Intuit (INTU, Financial) saw a significant 9% increase in its stock price following a robust Q3 earnings report. The company reported an impressive EPS beat and provided an optimistic Q4 guidance. Q3 is crucial for Intuit as it coincides with tax season, boosting sales of TurboTax. Intuit primarily caters to small businesses and consumers through products like QuickBooks, TurboTax, Credit Karma, and Mailchimp.
- Consumer Group Performance: TurboTax revenue grew by 11% year-over-year to $4.0 billion. Intuit made strides in the assisted tax category and excelled in the DIY category. The company saw a 13% increase in average revenue per return (ARPR) as more customers opted for assisted offerings and quicker refunds.
- Customer Shift: Intuit anticipates a decline in pay-nothing customers from 10 million to 8 million as it focuses on the assisted tax market. Consumer Group revenue is expected to grow by 10% this year, driven by a 24% increase in TurboTax Live customers and a 47% rise in TurboTax Live revenue, surpassing the long-term growth expectation of 15-20%. ProTax revenue increased by 9% in Q3.
- Global Business Solutions Group (GBSG): Outside tax season, GBSG is Intuit's largest segment, with revenue up 19% year-over-year to $2.8 billion. QuickBooks Online Accounting revenue rose 21% in Q3, fueled by higher prices and customer growth. However, Mailchimp's revenue remained flat, and Intuit expects improvement over several quarters.
- Credit Karma Recovery: After a sluggish FY23, Credit Karma rebounded in FY24 and continued its momentum in FY25. Q3 revenue grew 31% to $579 million, driven by credit cards, personal loans, and auto insurance, despite facing strong growth comparisons from the previous year.
Overall, Intuit delivered an outstanding quarter, with tax season playing a pivotal role. The company made notable progress in expanding its higher-margin assisted tax services. Despite macroeconomic and inflation challenges, Intuit's business remains stable, as reflected in its positive Q4 guidance. The focus on service rather than product provides some protection from tariffs. Credit Karma's integration with TurboTax further boosted growth in the Consumer segment.
