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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 10-Q
 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended January 31, 2023
OR
 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________ .
Commission File Number 0-21180
intu-20230131_g1.jpg
INTUIT INC.
(Exact name of registrant as specified in its charter)
Delaware77-0034661
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

2700 Coast Avenue, Mountain View, CA 94043
(Address of principal executive offices, including zip code)
(650944-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of each classTrading SymbolName of each exchange on which registered
 Common Stock, $0.01 par valueINTUNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting
company
Emerging growth
company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 280,546,394 shares of Common Stock, $0.01 par value, were outstanding at February 16, 2023.



INTUIT INC.
FORM 10-Q
INDEX
Page
 
 
Intuit, QuickBooks, TurboTax, Credit Karma, and Mailchimp, among others, are registered trademarks and/or registered service marks of Intuit Inc., or one of its subsidiaries, in the United States and other countries. Other parties’ marks are the property of their respective owners.
 Intuit Q2 Fiscal 2023 Form 10-Q
2


Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Please also see the section entitled "Risk Factors" in Item 1A of Part II of this Quarterly Report for important information to consider when evaluating these statements. All statements in this report, other than statements that are purely historical, are forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “forecast,” “estimate,” “seek,” and similar expressions also identify forward-looking statements. In this report, forward-looking statements include, without limitation, the following:
our expectations and beliefs regarding future conduct and growth of the business;
statements regarding the impact of the COVID-19 pandemic and macroeconomic conditions on our business;
our beliefs and expectations regarding seasonality, competition and other trends that affect our business;
our expectation that we will continue to invest significant resources in our product development, marketing and sales capabilities;
our expectation that we will continue to invest significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities;
our expectation that we will work with the broader industry and government to protect our customers from fraud;
our expectation that we will generate significant cash from operations;
our expectation that total service and other revenue as a percentage of our total revenue will continue to grow;
our expectations regarding the development of future products, services, business models and technology platforms and our research and development efforts;
our assumptions underlying our critical accounting policies and estimates, including our judgments and estimates regarding revenue recognition; the fair value of goodwill; and expected future amortization of acquired intangible assets;
our intention not to sell our investments and our belief that it is more likely than not that we will not be required to sell them before recovery at par;
our belief that the investments we hold are not other-than-temporarily impaired;
our belief that we take prudent measures to mitigate investment related risks;
our belief that our exposure to currency exchange fluctuation risk will not be significant in the future;
our assessments and estimates that determine our effective tax rate;
our belief that our income tax valuation allowance is sufficient;
our belief that it is not reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months;
our belief that our cash and cash equivalents, investments and cash generated from operations will be sufficient to meet our seasonal working capital needs, capital expenditure requirements, contractual obligations, debt service requirements and other liquidity requirements associated with our operations for at least the next 12 months;
our expectation that we will return excess cash generated by operations to our stockholders through repurchases of our common stock and the payment of cash dividends, after taking into account our operating and strategic cash needs;
our judgments and assumptions relating to our loan portfolio;
our belief that the credit facilities will be available to us should we choose to borrow under them;
our expectations regarding acquisitions and their impact on business and strategic priorities; and
our assessments and beliefs regarding the future developments and outcomes of pending legal proceedings and inquiries by regulatory authorities, the liability, if any, that Intuit may incur as a result of those proceedings and inquiries, and the impact of any potential losses or expenses associated with such proceedings or inquiries on our financial statements.
We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. We encourage you to read carefully all information provided in this report and in our other filings with the Securities and Exchange Commission before deciding to invest in our stock or to maintain or change your investment. These forward-looking statements are based on information as of the filing date of this Quarterly Report and, except as required by law, we undertake no obligation to revise or update any forward-looking statement for any reason.
 Intuit Q2 Fiscal 2023 Form 10-Q
3

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 Three Months EndedSix Months Ended
(In millions, except per share amounts)January 31,
2023
January 31,
2022
January 31,
2023
January 31,
2022
Net revenue:  
Product$607 $525 $1,034 $922 
Service and other2,434 2,148 4,604 3,758 
Total net revenue3,041 2,673 5,638 4,680 
Costs and expenses:  
Cost of revenue:  
Cost of product revenue23 20 38 35 
Cost of service and other revenue709 503 1,329 890 
Amortization of acquired technology41 42 82 57 
Selling and marketing924 942 1,719 1,492 
Research and development630 590 1,255 1,120 
General and administrative323 399 627 661 
Amortization of other acquired intangible assets121 121 242 174 
Total costs and expenses2,771 2,617 5,292 4,429 
Operating income270 56 346 251 
Interest expense(65)(21)(114)(28)
Interest and other income (loss), net23 (5)28 45 
Income before income taxes228 30 260 268 
Income tax provision (benefit)60 (70)52 (60)
Net income$168 $100 $208 $328 
Basic net income per share$0.60 $0.35 $0.74 $1.18 
Shares used in basic per share calculations281 283 281 278 
Diluted net income per share$0.60 $0.35 $0.73 $1.16 
Shares used in diluted per share calculations282 287 283 282 
See accompanying notes.
 Intuit Q2 Fiscal 2023 Form 10-Q
4


INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
 Three Months EndedSix Months Ended
(In millions)January 31,
2023
January 31,
2022
January 31,
2023
January 31,
2022
Net income$168 $100 $208 $328 
Other comprehensive income (loss), net of income taxes:
Unrealized gain (loss) on available-for-sale debt securities6 (1) (5)
Foreign currency translation gain (loss)18 (4)(3)(5)
Total other comprehensive income (loss), net24 (5)(3)(10)
Comprehensive income$192 $95 $205 $318 
See accompanying notes.


 Intuit Q2 Fiscal 2023 Form 10-Q
5


INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In millions)January 31,
2023
July 31,
2022
ASSETS  
Current assets:  
Cash and cash equivalents$1,547 $2,796 
Investments524 485 
Accounts receivable, net903 446 
Notes receivable948 509 
Income taxes receivable67 93 
Prepaid expenses and other current assets391 287 
Current assets before funds receivable and amounts held for customers4,380 4,616 
Funds receivable and amounts held for customers376 431 
Total current assets4,756 5,047 
Long-term investments108 98 
Property and equipment, net931 888 
Operating lease right-of-use assets508 549 
Goodwill13,779 13,736 
Acquired intangible assets, net6,737 7,061 
Long-term deferred income tax assets12 11 
Other assets371 344 
Total assets$27,202 $27,734 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Short-term debt$501 $499 
Accounts payable811 737 
Accrued compensation and related liabilities502 576 
Deferred revenue852 808 
Other current liabilities820 579 
Current liabilities before funds payable and amounts due to customers3,486 3,199 
Funds payable and amounts due to customers376 431 
Total current liabilities3,862 3,630 
Long-term debt6,576 6,415 
Long-term deferred income tax liabilities320 619 
Operating lease liabilities514 542 
Other long-term obligations88 87 
Total liabilities11,360 11,293 
Commitments and contingencies
Stockholders’ equity:  
Preferred stock  
Common stock and additional paid-in capital18,392 17,725 
Treasury stock, at cost(15,824)(14,805)
Accumulated other comprehensive loss(63)(60)
Retained earnings13,337 13,581 
Total stockholders’ equity15,842 16,441 
Total liabilities and stockholders’ equity$27,202 $27,734 
See accompanying notes.
 Intuit Q2 Fiscal 2023 Form 10-Q
6

.
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
Three Months Ended January 31, 2023
(In millions, except per share amount and shares in thousands)Shares of
Common
Stock
Common
Stock and
Additional
Paid-In Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Balance at October 31, 2022281,328 $18,082 $(15,324)$(87)$13,396 $16,067 
Comprehensive income— — — 24 168 192 
Issuance of stock under employee stock plans, net of shares withheld for employee taxes616 (113)— — — (113)
Stock repurchases under stock repurchase programs(1,276)— (500)— — (500)
Dividends and dividend rights declared ($0.78 per share)
— — — — (227)(227)
Share-based compensation expense— 423 — — — 423 
Balance at January 31, 2023280,668 $18,392 $(15,824)$(63)$13,337 $15,842 

Six Months Ended January 31, 2023
(In millions, except per share amount and shares in thousands)Shares of
Common
Stock
Common
Stock and
Additional
Paid-In Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Balance at July 31, 2022281,932 $17,725 $(14,805)$(60)$13,581 $16,441 
Comprehensive income— — — (3)208 205 
Issuance of stock under employee stock plans, net of shares withheld for employee taxes1,250 (178)— — — (178)
Stock repurchases(2,514)— (1,019)— — (1,019)
Dividends and dividend rights declared ($1.56 per share)
— — — — (452)(452)
Share-based compensation expense— 845 — — — 845 
Balance at January 31, 2023280,668 $18,392 $(15,824)$(63)$13,337 $15,842 

See accompanying notes.

 Intuit Q2 Fiscal 2023 Form 10-Q
7

INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
Three Months Ended January 31, 2022
(In millions, except per share amount and shares in thousands)Shares of
Common
Stock
Common
Stock and
Additional
Paid-In Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Balance at October 31, 2021273,222 $10,718 $(13,289)$(29)$12,333 $9,733 
Comprehensive income— — — (5)100 95 
Issuance of stock under employee stock plans, net of shares withheld for employee taxes498 (168)— — — (168)
Stock repurchases under stock repurchase programs(810)— (519)— — (519)
Dividends and dividend rights declared ($0.68 per share)
— — — — (198)(198)
Share-based compensation expense— 336 — — — 336 
Issuance of stock in business combination10,090 6,316 — — — 6,316 
Balance at January 31, 2022283,000 $17,202 $(13,808)$(34)$12,235 $15,595 

Six Months Ended January 31, 2022
(In millions, except per share amount and shares in thousands)Shares of
Common
Stock
Common
Stock and
Additional
Paid-In Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Balance at July 31, 2021273,235 $10,548 $(12,951)$(24)$12,296 $9,869 
Comprehensive income— — — (10)328 318 
Issuance of stock under employee stock plans, net of shares withheld for employee taxes1,091 (279)— — — (279)
Stock repurchases under stock repurchase programs(1,416)— (857)— — (857)
Dividends and dividend rights declared ($1.36 per share)
— — — — (389)(389)
Share-based compensation expense— 617 — — — 617 
Issuance of stock in business combination10,090 6,316 — — — 6,316 
Balance at January 31, 2022283,000 $17,202 $(13,808)$(34)$12,235 $15,595 

See accompanying notes.
 Intuit Q2 Fiscal 2023 Form 10-Q
8


INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
(In millions)January 31,
2023
January 31,
2022
Cash flows from operating activities:  
Net income$208 $328 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation94 96 
Amortization of acquired intangible assets324 233 
Non-cash operating lease cost46 40 
Share-based compensation expense845 616 
Deferred income taxes(290)(12)
Other42 (29)
Total adjustments1,061 944 
Changes in operating assets and liabilities:
Accounts receivable(456)(472)
Income taxes receivable27 (117)
Prepaid expenses and other assets(108)(133)
Accounts payable60 84 
Accrued compensation and related liabilities(75)(523)
Deferred revenue40 83 
Operating lease liabilities(38)(41)
Other liabilities(107)77 
Total changes in operating assets and liabilities(657)(1,042)
Net cash provided by operating activities612 230 
Cash flows from investing activities:  
Purchases of corporate and customer fund investments(388)(318)
Sales of corporate and customer fund investments125 1,429 
Maturities of corporate and customer fund investments225 154 
Purchases of property and equipment(132)(107)
Acquisitions of businesses, net of cash acquired(33)(5,682)
Originations and purchases of loans(1,015)(317)
Principal repayments of loans530 175 
Other(16)(16)
Net cash used in investing activities(704)(4,682)
Cash flows from financing activities:  
Proceeds from issuance of long-term debt 4,700 
Repayment of debt(9) 
Proceeds from borrowings under secured revolving credit facilities175 2 
Repayments on borrowings under secured revolving credit facilities(16) 
Proceeds from issuance of stock under employee stock plans81 75 
Payments for employee taxes withheld upon vesting of restricted stock units(259)(355)
Cash paid for purchases of treasury stock(1,017)(874)
Dividends and dividend rights paid(446)(385)
Net change in funds receivable and funds payable and amounts due to customers(199)(82)
Cash received from a bank partner336  
Other(1)(9)
 Intuit Q2 Fiscal 2023 Form 10-Q
9

Net cash provided by (used in) financing activities(1,355)3,072 
Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents(1)(6)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents(1,448)(1,386)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period2,997 2,819 
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,549 $1,433 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the condensed consolidated balance sheets to the total amounts reported on the condensed consolidated statements of cash flows
Cash and cash equivalents$1,547 $1,257 
Restricted cash and restricted cash equivalents included in funds receivable and amounts held for customers2 176 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,549 $1,433 
Supplemental schedule of non-cash investing activities:
Issuance of common stock in business combinations$ $6,316 
See accompanying notes.
 Intuit Q2 Fiscal 2023 Form 10-Q
10

INTUIT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Intuit helps consumers and small businesses prosper by delivering financial management and compliance 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, save money, pay off debt and do their taxes. For those customers who run small businesses, we are also focused on helping them find and keep customers, get paid faster, pay their employees, manage and get access to capital, and ensure that their books are done right. ProSeries and Lacerte are our leading tax preparation offerings for professional accountants. Incorporated in 1984 and headquartered in Mountain View, California, we sell our products and services primarily in the United States.
Basis of Presentation
These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented. We have reclassified certain amounts previously reported in our financial statements that were not material to conform to the current presentation.
We acquired The Rocket Science Group LLC (Mailchimp) on November 1, 2021. We have included the results of operations for Mailchimp in our condensed consolidated statements of operations from the date of acquisition. We have completed the purchase price allocation for the Mailchimp acquisition as of January 31, 2023 with no material adjustments from those disclosed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2022. Mailchimp is part of our Small Business & Self-Employed segment.
On August 1, 2022, we renamed our ProConnect segment as the ProTax segment. This segment continues to serve professional accountants. See Note 12, "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 12, "Segment Information," for more information.
These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2022. Results for the six months ended January 31, 2023 do not necessarily indicate the results we expect for the fiscal year ending July 31, 2023 or any other future period.
Seasonality
Our Consumer and ProTax offerings have a significant and distinct seasonal pattern as sales and revenue from our income tax preparation products and services are typically concentrated in the period from November through April. This seasonal pattern results in higher net revenues during our second and third quarters ending January 31 and April 30, respectively.
Significant Accounting Policies
We describe our significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2022. There have been no changes to our significant accounting policies during the first six months of fiscal 2023.
 Intuit Q2 Fiscal 2023 Form 10-Q
11

Use of Estimates
In preparing our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP), we make certain judgments, estimates, and assumptions that affect the amounts reported in our financial statements and the disclosures made in the accompanying notes. For example, we use judgments and estimates in determining how revenue should be recognized. These judgments and estimates include identifying performance obligations, determining if the performance obligations are distinct, determining the standalone sales price (SSP) and timing of revenue recognition for each distinct performance obligation, and estimating variable consideration to be included in the transaction price. We use estimates in determining the collectibility of accounts receivable and notes receivable, the appropriate levels of various accruals including accruals for litigation contingencies, the discount rate used to calculate lease liabilities, the amount of our worldwide tax provision, the realizability of deferred tax assets, the credit losses of available-for-sale debt securities, reserves for losses, and the fair value of assets acquired and liabilities assumed for business combinations. We also use estimates in determining the remaining economic lives and fair values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.
Computation of Net Income Per Share
We compute basic net income or loss per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of the shares issuable upon the exercise of stock options and upon the vesting of restricted stock units (RSUs) under the treasury stock method.
We include stock options with combined exercise prices and unrecognized compensation expense that are less than the average market price for our common stock, and RSUs with unrecognized compensation expense that is less than the average market price for our common stock, in the calculation of diluted net income per share. We exclude stock options with combined exercise prices and unrecognized compensation expense that are greater than the average market price for our common stock, and RSUs with unrecognized compensation expense that is greater than the average market price for our common stock, from the calculation of diluted net income per share because their effect is anti-dilutive. Under the treasury stock method, the amount that must be paid to exercise stock options and the amount of compensation expense for future service that we have not yet recognized for stock options and RSUs are assumed to be used to repurchase shares.
All of the RSUs we grant have dividend rights. Dividend rights are accumulated and paid when the underlying RSUs vest. Since the dividend rights are subject to the same vesting requirements as the underlying equity awards they are considered a contingent transfer of value. Consequently, the RSUs are not considered participating securities and we do not present them separately in earnings per share.
In loss periods, basic net loss per share and diluted net loss per share are the same since the effect of potential common shares is anti-dilutive and therefore excluded.
 Intuit Q2 Fiscal 2023 Form 10-Q
12

The following table presents the composition of shares used in the computation of basic and diluted net income per share for the periods indicated.
 Three Months EndedSix Months Ended
(In millions, except per share amounts)January 31,
2023
January 31,
2022
January 31,
2023
January 31,
2022
Numerator:    
Net income$168 $100 $208 $328 
Denominator:    
Shares used in basic per share amounts:    
Weighted average common shares outstanding281 283 281 278 
Shares used in diluted per share amounts:
Weighted average common shares outstanding281 283 281 278 
Dilutive common equivalent shares from stock options
and restricted stock awards1 4 2 4 
Dilutive weighted average common shares outstanding282 287 283 282 
Basic and diluted net income per share:    
Basic net income per share$0.60 $0.35 $0.74 $1.18 
Diluted net income per share$0.60 $0.35 $0.73 $1.16 
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 effect7  3  
Deferred Revenue
We record deferred revenue when we have entered into a contract with a customer, and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation. During the three and six months ended January 31, 2023, we recognized revenue of $158 million and $693 million, respectively, that was included in deferred revenue at July 31, 2022. During the three and six months ended January 31, 2022, we recognized revenue of $157 million and $578 million, respectively, 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 January 31, 2023 and July 31, 2022, the deferred revenue balance related to performance obligations that will be satisfied after 12 months was $4 million and $6 million, respectively, and is included in other long-term obligations on our condensed consolidated balance sheets.
Concentration of Credit Risk and Significant Customers
No customer accounted for 10% or more of total net revenue in the three or six months ended January 31, 2023 or January 31, 2022. No customer accounted for 10% or more of gross accounts receivable at January 31, 2023 or July 31, 2022.
Accounting Standards Not Yet Adopted
We do not expect that any recently issued accounting pronouncements will have a significant 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.
 Intuit Q2 Fiscal 2023 Form 10-Q
13

The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:
Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.
Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.
Level 3 uses one or more unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes financial assets and financial liabilities that we measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above.
January 31, 2023July 31, 2022
(In millions)Level 1Level 2Total
Fair Value
Level 1Level 2Total
Fair Value
Assets:      
Cash equivalents, primarily money market funds and time deposits$249 $ $249 $1,835 $ $1,835 
Available-for-sale debt securities:      
Corporate notes 597 597  589 589 
U.S. agency securities 127 127  96 96 
Total available-for-sale debt securities 724 724  685 685 
Total assets measured at fair value on a recurring basis$249 $724 $973 $1,835 $685 $2,520 
Liabilities:
Senior unsecured notes(1)
$ $1,807 $1,807 $ $1,838 $1,838 
(1) Carrying value on our condensed consolidated balance sheets at January 31, 2023 and July 31, 2022 was $1.99 billion. See Note 6, “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.
January 31, 2023July 31, 2022
(In millions)Level 1Level 2Total
Fair Value
Level 1Level 2Total
Fair Value
Cash equivalents:      
In cash and cash equivalents$249 $ $249 $1,835 $ $1,835 
In funds receivable and amounts held for customers      
Total cash equivalents$249 $ $249 $1,835 $ $1,835 
Available-for-sale debt securities:      
In investments$ $524 $524 $ $485 $485 
In funds receivable and amounts held for customers 200 200  200 200 
Total available-for-sale debt securities$ $724 $724 $ $685 $685 
We value our Level 1 assets, consisting primarily of money market funds and time deposits, using quoted prices in active markets for identical instruments.
Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of corporate notes and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying
 Intuit Q2 Fiscal 2023 Form 10-Q
14

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 6, “Debt,” for more information. We measure the fair value of our senior unsecured notes based on their trading prices and the interest rates we could obtain for other borrowings with similar terms.
There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended January 31, 2023.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
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 three and six months ended January 31, 2023, respectively. We recognized no upward adjustments during the three months ended January 31, 2022 and $46 million during the six months ended January 31, 2022. Impairments recognized during the three and six months ended January 31, 2023 and January 31, 2022 were not material. Cumulative upward adjustments were $71 million, and cumulative impairments were not material through January 31, 2023 for measurement alternative investments held as of January 31, 2023. The carrying value of long-term investments on our condensed consolidated balance sheets was $108 million and $98 million at January 31, 2023 and July 31, 2022, respectively.
3. Cash and Cash Equivalents, Investments, and Funds Receivable and Amounts Held for Customers
We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. In all periods presented, cash equivalents consist primarily of money market funds and time deposits. Investments consist primarily of investment-grade available-for-sale debt securities. Funds receivable and amounts held for customers 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 securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments in debt securities by limiting our holdings with any individual issuer.
The following table summarizes our cash and cash equivalents, investments, and funds receivable and amounts held for customers by balance sheet classification at the dates indicated.
 January 31, 2023July 31, 2022
(In millions)Amortized
Cost
Fair ValueAmortized
Cost
Fair Value
Classification on condensed consolidated balance sheets:    
Cash and cash equivalents$1,547 $1,547 $2,796 $2,796 
Investments529 524 490 485 
Funds receivable and amounts held for customers381 376 435 431 
Total cash and cash equivalents, investments, and funds receivable and amounts held for customers$2,457 $2,447 $3,721 $3,712 
 Intuit Q2 Fiscal 2023 Form 10-Q
15

The following table summarizes our cash and cash equivalents, investments, and relevant portion of funds receivable and amounts held for customers by investment category at the dates indicated. As of January 31, 2023 and July 31, 2022, this excludes $174 million and $30 million, respectively, of funds receivable included on our condensed consolidated balance sheets in funds receivable and amounts held for customers not measured and recorded at fair value.
 January 31, 2023July 31, 2022
(In millions)Amortized
Cost
Fair ValueAmortized
Cost
Fair Value
Type of issue:    
Total cash, cash equivalents, restricted cash,
and restricted cash equivalents
$1,549 $1,549 $2,997 $2,997 
Available-for-sale debt securities:
Corporate notes605 597 597 589 
U.S. agency securities129 127 97 96 
Total available-for-sale debt securities734 724 694 685 
Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments$2,283 $2,273 $3,691 $3,682 
We use the specific identification method to compute gains and losses on investments. We include realized gains and losses on our available-for-sale debt securities in interest and other income on our condensed consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the six months ended January 31, 2023 and January 31, 2022 were not material.
We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income or loss in the stockholders’ equity section of our condensed consolidated balance sheets, except for certain unrealized losses described below. Gross unrealized gains and losses on our available-for-sale debt securities at January 31, 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 condensed consolidated statement of operations, not to exceed the amount of the unrealized loss. Any excess unrealized loss greater than the credit loss at a security level is recognized in accumulated other comprehensive income or loss in the stockholders' equity section of our condensed consolidated balance sheets. We determined there were no credit losses related to available-for-sale debt securities as of January 31, 2023. Unrealized losses on available-for-sale debt securities at January 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.
 January 31, 2023July 31, 2022
(In millions)Amortized
Cost
Fair ValueAmortized
Cost
Fair Value
Due within one year$375 $371 $316 $