.

Let me just add.

You have asked about the consumer opportunity to use merchant acceptance to help drive change on the consumer side.

There is also a similar opportunity in Small Business.

And our strategic Payments initiative, which is how we have focused on our Small Business opportunity, is creating a solution where there has not been one for businesses to pay electronically.

Now that is one where we are doing the thing that you described in the Small Business ecosystem.

And this is early days, but it is off to a good start.

Great, thanks.

Jim MacDonald, First Analysis.

Good quarter.

Can we talk a little bit more about the Employee Services area?

You talk about the revenue per customer increasing.

But with customers increasing so slowly it is hard for me to think about that.

Is there a good way for us to think about that opportunity in Employee Services?

Yes, there is.

I think, first of all, on customer count, you are right.

When customers grow at around 2% that is modest by our expectations.

It is actually pretty good relative to the other alternatives in the market in their growth rates, if you compare them to a few others right now.

But it is a tough time right now when people are laying off employees and unemployment is at 14%.

And so people really aren't growing their payroll, but what they are doing is they are looking for other ways to retain their employees.

And we have things like 401(k) plans that are very different than other alternatives in the market.

We have some solutions right now we are testing with healthcare cards to help small businesses be able to give their employees money towards healthcare without having to get into the benefits business.

And we still have a tremendous opportunity to continue to grow our Payroll business by just increasing the penetration within the existing QuickBooks customer base, which, as you know, 4 million customers today using QuickBooks, we just have a little over 1.1 million using the Payroll service.

We are not trying to put anything on these 2% growth numbers to suggest that they are the numbers we expect going forward.

I do think that in the current context they are not anything that we are ashamed of, but we do still continue to see an opportunity to get additional revenue per customer, as well as to continue to grow the penetration into the QuickBooks space.

Just to follow up, is there -- can you talk about the growth in the PayCycle type of service offering versus the other offerings in that space?

And maybe also a little more -- you mentioned the other add-on offerings in addition to direct deposit, are any of those doing particularly well?

Yes, they are.

In fact, starting with the PayCycle offering, which we refer to as our Online Payroll Service, it grew 13%.

And that is a healthy customer growth in the context of what I just described a few minutes ago.

By the way, that was in the midst of a transition, where we had to move some customers off a little platform and onto a new platform.

You don't always get 100% of them to make the jump.

So that 13% even got a little bit of a one-time downdraft on it.

And the neat thing about having Online Payroll is it is so much easier to have direct deposit become the assumed solution, and to have other services sold.

And so we really see that as being the catalyst for growth as we move forward.

Thanks very much.

Scott Schneeberger, Oppenheimer.

On Consumer Tax, I just curious, you alluded to taking share.

Now we are three or four months past the season.

Brad, could you speak a little bit to the winners and losers now that you have had a little bit more time to digest?

It is still a bit of science and alchemy, but I will tell you what we have seen at least from the public things that have been disclosed by competitors or what has been produced by the IRS.

No one is arguing that we picked up 2 more points of share in retail with our desktop product.

There is only a couple out there, but we also acknowledge the gain going forward is online.

Our data suggest we picked up about 1 point of share online.

I believe our primary competitor picked up a point or a 2 online as well.

And I think it was the others who suffered the consequences of those two gains.

So I would say the smaller players lost share.

The two more recognized players picked up online.

And, of course, we took share at retail as well.

Thanks, and just following up on that, the first question on this call was about the composition of your Consumer Tax guidance for next year.

I'm just curious what are some of the puts and takes year-over-year?

For instance, I figure you may have benefited from no forms this year.

Could you give us any color on things that may be different 2012 versus 2011 as you think about it?

Thanks.

I think we will go a little deeper at Investor Day, but you're right, this year there was a one-time benefit when the IRS tried to take that remaining 11 million people, who a year ago were still filing their taxes manually, and chose not to send them a paper form to their home and not to put those out in post offices, and kind of left them without an obvious solution.

I think that helps, by the way, the tax stores as they struggle, because, hey, I've got to go somewhere.

It also helps software.

So at the end of the day -- now that was a one-time event.

If you look at it, the software category over the last five or six years has been growing 6% to 8%.

It was a little bit of a bump this year for tax stores, which by the way is completely counter to the last five years where it has been flat.

So I think next year, for us, we had less of a question about how we're going to grow, because we are going to continue to grow the way we have been, which is capturing more of the new filers who enter the tax system for the first time.

And they are younger and they go online.

And by continuing to push back against tax stores and say, look, we have a better solution that is 75% cheaper and delivers the same outcome.

I think the challenge is probably going to be a little harder for some of those other methods who aren't going to have the benefit of that one-time decision that the IRS had.

And we will have to look and see if that plays out the way we think it is going to.

Great, thanks, and congratulations on a great year.

Sonya Banerjee, Jefferies.

Thank you for taking my question.

I just have a quick follow-up regarding the Financial Management Solutions business.

Can you speak to the success that you have had in terms of a product cross-sells with QuickBooks Online relative to the desktop piece, simply because our analysis suggests that an uplift related to adoption of QuickBooks Online relative to the desktop product is primarily related to ancillary product attach?

So just curious, simply because in the past you have said that it seems like attached to desktop has been higher than online.

So at this point is there any update in terms of just relative success with cross-sells with online versus desktop?

You know, first of all, there is a benefit of apples-to-apples just going financial management to financial management.

You go from $200 every two or three years to $24.95 a month, right off the bat you have an uplift if you move from desktop to online.

And then to your point, you're right, it is easier for us to introduce other solutions that you can cross-sell.

And one of the proof points we have talked about is it took us about 10 to 11 years on desktop to get a roughly 25% penetration of Payroll.

And if you look at where we are with online, we have been able to get there in literally the last few years.

We didn't really introduce Payroll into QuickBooks Online until four years ago.

So we are seeing an accelerated adoption of these other services, if you're online, and we think that will only continue as we look at things like Payments and other services as well.

That's helpful, thanks.

But just a quick follow-up to that.

So comparing the $200 every three years to the $25 per month -- monthly subscription, is that really a one-for-one comparison, simply because the online offering offers additional users and other features that the QuickBooks desktop product doesn't have?

Thanks.

It is a fair question.

You don't actually get a complete apples-to-apples.

You've got more feature functionality in the desktop than you do online.

It got some embedded services online that don't come with desktop, like automatic backup and the ability to have customer service through a click.

But as close as we can get to an off-line/online comparison, that is probably apples-to-apples in the way I refer to it.

I tell you what we are going to do, at Investor Day we're going to try to show the average lifetime value of a customer and what you can expect at a year one versus a year five, and that will help answer some of the more detailed questions.

Okay, thank you.

Michael Millman, Millman Research.

Following up a bit on Scott's question, are you seeing that the -- what you call manual methods in tax drying up and will no longer be much of a source?

Also, could you talk a little bit about online tax prep fee elasticity?

And then maybe you can tell us what Block did differently last year that helped them take share?

All right, so let me start with manual.

If you look at what the IRS publishes, their estimate a year ago was that there were about 11 million people who still filed taxes out of roughly 140 million on paper.

The data right now through what they produced through June suggest it is probably going to be closer to 8 million this year, which means it is down about 25% to 28% year-over-year.

So when you look at 147 million people filing taxes, about 8 million on paper, it is definitely a pond that is going to dry up over the next few years.

So that is what I meant about the manual opportunity continuing to dry up.

In terms of online tax prep fees and the elasticity, it really comes down to the fact that we start with a free operating, and then we add additional value and we price for that value.

And in the marketplace we have been able to demonstrate that we can get customers in on free and then convert them to a paid product, or we can actually find other solutions for them if they are willing to come in and pay for it.

So the elasticity really comes down to how much value the customer sees in the product itself.

And we have been able to compete very effectively with low priced competitive alternatives in the online space for over a half a dozen years.

In terms of Block, I think you know what they have done as well as we do.

You do a wonderful job of covering the tax industry.

And you know that this year they got pretty aggressive on both advertising.

They also got aggressive with offering a free E-Z Form in their stores, and then they looked for ways to upsell the customer.

I think all of those were good strategic alternatives that they tested to see if they could drive traffic back into the stores.

I think it is an excellent thing for the total tax category, because the more people talking about tax alternatives the better it is, because they are more able to go in and introduce [our value pros] as well.

I assume they're going to be aggressive again this year.

And that is pretty much what we have planned for.

This is Scott.

I would add one thing.

Brad, on your elasticity question.

Brad did a good job of addressing elasticity within the line that TurboTax has and the price range there.

You might also be curious about the elasticity between solutions like between the tax stores, which charge an average of about $200, and offerings like we have that are usually in the $150.

(inaudible) taxes are a very large group of people paying $200 a year for potentially the same end result of a tax return, suggest that people are willing to pay for the tax solutions, and they're willing to pay for the help that comes along with a pro.

So that suggest that there is a lot of willingness to pay in the category.

One of the growth avenues to consider is how can you take the initiative to do it alone solution, like Lee and our software competitors sell, and start finding ways to chip away at the service level and offering of tax stores, so you can find some way to get more customers who are willing to pay those higher amounts of money for higher levels of service.

So I think the elasticity here suggest there is quite a level of growth opportunity for those who can figure out how to effectively compete and pull customers from tax stores to our automated solutions like we make.

Scott, would the demise of RAL's change some of the retail prep elasticity?

Well, we kind of thought Block would have a little more trouble this past year with RAL's going away, that they seem to surmount that rather well.

So I am guessing the demise of RAL's will have less of an impact in the industry than we might have guessed.

Great, thank you.

But since we were never in the RAL business ourselves, it really won't have much of an impact on us.

Thank you, Scott.

Kartik Mehta, Northcoast Research.

Good afternoon, Brad.

Just a question on the tax side of the business.

You obviously have an excellent product in TurboTax.

You have talked about the next net promoter score being high.

I am wondering as you look at that and you look at what happened in the most recent season, maybe why you didn't take the marketshare from tax stores that you thought you would have, and what will change next year to help you take that marketshare again?

I think that it is, first of all, the category itself, and we did take share.

We grew share in desktop.

We grew share online.

And the software category actually grew faster than tax store as a category.

But I don't believe that we felt we did the best we could in helping customers understand exactly what Scott just described, that we have a solution that is about one-fourth the price of going to a tax store.

And with the kinds of services we can offer, and the kinds of help we can provide you, that you have the same exact outcome if you work with an online do-it-yourself solution as you do through a tax store.

I think you're going to see us just get much clearer and much more focused on how we help people understand that there is a viable alternative in the market than going down the street and having somebody do your tax for you at one of these tax stores.

So that is pretty much the challenge ahead of us.

If you look at the performance we had for many years, we have been able to get that message across.

I think last year we weren't as crisp and clear as we could have been.

Clearly, we had competition out there who are refining their strategies.

And we have taken some lessons from that and I think we're going to do a better job this year.

Brad, does that mean you need to spend more money on marketing or is it just me, and you need to spend it differently?

I think it really comes down to the message, not so much the amount.

One of the things that I have been asked in between these calls is, well, what is going to happen to margins?

Last year we had a good year in tax, and this year we had a good year in tax, but this year was a little more competitive and everybody saw us and saw our competitors really amp up the volume.

And yet, look at the margin in the business, the margin in the business remained the same.

It is 65%, a very healthy margin for us.

So I think that what you're going to see is less about how much marketing and more about how effective is that marketing and where do you make sure that you make your message points clear.

Neil, in the past you have always -- you have stated that you would like to have about $500 million to $1 billion of cash on the balance sheet.

Well, now with the change in your dividend strategy, did the balance sheet strategy change it all or did it still stay the same?

No, it still stays the same.

We are still focusing now on $500 million to $750 million on average for the year net of all debt.

And with our cash flow as consistent as it is, and north of $1 billion a year, we have opportunities and plenty of growth to fund the internal development we need to do, things we want to do to build products and grow the Company long term, take advantage of other opportunities as they come along, and cover the cash dividend.

So I think we have reached a point in our maturity and consistency of our cash flows where we are able to implement this as an additional tool in our capital allocation toolbox.

Then just one last question.

Neil, any thoughts on your ability to benefit from either through greater marketshare or through revenue and earnings because of the Durbin Amendment, now that we have some clarity, and the way you're able to price your product?

Thanks for asking that.

That is really an area that is undergoing a lot of change.

And candidly we are anxious to see what additional types of fees will be introduced in the marketplace by some of the card networks, by banks and by some of the processors.

I think the jury is still out about exactly how all the economics will change for consumers and small businesses as a result of this amendment.

So we're being cautious right now to see how all that plays out.

Again, we want to use this as an opportunity to grow customers and bring more people to our Payment Solution.

We still feel like it has got plenty of opportunity to grow.

And so we would be more inclined probably to use this as an opportunity to grow the business rather than try to expand the margins necessarily just through the pricing.

But we will have to wait and see what other prices and what other costs emerge in the processing scheme, and from the banks who issue the cards and from the card networks.

Thank you very much, gentlemen.

Phil Rueppel, Wells Fargo.

It is actually (inaudible) in for Phil.

A quick one and a follow-up to the mobile question which was asked earlier.

How has it performed relative to your expectations?

And also are you seeing traction across both new and existing customers?

Yes, first of all, it has actually exceeded our expectations.

We had it out there for a couple of years.

We learned some important lessons towards the end of last calendar year.

And we have introduced a free card reader and got [some with] simplified pricing fee and a much more streamlined application, and it just continues to accelerate.

So it is exciting for us, because it is expanding up a whole new category of Payment customers that we weren't historically reaching.

The other thing that is interesting is it is not only a great additional service for an existing QuickBooks customer, someone who can now actually accept mobile payments as well.

As you know, about 60% of small businesses operate on wheels.

They are carpenters, They are landscapers, They are house painters.

And it is just a wonderful way for them to be able to take their payment.

But it is also bringing in customers who at this point have not adopted a product like QuickBooks.

So we are seeing a good two-thirds, one-third [ref] if you want to think about.

Two-thirds being new and one-third being existing that are coming in on our GoPayment product, which means it is adding value to existing customers.

And there is a lot of room for us to get the rest of them to learn about it, and it is bringing a bunch of new people in as well.

Thank you.

Brad Zelnick, Macquarie.

Thanks, this is Bhavin Shah for Brad.

Most of my questions have already been answered, but can you just give us an update on products such as Trends, what the uptake has been like?

And have you seen an increase in QuickBooks Online renewal rates because of these types of features?

I tell you, Trends right now is really getting good positive feedback.

For those of you who don't know what Trends is, it is the ability for you to understand how the key metrics in your business compare to other businesses who look like you.

So if you are a four-person florist in Boston, and you want to understand how other four-employee florists look like in other parts of the country to see if your accounts receivable or if your profit and loss is in the right zip code, it is just a great way for that lonely job of a small business owner to know whether their decisions are keeping pace with others in their category.

It is really an example of what I answered earlier, which is the power of data, to help people make better decisions and to become much more successful in business.

And we do think it is having a positive impact, which is why you're going to continue to hear us focusing on this area to try to help small businesses make the most out of -- other informed decisions.

In terms of whether or not we can actually show that it is causal to the fact that we are improving our retention rates and our renewal rates, while those are improving, I can't sit here and point to it and say, hey it is the because of Trends.

I can tell you we've got really good customer feedback that this is the kind of stuff they're looking for, and we're going to continue to bring them more value like this.

Got it, thanks.

Great quarter.

Thank you.

This concludes our question-and-answer session for today.

I would like to hand the conference back over for any closing remarks.

All right, well, I just want to thank everybody.

I know this is definitely one of those crazy times in the market.

I hope everybody brought an umbrella, because it is raining out there in terms of just how things look in the economy.

But if you want to come out of the rain, just spend a little time with us.

We are feeling pretty good right now for about a year, and we're looking forward to fiscal year 2012.

So we will speak with you again soon.

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

This concludes our program.

You may all disconnect.

And have a wonderful day.