Segment Information

6 Months Ended

Jan. 31, 2020

10. Segment Information

We have defined our three 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.

Small Business & Self-Employed: This segment serves small businesses and the self-employed around the world, and the accounting professionals who serve and advise them. Our offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, merchant payment processing solutions, and financing for small businesses.

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. Our Mint and Turbo offerings serve consumers and help them understand and improve their financial lives by offering a view of their financial health.

Strategic Partner: 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, ProFile, and ProConnect Tax Online.

All of our segments operate primarily in the United States and sell primarily to customers in the United States. International total net revenue was approximately 5% of consolidated total net revenue for all periods presented.

We include expenses such as corporate selling and marketing, product development, general and administrative, and share-based compensation, which are not allocated to specific segments, in unallocated corporate items. Unallocated corporate items also include amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges.

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2019 and in Note 1, "Description of Business and Summary of Significant Accounting Policies – Significant Accounting Policies" in this Quarterly Report on Form 10-Q. 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.

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



	Three Months Ended						Six Months Ended
(In millions)	January 31, 2020			January 31, 2019			January 31, 2020			January 31, 2019
Net revenue:
Small Business & Self-Employed	$	973		$	833		$	2,019		$	1,741
Consumer	499			461			599			551
Strategic Partner	224			208			243			226
Total net revenue	$	1,696		$	1,502		$	2,861		$	2,518

Operating income:
Small Business & Self-Employed	$	402		$	320		$	952		$	780
Consumer	163			164			118			123
Strategic Partner	182			166			161			146
Total segment operating income	747			650			1,231			1,049
Unallocated corporate items:
Share-based compensation expense	(107		)	(100		)	(218		)	(205		)
Other common expenses	(363		)	(311		)	(718		)	(608		)
Amortization of acquired technology	(6		)	(5		)	(12		)	(10		)
Amortization of other acquired intangible assets	(1		)	(1		)	(3		)	(3		)
Total unallocated corporate items	(477		)	(417		)	(951		)	(826		)
Total operating income	$	270		$	233		$	280		$	223

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



	Three Months Ended				Six Months Ended
(In millions)	January 31, 2020		January 31, 2019		January 31, 2020		January 31, 2019
Net revenue:

QuickBooks Online Accounting	$	330	$	231	$	636	$	448
Online Services	200		163		395		317
Total Online Ecosystem	530		394		1,031		765
QuickBooks Desktop Accounting	165		154		404		382
Desktop Services and Supplies	278		285		584		594
Total Desktop Ecosystem	443		439		988		976
Small Business & Self-Employed	973		833		2,019		1,741
Consumer	499		461		599		551
Strategic Partner	224		208		243		226
Total net revenue	$	1,696	$	1,502	$	2,861	$	2,518

Revenue from our QuickBooks Desktop packaged software products was $34 million and $61 million for the three and six months ended January 31, 2020, respectively, and $37 million and $66 million for the three and six months ended January 31, 2019, respectively. These amounts are included in the QuickBooks Desktop Accounting revenue presented in the table above.