intu-20240131

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q


☑						Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 31, 2024


☐						Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
						For the transition period from ____________ to ____________ .

Commission File Number 0-21180

INTUIT INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0034661
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

2700 Coast Avenue, Mountain View, CA 94043

(Address of principal executive offices, including zip code)

(650) 944-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

INTU

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting
company

☐

Emerging growth
company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares (in thousands) of Common Stock, $0.01 par value, outstanding as of February 15, 2024 was 279,979.


INTUIT INC. FORM 10-Q INDEX


			Page
PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations for the three and six months ended January 31, 2024 and 2023			4

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended January 31, 2024 and 2023			5

Condensed Consolidated Balance Sheets at January 31, 2024 and July 31, 2023			6

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended January 31, 2024 and 2023			7

Condensed Consolidated Statements of Cash Flows for the six months ended January 31, 2024 and 2023			9

Notes to Condensed Consolidated Financial Statements			11

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			30

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk			47

ITEM 4: Controls and Procedures			47

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings			48

ITEM 1A: Risk Factors			48

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			62

ITEM 5: Other Information			62

ITEM 6: Exhibits			62

Signatures			63

Intuit, QuickBooks, TurboTax, Credit Karma, and Mailchimp, among others, are registered trademarks and/or registered service marks of Intuit Inc., or one of its subsidiaries, in the United States and other countries. Other parties’ marks are the property of their respective owners.



			Intuit Q2 Fiscal 2024 Form 10-Q			2

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Please also see the section entitled "Risk Factors" in Item 1A of Part II of this Quarterly Report for important information to consider when evaluating these statements. All statements in this report, other than statements that are purely historical, are forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “forecast,” “estimate,” “seek,” and similar expressions also identify forward-looking statements. In this report, forward-looking statements include, without limitation, the following:

•our expectations and beliefs regarding future conduct and growth of the business;

•statements regarding the impact of macroeconomic conditions on our business;

•our beliefs and expectations regarding seasonality, competition, and other trends that affect our business;

•our expectation that we will continue to invest significant resources in our product development, marketing and sales capabilities;

•our expectation that we will continue to invest significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities;

•our expectation that we will work with the broader industry and government to protect our customers from fraud;

•our expectation that we will generate significant cash from operations;

•our expectation that total service revenue as a percentage of our total revenue will continue to grow;

•our expectations regarding the development of future products, services, business models and technology platforms and our research and development efforts;

•our assumptions underlying our critical accounting policies and estimates, including our judgments and estimates regarding revenue recognition; the fair value of goodwill; and expected future amortization of acquired intangible assets;

•our intention not to sell our investments and our belief that it is more likely than not that we will not be required to sell them before recovery at par;

•our belief that the investments we hold are not other-than-temporarily impaired;

•our belief that we take prudent measures to mitigate investment-related risks;

•our belief that our exposure to currency exchange fluctuation risk will not be significant in the future;

•our assessments and estimates that determine our effective tax rate;

•our belief that our income tax valuation allowance is sufficient;

•our belief that it is not reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months;

•our belief that our cash and cash equivalents, investments and cash generated from operations will be sufficient to meet our seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements and other liquidity requirements associated with our operations for at least the next 12 months;

•our expectation that we will return excess cash generated by operations to our stockholders through repurchases of our common stock and the payment of cash dividends, after taking into account our operating and strategic cash needs;

•our judgments and assumptions relating to our loan portfolio;

•our belief that the credit facilities will be available to us should we choose to borrow under them;

•our expectations regarding acquisitions and their impact on business and strategic priorities; and

•our assessments and beliefs regarding the future developments and outcomes of pending legal proceedings and inquiries by regulatory authorities, the liability, if any, that Intuit may incur as a result of those proceedings and inquiries, and the impact of any potential losses or expenses associated with such proceedings or inquiries on our financial statements.

We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. We encourage you to read carefully all information provided in this report and in our other filings with the Securities and Exchange Commission before deciding to invest in our stock or to maintain or change your investment. These forward-looking statements are based on information as of the filing date of this Quarterly Report and, except as required by law, we undertake no obligation to revise or update any forward-looking statement for any reason.



			Intuit Q2 Fiscal 2024 Form 10-Q			3

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PART I - FINANCIAL INFORMATION


ITEM 1 - FINANCIAL STATEMENTS


INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended				Six Months Ended
(In millions, except per share amounts)	January 31, 2024		January 31, 2023		January 31, 2024		January 31, 2023
Net revenue:
Service	$	2,693	$	2,418	$	5,143	$	4,573
Product and other	693		623		1,221		1,065
Total net revenue	3,386		3,041		6,364		5,638
Costs and expenses:
Cost of revenue:
Cost of service revenue	796		708		1,503		1,328
Cost of product and other revenue	23		24		38		39
Amortization of acquired technology	36		41		74		82
Selling and marketing	1,020		924		1,789		1,719
Research and development	678		630		1,358		1,255
General and administrative	344		323		686		627
Amortization of other acquired intangible assets	120		121		240		242

Total costs and expenses	3,017		2,771		5,688		5,292
Operating income	369		270		676		346
Interest expense	(57)		(65)		(122)		(114)
Interest and other income, net	42		23		64		28
Income before income taxes	354		228		618		260
Income tax provision	1		60		24		52


Net income	$	353	$	168	$	594	$	208



Basic net income per share	$	1.26	$	0.60	$	2.12	$	0.74
Shares used in basic per share calculations	280		281		280		281



Diluted net income per share	$	1.25	$	0.60	$	2.10	$	0.73
Shares used in diluted per share calculations	284		282		284		283

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			4

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INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended				Six Months Ended
(In millions)	January 31, 2024		January 31, 2023		January 31, 2024		January 31, 2023

Net income	$	353	$	168	$	594	$	208
Other comprehensive income (loss), net of income taxes:
Unrealized gain on available-for-sale debt securities	5		6		6		—

Foreign currency translation gain (loss)	13		18		(11)		(3)
Total other comprehensive income (loss), net	18		24		(5)		(3)
Comprehensive income	$	371	$	192	$	589	$	205

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			5

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INTUIT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions)	January 31, 2024		July 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,474	$	2,848
Investments	15		814
Accounts receivable, net	928		405
Notes receivable held for investment, net	1,001		687
Notes receivable held for sale	21		—
Income taxes receivable	126		29
Prepaid expenses and other current assets	345		354
Current assets before funds receivable and amounts held for customers	3,910		5,137
Funds receivable and amounts held for customers	3,390		420
Total current assets	7,300		5,557
Long-term investments	128		105
Property and equipment, net	1,049		969
Operating lease right-of-use assets	444		469
Goodwill	13,779		13,780
Acquired intangible assets, net	6,104		6,419
Long-term deferred income tax assets	383		64
Other assets	501		417
Total assets	$	29,688	$	27,780

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	$	789	$	638
Accrued compensation and related liabilities	547		665
Deferred revenue	887		921
Income taxes payable	1		698
Other current liabilities	602		448
Current liabilities before funds payable and amounts due to customers	2,826		3,370
Funds payable and amounts due to customers	3,390		420
Total current liabilities	6,216		3,790
Long-term debt	5,950		6,120

Long-term deferred income tax liabilities	3		4
Operating lease liabilities	473		480
Other long-term obligations	138		117
Total liabilities	12,780		10,511
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—		—
Common stock and additional paid-in capital	19,739		19,029
Treasury stock, at cost	(17,911)		(16,772)
Accumulated other comprehensive loss	(60)		(55)
Retained earnings	15,140		15,067
Total stockholders’ equity	16,908		17,269
Total liabilities and stockholders’ equity	$	29,688	$	27,780

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			6

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INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)


	Three Months Ended January 31, 2024
(Dollars in millions, except per share amount; shares in thousands)	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Balance at October 31, 2023	280,105	$	19,398	$	(17,375)	$	(78)	$	15,047	$	16,992
Comprehensive income	—	—		—		18		353		371
Issuance of stock under employee stock plans, net of shares withheld for employee taxes	857	(134)		—		—		—		(134)
Stock repurchases under stock repurchase programs	(937)	—		(536)		—		—		(536)
Dividends and dividend rights declared ($0.90 per share)	—	—		—		—		(260)		(260)
Share-based compensation expense	—	475		—		—		—		475

Balance at January 31, 2024	280,025	$	19,739	$	(17,911)	$	(60)	$	15,140	$	16,908



	Six Months Ended January 31, 2024
(Dollars in millions, except per share amount; shares in thousands)	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Balance at July 31, 2023	280,421	$	19,029	$	(16,772)	$	(55)	$	15,067	$	17,269
Comprehensive income	—	—		—		(5)		594		589
Issuance of stock under employee stock plans, net of shares withheld for employee taxes	1,707	(260)		—		—		—		(260)
Stock repurchases under stock repurchase programs	(2,103)	—		(1,139)		—		—		(1,139)
Dividends and dividend rights declared ($1.80 per share)	—	—		—		—		(521)		(521)
Share-based compensation expense	—	970		—		—		—		970

Balance at January 31, 2024	280,025	$	19,739	$	(17,911)	$	(60)	$	15,140	$	16,908

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			7

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INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)



	Three Months Ended January 31, 2023
(Dollars in millions, except per share amount; shares in thousands)	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Balance at October 31, 2022	281,328	$	18,082	$	(15,324)	$	(87)	$	13,396	$	16,067
Comprehensive income	—	—		—		24		168		192
Issuance of stock under employee stock plans, net of shares withheld for employee taxes	616	(113)		—		—		—		(113)
Stock repurchases under stock repurchase programs	(1,276)	—		(500)		—		—		(500)
Dividends and dividend rights declared ($0.78 per share)	—	—		—		—		(227)		(227)
Share-based compensation expense	—	423		—		—		—		423

Balance at January 31, 2023	280,668	$	18,392	$	(15,824)	$	(63)	$	13,337	$	15,842



	Six Months Ended January 31, 2023
(Dollars in millions, except per share amount; shares in thousands)	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Balance at July 31, 2022	281,932	$	17,725	$	(14,805)	$	(60)	$	13,581	$	16,441
Comprehensive income	—	—		—		(3)		208		205
Issuance of stock under employee stock plans, net of shares withheld for employee taxes	1,250	(178)		—		—		—		(178)
Stock repurchases under stock repurchase programs	(2,514)	—		(1,019)		—		—		(1,019)
Dividends and dividend rights declared ($1.56 per share)	—	—		—		—		(452)		(452)
Share-based compensation expense	—	845		—		—		—		845

Balance at January 31, 2023	280,668	$	18,392	$	(15,824)	$	(63)	$	13,337	$	15,842

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			8

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INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
(In millions)	January 31, 2024		January 31, 2023
Cash flows from operating activities:
Net income	$	594	$	208
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	69		94
Amortization of acquired intangible assets	314		324
Non-cash operating lease cost	43		46

Share-based compensation expense	970		845

Deferred income taxes	(310)		(290)


Other	55		42
Total adjustments	1,141		1,061
Originations and purchases of loans held for sale	(96)		—
Sales and principal payments of loans held for sale	76		—
Changes in operating assets and liabilities:
Accounts receivable	(522)		(456)
Income taxes receivable	(97)		27
Prepaid expenses and other assets	(4)		(108)
Accounts payable	151		60
Accrued compensation and related liabilities	(119)		(75)
Deferred revenue	(37)		40
Income taxes payable	(697)		(8)
Operating lease liabilities	(33)		(38)
Other liabilities	159		(99)
Total changes in operating assets and liabilities	(1,199)		(657)
Net cash provided by operating activities	516		612
Cash flows from investing activities:
Purchases of corporate and customer fund investments	(92)		(388)
Sales of corporate and customer fund investments	490		125
Maturities of corporate and customer fund investments	456		225
Purchases of property and equipment	(147)		(132)
Acquisitions of businesses, net of cash acquired	—		(33)

Originations and purchases of loans held for investment	(1,140)		(1,015)
Principal repayments of loans held for investment	709		530
Other	(32)		(16)
Net cash provided by (used in) investing activities	244		(704)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of discount and issuance costs	3,956		—
Repayment of debt	(4,200)		(9)
Proceeds from borrowings under unsecured revolving credit facility	100		—
Repayments on borrowings under unsecured revolving credit facility	(100)		—
Proceeds from borrowings under secured revolving credit facilities	95		175
Repayments on borrowings under secured revolving credit facilities	(25)		(16)
Proceeds from issuance of stock under employee stock plans	169		81
Payments for employee taxes withheld upon vesting of restricted stock units	(430)		(259)
Cash paid for purchases of treasury stock	(1,135)		(1,017)
Dividends and dividend rights paid	(516)		(446)



			Intuit Q2 Fiscal 2024 Form 10-Q			9

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Net change in funds receivable and funds payable and amounts due to customers	2,921		(199)
Cash received from a bank partner	—		336
Other	(2)		(1)
Net cash provided by (used in) financing activities	833		(1,355)
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents	(4)		(1)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	1,589		(1,448)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	2,852		2,997
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	4,441	$	1,549

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the condensed consolidated balance sheets to the total amounts reported on the condensed consolidated statements of cash flows
Cash and cash equivalents	$	1,474	$	1,547
Restricted cash and restricted cash equivalents included in funds receivable and amounts held for customers	2,967		2
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	4,441	$	1,549

See accompanying notes.



			Intuit Q2 Fiscal 2024 Form 10-Q			10

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INTUIT INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1. Description of Business and Summary of Significant Accounting Policies


Description of Business

Intuit helps consumers and small businesses prosper by delivering financial management, compliance, and marketing products and services. We also provide specialized tax products to accounting professionals, who are key partners that help us serve small business customers.

Our global financial technology platform, which includes TurboTax, Credit Karma, QuickBooks, and Mailchimp, is designed to help consumers and small businesses manage their finances, get and retain customers, save money, pay off debt, and do their taxes with ease and confidence. For those customers who run small businesses, we are also focused on helping them find and keep customers, get paid faster, pay their employees, manage and get access to capital, and ensure their books are done right. Lacerte, ProSeries, and ProConnect Tax Online are our leading tax preparation offerings for professional accountants. Incorporated in 1984 and headquartered in Mountain View, California, we sell our products and services primarily in the United States.


Basis of Presentation

These condensed consolidated financial statements include the financial statements of Intuit and its wholly-owned subsidiaries. We have eliminated all intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation.

In the first quarter of fiscal 2024, to align our presentation of revenue and cost of revenue with our current revenue mix, we began to aggregate other revenue with product revenue, rather than service revenue, and cost of other revenue with cost of product revenue, rather than cost of service revenue. We reclassified the previously reported balances to conform to the current presentation. The reclassification was not material and had no impact on previously reported total net revenue or cost of revenue.

On August 1, 2023, we reorganized certain technology functions in our Consumer and ProTax segments that support and benefit our overall platform. Additionally, certain workplace and real estate functions in our Small Business & Self-Employed segment are now managed at the corporate level. As a result of these reorganizations, costs associated with these functions are no longer included in segment operating income and are now included in other corporate expenses. For the three and six months ended January 31, 2023, we reclassified expenses totaling $10 million and $19 million from Small Business & Self-Employed, $43 million and $83 million from Consumer, and $16 million and $31 million from ProTax to other corporate expenses, respectively. See Note 12, "Segment Information," for more information.

These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Results for the six months ended January 31, 2024 are not necessarily indicative of the results we expect for the fiscal year ending July 31, 2024 or any other future period.


Seasonality

Our Consumer and ProTax offerings have a significant and distinct seasonal pattern as sales and revenue from our income tax preparation products and services are typically heavily concentrated in the period from November through April. This seasonal pattern typically results in higher net revenues during our second and third quarters ending January 31 and April 30, respectively.


Significant Accounting Policies

We described our significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023. There have been no changes to our significant accounting policies during the first six months of fiscal 2024.



			Intuit Q2 Fiscal 2024 Form 10-Q			11

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Use of Estimates

In preparing our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP), we make certain judgments, estimates, and assumptions that affect the amounts reported in our financial statements and the disclosures made in the accompanying notes. For example, we use judgments and estimates in determining how revenue should be recognized. These judgments and estimates include identifying performance obligations, determining if the performance obligations are distinct, determining the standalone sales price (SSP) and timing of revenue recognition for each distinct performance obligation, and estimating variable consideration to be included in the transaction price. We use estimates in determining the collectibility of accounts receivable and notes receivable held for investment, the appropriate levels of various accruals including accruals for litigation contingencies, the discount rate used to calculate lease liabilities, the amount of our worldwide tax provision, the realizability of deferred tax assets, the credit losses of available-for-sale debt securities, reserves for losses, and the fair value of assets acquired and liabilities assumed for business combinations. We also use estimates in determining the remaining economic lives and fair values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.


Computation of Net Income Per Share

We compute basic net income or loss per share using the weighted-average number of common shares outstanding during the period. We compute diluted net income per share using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of the shares issuable upon the exercise of stock options and upon the vesting of restricted stock units (RSUs) under the treasury stock method.

We include stock options with combined exercise prices and unrecognized compensation expense that are less than the average market price for our common stock, and RSUs with unrecognized compensation expense that is less than the average market price for our common stock, in the calculation of diluted net income per share. We exclude stock options with combined exercise prices and unrecognized compensation expense that are greater than the average market price for our common stock, and RSUs with unrecognized compensation expense that is greater than the average market price for our common stock, from the calculation of diluted net income per share because their effect is anti-dilutive. Under the treasury stock method, the amount that must be paid to exercise stock options and the amount of compensation expense for future service that we have not yet recognized for stock options and RSUs are assumed to be used to repurchase shares.

All of the RSUs we grant have dividend rights. Dividend rights are accumulated and paid when the underlying RSUs vest. Since the dividend rights are subject to the same vesting requirements as the underlying equity awards, they are considered a contingent transfer of value. Consequently, the RSUs are not considered participating securities, and we do not present them separately in earnings per share.

In loss periods, basic net loss per share and diluted net loss per share are the same since the effect of potential common shares is anti-dilutive and therefore excluded.



			Intuit Q2 Fiscal 2024 Form 10-Q			12

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The following table presents the composition of shares used in the computation of basic and diluted net income per share for the periods indicated.


	Three Months Ended				Six Months Ended
(In millions, except per share amounts)	January 31, 2024		January 31, 2023		January 31, 2024		January 31, 2023
Numerator:


Net income	$	353	$	168	$	594	$	208

Denominator:
Shares used in basic per share amounts:
Weighted-average common shares outstanding	280		281		280		281

Shares used in diluted per share amounts:
Weighted-average common shares outstanding	280		281		280		281
Dilutive common equivalent shares from stock options
and restricted stock awards	4		1		4		2
Dilutive weighted-average common shares outstanding	284		282		284		283

Basic and diluted net income per share:


Basic net income per share	$	1.26	$	0.60	$	2.12	$	0.74



Diluted net income per share	$	1.25	$	0.60	$	2.10	$	0.73

Shares excluded from diluted net income per share:


Weighted-average stock options and restricted stock units that have been excluded from dilutive common equivalent shares outstanding due to their anti-dilutive effect	—		7		1		3


Deferred Revenue

We record deferred revenue when we have entered into a contract with a customer, and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation. During the three and six months ended January 31, 2024, we recognized revenue of $167 million and $805 million, respectively, that was included in deferred revenue at July 31, 2023. During the three and six months ended January 31, 2023, we recognized revenue of $158 million and $693 million, respectively, that was included in deferred revenue at July 31, 2022.

Our performance obligations are generally satisfied within 12 months of the initial contract date. As of January 31, 2024 and July 31, 2023, the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $3 million and $5 million, respectively, and is included in other long-term obligations on our condensed consolidated balance sheets.


Concentration of Credit Risk and Significant Customers

No customer accounted for 10% or more of total net revenue in the three or six months ended January 31, 2024 or January 31, 2023. No customer accounted for 10% or more of gross accounts receivable at January 31, 2024 or July 31, 2023.


Accounting Standards Not Yet Adopted

Segment Information - In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This standard requires incremental segment information disclosures, including disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, which means that it will be effective for our annual reporting for the fiscal year ending July 31, 2025 and for interim period reporting beginning in fiscal 2026. Early adoption is permitted, and retrospective adoption is required for all prior periods presented. We are currently evaluating the impact of our pending adoption of ASU 2023-07 on our consolidated financial statements and related disclosures.



			Intuit Q2 Fiscal 2024 Form 10-Q			13

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Income Tax - In December 2023, the FASB issued Accounting Standard Update (ASU) 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This standard requires additional disclosures related to the income tax rate reconciliation, income taxes paid by jurisdiction, and other income tax-related disclosures. The standard is effective for fiscal years beginning after December 15, 2024, which means that it will be effective for us for the fiscal year ending July 31, 2026. Early adoption is permitted. The standard should be applied on a prospective basis, and retrospective application is permitted. We are currently evaluating the impact of adopting ASU 2023-09 on our consolidated financial statements and related disclosures.


2. Fair Value Measurements


Fair Value Hierarchy

The authoritative guidance defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, we consider the principal or most advantageous market for an asset or liability and assumptions that market participants would use when pricing the asset or liability. In addition, we consider and use all valuation methods that are appropriate in estimating the fair value of an asset or liability.

The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:

•Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

•Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.

•Level 3 uses one or more unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques and significant management judgment or estimation.


Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and financial liabilities that we measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above.


	January 31, 2024				July 31, 2023
(In millions)	Level 1		Level 2		Total Fair Value		Level 1		Level 2		Total Fair Value
Assets:
Cash equivalents, primarily money market funds and time deposits	$	46	$	—	$	46	$	1,888	$	—	$	1,888
Available-for-sale debt securities:

Corporate notes	—		147		147		—		805		805
U.S. agency securities	—		26		26		—		209		209
Total available-for-sale debt securities	—		173		173		—		1,014		1,014
Total assets measured at fair value on a recurring basis	$	46	$	173	$	219	$	1,888	$	1,014	$	2,902
Liabilities:
Senior unsecured notes (1)	$	—	$	5,509	$	5,509	$	—	$	1,309	$	1,309

(1) Carrying values on our condensed consolidated balance sheets at January 31, 2024 and July 31, 2023 were $5.45 billion and $1.49 billion, respectively. See Note 6, “Debt,” for more information.



			Intuit Q2 Fiscal 2024 Form 10-Q			14

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The following table summarizes our cash equivalents and available-for-sale debt securities by balance sheet classification and level in the fair value hierarchy at the dates indicated.


	January 31, 2024				July 31, 2023
(In millions)	Level 1		Level 2		Total Fair Value		Level 1		Level 2		Total Fair Value
Cash equivalents:
In cash and cash equivalents	$	46	$	—	$	46	$	1,888	$	—	$	1,888




Available-for-sale debt securities:
In investments	$	—	$	15	$	15	$	—	$	814	$	814
In funds receivable and amounts held for customers	—		158		158		—		200		200

Total available-for-sale debt securities	$	—	$	173	$	173	$	—	$	1,014	$	1,014

We value our Level 1 assets, consisting primarily of money market funds and time deposits, using quoted prices in active markets for identical instruments.

Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of corporate notes and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying significant adjustments. Our fair value processes include controls designed to ensure that we record appropriate fair values for our Level 2 investments. These controls include comparison to pricing provided by a secondary pricing service or investment manager, validation of pricing sources and models, review of key model inputs, analysis of period-over-period price fluctuations, and independent recalculation of prices where appropriate.

Financial assets whose fair values we measure using Level 3 inputs consist of notes receivable held for sale. These loans are recorded at the lower of cost or fair value. As of January 31, 2024, total notes receivable held for sale were not material and the difference between amortized cost and fair value was not material.

Financial liabilities whose fair values we measure using Level 2 inputs consist of senior unsecured notes. See Note 6, “Debt,” for more information. We measure the fair value of our senior unsecured notes based on their trading prices and the interest rates we could obtain for other borrowings with similar terms.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended January 31, 2024.


Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Long-term investments primarily include non-marketable equity securities in privately-held companies that do not have a readily determinable fair value. They are accounted for at cost and adjusted based on observable price changes from orderly transactions for identical or similar investments of the same issuer or impairment. These investments are classified as Level 3 in the fair value hierarchy because we estimate the value of these investments using a valuation method based on observable transaction price changes at the transaction date. We recognized $4 million of upward adjustments during the three and six months ended January 31, 2024. We recognized no upward adjustments during the three and six months ended January 31, 2023. Impairments recognized during the three and six months ended January 31, 2024 and January 31, 2023 were not material. Cumulative upward adjustments were $75 million, and cumulative impairments were not material through January 31, 2024 for measurement alternative investments held as of January 31, 2024. The carrying value of long-term investments on our condensed consolidated balance sheets was $128 million and $105 million at January 31, 2024 and July 31, 2023, respectively.


3. Cash and Cash Equivalents, Investments, and Funds Receivable and Amounts Held for Customers

We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. In all periods presented, cash equivalents consist primarily of money market funds and time deposits. Investments consist primarily of investment-grade available-for-sale debt securities. Funds receivable and amounts held for customers represent funds receivable from third-party payment processors for customer transactions and cash held on behalf of our customers that is invested in cash and cash equivalents and investment-grade available-for-sale securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers.

In the first quarter of fiscal 2024, we updated our terms of service and end user license agreements related to our payroll and payments offerings to reflect a change in our obligations with respect to funds we transmit on behalf of our customers. As a result of the change, our obligations are now satisfied when the funds are settled in the customers' accounts. These obligations are reflected in funds payable and amounts due to customers in the accompanying condensed consolidated balance sheets. Under our previous agreements, our obligations were satisfied as of the point that we initiated the transmission of the funds on the customers' behalf.



			Intuit Q2 Fiscal 2024 Form 10-Q			15

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Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments in debt securities by limiting our holdings with any individual issuer.

The following table summarizes our cash and cash equivalents, investments, and funds receivable and amounts held for customers by balance sheet classification at the dates indicated.


	January 31, 2024				July 31, 2023
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on condensed consolidated balance sheets:
Cash and cash equivalents	$	1,474	$	1,474	$	2,848	$	2,848
Investments	15		15		819		814
Funds receivable and amounts held for customers	3,391		3,390		424		420

Total cash and cash equivalents, investments, and funds receivable and amounts held for customers	$	4,880	$	4,879	$	4,091	$	4,082

The following table summarizes our cash and cash equivalents, investments, and relevant portion of funds receivable and amounts held for customers by investment category at the dates indicated. As of January 31, 2024 and July 31, 2023, this excludes $265 million and $216 million, respectively, of funds receivable included on our condensed consolidated balance sheets in funds receivable and amounts held for customers not measured and recorded at fair value.


	January 31, 2024				July 31, 2023
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	4,441	$	4,441	$	2,852	$	2,852

Available-for-sale debt securities:

Corporate notes	148		147		811		805
U.S. agency securities	26		26		212		209

Total available-for-sale debt securities	174		173		1,023		1,014

Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments	$	4,615	$	4,614	$	3,875	$	3,866

We use the specific identification method to compute gains and losses on investments. We include realized gains and losses on our available-for-sale debt securities in interest and other income, net in our condensed consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the six months ended January 31, 2024 and January 31, 2023 were not material.

We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income or loss in the stockholders’ equity section of our condensed consolidated balance sheets, except for certain unrealized losses described below. Gross unrealized gains and losses on our available-for-sale debt securities at January 31, 2024 and July 31, 2023 were not material.

For available-for-sale debt securities in an unrealized loss position, we determine whether a credit loss exists. The estimate of the credit loss is determined by considering available information relevant to the collectibility of the security and information about past events, current conditions, and reasonable and supportable forecasts. The allowance for credit loss is recorded to interest and other income, net in our condensed consolidated statements of operations, not to exceed the amount of the unrealized loss. Any excess unrealized loss greater than the allowance for credit loss at a security level is recognized in accumulated other comprehensive income or loss in the stockholders' equity section of our condensed consolidated balance sheets. We determined there were no credit losses related to available-for-sale debt securities as of January 31, 2024. Unrealized losses on available-for-sale debt securities at January 31, 2024 were not material. We do not intend to sell these investments. In addition, it is more likely than not that we will not be required to sell them before recovery of the amortized cost basis, which may be at maturity.

The following table summarizes our available-for-sale debt securities, included in investments and relevant portion of funds receivable and amounts held for customers, classified by the stated maturity date of the security at the dates indicated.



			Intuit Q2 Fiscal 2024 Form 10-Q			16

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	January 31, 2024				July 31, 2023
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	84	$	83	$	735	$	730
Due within two years	68		68		147		144
Due within three years	22		22		141		140
Due after three years	—		—		—		—
Total available-for-sale debt securities	$	174	$	173	$	1,023	$	1,014

The following table summarizes our funds receivable and amounts held for customers by asset category at the dates indicated.


(In millions)	January 31, 2024		July 31, 2023
Restricted cash and restricted cash equivalents	$	2,967	$	4
Restricted available-for-sale debt securities and funds receivable	423		416
Total funds receivable and amounts held for customers	$	3,390	$	420


(In millions)	January 31, 2023		July 31, 2022
Restricted cash and restricted cash equivalents	$	2	$	201
Restricted available-for-sale debt securities and funds receivable	374		230
Total funds receivable and amounts held for customers	$	376	$	431


4. Notes Receivable and Allowances for Loan Losses

As of January 31, 2024, our notes receivable portfolio consisted of notes receivable held for investment, including term loans to small businesses and refund advance loans to consumers, and notes receivable held for sale, including term loans to small businesses.


Notes Receivable Held for Investment

Notes receivable that we have the intent and ability to hold until maturity are classified as notes receivable held for investment.

Term loans to small businesses. We provide financing to small businesses via term loans that we originate directly or through an originating bank partner. During the six months ended January 31, 2024 and 2023, we purchased loans from our originating bank partner with principal balances in the amount of $748 million and $64 million, respectively. As of January 31, 2024, we had commitments to purchase $13 million in loans that were originated on or prior to January 31, 2024.

The term loans are not secured and are recorded at amortized cost, net of allowances for loan losses. As of January 31, 2024 and July 31, 2023, the net notes receivable balance for term loans to small businesses was $807 million and $757 million, respectively. The current portion is included in notes receivable held for investment and the long-term portion is included in other assets on our condensed consolidated balance sheets.

We maintain an allowance for loan losses to reserve for potentially uncollectible notes receivable. We evaluate the creditworthiness of our term loan portfolio on a pooled basis due to its composition of loans with similar general credit risk and characteristics and apply a loss rate at the time of loan origination. The allowance is subjective and requires management estimates. The loss rate and underlying probability of default methodology are updated periodically to reflect factors such as actual loan performance, changes to assumptions, portfolio growth, our current credit policies, changes to our applicant base, and macroeconomic conditions. Factors taken into consideration in the methodology include historical performance, customer creditworthiness, changes in the size and composition of the loan portfolio, delinquency levels, and actual credit loss experience. We use empirical data and management judgment to estimate losses for new credit tests or products for which we do not have enough history. We make judgments about the known and inherent risks in the loan portfolio, adverse situations that may affect borrowers’ ability to repay, and current and future economic conditions. When we determine that amounts are uncollectible, we write them off against the allowance. As of January 31, 2024 and July 31, 2023, the allowances for loan losses on term loans to small businesses were not material.

We consider a loan to be delinquent when the payments are one day past due. We place delinquent loans on nonaccrual status and stop accruing interest revenue. Loans are returned to accrual status if they are brought current or have performed in accordance with the contractual terms for a reasonable period of time and, in our judgment, will continue to make periodic principal and interest payments as per contractual terms. Past due amounts were not material for all periods presented.



			Intuit Q2 Fiscal 2024 Form 10-Q			17

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Interest revenue is earned on loans originated and purchased and held for investment in accordance with the specified period of time and defined interest rate noted in the loan contract. Interest revenue is recorded net of amortized direct origination costs and is included in service revenue in our condensed consolidated statements of operations. Interest revenue was not material for all periods presented.

Refund Advance Loans. Refund advance loans are loans available to eligible TurboTax customers based on a customer's anticipated income tax refund, at no cost to the customer. The loans are repaid from the customer's income tax refund, which is generally received within three to four weeks after acceptance of the customer's income tax return by the IRS. We partner with a third-party issuing bank to originate the loans and subsequently purchase full participating interests in those loans. The refund advance loans are not secured and are recorded at amortized cost, net of an allowance for loan losses. As of January 31, 2024 and July 31, 2023, the net notes receivable balance for refund advance loans was $329 million and $5 million, respectively. As of January 31, 2024, we had commitments to purchase $70 million in loans that were originated on or prior to January 31, 2024. We maintain an allowance for loan losses to reserve for potentially uncollectible loans. We estimate the allowance based on the expected funding of refunds by the IRS using historical trends. When we determine that any amounts are uncollectible, we write them off against the allowance. As of January 31, 2024 and July 31, 2023, the allowance for loan losses on refund advance loans was not material.


Notes Receivable Held for Sale

Term loans to small businesses. We have a forward flow arrangement with an institutional investor. Pursuant to this arrangement, we have a commitment to sell to the institutional investor a minimum of $250 million in participation interests in unsecured term loans purchased or made to small businesses over 18 months, subject to certain eligibility criteria. As of January 31, 2024, the remaining commitment to sell loans under this arrangement was $176 million.

Term loans to small businesses originated or purchased with the intent to sell are considered notes receivable held for sale. We have the intent and ability to sell substantially all of our rights, title, and interests in these qualified loans to a third-party investor after origination or purchase. A loan that is initially designated as held for sale or held for investment may be reclassified when our intent for that loan changes. Notes receivable held for sale are recorded at the lower of cost or fair value until the loans are sold. To determine fair value, we utilize a cash flow methodology, taking into account estimated timing and expected selling prices. As of January 31, 2024, the balance of loans held for sale was $21 million and is included in notes receivable held for sale on our condensed consolidated balance sheets. Total sales of term loans during the six months ended January 31, 2024 were $74 million.


5. Acquired Intangible Assets

The following table shows the cost, accumulated amortization, and weighted-average life in years for our acquired intangible assets at the dates indicated. The weighted-average lives are calculated for assets that are not fully amortized.


(Dollars in millions)	Customer Lists / User Relationships		Purchased Technology		Trade Names and Logos		Covenants Not to Compete or Sue		Total

At January 31, 2024:
Cost	$	6,197	$	1,616	$	680	$	41	$	8,534
Accumulated amortization	(1,392)		(830)		(167)		(41)		(2,430)
Acquired intangible assets, net	$	4,805	$	786	$	513	$	—	$	6,104
Weighted-average life in years	14		9		13		0		13

At July 31, 2023:
Cost	$	6,197	$	1,616	$	680	$	42	$	8,535
Accumulated amortization	(1,178)		(756)		(140)		(42)		(2,116)
Acquired intangible assets, net	$	5,019	$	860	$	540	$	—	$	6,419
Weighted-average life in years	14		8		13		0		13



			Intuit Q2 Fiscal 2024 Form 10-Q			18

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The following table shows the expected future amortization expense for our acquired intangible assets at January 31, 2024. Amortization of purchased technology is charged to amortization of acquired technology in our condensed consolidated statements of operations. Amortization of other acquired intangible assets, such as customer lists, is charged to amortization of other acquired intangible assets in our condensed consolidated statements of operations. If impairment events occur, they could accelerate the timing of acquired intangible asset charges.


(In millions)	Expected Future Amortization Expense
Twelve months ending July 31,
2024 (excluding the six months ended January 31, 2024)	$	312
2025	623
2026	620
2027	594
2028	581
Thereafter	3,374
Total expected future amortization expense	$	6,104


6. Debt

The carrying value of our debt was as follows at the dates indicated:


(Dollars in millions)	January 31, 2024		July 31, 2023		Effective Interest Rate
Senior unsecured notes issued June 2020:
0.950% notes due July 2025	$	500	$	500	1.127%
1.350% notes due July 2027	500		500		1.486%
1.650% notes due July 2030	500		500		1.767%
Senior unsecured notes issued September 2023:
5.250% notes due September 2026	750		—		5.367%
5.125% notes due September 2028	750		—		5.221%
5.200% notes due September 2033	1,250		—		5.268%
5.500% notes due September 2053	1,250		—		5.565%
Term loan	—		4,200

Secured revolving credit facilities	500		430
Total principal balance of debt	6,000		6,130
Unamortized discount and debt issuance costs	(50)		(10)
Net carrying value of debt	$	5,950	$	6,120

Short-term debt	$	—	$	—
Long-term debt	$	5,950	$	6,120

Future principal payments for debt at January 31, 2024 were as shown in the table below.


(In millions)
Fiscal year ending July 31,
2024 (excluding the six months ended January 31, 2024)	$	—
2025	500
2026	500
2027	1,250
2028	—
Thereafter	3,750
Total future principal payments for debt	$	6,000



			Intuit Q2 Fiscal 2024 Form 10-Q			19

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Senior Unsecured Notes

2020 Notes. In June 2020, we issued four series of senior unsecured notes (together, the 2020 Notes) pursuant to a public debt offering. The proceeds from the issuance were $1.98 billion, net of debt discount of $2 million and debt issuance costs of $15 million. As of January 31, 2024, $1.5 billion of the 2020 Notes remained outstanding.

Interest is payable semiannually on January 15 and July 15 of each year. The discount and debt issuance costs are amortized to interest expense over the term of the 2020 Notes under the effective interest method. We paid $10 million and $12 million in interest on the 2020 Notes during the six months ended January 31, 2024 and 2023, respectively.

The 2020 Notes are senior unsecured obligations of Intuit and rank equally with all existing and future unsecured and unsubordinated indebtedness of Intuit and are redeemable by us at any time, subject to a make-whole premium. Upon the occurrence of change of control transactions that are accompanied by certain downgrades in the credit ratings of the 2020 Notes, we will be required to repurchase the 2020 Notes at a repurchase price equal to 101% of the aggregate outstanding principal plus any accrued and unpaid interest to but not including the date of repurchase. The indenture governing the 2020 Notes requires us to comply with certain covenants. For example, the 2020 Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As of January 31, 2024, we were compliant with all covenants governing the 2020 Notes.

2023 Notes. In September 2023, we issued four series of senior unsecured notes (together, the 2023 Notes) pursuant to a public debt offering. The proceeds from the issuance were $3.96 billion, net of debt discount of $20 million and debt issuance costs of $24 million, and were used, together with operating cash, to repay the outstanding balance on our unsecured term loan. As of January 31, 2024, $4.0 billion of the 2023 Notes remained outstanding.

Interest is payable semiannually on March 15 and September 15 of each year, commencing on March 15, 2024. The discount and debt issuance costs are amortized to interest expense over the term of the 2023 Notes under the effective interest method.

The 2023 Notes are senior unsecured obligations of Intuit and rank equally with all existing and future unsecured and unsubordinated indebtedness of Intuit and are redeemable by us at any time, subject to a make-whole premium. The indenture governing the 2023 Notes requires us to comply with certain covenants. For example, the 2023 Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As of January 31, 2024, we were compliant with all covenants governing the 2023 Notes.


Unsecured Credit Facility

On November 1, 2021, we entered into an amended and restated credit agreement with certain institutional lenders with an aggregate principal amount of $5.7 billion, which includes a $4.7 billion unsecured term loan that was repaid in September 2023, and a $1 billion unsecured revolving credit facility that matures on November 1, 2026 (2021 Credit Facility). On February 5, 2024, this agreement was terminated. See Note 13, "Subsequent Events" for more information.

The 2021 Credit Facility includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total gross debt to annual earnings before interest, taxes, depreciation, and amortization (EBITDA) of not greater than 3.25 to 1.00 and a ratio of annual EBITDA to annual interest expense of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. As of January 31, 2024, we were compliant with all required covenants.

Term Loan. On November 1, 2021, we borrowed the full $4.7 billion under the unsecured term loan to fund a portion of the cash consideration for the acquisition of Mailchimp. Under this agreement, we may, subject to certain customary conditions, on one or more occasions, increase commitments under the term loan in an amount not to exceed $400 million in the aggregate through November 1, 2024. In September 2023, we repaid the outstanding balance under the term loan with the proceeds from the 2023 Notes and operating cash, and at January 31, 2024, there was no balance outstanding. The term loan accrued interest at rates that were equal to, at our election, either (i) the alternate base rate plus a margin that ranges from 0.0% to 0.125%, or (ii) the Secured Overnight Finance Rate (SOFR) plus a margin that ranges from 0.625% to 1.125%. Actual margins under either election were based on our senior debt credit ratings. Interest on the term loan was payable monthly. We paid $42 million and $102 million in interest on the term loan during the six months ended January 31, 2024 and 2023, respectively.

Unsecured Revolving Credit Facility. The 2021 Credit Facility includes a $1 billion unsecured revolving credit facility that will expire on November 1, 2026. Under this agreement, we may increase commitments under the unsecured revolving credit facility in an amount not to exceed $250 million in the aggregate and may extend the maturity date up to two times, subject to customary conditions including lender approval. Advances under the unsecured revolving credit facility accrue interest at rates that are equal to, at our election, either (i) the alternate base rate plus a margin that ranges from 0.0% to 0.1%, or (ii) SOFR plus a margin that ranges from 0.69% to 1.1%. Actual margins under either election will be based on our senior debt credit ratings. At January 31, 2024, no amounts were outstanding under the unsecured revolving credit facility. Interest paid on the unsecured revolving credit facility was not material during the six months ended January 31, 2024. We paid no interest on the unsecured revolving credit facility during the six months ended January 31, 2023.



			Intuit Q2 Fiscal 2024 Form 10-Q			20

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Secured Revolving Credit Facilities

2019 Secured Facility. On February 19, 2019, a subsidiary of Intuit entered into a secured revolving credit facility with a lender to fund a portion of our loans to qualified small businesses (the 2019 Secured Facility). The 2019 Secured Facility is secured by cash and receivables of the subsidiary and is non-recourse to Intuit Inc. We have entered into several amendments to this facility, most recently on December 15, 2023. These amendments primarily increase the facility limit, extend the commitment term and maturity date, and update the benchmark interest rate. Under the amended 2019 Secured Facility, the facility limit is $500 million, of which $300 million is committed and $200 million is uncommitted. Advances accrue interest at adjusted daily simple SOFR plus 1.5%. Unused portions of the committed credit facility accrue interest at a rate ranging from 0.25% to 0.75%, depending on the total unused committed balance. The commitment term is through July 18, 2025, and the final maturity date is July 20, 2026. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As of January 31, 2024, we were compliant with all required covenants. At January 31, 2024, $275 million was outstanding under the 2019 Secured Facility and the weighted-average interest rate was 6.94%, which includes the interest on the unused committed portion. The outstanding balance is secured by cash and receivables of the subsidiary totaling $981 million. Interest on the 2019 Secured Facility is payable monthly. We paid $10 million and $6 million in interest on this secured revolving credit facility during the six months ended January 31, 2024 and 2023, respectively.

2022 Secured Facility. On October 12, 2022, another subsidiary of Intuit entered into a secured revolving credit facility with a lender to fund a portion of our loans to qualified small businesses (the 2022 Secured Facility). The 2022 Secured Facility is secured by cash and receivables of the subsidiary and is non-recourse to Intuit Inc. On October 20, 2023, we amended the 2022 Secured Facility primarily to extend the commitment term and final maturity date and increase the commitment amount. Under the amended agreement, the facility limit is $500 million, of which $225 million is committed and $275 million is uncommitted. Advances accrue interest at SOFR plus 1.3%. Unused portions of the committed credit facility accrue interest at a rate ranging from 0.2% to 0.4%, depending on the total unused committed balance. The commitment term is through April 18, 2025, and the final maturity date is April 20, 2026. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As of January 31, 2024, we were compliant with all required covenants. At January 31, 2024, $225 million was outstanding under the 2022 Secured Facility and the weighted-average interest rate was 6.62%. The outstanding balance is secured by cash and receivables of the subsidiary totaling $620 million. Interest on the 2022 Secured Facility is payable monthly. We paid $5 million in interest on this secured revolving credit facility during the six months ended January 31, 2024. Interest paid on this secured revolving credit facility was not material during the six months ended January 31, 2023.


7. Other Liabilities and Commitments


Other Current Liabilities

Other current liabilities were as follows at the dates indicated:


(In millions)	January 31, 2024		July 31, 2023

Executive deferred compensation plan liabilities	$	185	$	171
Reserve for returns, credits, and promotional discounts	101		32
Interest payable	84		12
Current portion of operating lease liabilities	81		89
Sales, property, and other taxes	57		45






Other	94		99
Total other current liabilities	$	602	$	448

The balances of several of our other current liabilities, particularly our reserves for product returns, credits, and promotional discounts, are affected by the seasonality of our business. See Note 1, “Description of Business and Summary of Significant Accounting Policies – Seasonality,” for more information.



			Intuit Q2 Fiscal 2024 Form 10-Q			21

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Other Long-Term Obligations

Other long-term obligations were as follows at the dates indicated:


(In millions)	January 31, 2024		July 31, 2023
Income tax liabilities	$	86	$	76
Dividends payable	18		16
Deferred revenue	3		5
Other	31		20
Total other long-term obligations	$	138	$	117


Unconditional Purchase Obligations

We describe our unconditional purchase obligations in Note 9 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023. There were no significant changes outside the ordinary course of business in our purchase obligations during the six months ended January 31, 2024.


8. Leases

We lease office facilities under non-cancellable operating lease arrangements. Our facility leases generally provide for periodic rent increases and may contain escalation clauses and renewal options. Our leases have remaining lease terms of up to 18 years, which include options to extend that are reasonably certain of being exercised. Some of our leases include one or more options to extend the leases for up to 10 years per option, which we are not reasonably certain to exercise. The options to extend are generally at rates to be determined in accordance with the agreements. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised.

We sublease certain office facilities to third parties. These subleases have remaining lease terms of up to 7 years, some of which include one or more options to extend the subleases for up to 5 years per option.

The components of lease expense were as follows:


	Three Months Ended				Six Months Ended
(In millions)	January 31, 2024		January 31, 2023		January 31, 2024		January 31, 2023
Operating lease cost (1)	$	26	$	36	$	52	$	64

Variable lease cost	6		5		12		9
Sublease income	(3)		(3)		(6)		(6)
Total net lease cost	$	29	$	38	$	58	$	67

(1) Includes short-term leases, which were not material for each of the three and six months ended January 31, 2024 and 2023.

Supplemental cash flow information related to operating leases was as follows:


	Six Months Ended
(In millions)	January 31, 2024		January 31, 2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	42	$	48
Right-of-use assets obtained in exchange for operating lease liabilities	$	22	$	17

Other information related to operating leases was as follows at the dates indicated:


	January 31, 2024		July 31, 2023
Weighted-average remaining lease term for operating leases	7.9 years		7.9 years
Weighted-average discount rate for operating leases	3.2	%	3.0	%



			Intuit Q2 Fiscal 2024 Form 10-Q			22

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Future minimum lease payments under non-cancellable operating leases as of January 31, 2024 were as follows:


(In millions)	Operating Leases (1)
Fiscal year ending July 31,
2024 (excluding the six months ended January 31, 2024)	$	34
2025	100
2026	82
2027	72
2028	64
Thereafter	287
Total future minimum lease payments	639
Less imputed interest	(85)
Present value of lease liabilities