INTUIT INC. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Tax results: Consumer group revenue expected to grow 10% this year, driven by 24% growth in TurboTax Live customers and 47% revenue growth. Data, AI, and AI-enabled human expertise disrupted the assisted tax category. Seamless customer experience across TurboTax and Credit Karma was achieved, with over 70% of Credit Karma members having zero-click login this season. Done-for-you experiences reduced average time on return, expanded data coverage from over 200 partners to cover 90% of customers' common tax documents, and AI guided customers to the right offerings.
• Business platform: Done-for-you experiences are resonating, with nearly a quarter of invoicing customers using generated invoice reminders seeing >10% higher payment conversion rate on overdue invoices. QuickBooks Live connecting customers to AI-enabled human experts increased 2x. Launching transformative innovations with end-to-end AI agents for customer, payments, finance, project management, accounting, including mid-market offerings to help customers achieve success with less effort and complete confidence.
• Mid-market: Making strong progress serving mid-market customers with $89 billion TAM. Intuit Inc.'s platform is becoming a one-stop shop for mid-market customers. Signed a deal with an 18-entity title company, which returned to Intuit Inc. after migrating to another ERP solution. Accelerating progress on IES with quarterly product releases, strengthening partnership with accounting firms, and accountants driving ~15% of Intuit Enterprise Suite deals

Segment Performance

• Consumer group: Revenue of $4 billion in Q3 grew 11%. Expected to grow ~10% this year. TurboTax Live customers expected to grow 24%, with revenue growing 47%, representing ~40% of consumer group revenue. Online paying units expected to grow 6% this year. Pay-nothing customers expected ~8 million, down from over 10 million last fiscal year. Online TurboTax units expected to decline ~1% this year, and share of total returns expected to decline ~one point.
• Pro tax group: Revenue grew 9% in Q3. Full year expected ProTax Group revenue growth of 3% to 4%.
• Global Business Solutions Group: Revenue grew 19% in Q3, driven by online ecosystem revenue growth of 20% or 24% excluding Mailchimp. QuickBooks online accounting revenue grew 21% in Q3. Online services revenue grew 18% in Q3, or 29% excluding Mailchimp. Desktop ecosystem revenue grew 18% in Q3, expected mid-single digits growth in fiscal 2025. Expect GBSG revenue in the upper band of previous guidance, representing 16% revenue growth for fiscal 2025.
• Credit Karma: Revenue grew 31% in Q3. Expected to drive a point of consumer group revenue growth this fiscal year. Guidance for fiscal 2025 revenue growth raised to 28% from 5% to 8% previously

Guidance

• Increasing fiscal 2025 total revenue, operating income, implied operating margin, and earnings per share guidance. Revenue growth 15% (up from prior 12%-13%), GAAP operating income growth 35% (up from 28%-30%), non-GAAP operating income growth 18% (up from 13%-14%), GAAP diluted EPS growth 26%-27% (up from 18%-20%), non-GAAP diluted EPS growth 18%-19% (up from 13%-14%). Q4 2025 total company revenue growth 17%-18%, GAAP EPS $0.84-$0.89, non-GAAP EPS $2.63-$2.68. Leveraging AI to operate more efficiently and increase productivity, expecting 100 basis point margin improvement this fiscal year while investing in growth

Risks

• There are a number of factors that could cause Intuit Inc.'s results to differ materially from expectations. These risks can be found in the press release issued earlier this afternoon, Intuit Inc.'s Form 10-Ks for fiscal 2024, and other SEC filings, available on the Investor Relations page of Intuit Inc.'s website at intuit.com

Question and Answer

• Q: Siti Panigrahi with Mizuho asked about the strategy behind the double-digit growth in consumer tax business and sustainability.

A: Sasan Goodarzi responded about winning on experience, price, and fastest access to money, breakthrough adoption, and areas for improvement in the customer experience

• Q: Brad Zelnick with Deutsche Bank asked about unpacking the 47% growth in live in full service A: Sasan Goodarzi talked about adoption within the base, breakthrough new customers, and areas for improvement in the go-to-market campaign
• Q: Alex Zukin with Wolfe Research asked about AI agents, pricing model, and OpEx efficiency A: Sasan Goodarzi and Sandeep Aujla discussed AI agents' functionality, pricing for value including one-for-one and consumption-based models, and AI's role in improving efficiency and margins
• Q: Raimo Lenschow with Barclays asked about Credit Karma's strong results A: Sandeep Aujla attributed it to execution, AI integration, and generating management alpha
• Q: Kash Rangan with Goldman Sachs asked about company resilience in an economic downturn A: Sasan Goodarzi stated that over 90% of the company is recurring revenue and subscription-based, mission-critical to customers, and Intuit is a low-cost disruptor in assisted tax and mid-market segments
• Q: Kirk Materne with Evercore ISI asked about reclaiming customers for Intuit Enterprise Services A: Sasan Goodarzi mentioned focus on upgrading existing customers to QuickBooks Advanced and IES, with word-of-mouth from customers like the 18-entity title company indicating potential for hunting outside the base
• Q: Alan Virkofsky with Scotiabank asked about general pricing increases and GBSG revenue growth confidence A: Sasan Goodarzi said customers are saving money by migrating to Intuit's platform, leading to pricing opportunities with one-for-one and consumption-based models, and confidence in GBSG revenue growth due to winning in small business, mid-market, and Mailchimp integration
• Q: Brent Thill with Jefferies asked about durability of TurboTax Live growth A: Sasan Goodarzi emphasized winning on experience, price, and early access to money, with focus on continuing to improve the platform and confidence in TurboTax Live growth within the 15%-20% range
• Q: Michael Turrin with Wells Fargo Securities asked about EPS growth and margin progression A: Sandeep Aujla talked about productivity gains from AI, automation, and technology embedding across the company, leading to margin expansion and operating income growing faster than revenue
• Q: Scott Schneeberger with Oppenheimer asked about assisted category growth and marketing spend A: Sasan Goodarzi and Sandeep Aujla discussed Intuit's role in disrupting the assisted tax category and the timing and ROI of marketing spend, focusing on maximizing ROI and targeting the right customers
• Q: Daniel Jester with BMO Capital Markets asked about IES go-to-market and accounting partner importance A: Sasan Goodarzi talked about the early innings of IES go-to-market, single-threaded focus on mid-market, and accounting partners being critical as partners to serve mid-market customers together