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Intuit (NASDAQ: INTU)
Q1 2025 Earnings Call
Nov 21, 2024, 4:30 p.m. ET

Intuit Reports Strong Q1 2025 Earnings with AI-Driven Growth

Today’s Discussion Overview

• Prepared Remarks
• Questions and Answers
• Call Participants

Insights from the Intuit Leadership

Operator

Good afternoon. My name is David, and I’ll be your conference operator. Welcome to Intuit’s first quarter fiscal year 2025 conference call. All lines have been muted to minimize background noise.

Following the speakers’ remarks, we will hold a question-and-answer session. [Operator instructions] Now, I will turn the call over to Kim Watkins, Intuit’s Vice President of Investor Relations. Ms. Watkins?

Kim A. Watkins — Vice President, Investor Relations

Thank you, David. Good afternoon, everyone. Welcome to Intuit’s first quarter fiscal 2025 conference call. I am joined by our CEO, Sasan Goodarzi, and CFO, Sandeep Aujla. Before we dive into the details, I want to remind you that our statements today will include forward-looking information.

Many factors could lead to outcomes that differ from our expectations. More on these risks can be found in our earlier press release, our Form 10-K for fiscal 2024, and other SEC filings available on the Intuit investor relations website. We are under no obligation to update any forward-looking statements.

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Some data presented here is on a non-GAAP basis, reconciled in today’s press release. Growth rates compare the current period to the same period last year, and business metrics reflect global figures. For more details, our prepared remarks and supplemental financial information will be available on our website post-call.

Now, I will turn the call over to Sasan.

Sasan K. Goodarzi — Chief Executive Officer and Director

Thank you, Kim. Thank you all for joining us today. It was encouraging to see many of you at our investor day. Our momentum and innovation highlight the impact of our AI-driven expert platform strategy, which provides real benefits for our customers and fuels Intuit’s growth.

Let’s delve into our first quarter. We’ve had a robust start, with revenue growth of 10%. This growth is driven primarily by our global business solutions group, which saw online ecosystem revenue increase by 20%, alongside a 29% growth in Credit Karma revenue. We remain confident in achieving double-digit revenue growth and margin expansion this year, affirming our full-year guidance. The future is indeed AI-driven.

This transformation is reshaping both work and personal life. Intuit has evolved from a tax and accounting platform into an AI-driven expert ecosystem. By offering done-for-you experiences, we empower our customers while providing access to AI-powered experts that support their financial success.

Our competitive edge lies in our extensive data, AI capabilities, and a vast network of virtual experts. We are revolutionizing our service categories, ensuring better financial outcomes for our users. Our steady progress and positive feedback reinforce our belief in this strategy. Let’s outline how our key initiatives are tackling customer challenges and fostering our platform’s success.

Focusing first on our consumer platform, our third major initiative aims to assist customers in making informed money decisions, thereby improving their financial health throughout the year and maximizing tax outcomes. Our goal is to lead as an AI-driven expert platform by enhancing user experience, speeding up service delivery, and providing the best pricing.

Our strategy starts with strengthening our position in the do-it-yourself tax sector, offering increased value for low-income filers and driving growth with more complex tax situations while ensuring faster refund access. We also aim to disrupt the assisted tax service market.

We are demonstrating that our innovative approach to tax filing, which prioritizes experience, speed, and price, is superior. We’ve expanded our marketing efforts ahead of tax season and are enhancing local search capabilities to connect customers with the right experts. Our focus is on fostering year-round engagement on our consumer platform, increasing benefits like rapid refund access, and enhancing Credit Karma across various sectors such as prime and insurance, which aids monetization.

Now turning to our business platform, we aspire to help businesses operate and grow comprehensively.

We achieved significant advancements this quarter in our two primary initiatives. Our first initiative revolves around enhancing speed-to-benefit through Intuit Assist, our AI-powered financial assistant. Following successful testing with over 2 million customers, it is now widely available to all U.S. QuickBooks Online users.

To support businesses in managing their cash flows, Intuit Assist employs AI to automatically convert emails, digital documents, and even handwritten notes into estimates, invoices, and bills. It identifies potential cash flow gaps in real-time and recommends solutions such as applying for a line of credit. Additionally, it sends invoice reminders, helping clients receive payments 45% faster—an average of five days earlier—and automates accounting by pairing transactions with bills and invoices for review.

This exemplifies the potential of our AI-driven expert platform, delivering tangible benefits that we expect will engage customers further with our offerings. And we are only at the beginning of this journey.

As we move to our fifth initiative, we aim to disrupt the mid-market segment, which presents an $89 billion total addressable market (TAM). We are already making progress in this area.

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Intuit Expands Offerings with Strong Growth Across Mid-Market and Enterprise Solutions

Intuit is gearing up to cater to a significant market segment with its newly launched Intuit Enterprise Suite, aiming at enhancing efficiency for complex businesses.

Strong Performance in Fiscal 2024

Intuit’s franchise encompasses 800,000 mid-market customers, many of whom may transition to their QBO Advanced and Intuit Enterprise Suite options. In fiscal 2024, QBO Advanced customers increased by 28%. The online ecosystem revenue rose by 36%, while the average revenue per customer (ARPC) in this ecosystem was five times that of the broader QBO customer base.

Intuit Enterprise Suite: A Game Changer

To further penetrate the mid-market, Intuit has introduced the Intuit Enterprise Suite (IES), a customizable set of integrated financial products for businesses with more complex needs. IES enables users to manage multiple entities, utilize AI for productivity boosts, and gain actionable insights. Early adopters like an eight-entity RV park operator with about $10 million in annual revenue have experienced significant workflow improvements. They transitioned from relying on a fractional CFO for multi-entity reporting, which took several days, to completing this in just five minutes using IES, allowing swifter decision-making. This operator’s CTO termed IES a “game changer” due to its AI-powered support.

Another noteworthy client is an economic development organization with over $60 million in annual revenue from 18 corporate entities. As part of its IES contract, the organization also integrated bill pay, payments, and payroll services, overcoming challenges associated with data from various apps.

First Intuit Connect Conference Achieves Success

Last month, Intuit held its inaugural Intuit Connect conference, attracting over 2,000 attendees, including mid-market businesses and major accounting firms. At this event, attendees learned about Intuit’s vision for a comprehensive business platform designed to enhance revenue and profitability for clients and accountants alike. The positive feedback regarding IES was encouraging, with existing users praising its impact on business performance and decision-making, illustrating its perceived value compared to switching platforms.

Market Potential and Strategic Expansion

Intuit is enthusiastic about its role in the $89 billion mid-market total addressable market (TAM) and continues to prioritize serving both large businesses and their accountants. In line with this, Intuit secured the No. 3 spot on Forbes’ America’s Best Companies list for this month, based on financial performance, trust, and satisfaction from customers and employees alike.

Financial Highlights from Q1 Fiscal 2025

Now, let’s turn to the financial specifics with Sandeep Aujla, Executive Vice President, Chief Financial Officer.

Thanks, Sasan. We reported a robust first quarter of fiscal 2025. Key results include:

• Revenue of $3.3 billion, up 10% year-over-year
• GAAP operating income of $271 million, down from $307 million last year
• Non-GAAP operating income of $953 million versus $960 million previously
• GAAP diluted earnings per share of $0.70 compared to $0.85 a year ago
• Non-GAAP diluted earnings per share of $2.50, slightly up from $2.47 last year

Results reflect a $9 million restructuring charge related to recent organizational changes and a $42 million net loss on a private company investment.

Global Business Solutions Group Revenue Growth

Turning to our global business solutions group, we noted a 9% revenue increase in Q1, mainly due to a 20% rise in online ecosystem revenue, a positive shift from Q4 last year. However, a 17% drop in desktop ecosystem revenue occurred, following changes made in early fiscal 2024.

The income from our online ecosystem underlines our success in providing essential tools for both small and mid-market businesses, demonstrating our offerings’ significance, especially in varied economic conditions. QBO accounting revenue surged 21% in Q1, attributed to customer growth and favorable pricing strategies. We remain committed to enhancing ARPC growth through strategic market approaches and ongoing product innovations. Notably, online services revenue increased by 19% in Q1, reflecting strength in our financial solutions, including payments and payroll services.

International Strategy and Future Outlook

We are executing well in our international strategy, with total international online ecosystem revenue climbing 10% in Q1 when measured on a constant currency basis. The aim is to establish a strong presence in both developed and emerging markets, leveraging Mailchimp while focusing on localized products.

In conclusion, our online ecosystem continues to grow and adapt, with revenue expanding by 20% overall in Q1 and a remarkable 42% increase in revenue from QBO Advanced and Intuit Enterprise Suite, reinforcing our commitment to addressing mid-market demands.

As we look forward, we expect online ecosystem revenue to maintain a growth rate of approximately 20% in fiscal 2025, setting us up for continued success.

Intuit Reports Mixed Results in Q1 Yet Remains Optimistic for Future Growth

Decline in Desktop Revenue Amid Transition to Subscriptions

Intuit announced a revenue drop of 17% in its desktop ecosystem during the first quarter, particularly noting a decrease in QuickBooks Desktop Enterprise sales by low double digits. Changes implemented at the beginning of fiscal 2024 aimed at transitioning to a recurring subscription model are making an impact. Despite these setbacks, the company anticipates a return to growth in the desktop ecosystem by the second quarter, projecting low single-digit expansion in fiscal 2025.

Credit Karma Drives Consumer Platform Growth

The company reported an impressive 29% revenue growth for Credit Karma in Q1, bolstered by strong performances in personal loans, auto insurance, and credit cards. Personal loans alone contributed 11 points to this growth, while auto insurance and credit card revenues accounted for 9 and 8 points, respectively. Notably, the increase in insurance revenue reflects robust spending from partners that began in Q3 of fiscal 2024. Intuit is placing significant focus on integrating TurboTax and Credit Karma, aiming to provide year-round financial benefits for customers.

Consumer and Pro Tax Groups Experience Mixed Outcomes

Revenue from Intuit’s consumer group fell by 6%, affected by last year’s extended tax filing deadline for California residents. The company aims to prioritize speed and affordability this tax season. Meanwhile, the Pro Tax group also faced a decline with revenues at $39 million, down 7%. Despite these challenges, Intuit remains optimistic about its strategies moving forward.

A Strong Balance Sheet and Strategic Capital Allocation

Intuit maintains solid financial health, concluding the quarter with roughly $3.4 billion in cash and investments versus $6.1 billion in debt. The company repurchased $570 million in stock during the first quarter while continuing its commitment to offset share-based compensation dilution. The board has approved a quarterly dividend of $1.04 per share, marking a notable 16% increase from the previous year.

Steady Guidance Amid Market Challenges

Intuit reaffirmed its guidance for fiscal 2025, predicting total revenue growth of 12% to 13%, a GAAP operating income growth of 28% to 30%, and non-GAAP earnings-per-share growth of 13% to 14%. The anticipated guidance for Q2 includes a revenue growth target of 13% to 14%. Although the consumer group is expected to see a slight revenue decline, this change pertains only to timing and will not affect overall projections for fiscal 2025.

Leadership Confidence Remains High

CEO Sasan K. Goodarzi emphasized confidence in the long-term growth strategy, which aims for double-digit revenue increases and a faster growth in operating income. Highlighting the potential within Intuit’s $300 billion total addressable market, he noted that with less than 5% penetration, there remains a significant opportunity ahead.

Q&A Session Provides Insights on Future Directions

During the Q&A, analysts inquired about the strategies behind online ecosystem growth and TurboTax marketing expenses. CFO Sandeep Aujla explained that marketing efforts have been increased to engage customers even before the tax season, which has already shown promising results. By disrupting the assisted tax category, Intuit aims to build customer loyalty and drive continued growth.

With solid strategies in place and a commitment to customer engagement, Intuit’s leadership remains optimistic about the company’s prospects, even in the face of current challenges.

Intuit Discusses Innovations and Strategies Amidst Strong Start to Fiscal Year

Insights on Marketing Budget and Product Integration

During the recent earnings call, Intuit executives shared their expectations for continued spending optimization throughout the tax season. They anticipate a slight increase in the consumer group’s marketing budget but noted it would not be significant.

Churn Issues at Mailchimp Addressed

Keith Weiss from Morgan Stanley posed a question regarding Mailchimp’s performance, specifically addressing the recent churn among smaller customers. Noticing a lack of previous discussion about this issue, Weiss sought clarification on whether this was a new development. He also prompted thoughts about the bundled solutions Intuit is working on, emphasizing the potential benefits of integrating backend and front office services.

Sasan K. Goodarzi, CEO of Intuit, responded by confirming that Mailchimp is part of the Intuit Enterprise Suite and is currently available to customers. However, he explained that a fully integrated experience would take several more quarters to be realized. The goal is to enhance the product’s integration, which will harness the company’s data and AI capabilities, resulting in more efficient customer experiences.

Goodarzi also acknowledged the churn issue, identifying it as a byproduct of rapid innovation aimed at mid-market customers, which inadvertently complicated usability for smaller clients. The company is focusing on improving the onboarding process for these smaller customers to ensure they can effectively utilize new features.

Small Customer Challenges Not Related to Market Trends

Weiss sought to clarify whether the churn was indicative of broader market weakness. Goodarzi assured him that it was not related to macroeconomic factors but rather linked to how well the company has innovated for larger customers. He expressed confidence in their strategy to enhance the experience for smaller customers.

Growth from Mid-Market Sales Team

Siti Panigrahi from Mizuho inquired about the performance of QuickBooks Online (QBO) and the impact of new mid-market sales hires on recent growth. Goodarzi highlighted the 20% revenue growth from the online ecosystem, with 42% growth specifically in QBO Advanced and Intuit Enterprise offerings. He confirmed that the hiring of over 200 account managers focused on direct sales is already positively impacting results, with even greater contributions expected in the future.

Goodarzi summarized that the growth acceleration from 18% to 20% was driven by enhanced services and retention strategies. He expressed optimism about maintaining this momentum moving forward.

Promotional Strategy for TurboTax Explained

In response to a follow-up question regarding TurboTax promotions, Goodarzi discussed the company’s alignment with retail partner buying behaviors. This year, promotions for the TurboTax Desktop product are being scheduled later in January to better meet consumer needs. This strategic shift has resulted in anticipated revenue adjustments, moving some expected income from Q2 to Q3. Goodarzi emphasized a positive outlook for the full year, bolstered by successful product launches and improvements.

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Strong Marketing Campaigns and Strategic Adjustments Set the Stage for Future Growth

Sasan K. Goodarzi — Chief Executive Officer and Director

We’re excited about our marketing efforts this year. Compared to previous seasons, we launched our campaigns earlier, and we feel more confident in the results we are seeing.

Siti Panigrahi — Analyst

Thank you.

Sasan K. Goodarzi — Chief Executive Officer and Director

Happy to share, Siti.

Operator

Our next question comes from Scott Schneeberger with Oppenheimer. Please go ahead.

Scott Schneeberger — Analyst

Thanks. I have a question for both of you, which are connected. Sasan, you’ve mentioned that the early marketing strategy was implemented sooner than usual. Could you provide an overview of your marketing campaign and details on the early successes? Sandeep, regarding the EPS guidance for the next quarter, although revenue growth is expected, it appears to be lower compared to the year before. Could you clarify this further? Thank you both.

Sasan K. Goodarzi — Chief Executive Officer and Director

Certainly, Scott. Let’s first discuss the tax element. Our goal is to enhance the assisted tax segment, focusing on precise timing for customers who prefer help with their taxes. This focus led to our early marketing campaign.

As we’ve moved forward, we looked for three key outcomes: Did we capture attention? Would customers engage? And how important would pricing be during pre-season? The results have been overwhelmingly positive, showing significant engagement and a strong response to pricing.

Our upcoming campaign will highlight a new approach to taxes, emphasizing experience, speed, and competitive pricing. The key takeaway is that we aim to elevate the customer experience while acknowledging the value of our expert partners. We learned that improving the experience is essential without undermining the credibility of traditional experts.

Moreover, I’ve been engaging with the new administration regarding potential changes to tax software. Notably, they are focusing on budget cuts, regulatory reductions, fraud prevention, and simplifying tax codes. These priorities align with our mission, and we believe that any introduction of free tax software would not diminish the value of our private services, as free offerings already exist.

We remain confident that the market for free tax software is well-served by private companies.

Now, Sandeep, I’ll pass it to you for the EPS update.

Sandeep Aujla — Executive Vice President, Chief Financial Officer

Thank you, Scott. As we plan for the full year, we continually optimize our spending and are quite confident in our guidance. We’re excited about leveraging AI to enhance our margins. Regarding Q2, we are extending our marketing efforts into November and December, which was not the case last year.

This year, Credit Karma has seen a positive shift, moving from a 5% decline last year to a 29% increase now, indicating strong partner engagement. We are investing more in our marketing campaigns and are already seeing impressive returns.

Meanwhile, in our global business solutions group, we’ve secured about 200 employees focused on mid-market solutions, and we plan to expand as long as we see favorable returns on investment.

Overall, earlier market entry for our campaigns this year is expected to yield better returns than in the past. We are optimistic about our strategies moving into the next quarter.

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Intuit’s Financial Outlook: Strong Performance Trends and Future Innovations

Executive Summary

Intuit’s leadership expressed confidence in the company’s path for margin expansion, citing a strategic approach that emphasizes continuous innovation across its platforms. Recent discussions revealed insights into payment volumes, product evolution, and investments aimed at enhancing customer experience.

Scott Schneeberger – Analyst

Thank you for the detailed insights, Sasan. Your explanations have been very helpful.

Sasan K. Goodarzi – Chief Executive Officer and Director

Thank you, Scott.

Operator

Next, we have Raimo Lenschow from Barclays. Please proceed with your question.

Raimo Lenschow – Analyst

Thank you, Sasan, for the clarification. My question pertains to payment volumes, which appear to have decelerated slightly to 17%. Can you explain the factors influencing this trend? Given the recent enhancements to your payment platform, what growth potential do you see moving forward?

Sasan K. Goodarzi – Chief Executive Officer and Director

Thank you for your question. Our optimism surrounding innovations in payments remains strong, particularly as we expand our services for both small businesses and mid-market clients. The 17% figure for the first quarter reflects various factors. Severe weather on the East Coast affected many service-based small enterprises, but we noted a subsequent recovery. Additionally, the number of operational days in this quarter compared to the same quarter last year also played a role. Looking ahead, we anticipate a rebound in growth rates.

Raimo Lenschow – Analyst

That clarifies things. For my follow-up, regarding the integration of AI in your tax services and the QBO platform, how do you envision enhancing customer loyalty through this evolution? Can we expect significant updates for tax season?

Sasan K. Goodarzi – Chief Executive Officer and Director

Great question. Our overarching strategy is to offer seamless experiences across services like marketing, accounting, and taxes. We aim to empower customers through AI-driven solutions while ensuring they maintain control throughout the process. All our small business clients will soon benefit from features enabling them to convert emails and handwritten notes into estimates, invoices, or bills. This efficiency is facilitated by Intuit Assist, an AI-powered tool designed to automate significant portions of the accounting process.

As for the upcoming tax season, our investments over the years in AI and data analytics will streamline the overall experience. We expect to make tax submissions more straightforward and help customers secure favorable refunds. Our goal is to provide the best possible experience, either for those choosing to handle their taxes themselves or those utilizing our expert services, which we anticipate will be more effective and efficient than ever before.

Raimo Lenschow – Analyst

I look forward to these developments. Thank you.

Sasan K. Goodarzi – Chief Executive Officer and Director

Thank you.

Operator

Next, Taylor McGinnis from UBS will ask a question. Your line is now open.

Taylor McGinnis – Analyst

Hello, and thank you for taking my question. Based on your guidance for operating margins in the second half, it appears higher than in previous years. Can you discuss how this season’s expenses compare to past years and what factors might contribute to a stronger second-half growth despite ongoing investments in your go-to-market strategy?

Sandeep Aujla – Executive Vice President, Chief Financial Officer

Hi Taylor. The early investments on the consumer side, which have already shown positive results, will continue to support us as we approach tax season. Our new sales team is also becoming increasingly effective with ongoing training, which will contribute to our growth moving forward.

Moreover, the Global Business Solutions group is optimizing its spending to drive user engagement and service adoption on our platform. As many of our services have longer onboarding timelines, we remain committed to our strategy of maximizing return on investment throughout the year, providing us with confidence in our growth trajectory.

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Intuit’s Strategic Growth: Insights from Leadership on New Offerings and Market Prospects

Taylor McGinnis — Analyst

Perfect. Thank you so much.

Sasan K. Goodarzi — Chief Executive Officer and Director

Thank you.

Operator

We’ll take our next question from Michael Turrin with Wells Fargo Securities. Please go ahead. Your line is open.

Michael Turrin — Analyst

Hey, great. Thanks very much. Appreciate you taking the questions. Sasan, I’m going to give you a chance to go back to Assist.

Following the recent QuickBooks announcements, could you share how you plan to capture value from these developments? Are you focused on monetization, or are there other financial benefits you’re starting to see as more customers access these tools?

Sasan K. Goodarzi — Chief Executive Officer and Director

Michael, are you referring to the Intuit Assist we announced this week?

Michael Turrin — Analyst

I am. Yep.

Sasan K. Goodarzi — Chief Executive Officer and Director

Yes, absolutely. From our experience with 2 million customers in beta, we’ve identified a few key outcomes: improved conversion rates, increased retention, and higher service adoption. These results support our original vision shared 18 months ago, which focused on creating seamless experiences with Intuit Assist. We believe this could lead to significant customer growth moving forward.

The capabilities we launched this week allow users to transform emails, photos of handwritten notes, or files directly into estimates or invoices, thus driving more usage of our bill-pay features. We’re excited about the potential for growth as TurboTax season approaches, anticipating increased customer acquisition and service adoption.

Michael Turrin — Analyst

Could you also inform us about the resurgence in Credit Karma? How much of this recovery do you attribute to macroeconomic factors versus specific product enhancements? Additionally, how are your current observations matching your guidance for the rest of the year, considering the latest adjustments?

Sandeep Aujla — Executive Vice President, Chief Financial Officer

Certainly, Michael. It’s a mix of both factors. I would estimate a 50-50 split here. The stability in personal loan interest rates has positively influenced our lending platform. Credit Karma’s teams have also effectively engaged users and expanded service segments, notably in insurance, leading to solid growth since Q3 last year.

Michael Turrin — Analyst

That’s helpful. Thank you.

Sasan K. Goodarzi — Chief Executive Officer and Director

You’re welcome.

Operator

We’ll take our next question from Alex Zukin with Wolfe Research. Please go ahead. Your line is open.

Alex Zukin — Analyst

Hello, and thanks for taking my question. Congratulations on the recent results. Sasan, could you provide your insights on the current demand environment for small and medium businesses (SMBs)? Are we witnessing early signs of recovery? How do you foresee this evolving in the coming months? Additionally, regarding AI applications within your offerings, when can we expect to see significant monetization impacts from tools like Assist?

Sasan K. Goodarzi — Chief Executive Officer and Director

Thank you, Alex. Regarding SMB demand, we see a stable environment currently. We’re not factoring significant changes into our guidance, but we anticipate improving conditions in 2025 due to factors like interest rates and employment trends. These elements create challenges for businesses, but our outlook remains positive.

Our reported growth—predicted at 16% to 17% for the year, with online revenue projected at 20%—is largely driven by our innovative platform. Businesses are digitizing their operations and benefiting from our tools, which simplifies their needs into a single platform instead of managing multiple applications. As demand potentially improves, we expect this to positively influence our results.

As for AI integration, our core belief remains that by simplifying tasks for our customers, we will enhance our growth trajectory. Following our recent launch of Intuit Assist, we’re committed to driving both new customer acquisition and deeper service usage. Our AI agents are designed to support SMBs in managing their operations effectively, mimicking functions traditionally fulfilled by CFOs or CMOs. Nonetheless, we have not included anticipated impacts from these innovations in our current fiscal predictions.

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Intuit Reports Strong Q1 Growth Driven by Money Strategy and Advanced Solutions

Company Exceeds Expectations on Revenue While Managing Investments

Analyst Alex Zukin engaged Intuit’s Executive Vice President and CFO, Sandeep Aujla, regarding the variations in earnings following revenue outperformance. Zukin inquired if the smaller than expected earnings beat was mainly due to the timing of new initiatives and hiring strategies.

Sandeep Aujla confirmed, saying, “That’s exactly right.” Last year, timing adjustments led to delayed expenses in Q1, but this year’s circumstances allowed for early investments, particularly in areas like Credit Karma. The revenue boost gave the company flexibility to increase spending in Q1 to capitalize on emerging opportunities.

Brad Reback, Analyst, raised a question about the contributions from the Money segment, noting it constituted over half of the growth in online services. He asked if this momentum would likely persist throughout the year.

Sandeep Aujla expressed confidence in the Money strategy, which encompasses payments, bill pay, and capital. He expects similar growth patterns to continue, confidently noting that the online ecosystem is forecasted to grow by 20% as the business scales, with the Money portfolio being a critical contributor.

Reback followed up, suggesting the recovery of Mailchimp may not significantly impact this year’s performance but could be more crucial for future growth.

Sandeep Aujla responded that Mailchimp’s progress will take several quarters to achieve desired results. The company is focused on enhancing the customer experience, particularly the first-time use experience, rather than depending on it for immediate revenue assurances.

Brent Thill, Analyst, then inquired about the mid-market strategy and its potential lower margins as a concern for investors. He sought updates on key deals and milestones.

Sasan K. Goodarzi**, the CEO, reassured that mid-market endeavors are yielding high margins and significant returns, contrary to investor fears. He referenced past concerns surrounding disruptions in the market, noting that revenue from innovative approaches and data-driven strategies, particularly through services like QuickBooks Online Advanced, demonstrate profitability and efficiency.

Goodarzi emphasized that recent trends reflect robust growth, with the Advanced and Enterprise Suite initiatives achieving a 42% increase, underlining their lucrative potential.

Mark Murphy, Analyst, questioned about the performance of the QuickBooks Enterprise Suite, specifically regarding the $20,000 annual recurring revenue per customer. He acknowledged the size of some recent customer acquisitions and asked about feedback on functionality tailored for businesses with multiple locations and complex reporting needs.

Sasan K. Goodarzi shared that conversations with large businesses reveal transformative impacts from their services. Clients expressed gratitude, highlighting that the solutions offered by Intuit have significantly improved their operations.

Intuit’s Game-Changing Software: A Transformative Experience for Businesses

Efficiency Boost: From Days to Minutes

Businesses often struggle to gauge their performance, but Intuit is changing that narrative. With their software, companies can now assess their operations in mere minutes instead of days. The tool provides deep insights and actionable recommendations, making it a crucial part of decision-making. Additionally, having all financial activities—like bill payments and payroll—integrated into a single dashboard represents a major advancement for users.

Growing Demand for Expanded Services

Users have expressed their desire for more features, especially from new clients in sectors not currently served by Intuit. These organizations are eager for access to the Enterprise Suite, reflecting a strong interest in quicker service delivery. This feedback highlights a significant market opportunity for Intuit.

Support for Accountants and Collaboration

Intuit is also focusing on enhancing their offerings for accountants. The goal is to create a monetization model that benefits both the company and accountants, enabling improved market service. Such collaboration is expected to yield positive results for all parties involved.

Closing Remarks from Leadership

Sasan K. Goodarzi — Chief Executive Officer and Director

They express gratitude for the active participation and questions from attendees. Goodarzi concluded with a friendly reminder for everyone to stay safe and keep in touch.

Operator’s Conclusion

This wraps up today’s discussions. We thank everyone for attending the call.

Duration: 0 minutes

Call Participants:

Kim A. Watkins — Vice President, Investor Relations

Sasan K. Goodarzi — Chief Executive Officer and Director

Sandeep Aujla — Executive Vice President, Chief Financial Officer

Brad Zelnick — Analyst

Keith Weiss — Analyst

Siti Panigrahi — Analyst

Scott Schneeberger — Analyst

Raimo Lenschow — Analyst

Taylor McGinnis — Analyst

Michael Turrin — Analyst

Alex Zukin — Analyst

Brad Reback — Analyst

Brent Thill — Analyst

Mark Murphy — Analyst

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