Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

1.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The following financial statements are filed as part of this report:

			Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			53
Consolidated Statements of Operations for each of the three years in the period ended July 31, 2023			56
Consolidated Statements of Comprehensive Income for each of the three years in the period ended July 31, 2023			57
Consolidated Balance Sheets as of July 31, 2023 and 2022			58
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended July 31, 2023			59
Consolidated Statements of Cash Flows for each of the three years in the period ended July 31, 2023			60
Notes to Consolidated Financial Statements			62

2.INDEX TO FINANCIAL STATEMENT SCHEDULES

The following financial statement schedule is filed as part of this report and should be read in conjunction with the Consolidated Financial Statements:

Schedule									Page
II			Valuation and Qualifying Accounts						96

						All other schedules not listed above have been omitted because they are inapplicable or are not required.

			Intuit Fiscal 2023 Form 10-K			52

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Intuit Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Intuit Inc. (the Company) as of July 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended July 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at July 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of July 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated September 1, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

						Determination of Distinct Performance Obligations in Revenue Contracts
Description of the Matter						As described in Note 1 to the consolidated financial statements, the Company enters into contracts with customers that often include promises to transfer multiple products and services. The Company has generally concluded that software licenses and services are separate performance obligations and revenues from software licenses and services are recognized as those products and services are provided. Given the nature of the Company’s product and service offerings, there is complexity in determining whether software licenses and services are considered performance obligations that should be accounted for separately or together. Auditing the Company’s determination of distinct performance obligations related to its various product and service offerings involved complex auditor judgment. In particular, significant judgment was required when assessing whether the promised products and services are separate performance obligations or inputs to a combined performance obligation due to the evaluation of the interdependency or interrelation of the promised products and services within each contract.

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How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s processes, as they relate to the determination of distinct performance obligations. We also obtained an understanding of the Company’s product and service offerings and tested the application of the revenue recognition accounting model to determine distinct performance obligations. Among other audit procedures, we evaluated whether the performance obligations identified by the Company were capable of being distinct and distinct in the context of the contract through review of contracts, discussions with management, observing product demonstrations and review of the Company’s website and other marketing materials. More specifically, we evaluated the Company’s determination of whether the contract was to deliver (1) multiple promised products or services that constitute separate performance obligations or (2) a single performance obligation that is comprised of the combined products or services. That is, considering the utility, integration, interrelation or interdependence of the products and services, we evaluated whether the multiple promised products and services that were delivered to the customer were outputs or inputs to a combined item.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1990.

San Jose, California

September 1, 2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Intuit Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Intuit Inc.’s internal control over financial reporting as of July 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Intuit Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of July 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of July 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended July 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a) and our report dated September 1, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

September 1, 2023

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INTUIT INC. CONSOLIDATED STATEMENTS OF OPERATIONS
			Twelve Months Ended July 31,
(In millions, except per share amounts)			2023						2022						2021
Net revenue:
Product			$	1,970					$	1,747					$	1,698
Service and other			12,398						10,979						7,935
Total net revenue			14,368						12,726						9,633
Costs and expenses:
Cost of revenue:
Cost of product revenue			71						69						69
Cost of service and other revenue			2,909						2,197						1,564
Amortization of acquired technology			163						140						50
Selling and marketing			3,762						3,526						2,644
Research and development			2,539						2,347						1,678
General and administrative			1,300						1,460						982
Amortization of other acquired intangible assets			483						416						146
Total costs and expenses			11,227						10,155						7,133
Operating income			3,141						2,571						2,500
Interest expense			(248)						(81)						(29)
Interest and other income, net			96						52						85
Income before income taxes			2,989						2,542						2,556
Income tax provision			605						476						494
Net income			$	2,384					$	2,066					$	2,062
Basic net income per share			$	8.49					$	7.38					$	7.65
Shares used in basic per share calculations			281						280						270
Diluted net income per share			$	8.42					$	7.28					$	7.56
Shares used in diluted per share calculations			283						284						273

See accompanying notes.

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INTUIT INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Net income			$	2,384					$	2,066					$	2,062
Other comprehensive income (loss), net of income taxes:
Unrealized gain (loss) on available-for-sale debt securities			—						(10)						(3)
Foreign currency translation gain (loss)			5						(26)						11
Total other comprehensive income (loss), net			5						(36)						8
Comprehensive income			$	2,389					$	2,030					$	2,070

See accompanying notes.

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INTUIT INC. CONSOLIDATED BALANCE SHEETS
			July 31,
(Dollars in millions, except par value; shares in thousands)			2023						2022
ASSETS
Current assets:
Cash and cash equivalents			$	2,848					$	2,796
Investments			814						485
Accounts receivable, net of allowance for doubtful accounts of $7 and $31			405						446
Notes receivable, net			687						509
Income taxes receivable			29						93
Prepaid expenses and other current assets			354						287
Current assets before funds receivable and amounts held for customers			5,137						4,616
Funds receivable and amounts held for customers			420						431
Total current assets			5,557						5,047
Long-term investments			105						98
Property and equipment, net			969						888
Operating lease right-of-use assets			469						549
Goodwill			13,780						13,736
Acquired intangible assets, net			6,419						7,061
Long-term deferred income tax assets			64						11
Other assets			417						344
Total assets			$	27,780					$	27,734
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt			$	—					$	499
Accounts payable			638						737
Accrued compensation and related liabilities			665						576
Deferred revenue			921						808
Income taxes payable			698						8
Other current liabilities			448						571
Current liabilities before funds payable and amounts due to customers			3,370						3,199
Funds payable and amounts due to customers			420						431
Total current liabilities			3,790						3,630
Long-term debt			6,120						6,415
Long-term deferred income tax liabilities			4						619
Operating lease liabilities			480						542
Other long-term obligations			117						87
Total liabilities			10,511						11,293
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value Authorized - 1,345 shares total; 145 shares designated Series A; 250 shares designated Series B Junior Participating Issued and outstanding - None			—						—
Common stock, $0.01 par value Authorized - 750,000 shares Outstanding - 280,421 shares at July 31, 2023 and 281,932 shares at July 31, 2022			3						3
Additional paid-in capital			19,026						17,722
Treasury stock, at cost			(16,772)						(14,805)
Accumulated other comprehensive loss			(55)						(60)
Retained earnings			15,067						13,581
Total stockholders’ equity			17,269						16,441
Total liabilities and stockholders’ equity			$	27,780					$	27,734

See accompanying notes.

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INTUIT INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
			Common Stock						Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
(Dollars in millions, except per share amounts; shares in thousands)			Shares			Amount
Balance at July 31, 2020			261,740			$	3		$	6,179		$	(11,929)		$	(32)		$	10,885		$	5,106
Comprehensive income			—			—			—			—			8			2,062			2,070
Issuance of stock under employee stock plans, net of shares withheld for employee taxes			2,593			—			(187)			—			—			—			(187)
Stock repurchases under stock repurchase programs			(2,422)			—			—			(1,022)			—			—			(1,022)
Dividends and dividend rights declared ($2.36 per share)			—			—			—			—			—			(651)			(651)
Share-based compensation expense			—			—			755			—			—			—			755
Issuance of stock in a business combination			11,324			—			3,798			—			—			—			3,798
Balance at July 31, 2021			273,235			3			10,545			(12,951)			(24)			12,296			9,869
Comprehensive income			—			—			—			—			(36)			2,066			2,030
Issuance of stock under employee stock plans, net of shares withheld for employee taxes			2,361			—			(448)			—			—			—			(448)
Stock repurchases			(3,754)			—			—			(1,854)			—			—			(1,854)
Dividends and dividend rights declared ($2.72 per share)			—			—			—			—			—			(781)			(781)
Share-based compensation expense			—			—			1,309			—			—			—			1,309
Issuance of stock in a business combination			10,090			—			6,316			—			—			—			6,316
Balance at July 31, 2022			281,932			3			17,722			(14,805)			(60)			13,581			16,441
Comprehensive income			—			—			—			—			5			2,384			2,389
Issuance of stock under employee stock plans, net of shares withheld for employee taxes			3,189			—			(408)			—			—			—			(408)
Stock repurchases under stock repurchase programs			(4,700)			—			—			(1,967)			—			—			(1,967)
Dividends and dividend rights declared ($3.12 per share)			—			—			—			—			—			(898)			(898)
Share-based compensation expense			—			—			1,712			—			—			—			1,712
Balance at July 31, 2023			280,421			$	3		$	19,026		$	(16,772)		$	(55)		$	15,067		$	17,269

See accompanying notes.

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INTUIT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Cash flows from operating activities:
Net income			$	2,384					$	2,066					$	2,062
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			160						187						166
Amortization of acquired intangible assets			646						559						197
Non-cash operating lease cost			90						83						62
Share-based compensation expense			1,712						1,308						753
Deferred income taxes			(628)						120						(42)
Other			81						2						(39)
Total adjustments			2,061						2,259						1,097
Originations of loans held for sale			—						—						(41)
Sale and principal payments of loans held for sale			—						—						143
Changes in operating assets and liabilities:
Accounts receivable			42						(31)						(104)
Income taxes receivable			64						29						(51)
Prepaid expenses and other assets			(75)						(121)						30
Accounts payable			(97)						(95)						206
Accrued compensation and related liabilities			88						(357)						(70)
Deferred revenue			111						71						22
Operating lease liabilities			(81)						(83)						(66)
Income taxes payable			690						6						(8)
Other liabilities			(141)						145						30
Total changes in operating assets and liabilities			601						(436)						(11)
Net cash provided by operating activities			5,046						3,889						3,250
Cash flows from investing activities:
Purchases of corporate and customer fund investments			(1,015)						(830)						(1,489)
Sales of corporate and customer fund investments			240						1,524						229
Maturities of corporate and customer fund investments			449						234						550
Purchases of property and equipment			(210)						(157)						(53)
Capitalization of internal use software			(50)						(72)						(72)
Acquisitions of businesses, net of cash acquired			(33)						(5,682)						(3,064)
Originations and purchases of loans			(1,983)						(933)						(232)
Principal repayments of loans			1,727						519						136
Other			(47)						(24)						30
Net cash used in investing activities			(922)						(5,421)						(3,965)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			—						4,700						—
Repayments of debt			(1,009)						—						(338)
Repayments on borrowings under unsecured revolving credit facility			—						—						(1,000)
Proceeds from borrowings under secured revolving credit facilities			222						182						—
Repayments on borrowings under secured revolving credit facilities			(23)						—						—
Proceeds from issuance of stock under employee stock plans			228						162						196
Payments for employee taxes withheld upon vesting of restricted stock units			(633)						(611)						(383)
Cash paid for purchases of treasury stock			(1,967)						(1,861)						(1,005)

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INTUIT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Dividends and dividend rights paid			(889)						(774)						(646)
Net change in funds receivable and funds payable and amounts due to customers			(197)						(56)						2
Other			(1)						(10)						(2)
Net cash provided by (used in) financing activities			(4,269)						1,732						(3,176)
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents			—						(22)						13
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents			(145)						178						(3,878)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period			2,997						2,819						6,697
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period			$	2,852					$	2,997					$	2,819
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the consolidated balance sheets to the total amounts reported on the consolidated statements of cash flows
Cash and cash equivalents			$	2,848					$	2,796					$	2,562
Restricted cash and restricted cash equivalents included in funds receivable and amounts held for customers			4						201						257
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period			$	2,852					$	2,997					$	2,819
Supplemental disclosure of cash flow information:
Interest paid			$	272					$	67					$	30
Income taxes paid			$	484					$	303					$	578
Supplemental schedule of non-cash investing activities:
Issuance of common stock in business combinations			$	—					$	6,316					$	3,798

See accompanying notes.

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INTUIT INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 consolidated financial statements include the financial statements of Intuit and its wholly-owned subsidiaries. We have eliminated all material intercompany balances and transactions in consolidation. We have reclassified certain amounts previously reported in our financial statements that were not material, to conform to the current presentation.

We acquired Credit Karma on December 3, 2020. We have included the results of operations for Credit Karma in our consolidated statements of operations from the date of acquisition. Credit Karma operates as a separate reportable segment. See Note 15, "Segment Information," for more information.

We acquired The Rocket Science Group LLC (Mailchimp) on November 1, 2021. We have included the results of operations for Mailchimp in our consolidated statements of operations from the date of acquisition. Our Mailchimp offerings are part of our Small Business & Self-Employed segment. See Note 7, “Business Combinations,” for more information.

On August 1 2022, we renamed our ProConnect segment as the ProTax segment. This segment continues to serve professional accountants. See Note 15, "Segment Information," for more information.

On August 1, 2022, to better align our personal finance strategy, our Mint offering moved from our Consumer segment to our Credit Karma segment. See Note 15, "Segment Information," for more information.

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 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.

In fiscal 2021, the IRS extended the tax filing deadline from April to May 17, 2021. As a result of this extension, a significant amount of our fiscal 2021 Consumer segment and ProTax segment revenues were recognized in the fourth quarter as compared to the third quarter of fiscal 2023 and 2022.

Use of Estimates

In preparing our 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, 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

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estimates.

Revenue Recognition

We derive revenue from the sale of software subscriptions, hosted services, payroll services, merchant payment processing services, packaged software products, live expert advice, financing for small businesses, delivery of qualified links, and financial supplies and hardware. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation.

Nature of Products and Services

Online Offerings

Our online offerings include TurboTax Online and TurboTax Live, ProConnect Tax Online, QuickBooks Online, online payroll, and merchant payment processing services for small businesses who use our online offerings. Our Mailchimp offerings include marketing automation and customer relationship management.

These online offerings provide customers with the right to use the hosted software over the contract period without taking possession of the software and are billed on either a subscription or consumption basis. Revenue related to our online offerings that are billed on a subscription basis is recognized ratably over the contract period. Revenue related to online offerings that are billed on a consumption basis is recognized when the customer consumes the related service.

Desktop Offerings

Our desktop offerings consist of our subscription-based QuickBooks Desktop products, our consumer and professional tax desktop products, which include TurboTax, Lacerte and ProSeries, our desktop payroll products, and merchant payment processing services for small businesses who use our desktop offerings.

Our QuickBooks Desktop software subscriptions include a term software license, version protection, enhancements, support, and various connected services. We recognize revenue for the software license and version protection at the time they are delivered and recognize revenue for support and connected services over the subscription term as the services are provided. We have determined that the enhancements included in our QuickBooks Desktop software subscriptions are not material within the context of the contract.

Our consumer and professional tax packaged desktop software products include an on-premise tax software license, related tax form updates, electronic filing service, and connected services. We recognize revenue for the software license and related tax form updates, as one performance obligation, over the period the forms and updates are delivered. We recognize revenue for our electronic filings service and connected services as those services are provided.

We also sell some of our consumer tax packaged desktop software products in non-consignment and consignment arrangements to certain retailers. Additionally, we sell our QuickBooks Enterprise software on retailer websites. For these retailers, we begin recognizing revenue at the later of when control has transferred to the retailer or customer for consumer tax packaged desktop software and upon activation of the subscriptions by the customer for QuickBooks subscription offerings.

Our desktop payroll products are sold as software subscriptions and include a term software license with a stand-ready obligation to maintain compliance with current payroll tax laws, support, and connected services. The term software license and stand-ready obligation to maintain compliance with current payroll tax laws is considered one performance obligation. Each of the performance obligations is considered distinct, and control is transferred to the customer over the subscription term. As a result, revenue is recognized ratably over the subscription term as services are provided.

We offer merchant payment processing services as a separately paid connected service for our QuickBooks Desktop packaged software products and software subscriptions, and revenue is recognized as the services are provided to the customers.

Other Solutions

Revenue from our Credit Karma segment is primarily comprised of revenue from the delivery of qualified links that result in completed actions, or cost-per-action transactions. Credit Karma also generates revenue from cost-per-click and cost-per-lead transactions. All revenue from our Credit Karma segment is included in service and other revenue in our consolidated statements of operations.

Cost-per-action revenue is earned based on a pre-determined fee for approved actions, such as when credit cards are issued or when personal loans and other loans to businesses are funded. Revenue is recognized when a lead is generated that results in one of these approved actions.

Cost-per-click and cost-per-lead revenue is primarily related to mortgage and insurance businesses. Cost-per-click revenue is earned as users click on our customers' advertisements and is recognized based on the number of clicks recorded each month.

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Cost-per-lead revenue is earned via customer advertisements that allow the generation of leads from consumers interested in the advertised products and is recognized at the time a consumer request or lead is delivered to the customer.

Revenue from the sale of our financial supplies, such as printed check stock and hardware, including credit card readers for mobile phones, is recognized when control is transferred to the customer, which is generally when the products are shipped.

We also have revenue-sharing and royalty arrangements with third-party partners and recognize this revenue as earned based upon reporting provided to us by our partners. In instances where we do not have reporting from our partners, we estimate revenue based on information available to us at the time.

Product Revenue and Service and Other Revenue

Product revenue includes revenue from: QuickBooks Desktop software licenses and version protection; consumer and professional tax desktop licenses and the related form updates; desktop payroll licenses and related updates; and financial supplies.

Service and other revenue includes revenue from: our online offerings discussed above; our Credit Karma offerings; support, electronic filing services, and connected services included with our desktop offerings; merchant payment processing services; revenue-sharing and royalty arrangements; and interest on loans and amounts held for customers.

We record revenue net of sales tax obligations. For payroll services, we generally require customers to remit payroll tax funds to us in advance of the payroll date via electronic funds transfer. Revenue for electronic payment processing services that we provide to merchants is recorded net of interchange fees charged by credit card associations. We hold customer cash as part of delivering payroll and payment services, and we include in total net revenue the interest earned on these funds from the time they are collected until the time that we remit them to outside parties or merchants.

Judgments and Estimates

Our contracts with customers often include promises to transfer multiple products and services to a customer. In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates. These judgments and estimates include identifying performance obligations in the contract, determining whether the performance obligations are distinct, determining the SSP for each distinct performance obligation, determining the timing of revenue recognition for distinct performance obligations, and estimating the amount of variable consideration to include in the transaction price.

The functionality of the software licenses included in our consumer and professional tax and payroll desktop offerings is dependent on the related enhancements and updates included in these offerings. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the related updates and recognized over time.

Our contracts with customers include promises to transfer various products and services, which are generally capable of being distinct performance obligations. In many cases, SSPs for distinct performance obligations are based on directly observable pricing. In instances where the SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs.

Our consumer and professional tax desktop products include an on-premise tax software license and related tax form updates that are recognized as the forms and updates are delivered. We measure progress toward complete satisfaction of the software license and related tax form updates using an output method based on the timing of when the tax forms are delivered.

We generally provide refunds to customers for product returns and subscription cancellations. We also provide promotional discounts and incentive rebates on retail and distribution sales. These refunds, discounts, and incentive rebates are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated based on historical experience and current business and economic indicators and are updated at the end of each reporting period as additional information becomes available to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Discounts and incentive rebates are estimated based on distributors' and retailers' performance against the terms and conditions of the rebate programs.

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 twelve months ended July 31, 2023, we recognized revenue of $808 million, that was included in deferred revenue at July 31, 2022. During the twelve months ended July 31, 2022, we recognized revenue of $684 million, that was included in deferred revenue at July 31, 2021.

Our performance obligations are generally satisfied within 12 months of the initial contract date. As of July 31, 2023 and 2022, the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $5 million and $6 million, respectively, and is included in other long-term obligations on our consolidated balance sheets.

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Assets Recognized from the Costs to Obtain a Contract with a Customer

Our sales commissions are considered incremental costs of obtaining the contract with a customer. Sales commissions for subscription offerings where we expect the benefit of those costs to continue longer than one year, are capitalized and amortized ratably over the period of benefit, which ranges from three to four years. Total capitalized costs to obtain a contract are not material and are included in prepaid expenses and other current assets and other assets on our consolidated balance sheets.

We apply a practical expedient to expense costs incurred to obtain a contract with a customer when the period of benefit is less than one year. These costs primarily include internal and external sales commissions for our consumer and professional tax offerings.

Shipping and Handling

We record the amounts we charge our customers for the shipping and handling of our software products as product revenue, and we record the related costs as cost of product revenue in our consolidated statements of operations.

Customer Service and Technical Support

We include the costs of customer service and technical support associated with our online or hosted offerings in cost of service and other revenue line in our consolidated statements of operations. We also include the costs of providing technical support for our desktop offerings in cost of service and other revenue. We include the costs of customer service related to desktop offerings in selling and marketing expense in our consolidated statements of operations. Customer service and technical support costs include costs associated with performing order processing, answering customer inquiries by telephone and through websites, e-mail, and other electronic means, and providing technical support assistance to customers. We expense the cost of providing this support as incurred.

Software Development Costs

We expense software development costs as we incur them until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. To date, our software has been available for general release concurrent with the establishment of technological feasibility and, accordingly, we have not capitalized any development costs. Costs we incur to enhance our existing products or after the general release of the service using the product are expensed in the period they are incurred and included in research and development expense in our consolidated statements of operations.

Internal Use Software

We capitalize costs related to the development of hosted services that we provide to our customers and internal use of enterprise-level business and finance software in support of our operational needs. Costs incurred in the application development phase are capitalized and amortized on a straight-line basis over their useful lives, which are generally three to six years. Costs related to planning and other preliminary project activities and to post-implementation activities are expensed as incurred. We test these assets for impairment whenever events or changes in circumstances occur that could impact their recoverability.

Advertising

We expense all advertising costs as we incur them to selling and marketing expense in our consolidated statements of operations. We recorded advertising expense of approximately $1.5 billion for the twelve months ended July 31, 2023, $1.6 billion for the twelve months ended July 31, 2022, and $1.1 billion for the twelve months ended July 31, 2021.

Leases

Our leases are primarily operating leases for office facilities. We do not have material finance leases. We determine if an arrangement is a lease and classify it as either a finance or operating lease at lease inception. Operating leases are included in operating lease right-of-use (ROU) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets.

Operating lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. Our leases generally do not have a readily determinable implicit rate, therefore we use our incremental borrowing rate at the commencement date in determining the present value of future payments. Our incremental borrowing rate is determined based on a yield curve derived from publicly traded bond offerings for companies with similar credit ratings to ours. Our lease terms may include options to purchase, extend, or terminate the lease when it is

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reasonably certain that we will exercise that option. We account for the lease and non-lease components as a single lease component.

We measure ROU assets based on the corresponding lease liabilities adjusted for any initial direct costs and prepaid lease payments made to the lessor before or at the commencement date, net of lease incentives. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the calculation of the ROU asset and lease liability and are recognized as lease expense is incurred. Our variable lease payments generally relate to amounts paid to lessors for common area maintenance under our real estate leases.

Our subleases generally do not relieve us of our primary obligations under the corresponding head lease. As a result, we account for the head lease based on the original assessment at inception. We determine if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception. If the total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the ROU asset is assessed for impairment. Our subleases are generally operating leases, and we recognize sublease income on a straight-line basis over the sublease term.

Capitalization of Interest Expense

We capitalize interest on capital projects, including facilities build-out projects and internal use computer software projects. Capitalization commences with the first expenditure for the project and continues until the project is substantially complete and ready for its intended use. We amortize capitalized interest to depreciation expense using the straight-line method over the same lives as the related assets. Capitalized interest was not material for any period presented.

Foreign Currency

The functional currencies of our international operating subsidiaries are generally the local currencies. We translate the assets and liabilities of our foreign subsidiaries at the exchange rates in effect on the balance sheet date. We translate the revenue, costs, and expenses of our foreign subsidiaries at the average rates of exchange in effect during the period. We include translation gains and losses in the stockholders’ equity section of our consolidated balance sheets. We include net gains and losses resulting from foreign exchange transactions in interest and other income or expense in our consolidated statements of operations. Translation gains and losses and transaction gains and losses were not material for any period presented.

Income Taxes

We estimate our income taxes based on the various jurisdictions where we conduct business. Significant judgment is required in determining our worldwide income tax provision. We estimate our current tax liability and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which we show on our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be realized. To the extent we believe that realization is not likely, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding income tax expense in our consolidated statements of operations.

We review the need for a valuation allowance to reflect uncertainties about whether we will be able to utilize some of our deferred tax assets before they expire. The valuation allowance analysis is based on our estimates of taxable income for the jurisdictions in which we operate and the periods over which our deferred tax assets will be realizable. While we have considered future taxable income in assessing the need for a valuation allowance for the periods presented, we could be required to record a valuation allowance to take into account additional deferred tax assets that we may be unable to realize. An increase in the valuation allowance would have an adverse impact, which could be material, on our income tax provision and net income in the period in which we record the increase.

We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions that are more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions. We evaluate our uncertain tax positions on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits, and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.

A description of our accounting policies associated with tax-related contingencies and valuation allowances assumed as part of a business combination is provided under “Business Combinations” below.

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Computation of Net Income Per Share

We compute basic net income 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.

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

			Twelve Months Ended July 31,
(In millions, except per share amounts)			2023						2022						2021
Numerator:
Net income			$	2,384					$	2,066					$	2,062
Denominator:
Shares used in basic per share amounts:
Weighted-average common shares outstanding			281						280						270
Shares used in diluted per share amounts:
Weighted-average common shares outstanding			281						280						270
Dilutive common equivalent shares from stock options and restricted stock awards			2						4						3
Dilutive weighted-average common shares outstanding			283						284						273
Basic and diluted net income per share:
Basic net income per share			$	8.49					$	7.38					$	7.65
Diluted net income per share			$	8.42					$	7.28					$	7.56
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			1						1						—

Cash Equivalents and Investments

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. Investments consist primarily of investment-grade available-for-sale debt securities. 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 by limiting our holdings with any individual issuer.

We use the specific identification method to compute gains and losses on investments. We record unrealized gains and losses on investments, net of tax, in accumulated other comprehensive income in the stockholders’ equity section of our consolidated balance sheets and reflect unrealized gain and loss activity in other comprehensive income in our consolidated statements of comprehensive income. We generally classify available-for-sale debt securities as current assets based upon our ability and intent to use any and all of these securities as necessary to satisfy the significant short-term liquidity requirements that may arise from the highly seasonal nature of our businesses. Because of our significant business seasonality, stock repurchase programs, and acquisition opportunities, cash flow requirements may fluctuate dramatically from quarter to quarter and require us to use a significant amount of the investments we hold as available-for-sale.

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Accounts Receivable and Allowances for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and are not interest bearing. Third-party payment processor receivables due from financial institutions for the settlement of credit and debit card transactions for the sales of our products and services are included in accounts receivable. We maintain an allowance for doubtful accounts to reserve for credit losses. In determining the amount of the allowance, we consider our historical level of credit losses, current economic trends that might impact the level of future credit losses, customer-specific information, and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. We make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. When we determine that amounts are uncollectible, we write them off against the allowance.

Funds Receivable and Amounts Held for Customers and Funds Payable and Amounts Due to Customers

Funds receivable and amounts held for customers represents 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 debt securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers. Funds payable and amounts due to customers consist of amounts we owe on behalf of our customers, such as direct deposit payroll funds and payroll taxes.

Property and Equipment

Property and equipment is stated at the lower of cost or realizable value, net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from two to 30 years. We amortize leasehold improvements using the straight-line method over the lesser of their estimated useful lives or remaining lease terms. We include the amortization of assets that are recorded under finance leases in depreciation expense. We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not record any material property or equipment impairment charges during the twelve months ended July 31, 2023, 2022, or 2021.

Business Combinations

The acquisition method of accounting for business combinations requires us to use significant estimates and assumptions, including fair value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which we may adjust the provisional amounts recognized for a business combination).

Under the acquisition method of accounting, we recognize separately from goodwill the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree, generally at the acquisition date fair value. We measure goodwill as of the acquisition date as the excess of consideration transferred, which we also measure at fair value, over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed. Costs that we incur to complete the business combination, such as investment banking, legal, and other professional fees, are not considered part of consideration, and we recognize such costs as general and administrative expenses as they are incurred. Under the acquisition method, we also account for acquired company restructuring activities that we initiate separately from the business combination.

Should the initial accounting for a business combination be incomplete by the end of a reporting period that falls within the measurement period, we report provisional amounts in our financial statements. During the measurement period, we adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date, and we record those adjustments to our financial statements. We apply those measurement period adjustments that we determine to be material retrospectively to comparative information in our financial statements, including adjustments to depreciation and amortization expense.

Under the acquisition method of accounting for business combinations, if we identify changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment and we record the offset to goodwill. We record all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense. This accounting applies to all of our acquisitions regardless of acquisition date.

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Goodwill, Acquired Intangible Assets and Other Long-Lived Assets

Goodwill

We record goodwill when the fair value of consideration transferred in a business combination exceeds the fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but is tested for impairment annually during our fourth fiscal quarter and whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable.

In accordance with authoritative guidance, we define fair value as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We consider and use all valuation methods that are appropriate in estimating the fair value of our reporting units and generally use a weighted combination of income and market approaches. Under the income approach, we estimate the fair value of each reporting unit based on the present value of future cash flows. We use a number of assumptions in our discounted cash flow model, including market factors specific to the business, the amount and timing of estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for the business, and a rate of return that considers the relative risk of achieving the cash flows and the time value of money. Under the market approach, we estimate the fair value of each reporting unit based on market multiples of revenue, operating income, and earnings for comparable publicly traded companies engaged in similar businesses. If the estimated fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired.

If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of the unit, we would record an impairment loss equal to the difference. We recorded no goodwill impairment charges for the twelve months ended July 31, 2023, 2022, or 2021.

Acquired Intangible Assets and Other Long-Lived Assets

We generally record acquired intangible assets that have finite useful lives, such as purchased technology, in connection with business combinations. We amortize the cost of acquired intangible assets on a straight-line basis over their estimated useful lives, which range from two to fifteen years. We review intangible assets that have finite useful lives and other long-lived assets whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable. We estimate the recoverability of these assets by comparing the carrying amount of the asset to the future undiscounted cash flows that we expect the asset to generate. We estimate the fair value of assets that have finite useful lives based on the present value of future cash flows for those assets. If the carrying value of an asset with a finite life exceeds its estimated fair value, we would record an impairment loss equal to the difference. Impairment charges for acquired intangible assets and other long-lived assets were not material for the twelve months ended July 31, 2023, 2022, or 2021.

Share-Based Compensation Plans

RSUs granted typically vest based on continued service. We value these time-based RSUs at the date of grant using the intrinsic value method. We amortize the fair value of time-based RSUs on a straight-line basis over the service period. Certain RSUs granted to senior management vest based on the achievement of pre-established market or performance goals. We estimate the fair value of market-based RSUs at the date of grant using a Monte Carlo valuation methodology and amortize those fair values over the requisite service period for each separately vesting tranche of the award. The Monte Carlo methodology that we use to estimate the fair value of market-based RSUs at the date of grant incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the market-based RSUs at the date of grant must be recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria. We estimate the fair value of performance-based RSUs at the date of grant using the intrinsic value method and the probability that the specified performance criteria would be met. Each quarter we update our assessment of the probability that the specified performance criteria will be achieved and adjust our estimate of the fair value of the performance-based RSUs if necessary. We amortize the fair values of performance-based RSUs over the requisite service period for each separately vesting tranche of the award. All of the RSUs we grant have dividend rights that are subject to the same vesting requirements as the underlying equity awards, so we do not adjust the intrinsic (market) value of our RSUs for dividends.

We estimate the fair value of stock options granted using a lattice binomial model and a multiple option award approach. We amortize the fair value of stock options on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods.

See Note 12, “Stockholders’ Equity,” for a description of our share-based compensation plans and more information on the assumptions we use to calculate the fair value of share-based compensation.

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Concentration of Credit Risk and Significant Customers and Suppliers

We operate in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact our operating results.

We are also subject to risks related to changes in the value of our material balance of investments. Our portfolio of investments consists of investment-grade securities. 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 by limiting our holdings with any individual issuer. Our cash balances are primarily on deposit at high credit quality financial institutions. These deposits are typically in excess of insured limits.

We sell a portion of our products through third-party retailers and distributors. As a result, we face risks related to the collectibility of our accounts receivable. To appropriately manage this risk, we perform ongoing evaluations of customer credit and limit the amount of credit extended as we deem appropriate, but generally do not require collateral. We maintain reserves for estimated credit losses and these losses have historically been within our expectations. However, since we cannot predict future changes in the financial stability of our customers, we cannot guarantee that our reserves will continue to be adequate. No customer accounted for 10% or more of total net revenue for the twelve months ended July 31, 2023, 2022 or 2021, nor did any customer account for 10% or more of total accounts receivable at July 31, 2023 or July 31, 2022.

We rely primarily on one third-party vendor to perform the manufacturing and distribution functions for our retail desktop software products. We also have a key single-source vendor that prints and fulfills orders for most of our financial supplies business. While we believe that relying on key vendors improves the efficiency and reliability of our business operations, relying on any one vendor for a significant aspect of our business can have a material negative impact on our revenue and profitability if that vendor fails to perform at acceptable service levels for any reason, including financial difficulties of the vendor.

Accounting Standards Not Yet Adopted

We do not expect that any recently issued accounting pronouncements will have a material effect on our financial statements.

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.

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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.

			At July 31, 2023																		At July 31, 2022
(In millions)			Level 1						Level 2												Total Fair Value						Level 1						Level 2												Total Fair Value
Assets:
Cash equivalents, primarily money market funds			$	1,888					$	—											$	1,888					$	1,835					$	—											$	1,835
Available-for-sale debt securities:
Corporate notes			—						805												805						—						589												589
U.S. agency securities			—						209												209						—						96												96
Total available-for-sale debt securities			—						1,014												1,014						—						685												685
Total assets measured at fair value on a recurring basis			$	1,888					$	1,014											$	2,902					$	1,835					$	685											$	2,520
Liabilities:
Senior unsecured notes(1)			$	—					$	1,309											$	1,309					$	—					$	1,838											$	1,838

(1) Carrying values on our consolidated balance sheets were $1.49 billion and $1.99 billion at July 31, 2023 and July 31, 2022, respectively. See Note 8, “Debt” for more information.

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:

			At July 31, 2023																		At July 31, 2022
(In millions)			Level 1						Level 2												Total Fair Value						Level 1						Level 2												Total Fair Value
Cash equivalents:
In cash and cash equivalents			$	1,888					$	—											$	1,888					$	1,835					$	—											$	1,835
Available-for-sale debt securities:
In investments			$	—					$	814											$	814					$	—					$	485											$	485
In funds receivable and amounts held for customers			—						200												200						—						200												200
Total available-for-sale debt securities			$	—					$	1,014											$	1,014					$	—					$	685											$	685

We value our Level 1 assets, consisting primarily of money market funds, 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 liabilities whose fair values we measure using Level 2 inputs consist of senior unsecured notes. See Note 8, “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, Level 2, and Level 3 of the fair value hierarchy during the twelve months ended July 31, 2023, 2022, or 2021.

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

Assets measured at fair value on a non-recurring basis include reporting units measured at fair value in a goodwill impairment test and our long-term investments.

Estimates of fair value for reporting units fall under Level 3 of the fair value hierarchy. During the fourth quarters of fiscal 2023, fiscal 2022, and fiscal 2021, we performed our annual goodwill impairment tests. Using the methodology described in Note 1, we determined that the estimated fair values of all of our reporting units exceeded their carrying values and that they were not impaired.

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Long-term investments represent 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 no upward adjustments during the twelve months ended July 31, 2023. We recognized $54 million and $17 million of upward adjustments during the twelve months ended July 31, 2022 and July 31, 2021, respectively. Impairments recognized during the twelve months ended July 31, 2023, July 31, 2022, and July 31, 2021 were not material. Cumulative upward adjustments were $71 million, and cumulative impairments were not material through July 31, 2023 for measurement alternative investments held as of July 31, 2023. As of July 31, 2023 and July 31, 2022, the carrying value of long-term investments was $105 million and $98 million, respectively.

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

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.

			July 31, 2023												July 31, 2022
(In millions)			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Classification on consolidated balance sheets:
Cash and cash equivalents			$	2,848					$	2,848					$	2,796					$	2,796
Investments			819						814						490						485
Funds receivable and amounts held for customers			424						420						435						431
Total cash and cash equivalents, investments, and funds receivable and amounts held for customers			$	4,091					$	4,082					$	3,721					$	3,712

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 July 31, 2023 and July 31, 2022, this excludes $216 million and $30 million, respectively, of funds receivable included on our consolidated balance sheets in funds receivable and amounts held for customers not measured and recorded at fair value.

			July 31, 2023												July 31, 2022
(In millions)			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Type of issue:
Total cash, cash equivalents, restricted cash, and restricted cash equivalents			$	2,852					$	2,852					$	2,997					$	2,997
Available-for-sale debt securities:
Corporate notes			811						805						597						589
U.S. agency securities			212						209						97						96
Total available-for-sale debt securities			1,023						1,014						694						685
Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments			$	3,875					$	3,866					$	3,691					$	3,682

We include realized gains and losses on our available-for-sale debt securities in interest and other income or expense in our consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the twelve months ended July 31, 2023, 2022, and 2021 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 consolidated balance sheets, except for certain unrealized losses described below. Gross unrealized gains and losses on our available-for-sale debt securities at July 31, 2023 and July 31, 2022 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 on our 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 consolidated balance sheets. We determined there were no credit losses related to available-for-sale debt securities as of July 31, 2023. Unrealized losses on available-for-sale

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debt securities at July 31, 2023 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.

			July 31, 2023												July 31, 2022
(In millions)			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Due within one year			$	735					$	730					$	316					$	313
Due within two years			147						144						298						293
Due within three years			141						140						79						78
Due after three years			—						—						1						1
Total available-for-sale debt securities			$	1,023					$	1,014					$	694					$	685

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

(In millions)			July 31, 2023						July 31, 2022						July 31, 2021						July 31, 2020
Restricted cash and restricted cash equivalents			$	4					$	201					$	257					$	255
Restricted available-for-sale debt securities and funds receivable			416						230						200						200
Total funds receivable and amounts held for customers			$	420					$	431					$	457					$	455

4. Notes Receivable and Allowances for Loan Losses

Notes receivable primarily consist of term loans to small businesses and refund advance loans to consumers. As of July 31, 2023 and July 31, 2022, the net notes receivable balance was $762 million and $540 million, respectively. The current portion is included in notes receivable, and the long term portion is included in other assets on our consolidated balance sheets. As of July 31, 2023 and July 31, 2022, the allowances for loan losses were not material.

Term loans to small businesses. We provide financing to small businesses via term loans. The term loans are not secured and are recorded at amortized cost, net of allowances for loan losses. As of July 31, 2023 and July 31, 2022, the net notes receivable balance for term loans was $757 million and $540 million, respectively. 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 small, homogeneous loans with similar general credit risk and characteristics and apply a loss rate at the time of loan origination. The loss rate and underlying model are updated periodically to reflect actual loan performance and changes to assumptions. 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 July 31, 2023 and July 31, 2022, 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.

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Interest revenue is earned on loans originated and held to maturity 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 and other revenue in our consolidated statements of operations. Interest revenue was not material for all periods presented.

In August 2023, we entered into a forward flow arrangement with an institutional investor. Pursuant to this arrangement, we have a commitment to sell a minimum of $250 million in participation interests of unsecured term loans to small businesses over the next 18 months, subject to certain eligibility criteria.

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 Internal Revenue Service (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 July 31, 2023, the net notes receivable balance for refund advance loans was not material. We had no refund advance loans outstanding as of July 31, 2022. We maintain an allowance for loan losses to reserve for potentially uncollectible loans. We evaluate the likelihood of repayment on a pooled basis due to its composition of small, homogeneous loans with similar general credit risk and characteristics and apply a loss rate at the time of loan purchase. The loss rate and underlying model are updated periodically to reflect actual loan performance and changes to assumptions. When we determine that amounts are uncollectible, we write them off against the allowance. As of July 31, 2023, the allowance for loan losses on refund advance loans was not material.

5. Property and Equipment

Property and equipment consisted of the following at the dates indicated:

			Life in						July 31,
(Dollars in millions)			Years						2023						2022
Equipment			3-5						$	214					$	208
Computer software			2-6						898						911
Furniture and fixtures			5						104						101
Leasehold improvements			2-16						404						366
Land			NA						79						79
Buildings			5-30						382						378
Capital in progress			NA						360						283
									2,441						2,326
Less accumulated depreciation and amortization									(1,472)						(1,438)
Total property and equipment, net									$	969					$	888

---

NA = Not Applicable

Capital in progress at July 31, 2023 and 2022, consisted primarily of costs related to various buildings and site improvements that have not yet been placed into service.

As discussed in Note 1, “Description of Business and Summary of Significant Accounting Policies – Internal Use Software,” we capitalize costs related to the development of computer software for internal use. We capitalized internal use software costs totaling $50 million for the twelve months ended July 31, 2023; $72 million for the twelve months ended July 31, 2022; and $72 million for the twelve months ended July 31, 2021. There was no capitalized labor in these amounts for the twelve months ended July 31, 2023. There was $13 million and $30 million of capitalized labor in these amounts for the twelve months ended July 31, 2022 and July 31, 2021, respectively. Costs related to internal use software projects are included in the capital in progress category of property and equipment until project completion, at which time they are transferred to the computer software category.

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6. Goodwill and Acquired Intangible Assets

Goodwill

Changes in the carrying value of goodwill by reportable segment during the twelve months ended July 31, 2023 and July 31, 2022 were as shown in the following table. Our reportable segments are described in Note 15, “Segment Information.”

(In millions)			Balance July 31, 2021						Goodwill Acquired/ Adjusted						Foreign Currency Translation						Balance July 31, 2022						Goodwill Acquired/ Adjusted						Foreign Currency Translation						Balance July 31, 2023
Small Business & Self-Employed			$	1,578					$	8,115					$	(4)					$	9,689					$	1					$	1					$	9,691
Consumer			42						10						(1)						51						—						—						51
Credit Karma			3,898						5						(4)						3,899						40						2						3,941
ProTax			95						2						—						97						—						—						97
Totals			$	5,613					$	8,132					$	(9)					$	13,736					$	41					$	3					$	13,780

Goodwill is net of accumulated impairment losses of $114 million, which were recorded prior to July 31, 2021 and are included in our Consumer segment. The increase in goodwill during the twelve months ended July 31, 2022 was primarily due to the acquisition of Mailchimp.

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 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
At July 31, 2022:
Cost			$	6,197					$	1,612					$	680					$	42					$	8,531
Accumulated amortization			(748)						(593)						(87)						(42)						(1,470)
Acquired intangible assets, net			$	5,449					$	1,019					$	593					$	—					$	7,061
Weighted-average life in years			14						8						13						0						13

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The following table shows the expected future amortization expense for our acquired intangible assets at July 31, 2023. Amortization of purchased technology is charged to amortization of acquired technology in our 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 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			$	626
2025			624
2026			620
2027			594
2028			581
Thereafter			3,374
Total expected future amortization expense			$	6,419

7. Business Combinations

Mailchimp

On November 1, 2021, we acquired all of the outstanding equity of Mailchimp, a global customer engagement and marketing platform for growing small and mid-market businesses. We acquired Mailchimp to help deliver on the vision of an innovative, end-to-end customer growth platform for small and mid-market businesses. Mailchimp is part of our Small Business & Self-Employed segment. We have included the financial results of Mailchimp in the consolidated financial statements from the date of acquisition. Pro forma information related to this acquisition has not been presented, as the effect of the acquisition on our consolidated results of operations was not material. Our results of operations for the twelve months ended July 31, 2022 included $762 million of revenue attributable to Mailchimp. For the twelve months ended July 31, 2022, we recorded professional fees associated with the acquisition of $63 million in general and administrative expenses.

The fair value of the purchase consideration totaled $12.0 billion, which included $5.7 billion in cash and 10.1 million shares of Intuit common stock with a value of approximately $6.3 billion. The fair value of the stock consideration is based on the October 29, 2021 closing price of Intuit common stock of $625.99.

Pursuant to the equity purchase agreement, we also issued approximately 583,000 RSUs in substitution of outstanding equity incentive awards. These RSUs have a grant date fair value of $355 million and will be expensed over three years. Additionally, we issued approximately 325,000 RSUs with a total grant date fair value of $211 million to Mailchimp employees, of which $151 million will be expensed over four years and $60 million was expensed during the first six months following the acquisition date.

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The allocation of the Mailchimp purchase price is as follows:

(In millions)			Amount
Cash and cash equivalents			$	42
Investments			126
Accounts receivable, net			25
Income taxes receivable			1
Prepaid expenses and other current assets			24
Long-term investments			1
Property and equipment, net			15
Operating lease right-of-use assets			31
Goodwill			8,102
Intangible assets			4,340
Long-term deferred income tax assets			6
Other assets			1
Accounts payable			(163)
Accrued compensation and related liabilities			(409)
Deferred revenue			(52)
Other current liabilities			(69)
Long-term portion of operating lease liabilities			(20)
Other long-term obligations			(5)
Total purchase price allocation			$	11,996

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Mailchimp and the synergies expected to be achieved. This goodwill is assigned to the Small Business & Self-Employed segment and substantially all is deductible for income tax purposes. We completed the purchase price allocation for the Mailchimp acquisition during the second quarter of fiscal 2023, with no material adjustments to our preliminary purchase price allocation.

Intangible assets consist of customer lists, purchased technology, and trade names/trademarks. We amortize purchased intangible assets on a straight-line basis over their respective useful lives. The weighted-average life of the total acquired identifiable intangible assets is 12.0 years. The following table presents the details of identifiable intangible assets acquired.

(In millions, except years)			Estimated Useful Life						Amount
Customer lists			13 years						$	3,160
Purchased technology			9 years						900
Trade names/trademarks			10 years						280
Total identifiable intangible assets									$	4,340

Credit Karma

On December 3, 2020, we acquired all of the outstanding shares of Credit Karma, a consumer technology platform. We acquired Credit Karma to help consumers unlock smart money decisions and accelerate our mission of powering prosperity around the world, by creating a personal financial assistant that helps consumers find the right financial products, put more money in their pockets, and access financial expertise and education. Credit Karma is a separate reportable segment. See Note 15, "Segment Information," for more information. We have included the financial results of Credit Karma in the consolidated financial statements from the date of acquisition. For the twelve months ended July 31, 2021, the transaction costs associated with the acquisition were approximately $31 million, and were recorded in general and administrative expenses.

We acquired Credit Karma for total consideration of $8.1 billion, which included assumed equity awards and restricted shares subject to a revest provision.

The fair value of the purchase consideration totaled $7.2 billion and included $3.4 billion in cash, 10.6 million shares of Intuit common stock with a fair value of $3.8 billion and assumed equity awards for services rendered through the acquisition date of $47 million.

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We also issued shares of common stock with a fair value of $275 million which are restricted due to a revest provision, and will be expensed over a service period of three years. The share-based compensation expense related to these restricted shares is non-deductible for income tax purposes. Additionally, we assumed equity awards for future services with a fair value of $663 million that are being charged to expense over the remaining service periods, which average approximately three years.

The fair value of the stock consideration is based on the December 2, 2020 closing price of Intuit common stock of $355.49.

As part of the merger agreement, following the close of the transaction, we issued approximately $300 million of restricted stock units to employees of Credit Karma, which is being charged to expense over a service period of four years.

The allocation of the Credit Karma purchase price is as follows:

(In millions)			Amount
Cash and cash equivalents			$	436
Accounts receivable, net			141
Income taxes receivable			59
Prepaid expenses and other current assets			7
Long-term investments			3
Property and equipment, net			63
Operating lease right-of-use assets			167
Goodwill			3,898
Intangible assets			3,372
Other assets			81
Accounts payable			(86)
Accrued compensation and related liabilities			(113)
Other current liabilities			(24)
Operating lease liabilities			(172)
Long-term deferred income tax liabilities			(627)
Other long-term obligations			(10)
Total purchase price allocation			$	7,195

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Credit Karma and the synergies expected to be achieved. This goodwill is assigned to the Credit Karma segment and is non-deductible for income tax purposes. We completed the purchase price allocation for the Credit Karma acquisition during the second quarter of fiscal 2022, with no material adjustments to our preliminary purchase price allocation.

Intangible assets consist of user relationships, trade names/trademarks, purchased technology, and partner relationships. We amortize purchased intangible assets on a straight-line basis over their respective useful lives. The weighted-average life of the total acquired identifiable intangible assets is 14.4 years. The following table presents the details of identifiable intangible assets acquired.

(In millions, except years)			Estimated Useful Life						Amount
User relationships			15 years						$	2,781
Trade names/Trademarks			15 years						375
Purchased technology			6 years						216
Total identifiable intangible assets									$	3,372

The following table summarizes the long-term deferred income tax assets and liabilities included in the purchase price allocation above:

(In millions)			Amount
Intangibles			$	(851)
Federal and state net operating loss carryforwards			138
Federal research and experimentation credit carryforwards			51
Other, net			35
Total net long-term deferred income tax liabilities			$	(627)

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8. Debt

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

			July 31,						July 31,						Effective
(In millions)			2023						2022						Interest Rate
Senior unsecured notes issued June 2020:
0.650% notes due July 2023			$	—					$	500					0.837%
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%
Term loan			4,200						4,700
Secured revolving credit facilities			430						230
Total principal balance of debt			6,130						6,930
Unamortized discount and debt issuance costs			(10)						(16)
Net carrying value of debt			$	6,120					$	6,914
Short-term debt			$	—					$	499
Long-term debt			$	6,120					$	6,415

Future principal payments for debt at July 31, 2023 were as shown in the table below.

(In millions)
Fiscal year ending July 31,
2024			$	—
2025			4,700
2026			430
2027			500
2028			—
Thereafter			500
Total future principal payments for debt			$	6,130

Senior Unsecured Notes

In June 2020, we issued four series of senior unsecured notes (together, the 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. During the fourth quarter of fiscal 2023, we repaid the $500 million in notes due in July 2023, when they became due using cash from operations.

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 Notes under the effective interest method. We paid $23 million of interest on the Notes during the twelve months ended July 31, 2023, $23 million during the twelve months ended July 31, 2022, and $24 million during the twelve months ended July 31, 2021.

The 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 Notes, we will be required to repurchase the 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 Notes requires us to comply with certain covenants. For example, the Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As of July 31, 2023, we were compliant with all covenants governing the Notes.

Unsecured Credit Facility

On November 1, 2021, we terminated our amended and restated credit agreement dated May 2, 2019 (2019 Credit Facility), and entered into a 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 matures on November 1, 2024, and a $1 billion unsecured revolving credit facility that matures on November 1, 2026 (2021 Credit Facility).

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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 July 31, 2023, 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. The term loan accrues 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 0.125%, or (ii) the Secured Overnight Finance Rate (SOFR) plus a margin that ranges from 0.625% to 1.125%. Actual margins under either election will be based on our senior debt credit ratings. Interest on the term loan is payable monthly. At July 31, 2023, $4.2 billion was outstanding under the term loan. The carrying value of the term loan approximates its fair value. We paid $230 million and $42 million of interest on the term loan during the twelve months ended July 31, 2023 and July 31, 2022, respectively. We paid $2 million of interest on our previous term loan under the 2019 Credit Facility during the twelve months ended July 31, 2021.

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 July 31, 2023, no amounts were outstanding under the unsecured revolving credit facility. We paid no interest on the unsecured revolving credit facility during each of the twelve months ended July 31, 2023 and 2022. We paid $1 million of interest on our previous unsecured revolving credit facility during the twelve months ended July 31, 2021.

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 July 21, 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 July 31, 2023, we were compliant with all required covenants. At July 31, 2023, $300 million was outstanding under the 2019 Secured Facility and the weighted-average interest rate was 6.91%. The outstanding balance is secured by cash and receivables of the subsidiary totaling $912 million. Interest on the 2019 Secured Facility is payable monthly. We paid $16 million, $2 million, and $3 million of interest on this secured revolving credit facility during the twelve months ended July 31, 2023, 2022, and 2021, respectively.

2022 Secured Facilit****y. 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. Under the agreement, the facility limit is $500 million, of which $150 million is committed and $350 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 October 12, 2024, and the final maturity date is October 13, 2025. The agreement includes certain affirmative and negative covenants, including financial covenants, that require the subsidiary to maintain specified financial ratios. As of July 31, 2023, we were compliant with all required covenants. At July 31, 2023, $130 million was outstanding under the 2022 Secured Facility and the weighted-average interest rate was 6.64%, which includes the interest on the unused committed portion. The outstanding balance is secured by cash and receivables of the subsidiary totaling $375 million. Interest on the 2022 Secured Facility is payable monthly. We paid $4 million of interest on this secured revolving credit facility during the twelve months ended July 31, 2023.

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9. Other Liabilities and Commitments

Other Current Liabilities

Other current liabilities were as follows at the dates indicated:

			July 31,
(In millions)			2023						2022
Executive deferred compensation plan liabilities			$	171					$	147
Current portion of operating lease liabilities			89						84
Sales, property, and other taxes			45						40
Reserve for returns, credits, and promotional discounts			32						31
Accrued settlement for state attorneys general			—						141
Other			111						128
Total other current liabilities			$	448					$	571

Other Long-Term Obligations

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

			July 31,
(In millions)			2023						2022
Income tax liabilities			$	76					$	44
Dividend payable			16						12
Deferred revenue			5						6
Other			20						25
Total other long-term obligations			$	117					$	87

Unconditional Purchase Obligations

In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers. These are agreements to purchase products and services that are enforceable, legally binding, and specify terms that include fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the payments.

Annual minimum commitments under purchase obligations at July 31, 2023 were as shown in the table below.

(In millions)			Purchase Obligations
Fiscal year ending July 31,
2024			$	596
2025			574
2026			313
2027			68
2028			55
Thereafter			440
Total commitments			$	2,046

10. 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 19 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 do not have material finance leases.

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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:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Operating lease cost (1)			$	124					$	105					$	75
Variable lease cost			20						15						11
Sublease income			(12)						(17)						(16)
Total net lease cost			$	132					$	103					$	70

(1) Includes short-term leases, which were not material for the twelve months ended July 31, 2023, 2022 or 2021.

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

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Cash paid for amounts included in the measurement of operating lease liabilities			$	107					$	104					$	76
Right-of-use assets obtained in exchange for operating lease liabilities			$	28					$	238					$	60

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

			July 31,
			2023						2022						2021
Weighted-average remaining lease term for operating leases			7.9 years						8.1 years						6.8 years
Weighted-average discount rate for operating leases			3		%				2.9		%				2.3		%

Future minimum lease payments under non-cancellable operating leases as of July 31, 2023 were as follows:

(In millions)			Operating Leases (1)
Fiscal year ending July 31,
2024			$	76
2025			95
2026			78
2027			70
2028			60
Thereafter			281
Total future minimum lease payments			660
Less imputed interest			(91)
Present value of lease liabilities			$	569

(1) Non-cancellable sublease proceeds for the fiscal years ending July 31, 2024, 2025, 2026, 2027, 2028, and thereafter of $11 million, $6 million, $1 million, $1 million, $1 million, and $2 million, respectively, are not included in the table above.

Supplemental balance sheet information related to operating leases was as follows at the dates indicated:

			July 31,
(In millions)			2023						2022
Operating lease right-of-use assets			$	469					$	549
Other current liabilities			$	89					$	84
Operating lease liabilities			480						542
Total operating lease liabilities			$	569					$	626

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11. Income Taxes

The provision for income taxes consisted of the following for the periods indicated:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Current:
Federal			$	970					$	253					$	399
State			208						93						121
Foreign			86						31						17
Total current			1,264						377						537
Deferred:
Federal			(559)						85						(33)
State			(99)						18						(11)
Foreign			(1)						(4)						1
Total deferred			(659)						99						(43)
Total provision for income taxes			$	605					$	476					$	494

We recognized excess tax benefits on share-based compensation of $32 million, $134 million, and $126 million in the provision for income taxes for the twelve months ended July 31, 2023, 2022, and 2021, respectively.

The sources of income before the provision for income taxes consisted of the following for the periods indicated:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
United States			$	2,798					$	2,433					$	2,497
Foreign			191						109						59
Total			$	2,989					$	2,542					$	2,556

Differences between income taxes calculated using the federal statutory income tax rate and the provision for income taxes were as follows for the periods indicated:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Income before income taxes			$	2,989					$	2,542					$	2,556
Statutory federal income tax			$	628					$	534					$	537
State income tax, net of federal benefit			86						87						87
Federal research and experimentation credits			(106)						(94)						(70)
Share-based compensation			58						45						32
Excess tax benefits related to share-based compensation			(26)						(112)						(105)
Effects of non-U.S. operations			(28)						4						4
Other, net			(7)						12						9
Total provision for income taxes			$	605					$	476					$	494

The state income tax line in the table above includes excess tax benefits related to share-based compensation of $6 million, $22 million and $21 million for the twelve months ended July 31, 2023, 2022, and 2021, respectively.

During the twelve months ended July 31, 2023, a transfer of certain intangible assets from our United Kingdom subsidiary to the United States resulted in the utilization of deferred tax assets previously subject to a full valuation allowance. The net tax benefit realized on the transfer was approximately $32 million, which is included in the effects of non-U.S. operations and state income tax lines in the table above.

In the current global tax policy environment, the U.S. and other domestic and foreign governments continue to consider, and in some cases enact, changes in corporate tax laws. As changes occur, we account for finalized legislation in the period of enactment.

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Material deferred tax assets and liabilities were as follows at the dates indicated:

			July 31,
(In millions)			2023						2022
Deferred tax assets:
Accruals and reserves not currently deductible			$	31					$	84
Capitalized research and development (1)			667						—
Operating lease liabilities			153						168
Accrued and deferred compensation			90						84
Loss and tax credit carryforwards			256						224
Intangible assets			—						25
Share-based compensation			94						97
Other, net			27						23
Total gross deferred tax assets			1,318						705
Valuation allowance			(235)						(244)
Total deferred tax assets			1,083						461
Deferred tax liabilities:
Operating lease right-of-use assets			128						149
Intangibles			840						868
Property and equipment			8						9
Other, net			47						43
Total deferred tax liabilities			1,023						1,069
Net deferred tax assets (liabilities)			$	60					$	(608)

(1) As required by the 2017 Tax Cuts & Jobs Act, our research and development costs are capitalized and amortized for U.S. tax purposes for the twelve months ended July 31, 2023. The mandatory capitalization requirement significantly increased our deferred tax assets at July 31, 2023.

The components of total net deferred tax assets (liabilities), net of valuation allowances, as shown on our consolidated balance sheets were as follows at the dates indicated:

			July 31,
(In millions)			2023						2022
Long-term deferred income tax assets			$	64					$	11
Long-term deferred income tax liabilities			(4)						(619)
Net deferred tax assets (liabilities)			$	60					$	(608)

We have provided a valuation allowance related to state research and experimentation tax credit carryforwards, foreign loss carryforwards and state operating loss carryforwards that we believe are unlikely to be realized. We have a valuation allowance of $235 million and $244 million for the twelve months ended July 31, 2023 and July 31, 2022. The valuation allowance on our net deferred taxes decreased by $9 million for the twelve months ended July 31, 2023. The change in the valuation allowance was primarily related to a decrease in the allowance for foreign intangible deferred tax assets and foreign net operating loss carryforwards, net of an increase in the allowance for state research and experimentation tax credit carryforwards. The valuation allowance on our net deferred taxes increased by $39 million for the twelve months ended July 31, 2022. The change in the valuation allowance was primarily related to state research and experimentation tax credit carryforwards.

At July 31, 2023, we had federal net operating loss carryforwards of approximately $52 million that will start to expire in fiscal 2032. Utilization of the net operating losses is subject to annual limitation. The annual limitation may result in the expiration of net operating losses before utilization.

At July 31, 2023, we had state net operating loss carryforwards of approximately $150 million for which we have recorded a deferred tax asset of $10 million and a valuation allowance of $5 million. The state net operating loss carryforwards will start to expire in fiscal 2028. Utilization of the net operating losses is subject to annual limitation. The annual limitation may result in the expiration of net operating losses before utilization.

At July 31, 2023, we had foreign net operating loss carryforwards of approximately $96 million which carry forward indefinitely. We maintain a full valuation allowance with respect to the foreign net operating losses as there is not sufficient evidence of future sources of taxable income required to utilize such carryforwards.

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At July 31, 2023, we had California research and experimentation credit carryforwards of approximately $343 million. The California research and experimentation credit will carry forward indefinitely.

Unrecognized Tax Benefits

The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the periods indicated:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Gross unrecognized tax benefits, beginning balance			$	216					$	190					$	101
Increases related to tax positions from prior fiscal years, including acquisitions			11						9						69
Decreases related to tax positions from prior fiscal years			(16)						(13)						—
Increases related to tax positions taken during current fiscal year			38						31						31
Settlements with tax authorities			(2)						—						—
Lapse of statute of limitations			(1)						(1)						(11)
Gross unrecognized tax benefits, ending balance			$	246					$	216					$	190

The total amount of our unrecognized tax benefits at July 31, 2023 was $246 million. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $152 million. We do not believe that it is reasonably possible that there will be a material increase or decrease in unrecognized tax benefits over the next 12 months.

We file U.S. federal, U.S. state, and foreign tax returns. Our major tax jurisdiction is the U.S. federal jurisdiction. For U.S. federal tax returns, we are no longer subject to tax examinations for fiscal 2017 and for years prior to fiscal 2016.

We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes. Amounts accrued at July 31, 2023 and July 31, 2022 for the payment of interest and penalties were not material. The amounts of interest and penalties that we recognized during the twelve months ended July 31, 2023, 2022, and 2021, were also not material.

We offset an $85 million and $89 million long-term liability for uncertain tax positions against our long-term income tax receivable at July 31, 2023 and July 31, 2022, respectively. The long-term income tax receivable at July 31, 2023 and July 31, 2022 was primarily related to the government’s approval of a method of accounting change request for fiscal 2018 and a refund claim related to Credit Karma’s alternative minimum tax credit that was recorded as part of the acquisition.

12. Stockholders’ Equity

Stock Repurchase Programs and Treasury Shares

Intuit’s Board of Directors has authorized a series of common stock repurchase programs. Shares of common stock repurchased under these programs become treasury shares. Under these programs, we repurchased 4.7 million shares of our common stock for $2.0 billion during the twelve months ended July 31, 2023. Included in this amount were $10 million of repurchases which occurred in late July 2023 and settled in August 2023. At July 31, 2023, we had authorization from our Board of Directors for up to $1.5 billion in stock repurchases. On August 22, 2023, our Board approved an increase in the authorization under the existing stock repurchase program under which we are authorized to repurchase up to an additional $2.3 billion of our common stock. Future stock repurchases under the current program are at the discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.

Our treasury shares are repurchased at the market price on the trade date; accordingly, all amounts paid to reacquire these shares have been recorded as treasury stock on our consolidated balance sheets. Any direct costs to acquire treasury stock are recorded to treasury stock on our consolidated balance sheets. Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares, we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount.

In the past, we have satisfied option exercises and restricted stock unit vesting under our employee equity incentive plans by reissuing treasury shares, and we may do so again in the future. During the second quarter of fiscal 2014, we began issuing new shares of common stock to satisfy option exercises and RSU vesting under our 2005 Equity Incentive Plan. We have not yet determined the ultimate disposition of the shares that we have repurchased in the past, and consequently we continue to hold them as treasury shares.

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Dividends on Common Stock

During the twelve months ended July 31, 2023, we declared cash dividends that totaled $3.12 per share of outstanding common stock, or approximately $898 million. In August 2023, our Board of Directors declared a quarterly cash dividend of $0.90 per share of outstanding common stock payable on October 17, 2023 to stockholders of record at the close of business on October 9, 2023. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.

Description of 2005 Equity Incentive Plan and Credit Karma, Inc. 2015 Equity Incentive Plan

Our stockholders initially approved our 2005 Equity Incentive Plan (2005 Plan) on December 9, 2004. On January 20, 2022, our stockholders approved an Amended and Restated 2005 Equity Incentive Plan (Restated 2005 Plan) that expires on January 20, 2032. Under the Restated 2005 Plan, we are permitted to grant incentive and non-qualified stock options, restricted stock awards, RSUs, stock appreciation rights, and stock bonus awards to our employees, non-employee directors, and consultants. The Compensation and Organizational Development Committee of our Board of Directors or its delegates determine who will receive grants, when those grants will be exercisable, their exercise price, and other terms. We are permitted to issue up to 159.5 million shares under the Restated 2005 Plan, including 3,366,512 shares that were previously available for issuance prior to January 20, 2022 under the Credit Karma Plan, described below, adjusted for the fungible ratio of the Restated 2005 Plan. The plan provides a fungible share reserve. Each stock option granted on or after November 1, 2010 reduces the share reserve by one share and each restricted stock award or restricted stock unit granted reduces the share reserve by 2.3 shares. Stock options forfeited and returned to the pool of shares available for grant increase the pool by one share for each share forfeited. Restricted stock awards and RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited. Shares withheld for income taxes upon vesting of RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options granted under the 2005 Plan and the Restated 2005 Plan typically vest over three to four years based on continued service and have a seven year term. RSUs granted under those plans typically vest over three to four years based on continued service. Certain RSUs granted to senior management vest based on the achievement of pre-established performance or market goals.

In connection with our acquisition of Credit Karma on December 3, 2020, we assumed the Credit Karma, Inc. 2015 Equity Incentive Plan, as amended (Credit Karma Plan), under which the assumed equity awards were granted. See Note 7, “Business Combinations,” for more information on the Credit Karma acquisition and the related equity awards assumed. Under the Restated 2005 Plan, effective January 20, 2022, shares available under the Credit Karma Plan became available for grant under the Restated 2005 Plan and no shares may be granted out of the Credit Karma Plan.

Through January 20, 2022, the Credit Karma Plan provided a fungible share reserve. Each restricted stock unit granted reduced the share reserve by one share. RSUs forfeited and returned to the pool of shares available for grant increased the pool by one share for each share forfeited. Shares withheld for income taxes upon vesting of RSUs were also returned to the pool of shares available for grant. After January 20, 2022, shares forfeited and returned to the pool from grants issued out of the Credit Karma Plan will increase the pool by 2.3 shares for each share forfeited.

At July 31, 2023, there were approximately 19.0 million shares available for grant under the Restated 2005 Plan and no awards may be granted out of the Credit Karma Plan.

Description of Employee Stock Purchase Plan

On November 26, 1996, our stockholders initially adopted our Employee Stock Purchase Plan (ESPP) under Section 423 of the Internal Revenue Code. The ESPP permits our eligible employees to make payroll deductions to purchase our stock on regularly scheduled purchase dates at a discount. Our stockholders have approved amendments to the ESPP to permit the issuance of up to 25.8 million shares under the ESPP, which expires upon the earliest to occur of (a) termination of the ESPP by the Board, or (b) issuance of all the shares of Intuit’s common stock reserved for issuance under the ESPP. Offering periods under the ESPP are six months in duration and composed of two consecutive three-month accrual periods. Shares are purchased at 85% of the lower of the closing price for Intuit common stock on the first day of the offering period or the last day of the accrual period.

Under the ESPP, employees purchased 399,975 shares of Intuit common stock during the twelve months ended July 31, 2023; 326,961 shares during the twelve months ended July 31, 2022; and 405,268 shares during the twelve months ended July 31, 2021. At July 31, 2023, there were 2,323,980 shares available for issuance under this plan.

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Share-Based Compensation Expense

The following table summarizes the total share-based compensation expense that we recorded in operating income for the periods shown.

			Twelve Months Ended July 31,
(In millions except per share amounts)			2023						2022						2021
Cost of product revenue			$	3					$	2					$	1
Cost of service and other revenue			371						144						68
Selling and marketing			429						309						183
Research and development			532						521						281
General and administrative			377						332						220
Total share-based compensation expense			1,712						1,308						753
Income tax benefit			(373)						(396)						(269)
Decrease in net income			$	1,339					$	912					$	484
Decrease in net income per share:
Basic			$	4.77					$	3.26					$	1.79
Diluted			$	4.73					$	3.21					$	1.77

We capitalized no share-based compensation related to internal use software projects during the twelve months ended July 31, 2023, and $1 million and $2 million during the twelve months ended July 31, 2022, and 2021, respectively.

Determining Fair Value

Valuation and Amortization Methods

RSUs granted typically vest based on continued service. We value these time-based RSUs at the date of grant using the intrinsic value method. We amortize the fair value of time-based RSUs on a straight-line basis over the service period. These time-based RSUs accounted for approximately 85% of our total share-based compensation expense during the twelve months ended July 31, 2023. Certain RSUs granted to senior management vest based on the achievement of pre-established market or performance goals. We estimate the fair value of market-based RSUs at the date of grant using a Monte Carlo valuation methodology and amortize those fair values over the requisite service period for each separately vesting tranche of the award. The Monte Carlo methodology that we use to estimate the fair value of market-based RSUs at the date of grant incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the market-based RSUs at the date of grant must be recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria. We estimate the fair value of performance-based RSUs at the date of grant using the intrinsic value method and the probability that the specified performance criteria will be met. Each quarter we update our assessment of the probability that the specified performance criteria will be achieved and adjust our estimate of the fair value of the performance-based RSUs if necessary. We amortize the fair values of performance-based RSUs over the requisite service period for each separately vesting tranche of the award. All of the RSUs we grant have dividend rights that are subject to the same vesting requirements as the underlying equity awards, so we do not adjust the market price of our stock on the date of grant for dividends.

We estimate the fair value of stock options granted using a lattice binomial model and a multiple option award approach. Our stock options have various restrictions, including vesting provisions and restrictions on transfer, and are often exercised prior to their contractual maturity. We believe that lattice binomial models are more capable of incorporating the features of our stock options than closed-form models such as the Black Scholes model. The use of a lattice binomial model requires the use of extensive actual employee exercise behavior and a number of complex assumptions including the expected volatility of our stock price over the term of the options, risk-free interest rates and expected dividends. We amortize the fair value of options on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods.

Expected Term. The expected term of options granted represents the period of time that they are expected to be outstanding and is a derived output of the lattice binomial model. The expected term of stock options is impacted by all of the underlying assumptions and calibration of our model. The lattice binomial model assumes that option exercise behavior is a function of the option’s remaining vested life and the extent to which the market price of our common stock exceeds the option exercise price. The lattice binomial model estimates the probability of exercise as a function of these two variables based on the history of exercises and cancellations on all past option grants made by us.

Expected Volatility. We estimate the volatility of our common stock at the date of grant based on the implied volatility of one-year and two-year publicly traded options on our common stock. Our decision to use implied volatility was based upon the

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availability of actively traded options on our common stock and our assessment that implied volatility is more representative of future stock price trends than historical volatility.

Risk-Free Interest Rate*.* We base the risk-free interest rate that we use in our option valuation model on the implied yield in effect at the time of option grant on constant maturity U.S. Treasury issues with equivalent remaining terms.

Dividends*.* We use an annualized expected dividend yield in our option valuation model. We paid quarterly cash dividends during all years presented and currently expect to continue to pay cash dividends in the future.

Forfeitures*.* We adjust share-based compensation expense for actual forfeitures as they occur.

We used the following assumptions to estimate the fair value of stock options granted and shares purchased under our Employee Stock Purchase Plan for the periods indicated:

			Twelve Months Ended July 31,
			2023						2022						2021
Assumptions for stock options:
Expected volatility (range)			30.41% - 33.19%						35		%				29		%
Weighted-average expected volatility			30.67		%				35		%				29		%
Risk-free interest rate (range)			3.52% - 4.46%						2.73		%				0.62		%
Expected dividend yield			0.63		%				0.61		%				0.45		%
Assumptions for ESPP:
Expected volatility (range)			38% - 48%						26% - 39%						31% - 36%
Weighted-average expected volatility			42		%				23		%				34		%
Risk-free interest rate (range)			1.59% - 4.74%						0.04% - 0.44%						0.02% - 0.17%
Expected dividend yield (range)			0.74% - 0.81%						0.47% - 0.59%						0.60% - 0.75%

			Intuit Fiscal 2023 Form 10-K			88

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Share-Based Awards Available for Grant

A summary of share-based awards available for grant under our plans for the fiscal periods indicated was as follows:

(Shares in thousands)			Shares Available for Grant
Balance at July 31, 2020			18,047
Shares available for grant under the Credit Karma Plan			4,298
Restricted stock units granted (1)			(9,191)
Options granted			(323)
Share-based awards canceled/forfeited/expired (1)(2)			4,020
Balance at July 31, 2021			16,851
Additional shares authorized			19,903
Restricted stock units granted (1)			(14,868)
Options granted			(400)
Share-based awards canceled/forfeited/expired (1)(2)			4,774
Balance at July 31, 2022			26,260
Restricted stock units granted (1)			(12,098)
Options granted			(413)
Share-based awards canceled/forfeited/expired (1)(2)			5,277
Balance at July 31, 2023			19,026

(1)RSUs granted from the pool of shares available for grant under our Restated 2005 Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant under the Restated 2005 Plan increase the pool by 2.3 shares for each share forfeited. Through January 20, 2022, shares granted from the Credit Karma Plan reduce the pool by one share for each share granted and shares forfeited and returned to the pool from the Credit Karma Plan increase the pool by one share for each share forfeited. Beginning January 20, 2022, shares forfeited and returned to the pool from the Credit Karma Plan increase the pool by 2.3 shares for each share forfeited. No shares were granted from the Credit Karma Plan after January 20, 2022.

(2)Stock options and RSUs canceled, expired, or forfeited under our Restated 2005 Plan and Credit Karma Plan are returned to the pool of shares available for grant. Under the Restated 2005 Plan, shares withheld for income taxes upon vesting of RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options and RSUs canceled, expired, or forfeited under older expired plans are not returned to the pool of shares available for grant. Under the Credit Karma Plan, shares withheld for income taxes are also returned to the pool of shares available for grant.

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Restricted Stock Unit and Restricted Stock Activity

A summary of RSU and restricted stock activity for the periods indicated was as follows:

(Shares in thousands)			Number of Shares						Weighted Average Grant Date Fair Value
Nonvested at July 31, 2020			5,664						$231.97
Assumed through acquisition			1,998						355.49
Granted(1)			3,877						431.82
Restricted stock subject to revest provisions issued in connection with acquisition			775						355.49
Vested			(2,242)						262.23
Forfeited			(1,034)						251.41
Nonvested at July 31, 2021			9,038						345.86
Granted(2)			6,634						466.12
Vested			(3,154)						351.80
Forfeited			(1,051)						351.15
Nonvested at July 31, 2022			11,467						413.32
Granted			5,260						452.45
Vested			(4,019)						414.12
Forfeited			(814)						364.45
Nonvested at July 31, 2023			11,894						$433.70

(1)This includes 809,000 RSUs granted to employees of Credit Karma in connection with the acquisition with a grant date fair value of $300 million. See Note 7, “Business Combinations.”

(2)This includes approximately 583,000 RSUs granted to employees of Mailchimp in substitution of outstanding equity incentive awards with a grant date fair value of $355 million and approximately 325,000 RSUs granted to employees of Mailchimp in connection with the acquisition with a grant date fair value of $211 million. See Note 7, “Business Combinations.”

Additional information regarding our RSUs is shown in the table below.

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Total fair market value of shares vested			$	1,673					$	1,658					$	942
Share-based compensation for RSUs			$	1,636					$	1,248					$	708
Total tax benefit related to RSU share-based compensation expense			$	339					$	375					$	225
Cash tax benefits realized for tax deductions for RSUs			$	347					$	334					$	221

At July 31, 2023, there was $4.8 billion of unrecognized compensation cost related to non-vested RSUs and restricted stock with a weighted-average vesting period of 3.0 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.

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Stock Option Activity

A summary of stock option activity for the periods indicated was as follows:

			Options Outstanding
(Shares in thousands)			Number of Shares						Weighted Average Exercise Price Per Share
Balance at July 31, 2020			2,681						$185.83
Granted			323						525.51
Exercised			(718)						128.39
Canceled or expired			(82)						264.53
Balance at July 31, 2021			2,204						251.48
Granted			400						448.59
Exercised			(242)						164.94
Canceled or expired			(70)						426.22
Balance at July 31, 2022			2,292						289.62
Granted			413						489.85
Exercised			(551)						163.64
Canceled or expired			(24)						368.72
Balance at July 31, 2023			2,130						$360.17

Information regarding stock options outstanding as of July 31, 2023 is summarized below:

			Number of Shares (in thousands)						Weighted- Average Remaining Contractual Life (in years)						Weighted- Average Exercise Price per Share						Aggregate Intrinsic Value (in millions)
Options outstanding			2,130						4.26						$360.17						$327
Options exercisable			1,205						2.84						$278.28						$283

The aggregate intrinsic values at July 31, 2023 are calculated as the difference between the exercise price of the underlying options and the market price of our common stock for shares that were in-the-money at that date. In-the-money options at July 31, 2023 were options that had exercise prices that were lower than the $511.70 market price of our common stock at that date.

Additional information regarding our stock options and ESPP shares is shown in the table below.

			Twelve Months Ended July 31,
(In millions except per share amounts)			2023						2022						2021
Weighted-average fair value of options granted (per share)			$	144.92					$	136.76					$	122.16
Total grant date fair value of options vested			$	33					$	25					$	17
Aggregate intrinsic value of options exercised			$	150					$	78					$	179
Share-based compensation expense for stock options and ESPP			$	76					$	60					$	45
Total tax benefit for stock option and ESPP share-based compensation			$	34					$	21					$	44
Cash received from option exercises			$	90					$	40					$	92
Cash tax benefits realized related to tax deductions for non-qualified option exercises and disqualifying dispositions under all share-based payment arrangements			$	31					$	37					$	48

At July 31, 2023, there was $123 million of unrecognized compensation cost related to non-vested stock options with a weighted-average vesting period of 3.2 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.

			Intuit Fiscal 2023 Form 10-K			91

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Accumulated Other Comprehensive Loss

Comprehensive income consists of two elements, net income and other comprehensive income (loss). Other comprehensive income (loss) items are recorded in the stockholders’ equity section of our consolidated balance sheets and excluded from net income. Our other comprehensive income (loss) consists of unrealized gains and losses on marketable debt securities classified as available-for-sale and foreign currency translation adjustments for subsidiaries with functional currencies other than the U.S. dollar.

The following table shows the components of accumulated other comprehensive loss, net of income taxes, in the stockholders’ equity section of our consolidated balance sheets at the dates indicated.

			July 31,
(In millions)			2023						2022
Unrealized loss on available-for-sale debt securities			$	(7)					$	(7)
Foreign currency translation adjustments			(48)						(53)
Total accumulated other comprehensive loss			$	(55)					$	(60)

13. Benefit Plans

Non-Qualified Deferred Compensation Plan

Intuit’s Executive Deferred Compensation Plan provides that executives who meet minimum compensation requirements are eligible to defer up to 75% of their salaries and up to 75% of their bonuses. We have agreed to credit the participants’ contributions with earnings that reflect the performance of certain independent investment funds. We do not guarantee above-market interest on account balances. We may also make discretionary employer contributions to participant accounts in certain circumstances. The timing, amounts, and vesting schedules of employer contributions are at the sole discretion of the Compensation and Organizational Development Committee of our Board of Directors or its delegate. The benefits under this plan are unsecured and are general assets of Intuit. Participants are generally eligible to receive payment of their vested benefit at the end of their elected deferral period or after termination of their employment with Intuit for any reason or at a later date to comply with the restrictions of Section 409A of the Internal Revenue Code. Participants may elect to receive their payments in a lump sum or installments. Discretionary company contributions and the related earnings vest completely upon the participant’s disability, death, or a change in control of Intuit. We made no employer contributions to the plan for any period presented.

We had liabilities related to this plan of $171 million at July 31, 2023, and $147 million at July 31, 2022. We have matched the plan liabilities with similar-performing assets, which are primarily investments in life insurance contracts. These assets are recorded in other long-term assets, while liabilities related to obligations are recorded in other current liabilities on our consolidated balance sheets.

401(k) Plans

In the United States, employees who participate in the Intuit Inc. 401(k) Plan may currently contribute up to 50% of pre-tax compensation, subject to IRS limitations and the terms and conditions of the plan. We match a portion of employee contributions, currently 125% up to six percent of compensation, subject to maximum aggregate matching amounts and IRS limitations.

Additionally, Credit Karma employees in the United States who participate in the Credit Karma 401(k) Plan may currently contribute up to 90% of pre-tax compensation, subject to IRS limitations and the terms and conditions of the plan. We match a portion of Credit Karma employee contributions, currently 100% up to six percent of compensation each pay period, subject to maximum aggregate matching amounts and IRS limitations.

Matching contributions for both plans were $136 million for the twelve months ended July 31, 2023; $118 million for the twelve months ended July 31, 2022; and $80 million for the twelve months ended July 31, 2021.

			Intuit Fiscal 2023 Form 10-K			92

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14. Legal Proceedings

Beginning in May 2019, various legal proceedings were filed and certain regulatory inquiries were commenced in connection with our provision and marketing of free online tax preparation programs. We believe that the allegations contained within these legal proceedings are without merit and continue to defend our interests in them. These proceedings included, among others, multiple putative class actions that were consolidated into a single putative class action in the Northern District of California in September 2019 (the Intuit Free File Litigation). In August 2020, the Ninth Circuit Court of Appeals ordered that the putative class action claims be resolved through arbitration. In May 2021, the Intuit Free File Litigation was dismissed on a non-class basis after we entered into an agreement that resolved the matter on an individual non-class basis, without any admission of wrongdoing, for an amount that was not material. These proceedings also include a class action lawsuit that was filed in the Ontario (Canada) Superior Court of Justice on August 25, 2022.

These proceedings also included individual demands for arbitration that were filed beginning in October 2019. As of January 31, 2023, we settled all of these arbitration claims, without any admission of wrongdoing, for an amount that was not material. In June 2021, we received a demand and draft complaint from the Federal Trade Commission (FTC) and certain state attorneys general relating to the ongoing inquiries described above. On March 29, 2022, the FTC filed an action in federal court seeking a temporary restraining order and a preliminary injunction enjoining certain Intuit business practices pending resolution of the FTC’s administrative complaint seeking to permanently enjoin certain Intuit business practices (the FTC Actions). On April 22, 2022, the Northern District of California denied the FTC’s requests for a temporary restraining order and a preliminary injunction. Beginning on March 27, 2023, a final hearing on the administrative action was held before an administrative law judge at the FTC. That hearing concluded in April 2023 and, on August 29, 2023, the FTC administrative law judge issued an initial decision that was adverse to Intuit, requiring us to adhere to certain marketing practices but with no monetary penalty. This decision remains subject to further review by the FTC Commissioners before it takes effect. We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case. However, the defense and resolution of this matter could involve significant costs. The state attorneys general did not join the FTC Actions, and, on May 4, 2022, we entered into a settlement agreement with the attorneys general of the 50 states and the District of Columbia, admitting no wrongdoing, that resolved the states’ inquiry, as well as actions brought by the Los Angeles City Attorney and the Santa Clara County (California) Counsel. As part of this agreement, we agreed to pay $141 million and made certain commitments regarding our advertising and marketing practices. We recorded this as a one-time charge in the quarter ended April 30, 2022, and paid the full amount to the fund administrator in the quarter ended January 31, 2023.

In view of the complexity and ongoing and uncertain nature of the outstanding proceedings and inquiries, at this time we are unable to estimate a reasonably possible financial loss or range of financial loss that we may incur to resolve or settle the remaining matters.

To date, the legal and other fees we have incurred related to these proceedings and inquiries have not been material. The ongoing defense and any resolution or settlement of these proceedings and inquiries could involve significant costs to us.

Intuit is subject to certain routine legal proceedings, including class action lawsuits, as well as demands, claims, government inquiries, and threatened litigation, that arise in the normal course of our business, including assertions that we may be infringing patents or other intellectual property rights of others. Our failure to obtain necessary licenses or other rights, or litigation arising out of intellectual property claims could adversely affect our business. We currently believe that, in addition to any amounts accrued, the amount of potential losses, if any, for any pending claims of any type (either alone or combined) will not have a material impact on our consolidated financial statements. The ultimate outcome of any legal proceeding is uncertain and, regardless of outcome, legal proceedings can have an adverse impact on Intuit because of defense costs, negative publicity, diversion of management resources, and other factors.

			Intuit Fiscal 2023 Form 10-K			93

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15. Segment Information

We have defined our four reportable segments, described below, based on factors such as how we manage our operations and how our chief operating decision maker views results. We define the chief operating decision maker as our Chief Executive Officer and our Chief Financial Officer. Our chief operating decision maker organizes and manages our business primarily on the basis of product and service offerings.

On December 3, 2020, we acquired Credit Karma in a business combination and it operates as a separate reportable segment. We have included the results of operations of Credit Karma in our consolidated statements of operations from the date of acquisition. See Note 7, "Business Combinations," for more information. Segment operating income for Credit Karma includes all direct expenses, which is different from our other reportable segments where we do not fully allocate corporate expenses.

On November 1, 2021, we acquired Mailchimp in a business combination. Our Mailchimp offerings are part of our Small Business & Self-Employed segment. The related revenue is primarily included within Online Services in the revenue disaggregation below. We have included the results of operations of Mailchimp in our consolidated statements of operations from the date of acquisition.

On August 1, 2022, to better align our personal finance strategy, our Mint offering moved from our Consumer segment to our Credit Karma segment. Revenue and operating results for Mint are not material, and the previously reported segment results have not been reclassified. Effective August 1, 2022, the operating results for Mint are included in the Credit Karma segment.

On August 1 2022, we renamed our ProConnect segment as the ProTax segment. This segment continues to serve professional accountants.

Small Business & Self-Employed**:** This segment serves small businesses and the self-employed around the world, and the accounting professionals who assist and advise them. Our QuickBooks offerings include financial and business management online services and desktop software, payroll solutions, time tracking, merchant payment processing and bill pay solutions, and checking accounts through an FDIC member bank partner and financing for small businesses. Our Mailchimp offerings include marketing automation and customer relationship management. Consumer**:** This segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Credit Karma**:** This segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto, and personal loan, and insurance products; online savings and checking accounts through an FDIC member bank partner; and access to their credit scores and reports, credit and identity monitoring, credit report dispute, credit building tools, and tools to help understand net worth and make financial progress. Our Mint offering is a personal finance offering which helps customers track their finances and daily financial behaviors. ProTax**:** This segment serves professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, and ProConnect Tax Online in the U.S., and ProFile and ProTax Online in Canada.

All of our segments operate primarily in the United States and sell primarily to customers in the United States. Total international net revenue was approximately 8%, 8%, and 5% of consolidated total net revenue for the twelve months ended July 31, 2023, 2022, and 2021, respectively.

We include expenses such as corporate selling and marketing, product development, general and administrative, and non-employment related legal and litigation settlement costs, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. For our Credit Karma reportable segment, segment expenses include all direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, amortization of acquired technology, amortization of other acquired intangible assets, goodwill and intangible asset impairment charges, and professional fees and transaction charges related to business combinations.

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1. Except for goodwill and purchased intangible assets, we do not generally track assets by reportable segment and, consequently, we do not disclose total assets by reportable segment. See Note 6, “Goodwill and Acquired Intangible Assets,” for goodwill by reportable segment.

			Intuit Fiscal 2023 Form 10-K			94

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The following table shows our financial results by reportable segment for the periods indicated.

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Net revenue:
Small Business & Self-Employed			$	8,038					$	6,460					$	4,688
Consumer			4,135						3,915						3,563
Credit Karma			1,634						1,805						865
ProTax			561						546						517
Total net revenue			$	14,368					$	12,726					$	9,633
Operating income:
Small Business & Self-Employed			$	4,532					$	3,499					$	2,590
Consumer			2,707						2,483						2,237
Credit Karma			428						531						182
ProTax			395						383						372
Total segment operating income			8,062						6,896						5,381
Unallocated corporate items:
Share-based compensation expense			(1,712)						(1,308)						(753)
Other corporate expenses			(2,563)						(2,461)						(1,932)
Amortization of acquired technology			(163)						(140)						(50)
Amortization of other acquired intangible assets			(483)						(416)						(146)
Total unallocated corporate items			(4,921)						(4,325)						(2,881)
Total operating income			$	3,141					$	2,571					$	2,500

Revenue classified by significant product and service offerings was as follows:

			Twelve Months Ended July 31,
(In millions)			2023						2022						2021
Net revenue:
QuickBooks Online Accounting			$	2,849					$	2,267					$	1,699
Online Services			2,910						2,171						1,051
Total Online Ecosystem			5,759						4,438						2,750
QuickBooks Desktop Accounting			1,110						851						789
Desktop Services and Supplies			1,169						1,171						1,149
Total Desktop Ecosystem			2,279						2,022						1,938
Small Business & Self-Employed			8,038						6,460						4,688
Consumer			4,135						3,915						3,563
Credit Karma			1,634						1,805						865
ProTax			561						546						517
Total net revenue			$	14,368					$	12,726					$	9,633

			Intuit Fiscal 2023 Form 10-K			95

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INTUIT INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In millions)			Beginning Balance						Additions Charged to Expense/ Revenue						Deductions						Ending Balance
Year ended July 31, 2023
Allowance for doubtful accounts			$	31					$	57					$	(81)					$	7
Reserve for returns, credits, and promotional discounts			31						261						(260)						32
Year ended July 31, 2022
Allowance for doubtful accounts			$	96					$	74					$	(139)					$	31
Reserve for returns, credits, and promotional discounts			31						247						(247)						31
Year ended July 31, 2021
Allowance for doubtful accounts			$	12					$	92					$	(8)					$	96
Reserve for returns, credits, and promotional discounts			35						230						(234)						31

			Intuit Fiscal 2023 Form 10-K			96

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