直覺電腦 (INTU) 2015 Q2 法說會逐字稿

Good afternoon.

My name is Sayeed and I will be your conference facilitator.

At this time, I would like to welcome everyone to Intuit's second-quarter FY15 conference call.

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

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

(Operator Instructions)

With that, I would now like to turn the call over to Mr. Matt Rhodes, Intuit's Director of Investor Relations.

Mr. Rose, you may begin.

Thank you, sir.

Good afternoon, and welcome to Intuit's second-quarter FY15 conference call.

I'm here with Brad Smith, our President and CEO, and Neil Williams, our CFO.

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 Form10-K for FY14 and our other SEC filings.

All of those documents are available on the investor relations page of Intuit's website at Intuit.com.

We assume no obligation to update any forward-looking statement.

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

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

Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period and the business metrics and associated growth rates refer to worldwide business metrics.

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

And with that, I'll turn the call over to Brad Smith.

All right.

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

It has been an eventful few weeks at Intuit, and I suspect you have lots of questions.

Before we get to your questions, I'd like to provide as much context around the recent events as possible, while keeping the bigger picture in mind.

The bigger picture is straightforward: our financial results are strong through the first half of FY15, and we are reiterating our guidance for the full fiscal year.

Furthermore, our small business momentum has taken a step rate change in a positive direction, with growth in our QuickBooks Online subscribers continuing to accelerate at a very healthy rate.

With that said, I know that tax is on everybody's mind given the time of year and the recent press coverage, so let me start there first.

At the highest level, our tax strategy is on track.

We are in the second year of a multi-year journey to achieve our product vision that taxes are done.

This year's TurboTax significantly expanded its data import capability.

Nearly 75% of customers can now digitally import W-2s directly into the product; that is up from less than 30% last year.

This is a huge step towards our vision of taxes are done, making tax prep easier and more accurate, and this has led to several points of improvement and conversion for customers who choose to import their data.

The TurboTax experience now uses more advanced data-driven insights to tailor the interview to your unique situation.

We refer to this as responsive experience, and it is shaving significant time and questions off of the average taxpayer's preparation experience.

In addition, TurboTax users can now seamlessly move across platforms, working online, on tablets, or on smartphones, with the ability to start, stop, and continue their taxes on the device of their choice.

And for the first time ever, Americans with more straightforward tax needs were able to file both their Federal 1040A or 1040 EZ returns, as well as their state returns for free.

This was a powerful offer for those 60 million Americans, many of whom live paycheck to paycheck and count on their tax refund as being the biggest paycheck that they will receive in the year.

The collective impact of these innovations is showing up in the customer experience.

So far this season, our ability to convert those who visit the Turbotax.com website into those who file a return is up 200 basis points.

This improvement is on top of a big advance and conversion that we drove last year as well.

Our net promoter scores for TurboTax Online are also up about 6 points, which is quite encouraging.

This improved product experience is helping reduce customer care calls, which are down roughly 20% year over year.

And when it comes to the Affordable Care Act, we worked hard to ensure that all taxpayers could easily and accurately meet the new ACA requirements with TurboTax.

Unlike some other tax services, TurboTax includes all the necessary healthcare forms for free.

We don't see any evidence that ACA is driving TurboTax customers to other tax prep solutions.

In fact, the ACA section of our product has been one of our highest converting tax topics this year, which gives us confidence that our ACA implementation is meeting our customers needs.

Translating the sum total of these initiatives, total TurboTax units grew 11% through February 14, versus the comparable prior-year period.

TurboTax Online units are up 19%, while TurboTax desktop units are down 7%.

Which takes me to the recent events of the past few weeks, which have not been our best, in terms of consumer confidence.

There are no excuses when you make a mistake, and we've owned our mistakes and taken steps to make things right.

At the same time, we've been at the forefront of the ongoing battle to fight fraud in the US tax system, navigating lots of misinformation along the way.

Let me share some important context around both of these events.

First, let me address the change to the TurboTax desktop product lineup, which we subsequently reversed.

We didn't live up to our customers' expectations, and our net promoter scores are down for the TurboTax desktop product as a result.

So why did we make the change in the first place, and what have we learned from the experience?

I don't need to tell anyone on this call that we are in the midst of a massive platform shift to the cloud, and every established technology company is dealing with the balance of serving customers on legacy products while advancing their efforts and serving new customers on the next-generation platform.

It's a no longer a desktop software world.

Our computers no longer come equipped with optical drives, and shelf space allocated to software is down 50% in retail stores over the last five years.

With that said, a subset of customers simply do not want to move to the cloud.

Many of these are long-time, loyal customers who have used the same product for 20 years, which is why we've always been steadfast in our position that we won't push a software delivery model on a customer.

With that context, what happened?

Well, last year, we had moved to a complexity-based lineup in our TurboTax Online portfolio, steering customers to the best offering for their particular tax situation.

This included moving Schedules C, D, E, and F from Deluxe into our Premier and our Home and Business solutions.

These are the schedules that enabled a filer to report items such as investment gains and losses and small business expenses.

Our goal was simplification, so customers were clear which product was right for their particular tax needs.

For over 20 million online customers last year, the implementation went smoothly.

So this year, we sought to complete the alignment by making similar changes to our desktop offerings.

Our goal was to streamline product development and bring any new innovation from our online product back to our desktop customers as well.

And for those who might eventually choose to migrate to the cloud, they would enjoy a consistent and familiar product experience.

Good intentions but misinformed.

These loyal, long-time desktop customers simply didn't want a different product experience.

And they certainly didn't want to have to upgrade and pay a higher price for the functionality that they've always had in Deluxe.

In addition, we didn't make the communication clear enough, and we didn't make the transition easy.

For the 3% of TurboTax customers who were affected, it was simply unacceptable and they were right.

So here's what we've done.

Following a very public and heartfelt apology, we announced that next year we will offer the TurboTax Deluxe desktop software that our customers know and love, restoring all the forms that they've counted on for years.

Returning Deluxe desktop customers who need to upgrade this tax season are now able to do so seamlessly within the product for free.

More importantly, what lessons did we learn?

First, know the customer; we're a customer-backed Company and we didn't effectively apply our own expertise to this situation.

Second, ease to transition; if you're going to make product changes, make sure you have early dialogue with customers, and make the transition slowly.

And finally, act quickly and decisively; when you hear noise, assume smoke means fire, and jump on the situation fast.

Which takes me to the more recent news surrounding the concerns of increasing fraudulent activity in the US tax system, particularly at the state level.

As we've shared on many occasions, the privacy and security of our customers data is the top priority in our company.

We've been working for years to apply the most advanced technologies and techniques to ensure the safety and privacy of our customers' information, and we've been doing this in conjunction with the overall industry and with government as well.

I was just in Washington three weeks ago giving a keynote to more than 100 policy leaders on this very topic.

In more recent weeks, Intuit and some states saw an increase in suspicious filings.

As a result, several states communicated their intention to stop accepting TurboTax e-files.

So we took the precautionary step on Thursday, February 5 to temporarily pause the transmission of e-file state tax returns for all states.

As to our preliminary examination at the recent activities, with the help of a third-party security expert was concluded, we believe and we continue to believe these instances of fraud did not result from a security breach of our systems.

And the information being used to file fraudulent returns was obtained from other sources outside the tax-preparation industry.

We implemented targeted security measures to combat the type of fraudulent tax activity that we were seeing.

These additional steps included the implementation of more advanced multi-factor authentication, which is a proven technology for protection against identity theft.

With these measures in place, we resumed e-filing with the state the next day, once we felt comfortable that our customers' privacy and security were not at increased risk.

And we're continuing to work with the states as they build their own anti-fraud capabilities and will continue to share best practices as we work towards the common best interest of the taxpayer.

To assist any customers who are victims of tax fraud, we're providing a dedicated toll-free number with direct access to specially trained identity protection agents who will provide comprehensive support and filing assistance.

So to summarize consumer tax, the underlying health of the business and the product innovations that we're delivering are having a meaningful impact on the customer experience and on our results, season to date.

With that said, we suffered a self-inflicted wound on the desktop line-up situation, and we are leading the battle against an industry-wide threat of cyber fraud targeting the US tax system.

And all of this happened within the first few weeks of a 100-day tax season.

But there's plenty of time left on the clock, and if you look at the scoreboard so far, you'll see that the IRS data through February 6 shows that self-prepared e-file growth was up 7%, contrasted with assisted e-files down 4%.

This leads us to believe that the do-it-yourself software category continues to gain share.

TurboTax e-file growth and other third-party data also indicate that we are gaining 2 points of share so far this season.

So we're keeping the bigger picture in mind, and we are going to emerge from both of these recent situations wiser and even more focused.

Which takes me to the pro-tax side of the business, where we're seeing positive early trends in customer acquisition.

In addition, we are delivering more innovation in pro-tax than I have ever seen in my time at Intuit.

We provided tools and training for our Pro customers to manage the ACA situation and to help their clients achieve the best possible outcomes.

We've refreshed TurboTax Personal Pro, which we used to call CPA Select, and we expect the new interface and the accountant engagement tools to drive growth.

We've launched Intuit Link, a data and document collaboration tool for accountants that saves time and simplifies the accountant to client communication.

And we've enabled e-signature capabilities that help accountants streamline their work and securely transmit signatures on important forms.

I realize I don't need to remind anyone that it's early in the season for both of our tax businesses, but I will.

We're staying agile, and I am very pleased with our products and our pace of innovation.

We're focused on improved execution and delivering for our customers and shareholders for the remaining season.

Now, let's talk small business.

As I foreshadowed earlier, the QuickBooks Online ecosystem continues to build strong momentum.

We grew total -- excuse me, total QuickBooks Online subscribers by 50% in the second quarter, that is up from 43% growth last quarter.

We added 100,000 QBO subscribers quarter over quarter, and we now have 841,000 paying subs worldwide.

Outside the US, QuickBooks Online subscribers were up more than 170%, to 127,000, in line with last quarter's rapid growth.

Our QuickBooks Online customers continue to add payroll and payment solutions at a healthy clip.

In the US, our new customer online payroll attach rate was 21%.

This is a step down from roughly 30% last quarter, but it's due to a change from an opt-out payroll sign up to an opt in.

We expect our attach rate to be at the low 20s over the next few quarters, but we expect to see improvements in retention as a result of this change.

Our online payments attach rate was 8%, which is up from 7% a year ago.

To help fuel our international growth, we made two acquisitions in the past quarter that will add key features and functionality to the QBO ecosystem and targeted geographies.

In the UK, we acquired Acrede, a provider of payroll solutions with global compliance and data security.

Their easy-to-use cloud technology can be customized to deliver payroll across multiple geographies.

We also acquired ZeroPaper, a developer of fast and mobile financial management tools for entrepreneurs and micro-businesses in Brazil.

In addition to these acquisitions, we launched QuickBooks Self-Employed, designed specifically for the rapidly expanding population of freelancers and independent contractors.

As you may recall, there are roughly 12 million of these businesses in the US.

Our QuickBooks Self-Employed solution helps the smallest of small businesses manage their finances throughout the year and provides integration with TurboTax to simplify tax reporting.

These sole proprietors generally don't see a need for all the functionality in traditional QuickBooks Online.

They simply need to keep their personal and their business expenses tracked and separated for tax time.

This product is gaining real momentum.

And I'm excited about the partnerships we recently announced with Stripe, Uber, Lyft, TaskRabbit, and others, all centered around this particular market.

We will continue to add partners to expand our presence in this rapidly going on-demand services marketplace.

So in total, it's been an eventful first half of the year, and it has been a strong first half as well.

I'm inspired by our team's commitment to overcome obstacles, while continuing to reimagine the tax prep experience in both our consumer and our pro-tax businesses.

And you are going to see much more innovation from these teams over the next few years.

On the small business half of the house, our small business subscriber growth is accelerating, and we remain focused on global customer acquisition, all being powered by cloud-based services.

With that overview, I'm going to turn it over to Neil to walk you through the financial details.

Thanks, Brad.

I'll start with overall Company results, which all came in higher than our guidance.

For the second quarter of FY15, we delivered revenue of $808 million, up 3%, a non-GAAP operating loss of $20 million, a GAAP operating loss of $98 million, a non-GAAP loss per share of $0.06, and a GAAP loss per share of $0.23.

These factors reflect our strategic decision to deliver ongoing services and releases for future desktop offerings.

As a result, revenue for future desktop software licenses will be recognized as services are delivered rather than up front.

As we've discussed previously, approximately $400 million in revenue will move out of FY15 into later years.

The impact and quarter seasonality of this shift varies by business unit.

The business with a shift is hardest to understand from an external perspective is probably professional tax.

I'll provide some data to help with modeling of the pro-tax business in a moment.

Turning to the business segments, total small business group revenue declined 1% for the second quarter, again reflecting the impact of changes to the desktop product resulting in ratable, rather than up-front, revenue recognition.

QuickBooks total paying customers grew 20%.

Small business online ecosystem revenue grew 26%, and customer acquisition in our online ecosystem continues to drive growth.

QuickBooks Online subscribers grew 50%, accelerating from last quarter's growth rate, online payroll customers grew 23%, online active payments customers grew 3%, and online payments charge volume grew 20%, driven by an increase in charge volume per customer.

Payments customers attached to QuickBooks Online grew over 90%.

We're focused on growing payments in the QBO ecosystem, while de-emphasizing other services, such as standalone GoPayment's customers.

Rounding out the online ecosystem, Demandforce customers grew 18%.

Our primary goal is converting non-consumption to capture a larger share of the 29 million small businesses in the US and millions more around the world.

To do this, we're leaning into QuickBooks Self-Employed which is part of our QuickBooks Online lineup and is included on the QuickBooks Online subscriber line on the fact sheet.

We had approximately 4,000 QuickBooks Self-Employed paying subscribers at the end of the second quarter.

We will continue to call out the growth of this subscriber base over the next few quarters.

Moving to the desktop ecosystem, QuickBooks desktop units declined 26% in the second quarter, as we continue to emphasize QuickBooks Online.

More than 80% of our new QuickBooks Online customers are new to QuickBooks, rather than migrating from desktop.

Within the consumer group, consumer tax revenue was up 54% versus the second quarter last year, as we benefited from an earlier start to the tax season this year.

As you may recall, last year, IRS opened e-file on January 31, pushing revenue into our third fiscal quarter.

So this year, we're returning to a more normal seasonal pattern.

Our strong unit growth to date benefited from our Absolute Zero promotion, and our paid mix was also a bit better than we expected.

In the back half, we face a tougher compare, but we still expect units to grow faster than revenue for the season.

Pro-tax revenue was $11 million, down 69%.

As we have previously discussed, we expect a revenue shift of $150 million from FY15 to FY16 due to changes in our desktop offerings.

To help with your modeling, we expect pro-tax revenue of about $125 million in the third quarter of 2015 and about $100 million in the fourth quarter.

We continue to take a disciplined approach to capital management, investing the cash we generate in opportunities that yield an expected return on investment greater than 15%.

With approximately $1.4 billion in cash and investments on our balance sheet, our first priority is investing for customer growth.

We also look for inorganic opportunities, and in the second quarter, we completed two acquisitions, bringing us to a total of four transaction so far this fiscal year, totaling approximately $90 million.

We've also repurchased $555 million of shares in the second quarter, with about $1.2 billion remaining on our share repurchase authorization.

We intend to be in the market consistently during the year.

Our Board approved a $0.25 per share dividend for our fiscal third-quarter, payable on April 20.

This represents a 32% increase versus last year, and reflects our large and growing cash position, as well as more recurring and predictable revenue streams.

Looking ahead, we have reiterated our financial guidance and raised our QuickBooks Online subscriber guidance for FY15.

We also provided guidance for the third and fourth quarters, and you'll find our guidance details in the press release and on our fact sheet.

As a reminder, we will provide our next tax unit update in April, soon after the tax season ends.

And with that, I'll turn it back to Brad to close.

All right.

Thanks, Neil.

I know we've taken some time here to cover a lot of turf, but I hope it's been helpful context in advance of your questions.

We have a lot of opportunity in front of us, and at the end of the day, it all comes down to great people.

And I like what I see in our Company's culture and in our employees.

It is truly my privilege to be able to serve along side them each and every day.

So with that, let's open up to you to hear what's on your mind.

Sayeed?

(Operator Instructions)

Brent Thill, UBS.

Good afternoon.

Brad, on the tax side, you mentioned the conversion rate went up year over year.

I'm just curious if you could give everyone a sense of what that conversion rate is today and what you think you can do to continue to drive those conversion rates going forward?

Yes, Brent, thanks for the question.

First, we'd like to wait till the end of season, and then at investor day, we'll share with you the year-over-year comparison and conversion rates.

And one of the reason we want to do that is we're getting better every week.

One of the things I mentioned in the opening remarks is the responsive experience, which is our ability to actually look at the kinds of information that we can see in your tax return and compare it to others like you and truly streamline the interview process.

And so that's enabling us to get more conversion out of people who are coming in and starting their return and getting them all the way through to the end where they actually hit the send button.

The other thing that were able to do here is we're looking for areas where there were historical problems with entering data.

And then with the electronic import capability that we continue to advance, we're getting a lot of that work done for you, so it reduces friction.

And it's a combination of those things, which we call taxes are done, which is really improving our conversion.

And I'll tell you the teams truly are making improvements week over week and we will see how we finish up the season.

Great.

And just real quick for Neil, given some of the renewed focus on the cyber issues that are going on in the industry, there certainly have been a lot more investments that companies have been having to make to protect themselves.

I would assume given you haven't changed the year on the bottom line, that many of these increased investments around the cyber perimeter are included in your guidance.

Yes, Brent, clearly that is a very important issue for us, and so we're providing all the funding that we need in those areas.

Anything that was not included in our guidance for the full year, we expect to reallocate from other investment opportunities within the Company.

So we've given it a lot of thought and consideration before we reiterate a guidance for the full year.

Thank you.

Greg Dunham, Goldman Sachs.

Hi.

Yes.

Thanks for take my question.

One more on tax.

Clearly, the number surprised us to the [upside], especially given some of the bad press that we've seen in the market.

Can you talk to whether or not that actually has been a headwind to the business?

And if it has, what has more than offset that?

You mentioned conversion, but what are some of the other areas?

Or are we just assuming that the headwind on some of the bad press is just overblown?

Thanks.

So, Greg, first of all, we're not Hollywood and so unlike Hollywood where all PR is good PR, we certainly don't like to have negative press out there about our product or have any of our customers frustrated.

I think the first piece is the desktop lineup changes, we knew we made a mistake when we started hearing the feedback from customers.

But it's important to understand that affected 3% of our TurboTax customers.

So while the noise was out there and the press coverage was pretty strong, it really wasn't a significant number of customers.

And we worked really hard to get in touch with each and every one of them and to make it right.

And so I'd say first of all, the scope of that wasn't as significant as the press may have played it out to be.

But from our perspective, we took it very seriously because every customer matters.

The second is on this industry-wide threat of cyber fraud attacking the US tax system.

This has been an industry-wide challenge.

It is not a company-specific challenge, despite some of the early press clippings.

Whether you look at our own competitors issuing open letters from their CEO and major newspapers or you know the IRS has been working with industries since 2012 to solve this or even the state of Montana issuing its own press release last week saying, hey, this is happening to more than one company, I think most people understand that we are progressive.

We're applying the most advanced techniques, and at the end of the day, they trust Intuit that we're going to process their information and protect their privacy and security.

So I think the important thing here is the issue of cyber fraud is a threat to the tax system.

We're one of many players that want to be a part of the solution, but you have to separate the signal from the noise.

The press is not representative of what we're seeing, and as a result, I think what you're actually seeing in our business results, our customers trust our brand.

Our product is even much better than it was last year, so we're improving conversion.

And that plays out in the marketplace, and that's why you see stronger tax results than maybe what the press may have led you to believe.

Great.

Thanks, Brad.

All right.

Thank you, Greg.

Walter Pritchard, Citi.

Thanks.

Brad, I'm wondering on the -- you had a nice acceleration in the QuickBooks Online subscribers and you added about 100,000.

And your guidance for the third quarter actually assumes you had fewer than 100,000.

If I look at prior desktop seasonality, back when it was a pure desktop business, you'd actually see a nice pickup from Q2 two Q3 in terms of subs.

So I'm just wondering, did the seasonality change or is there some factor that you think drove Q2 that isn't repeatable as we look into Q3 for [sub adds].

Well, we know that each of our businesses do have cycles to them, and in small business, we do see a larger group of people buying heading into the new year.

And then it tends to tail off a little bit into the latter half of that -- our fiscal year, so heading into the spring and summer.

The desktop would throw you a little bit of out of whack there.

QBO is more of a real-time consideration, and you have a mix today of more service-based businesses, because we're still building out advanced inventories.

So the mix of the kind of customer in QBO is slightly different than desktop.

But right now what you're going to see is we're still in the early learnings of just how big QBO will be in each of the quarters.

This is our best forecast for the fourth quarter, and it really reflects the slightly nuanced differences in the service-based customers in QBO versus more inventory-based in desktop.

And the second is there is a seasonal pattern to when the peak periods are for QBO, just like there is on some of our other businesses.

And then just Brad, a follow-up on that.

So you've given a number I think out of FY17 of 2 million subscribers, and you talked about two-thirds -- or sorry, three quarters of those coming in through new customers.

And I'm wondering if what you learned in the second quarter, especially on that last part, the mix of customers coming in new versus installed base conversion, if there's any change in your view in terms of the long term?

At this point, Walter, we're not changing that long-term view, that 2 million subs.

Our aspiration is not only to meet that but to exceed it.

We're continuing to see strength in new to the franchise customers; this particular quarter, 80% of QBO customers were new to the franchise, about 20% were migrators from desktop.

We're doing everything we can to get desktop customers comfortable.

We're adding that advanced inventory capability.

We're continuing to finish out things like job costing.

We're running promotions.

But as you learn from the TurboTax desktop experience I just walked through, some of these customers are going to be moving anytime soon and we're fine with that.

What we really like to see is we're expanding the category; we're getting new people into accounting software that never even used a product before.

So right now we're locked in on that 2 million number, and we just raised our forecast on subs this year.

But we're not moving that 2 million yet, but if we continue to close in the way we are, we'll talk to you about that in the future.

Great.

Thank you very much.

All right.

Thank you.

Sterling Auty, JPMorgan.

Thanks.

Hi, Brad.

You mentioned the ACA was not causing TurboTax users to leave to tax prep.

I think the bigger concern that I hear from investors is whether it would stall the share shift to DIY.

Given your prepared remarks, it sounds like that is not the case.

I'm kind of curious if that's just where we are in this part of the tax season and maybe that changes?

Or is there something that you're seeing that the ACA just isn't having any impact on that category shift?

Sterling, it's a fair question, and I think it's still out there for many to think through.

Our assertion from early on was if you looked at what happened in Massachusetts back in the days when Romney was governor, there was no shift between tax prep methods when a like program was introduced at the state level.

So our hypothesis was if we do our job, and we take the complexity and make it simple, this should not be a catalyst to the assisted category.

And we worked really hard to do that.

I think the second thing is we do know that as you go further into the season, you will see the assisted tax prep methods start to pick up a little bit, as more complex returns processed.

But right now, this is about where we were this time last year with the assisted category growth through February 6th reported by the IRS, and then also where the DIY category was.

And at the end of the season, the DIY category picked up a little bit of share.

So I believe we're going to see the same thing happen this year.

My last point I would say is we anticipated if there was going to be a big impact that ACA would impact earlier in the season.

Because when you look at those who don't tend to have health insurance, there are oftentimes those families that are living paycheck to paycheck, and they need to file early to get their refund.

And the fact we haven't seen the kind of shift that some of the industry were suggesting was going to happened leads us to believe that our original hypothesis looks like it's going to play out.

We don't expect this to be a catalyst, but we also were prepared to respond if anything changes based upon that -- the balance of the season.

Okay.

And then just one follow-up, and you touched upon it in your answer there.

Can you help us understand, given the timing differences on when returns are starting to be accepted, et cetera, we end up with a lot of numbers over different periods of time, so a lot of apples and oranges.

Reiterate for us what you think the tax season growth will be for the tax business and what the results that you just reported means in terms of hitting those goals.

Yes, Sterling, I'll do two things here.

The IRS data through February 6the reported the category -- the self prep DIY category, digital category, was up 7, and assisted was down 4. If I take our numbers, and right now we reported February 14, if I move them back and make them apples to apples, the number of e-filed returns we submitted through the same day the IRS put their data out, we were up 13%.

So right off the bat, you can just do the math and say, okay, we're growing 13; the category is growing 7. It looks like TurboTax is picking up some share, and that's kind of where we were last year too.

If you step back and look at our assumptions for the full season, our forecasts were based upon the IRS total returns growing about 1%.

And right now, that's with the IRS has reported so far through February 6th.

The second is we anticipated that the do-it-yourself category would pick up about 1 point of share out of the total returns filed.

Right now, through the results of February 6th, it's up almost 3 points, so it's up a little bit higher than that.

But we know as it works through the balance of the season, it does start to shift a little more to assisted.

So that'll come down a little bit if history plays out.

The third lever we assumed is that we would pick up share, and so far the data suggest that we've picked up several points of share.

But we also know we came off of a very exciting program called Absolute Zero, so we're going to see we can hold our ground for the balance of the season.

And the last piece is revenue per return, we fully expect the customer growth will outpace revenues.

We don't expect that to be a big catalyst, and that adds up to the 5% to 7% total guidance we gave for consumer tax.

I know there's a lot in there, but I hope that parsed the numbers out and gave you apples to apples of us versus the IRS and then what our assumptions are.

That was perfect.

Thank you, guys.

You're welcome.

Ross MacMillan, RBC Capital Markets.

Thanks a lot.

I have two.

So first on consumer tax, a lot of price changes this year across the portfolio.

And Brad, you've said a couple of times, you expect units to grow faster than price.

But by my math so far this season, it looks like revenue per unit is a bit higher than last year.

And I'm a little surprised at that, just because you've obviously got the Absolute Zero program going on.

Any comments on that?

Is my math right?

And any thoughts around that so far?

You know, Ross, your math is right.

As Neil was going through his opening comments, he said not only do we have an exciting program with Absolute Zero, but our actual paid mix is higher than we had forecasted.

Part of that is driven by the complexity base lineup we moved to last year, where we were trying to help customers get into the right product.

And so in TurboTax Online, that's actually helped us get customers to the right product.

And as result, our paid mix is healthier.

People are getting to the Deluxe and the Premier versions of their products, which is where they should have been all along, and that's one.

Another one is just simply conversion and attach.

As we continue to make it more seamless and you're able to find services that are important to you, we're able to make that mix healthier as well.

So those two things are adding to a slightly higher revenue per return at this point in the season.

But as you know, we've still got about 60% of the season yet to go, and so we're going to see how the ultimate assumptions play out when were done on April 15th.

That's helpful, and then just a quick follow up on the small business aside.

Obviously, with the introduction of Self-Employed and as you are pushing into international markets, they're going to be quite different dynamics around, call it ARPU or revenue per subscriber.

Just from a big picture standpoint, how would you have us think about that as we progress through this transition?

Because I think right now, you've still got that ARR number on small business online ecosystem growing at a pretty nice clip.

Yes, Ross, I'm going to let Neil take that one.

I want Batman to have a chance to speak here; I tend to hog the airways.

So we will turn it to Neil on this one.

Yes.

So you're right, Ross, as you look at the Self-Employed product rolling out, and products growing globally, where we have less attach opportunities, you're going to see the ASP be slightly coming down for QuickBooks Online ecosystem overall.

We modeled all that in to the lifetime value equation we shared with you back at investor day, and will update that as we get into the end of this year.

We are closely monitoring how different things are impacting that.

As you heard us talk about on the call today, we like what's happening with attach, particularly in the US.

We've made some acquisitions that'll help us get to payroll faster outside the US, which will help those assumptions.

And we're waiting to see how well we do with the Self-Employed product that we are excited about at this point, but it's still very early days.

So the short answer to your question is that the lifetime value equation that we gave you back at investor day last year is still good at this point, and we're assessing as we go through each quarter, the puts and takes.

And we will update that for you at the end of the year and show you how it migrates from one to the other.

But look for higher attach rates in the US, improved retention, to mitigate some of the downward pressure you would see outside the US, where you don't have the same attach opportunities and a product like QuickBooks Self-Employed, which clearly has a lower ASP and a lower attach opportunity, more likely, than the traditional QBO product.

That's really helpful.

Thank you.

Kartik Mehta, Northcoast Research.

High, Brad and Neil.

Brad, you talked about your desktop customers about 3% being impacted by the changes.

So do you think the decline we saw in desktop, 7%, is the majority of that just people transitioning to online?

Or how would you parse up the changes in the clients impacted versus transitioning to online?

Kartik, if you look at the last five years at TurboTax desktop, the average has been a 3% decline.

But two of those five years, the desktop was actually down about 6%; those happen to be the two years where there was a delayed opening to tax season, so it ramped up a little bit later.

But I would tell you our 7% decline season to date is reflective of just an ongoing secular trend of people moving out of desktop to the cloud, and it's probably in that 3% to 4% range.

And the rest of it, honestly, I think was just the result of us having made a bad decision on our desktop line up, and we're going to have to work hard to earn those customers back.

And so that's the truth of it.

About half of it is secular shift to the cloud and the other half is a self-inflicted wound that we're going to go fight for and try to get those customers back.

And Brad, on the QBO side I believe you said 80% are new to this system.

As you look at those customers, are they new businesses or are they existing businesses that are now switching over to QBO?

It's a combination of both.

New to the world businesses are finding it a lot easier to come in now and get up and running from any device they want to use, including a tablet or a phone.

And the other are existing businesses that historically have been using Excel spreadsheets.

And so it's really a mix of complete new to the world and then those that are new to the category.

And just one last question, Brad, have you seen a change at all in your cost to acquire QBO clients based on the type of customers are getting and maybe if you see any other competition out there?

We continue to see improvement in our cost to acquire customers.

As the accountants are getting more comfortable with QBO, the new reimagined version, they're recommending it.

And of course, that recommendation leads to a faster yes from the small business side.

We're also getting better at SEO and SEM, and so ultimately our direct channels are more efficient and our accountant referrals are building steam.

And outside the US as we're in each of the countries, we are in brand-building mode, so the cost to acquire is more expensive in those countries.

But on a quarter-by-quarter basis, we're seeing the efficiency come in there as well.

So you put it all together and our cost to acquire is getting more efficient, regardless of the competitive dynamic in any of those countries.

Thank you very much, Brad.

Appreciate it.

All right.

Thank you, Kartik.

Raimo Lenschow, Barclays.

Thanks for taking my question.

I want to just stay on QBO; you have seen an acceleration of subscribers -- of subscriber growth ever since you launched the new Harmony product.

How do you think about where that is going to max out?

What are the puts and takes to say like, okay 50% of something we think it's good or can that go to 60%, 70%?

At some point we want to hit a number where you won't accelerate, and I just want to be ready for that.

And then also, can you talk a little bit about the international business in terms of what are the stronger and which countries did you like and where the performance could have been better?

Thank you.

You're welcome.

I wish I had an answer for your first one.

I'd like to know when it's going to max out too, not because I'm anxious to get there, but I just want to see if we can blow past it.

You touched on it.

We've had a half a dozen quarters here now where it continues to accelerate quarter over quarter, and we're feeling very good about the trajectory.

So right now, I can't tell you that we've got a flat line that we've drawn out, because we think we got a lot of opportunity ahead of us as we're expanding the category.

I wish I could be more helpful on that one.

Global markets right now, with the acquisition we just made of ZeroPaper in Brazil, that takes us into a new country that is now our sixth country.

So we have Canada, the UK, Australia, and India, the four we've been talking to you about historically.

We mentioned at investor day we were doing a greenfield launch France, and now with the acquisition of ZeroPaper, we're in Brazil.

In terms of the countries, each of one of them has different characteristics.

The Canada business is rocking and rolling.

It continues to grow more profitable.

As we look at the UK, that is a very competitive market right now, with many players over there, some established, some new.

We continue to accelerate our quarter-over-quarter performance, but we still have work ahead of us to get into the number-one position in that market.

In Australia, of course, that is somebody else's home court.

And so we're there in an aggressive fashion to show that we can play in the most contested battlefield there is, and so far, that has been our fastest-growing market, despite the fact that you would expect that to be the place where would have the most hostile environment.

India is greenfield.

We are truly creating the cloud category there, because almost everyone is desktop, and quite frankly, many of the products have a DOS-like feel to them.

And so, we're currently trying to create the category and get people comfortable with the cloud in India.

France and Brazil are going to be our newest entries, and right now we're in the early learning phases there.

One, we're doing organically where we're taking QBO and we're literally localizing it and then rolling it out in the market.

And in Brazil, we're doing it inorganically with ZeroPaper.

And so each of the countries have a different set of characteristics.

You put them all together and we're growing 170%, and we're feeling very good about our global trajectory and the fact that we're getting more efficient in our cost to acquire each and every quarter.

Perfect.

Thank you.

All right.

Brad Zelnick, Jefferies.

Great, thanks for taking my question.

Brad, turning back the clock to February 6th on tax, it's nice to see you are taking share based on the 13% growth in returns that you've shared.

Do you have any insight or thoughts on where the share is coming from, even just broadly, whether from the larger or smaller competitors?

Brad, we really don't at this point.

None of our competitors -- Well, TaxACT did report as a part of Blucora, but there wasn't a lot of data that was shared there.

They kind of reiterated their guidance for the season.

The other major competitor is not going to be reporting until I think March.

And so once they get their data out there and then we have the IRS data and our own, we will be able to have a better way to triangulate.

But today I would tell you it would just be speculation on my part.

Okay.

That's fair and if I could follow-up with one more on the change in new QBO payroll attach, going from an opt-out to an opt-in model.

Can you maybe just give us a little more color why the change and talk about the impact to the bigger picture?

Yes.

Sure can, Brad.

What we tried to do is make it very seamless for you to come in, sign up for QBO and have payroll included.

What ended up happening is a portion of customers would come in, and then they would find in their first bill that they were paying for payroll.

And in many cases, they didn't have a need for payroll, either didn't have employees or they were using another service.

And it became a point of frustration for them.

They would drive customer care calls, or in many cases, they were just cancel their subscription.

And so what we realized was we weren't clear enough and it was confusing.

So instead what we've done is we've moved to an op-in model, where based upon certain moments in need, you're adding an employee or you're going into the employee tab, we're able to basically make it more elegant to say, hey, do you want to add this payroll service?

What we're seeing right now is we've got cohort analysis and we're actually seeing an improvement in our retention, 200 basis points.

And that's one of the biggest leverage you have in a subscription business is improving your retention.

And so while we're taking a step back, because I think we had a false positive when we were out there in that 30% range as attach.

We've taken a step back into the lower 20s.

We're actually improving retention, and we think that's going to add up to a much healthier franchise over the long term.

Thanks so much.

You're welcome.

Gil Luria, Wedbush Securities.

Yes.

Thank you.

I wanted to ask about the impact of the True Zero promotion.

Have you seen a higher percentage of your online TurboTax filers in the promotion versus last year?

If I'm not mistaken, the promotion lasted a couple weeks longer this year.

And it obviously went down from 15 to true zero.

So of the 15.2 million TurboTax Online users this year, it was a higher proportion in the proportion within the promotion versus of the 13.6 million from last year?

Gil, the answer is more than last year, but the paid mix is healthier than we had forecasted.

So we actually got the best of both worlds.

I was looking at the analysis, Neil and I sit down with the tax team on a regular basis, as you might imagine, through tax season, and they're showing us the source of the new customers.

And the two biggest tranches year over year, which are really encouraging, are first-time filers, people who have never filed tax returns before.

And then first time moving into the category.

And those are basically both saying we are expanding to DIY category with this kind of offering.

And so I think this is really exciting for us, because we know if we can get a customer in the franchise, then we can actually monetize them and grow the lifetime value as their tax situation becomes more complex.

So right now, we're seeing not only a better conversion than last year in terms of people coming on the promotion, but our paid mix is healthier than we thought as well.

Got it.

And then, in the fraud situations, did you find that those customers that were affected by fraud, that somebody else filed under their information, that the attrition there was higher than the rest of the population?

Was that a significant factor?

It wasn't, and I'll tell you why.

First of all, I want to make sure that I was clear in the opening comments.

That the headline here is our customers know they can trust Intuit.

There is nothing we take more sacred than the privacy and security of their data.

And two things are a fact today: one is we're up and running and processing returns in the federal and all the states; and the second is there was no breach of Intuit systems.

And that is not only the result of our own analysis, but outside third parties have come in and run all their diagnostics with us and we've reached that conclusion.

I think with the customers, the thing that they appreciated is if they've actually been the victim of having their ID stolen from one of these other high-profile sources that we're all reading about in the newspaper.

And in fact, last week at Stanford University, I attended the Cyber Security Summit with President Obama and others, over 100 million identities have been stolen in the last 12 months.

That's people walking around with somebody else's Social Security number, and they are attacking the US tax system and trying to file these returns.

And so customers understand that this is broader, and what we're doing is we're helping them navigate the process.

We're getting them access to agents who can help them get their filing done for them.

And so it's not causing an attrition issue, because they recognize this isn't a particular product issue; this is a system-wide problem, and they're appreciating the help.

So we have not seen an increase in attrition due to that particular issue.

That's great.

Thank you.

All right.

Thank you.

Kash Rangan, Merrill Lynch.

Hey, thanks for taking my question.

Brad, with respect to the new user attach rates, I know you mentioned that due to a different change it would -- there are different methodology, the numbers look a little different.

But can you talk to how this trajectory should continue so as to enable you to hit or exceed your goals for the long term?

Are we looking at a hockey stick-type trajectory?

Or do think that the trends support a more normal progression towards the attach of payroll and payment, so you can hit your ARR objectives longer-term?

Yes, Kash.

We do see a continuation of a normalized attach rate.

We put in our prepared remarks that for payroll and QuickBooks Online we anticipate we will be in the low 20s for the next few quarters.

We see that moving up into a healthier mid-20s and beyond, as we get past the next few quarters.

But we also see a corresponding offset, which is an improvement in retention.

And it's a combination of those things that drive the lifetime value.

When we step back and we look at the payroll and the payment attach rates for new users in QBO, and then you look at the penetration opportunity against the base, we really do see opportunity ahead of us.

And we continue to see that increasing and improving quarter over quarter.

So aside from this next few quarters of payroll, if we have to grow over this opt-in, opt-out thing, we do see a continuation of strengthening attach rates for our payroll and payments products, which lead to that lifetime value assumption we've shared with you at investor day.

Got it.

With respect to the desktop QB product, are there any plans to curtail development of it, if not curtail selling of it completely and go into a maintenance mode at this point, so we can get the customer base to slowly shift to the online?

I was born at night a but not last night, and coming off of the TurboTax desktop challenge that we just had, I've learned a pretty important lesson there.

Which these customers are happy with their product.

We have committed to making sure that if they want to stay on the desktop, we're going to support them for as long as they want to use that product, but we're going to make it really enticing for them to go to the cloud.

But we have zero plans to sunset the product or to do anything that will upset them and make them decide to shop someplace else.

And I didn't mean to be flip.

I meant to be self-critical, which is make one mistake, that's okay; make two mistakes and somebody ought to slam my hand in a door.

Appreciate the candor.

And finally, maybe I missed this about six months back.

Did you share an ARR goal for the online business longer-term FY17 or FY18?

And if you did I'll look it up, but if you didn't, I'd love to hear your thoughts on that.

Thank you.

No.

We did not Kash; we shared an outlook for total Company revenue, which really is QuickBooks Online.

Revenue is a portion of that, but we did not give more specificity around the overall revenue guidance number.

Okay.

Got it.

Thanks a lot guys.

All right Kash, thank you, buddy.

Jim Macdonald, First Analysis.

Good afternoon, guys.

Looking at the February 14th tax data, at that point, do you think the impact of a delayed filing last year versus this year is washed out?

And then, I don't know if you can quantify the effect of your Absolute Zero program do you think in that data?

Jim, our assumption is that the effect of that delayed filing last year and where we are now is pretty much washed out at this point.

We will have to see full season how everything shakes out, but that's definitely what we are operating from.

In terms of the Absolute Zero promotion, we like the results so far.

We're going to wait till the end of the tax season, and we'll look back and say, did it achieve everything we thought it would?

But so far, the early data is suggesting very positive for us.

We like the impact of the new franchise -- new to the world filers coming in.

We like the fact that people are moving into the category for the first time.

We like the fact that the category has expanded, and also that it looks like we've picked up 2 points of share.

And all of that while still improving our paid mix.

So far so good, but we want to wait for the full season effect to see ultimately what the impact was.

Great and then down in Brazil on ZeroPaper, what are your plans about using their product versus -- will their product become effectively QuickBooks Online down there?

What are your thoughts on how that'll work in Brazil?

Yes, Jim.

It 's-- Brazil is a unique market.

They have this notion of something called a boleto, and sort of like an invoice here; it's a payment methodology, and then you can convert that invoice into cash.

And that's what ZeroPaper has done; it's really for what we're doing here with QuickBooks Self-Employed.

It's those micro-businesses.

But down there it's a tool that micro-businesses need to do to basically get paid.

And so what we're going to be doing is taking their product and importing it over onto the QBO platform.

And think of it in Brazil becoming the entry-level SKU, and then eventually that will lead up to our more mainline QuickBooks Online product.

So it will remain in market.

It is a Brazil-specific product, but that's a rapidly growing economy with a lot of opportunity.

And we're going to put it on our platform so you can naturally unlock and grow into QBO overtime.

Great.

Thanks.

All right.

Thank you.

Josh Schneeberger, Oppenheimer.

Thanks.

Good evening, Brad and Neil.

I'm just curious on the desktop, the pricing change, obviously, didn't go as you had planned.

And that was one of the things that was probably going to subsidize Absolute Zero.

I'm just curious, you guys have obviously reiterated the revenue guidance for consumer tax.

So I'm curious, Brad, how confident are you at this juncture of the year?

We know it affected 3% of TurboTax customers, and we saw volume impact.

But just on revenue per return, obviously you have a lot of moving pieces.

So was that a headwind?

And you have mentioned earlier some positives on revenue per return.

Could you just compare and contrast these at this juncture?

Thanks.

Yes, Scott, so we've seen some puts and takes so far in the season.

The take was we've reversed our decision and we've given customers the upgrade for free.

And that does account for some revenue that we would've originally had in our forecast.

The flip of that is, as Neil said, even with the Absolute Zero, we've had a healthier paid mix than what we had in our forecast.

So when you put it all in the blender, it comes out to us having the confidence to sit with you today.

And based upon what we see, reiterate our guidance for the full year.

And I think it's really just the combination of all those things.

Great.

Thanks, and then following up with regard to strategy and I guess we'll have to see as this year completes, but just on going to free state with free federal, is that something you feel that you can reverse out of in the future?

Or now that you're there, is it something that you think is a permanent thing?

While, we'll certainly take a look at how the program played out at the end of the season.

And if it's an effective program, then you'll see us continuing to do things that we think makes sense for customers and make sense for our strategic goal, which is growing the category and our share.

If it's not a successful program, we have found that you can make the kinds of changes and those kind of promotions year over year and customers understand.

So at this point it's pretty premature for us to speculate what's going to happen with Absolute Zero next year.

But so far we like the results given where we are in the season.

Great.

Thanks very much.

All right.

Jennifer Lowe, Morgan Stanley.

Great.

Thank you.

Scott, I wanted to touch on some of the longer-term targets around QuickBooks Online subscribers, specifically the increased guidance for this year and then the targets for 2017.

And as you look at those, I'm curious how you think about those in terms of where the business is today, with 80% coming in as new to the QuickBooks franchise, versus what your expectations within those projections are around desktop conversions or potential future contributions from the Self-Employed product.

Yes, so, Jennifer, this is, as we're sitting here on speaking, we're looking at the assumptions we had and then what's playing out in the market.

There hasn't been anything that's fundamentally different; I'll give you a couple of tweaks.

One is the product is continuing to perform in a way that we are delighted by; its expanding the category and getting first-time small businesses as well as people who are new to the accounting software category in.

So we originally had assumed that we would have a slightly larger portion of desktop migrators going to the cloud.

That number is not at that level that we thought, but we're getting more new to the franchise customers.

And so the number hasn't changed; the mix has.

The other thing is QBSE, QuickBooks Self-Employed.

This is new for us, and we're looking to make it a global product.

Right now, we don't count those customers in QBO if they aren't paid subs, and we do have deals with Lyft and Uber and others that we mentioned that today is a free QuickBooks Self-Employed.

But ultimately the way we monetize is if you want to send that into TurboTax, we have an attach rate; it just shows up in a different business unit called TurboTax.

So it's a nice little one into it ecosystem play.

We will see as QBSE grows and becomes more meaningful as a part of the paid subscribers; we will always break that out so you can see it.

But right now, it's only about 4,000 of the total number of subs, so it's pretty immaterial.

So you put all that together.

We're hoping that we're going to get more and more desktop customers excited about the cloud.

If not, we still feel good about our 2 million subs, because were getting more people into the franchise, more than we had anticipated with the new QuickBooks Online.

Great, and maybe just a follow-up, one quick additional question.

When you talk about where those 80% are coming from, you highlighted new businesses, you highlighted customers coming off of Excel.

But curious if you're seeing customers coming off of competing small business accounting solutions that might have not chosen to go with QuickBooks in the past, given the more limited online offerings that might be making different competitive decisions today.

Well in the US, and I know that everyone on the call is familiar with this, we are primarily the player in the US with QuickBooks desktop.

The share is over 90%.

Then you've got a couple of other players.

The online players are relatively new in the United States.

So if we're actually growing the category, they are actually new businesses that have started, because the economy is getting healthy or they are a part of that 40% that are still in Excel spreadsheets, and so that's really the opportunity there.

Outside the US in other countries, we are able to convert some customers away from some of the competitive products.

But we're also getting an influx of people coming off of spreadsheets there too.

But the mix is a little more -- it's more people coming from competitors than what you'd see in the US.

But by and large, a lot of them are still new businesses and Excel spreadsheets.

Thank you.

All right.

Michael Millman, Millman Research.

Thank you.

Looking at fraud on online, can you talk a little bit more about EITC fraud, which I guess has been ongoing and certainly block has been doing battle with that and has gotten some move from Congress.

And then secondly, and related to tax, can you talk about whether you're seeing changes in lifetime value for the tax systems, depended upon at least over the last several years, as you move more and more starting with zero or Absolute Zero currently.

Thank you.

Hi, Mike.

So on EITC, yes, I'm aware that our collective industry peers are all standing shoulder to shoulder and working with the government to try to take on this cyber fraud.

And everyone is seeing a different side of the animal.

A

And I know in our particular case of the competitor you just mentioned, they are out there talking about two particular things: the need for licensed professionals and to keep an eye on earned income tax credit, where they've observed some patterns that have been nervous.

As you might imagine we have algorithms and data we look at on our own.

We produce a suspicious activity report, and we have since 2012, that we provide to the IRS on anything that we see that may be unusual.

And then the IRS is the ultimate legal entity that determines whether that is a legitimate or a fraudulent return.

And so as we look at our EITC data and the context of that, we're seeing right now that the growth of EITC this year season to date is in line with our units.

And we don't see that particular category sticking out as any more suspicious in our mix to date than any of the other variables that we look at.

But that is not to say that that isn't something that everyone in the industry has to keep an eye on.

We just haven't seen that particular pattern emerge in our own customer base.

Have you seen a change and that over the last three or four years?

Have we seen a change in the I -- I'm sorry can you just be a little bit more specific, Mike.

Percentage of filers using EITC or collecting on it.

Mike, I honestly can't answer that question.

I just don't know that date off the top of my head, so unfortunately I can't answer the question.

I apologize for that.

You had a second question, which was the lifetime value piece.

As you saw last year, our revenue per return was down slightly as we grew our units, and we grew our units faster than our revenue.

And ultimately our strategic goal is to expand the self-prepared category and then grow our share.

And we said that we would love every year to have units grow faster than revenue, because we know over time the lifetime value is going to improve.

To answer you question about the individual taxpayer, are we seeing improved LTV, we are.

But when you put it in an aggregate of mix, you got a bunch of new people coming in and are coming in at first year in Absolute Zero, it doesn't deflate the revenue per return on an average.

But what we saw last year moving to TurboTax Online with this new line up, we're getting a healthier mix of paid.

I think that's where one of the questions earlier that Kash or someone had asked, which is, is the assumption right?

Am I seeing revenue per return being a little healthier; the answer is yes.

Because on an individual tax return basis, we're actually seeing customers move up the product line.

So at an individual level, the LTV is healthy.

But in aggregate, when you bring more new people in and they come in in a promotion price, it's actually deflating the average.

Thank you.

All right.

You are welcome.

Ladies and gentlemen, that is all the time we have today for questions.

Would you like to close with any additional remarks?

Sayeed, I would.

And I appreciate it's a little bit past our normal time, and we were wanting to do that because we wanted to make sure that we got to everyone's questions.

So let me just wrap up by saying we want to thank everybody for your patience today.

I know our opening remarks were a bit longer than usual, but we wanted to give you as much contact as we could around these two recent events.

If you could take anything away from this call, I hope that you heard that me, Neil, Matt and the others feel confident in where we are through the first half of the year, and we're excited about the momentum we're building in the back half.

And with that, I want to thank you for your questions, and we'll look forward to catching up with you in the after calls.

Take care, everybody.

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

This concludes today's call.

You may disconnect, and have a wonderful day.