The paragraph is an introduction to Intuit's First Quarter Fiscal Year 2025 Conference Call. The conference operator, David, opens the call, mentioning that all lines are muted to avoid background noise. Kim Watkins, Intuit's Vice President of Investor Relations, takes over and introduces the call by noting the presence of Intuit's CEO, Sasan Goodarzi, and CFO, Sandeep Aujla. Watkins outlines that the discussion will include forward-looking statements and highlights available resources to understand potential risks, such as their SEC filings. She also mentions that some numbers will be presented on a non-GAAP basis, with reconciliations available in the press release. Finally, Watkins hands over the call to CEO Sasan Goodarzi, who expresses gratitude for the attendees' participation.

The paragraph highlights Intuit's AI-driven expert platform strategy, emphasizing its role in driving company growth and offering tangible benefits to customers. Intuit reports a strong start to the year with significant revenue growth in its Global Business Solutions Group and Credit Karma segments. The company is confident in achieving double-digit revenue growth and margin expansion, reiterating its full-year guidance. Intuit has transitioned from a tax and accounting platform to a broader AI-driven expert platform, offering customer-controlled, AI-enabled experiences. The platform leverages data, AI capabilities, and a network of virtual experts to support financial success for consumers and businesses. Intuit's strategic focus includes empowering customers to make smarter financial decisions, improve financial health, and maximize tax outcomes, focusing on ease of use, speed, and competitive pricing.

The article outlines a strategy to dominate the tax and financial services market through various initiatives. The focus is first on enhancing the do-it-yourself tax segment for low-income filers and complex cases while introducing a superior assisted tax service by leveraging experts. The company is increasing marketing efforts ahead of tax season and aiming for better consumer engagement year-round, expanding offerings like Credit Karma. On the business side, their vision is to support end-to-end business growth, highlighted by Intuit Assist, an AI-driven financial assistant for US QuickBooks online customers. This tool helps manage cash flow, accelerate payments, and automate accounting tasks, demonstrating tangible benefits and promoting platform adoption. Their ambitions include disrupting the mid-market, an $89 billion opportunity.

In fiscal year 2024, Intuit aims to expand its offerings for mid-market businesses through QBO Advanced and the Intuit Enterprise Suite (IES), targeting complex businesses with features like multi-entity management and AI-driven insights. The company reported a significant increase in online ecosystem revenue and highlighted customer successes as evidence of its strategy's potential. Examples include an RV park operator, which improved its reporting efficiency from days to minutes using IES, and an economic development organization that integrated various financial services into one platform, enhancing operational efficiency. These cases illustrate the value of Intuit's comprehensive and integrated solutions.

Last month, Intuit hosted its first Intuit Connect conference with over two thousand attendees, highlighting its end-to-end business platform, IES, which received positive feedback for enhancing business performance and decision-making. It's cost-effective for current customers to upgrade, fueling growth in the $89 billion mid-market TAM. Intuit was ranked third on Forbes America's best companies list, factoring in financial performance and satisfaction metrics. Sandeep Aujla reported a strong first quarter for fiscal 2025, with a 10% revenue increase to $3.3 billion, though GAAP operating income and diluted earnings per share saw decreases compared to the previous year.

The Global Business Solutions Group saw a 9% increase in revenue during Q1, driven by a 20% rise in online ecosystem revenue, though partially offset by a 17% decline in desktop ecosystem revenue due to changes made in early fiscal 2024. The online ecosystem's success highlights its importance for small and mid-market businesses aiming to grow and improve cash flow. QuickBooks online accounting revenue rose by 21%, attributed to customer growth, higher prices, and a shift in product mix. Online services revenue grew by 19%, led by increased earnings from payments, capital, bill pay, payroll, and Mailchimp. Growth was driven by more customers, higher prices, and increased payment volumes, with significant contributions from QuickBooks capital and Mailchimp.

The paragraph discusses the company's focus on improving customer retention among smaller Mailchimp users by enhancing product features and encouraging adoption. While progress is being made with mid-market customers, improvements will take a few quarters to see significant results. The company is also observing the effects of past price changes and is committed to its vision of an integrated business platform combining Mailchimp and QuickBooks services. Internationally, the company is implementing a localized strategy, with a 10% revenue growth in Q1. As a platform company, they are successfully serving small and mid-market businesses, with an addressable market of over $180 billion. In Q1, online ecosystem revenue grew 20%, with notable growth in offerings like QBO Advanced and Intuit Enterprise Suite. The company is optimistic about its progress with mid-market customers and expects total online ecosystem revenue to grow by 20% in fiscal 2025.

In Q1, Intuit's desktop ecosystem revenue declined by 17% due to the transition to a recurring subscription model, but it expects growth in Q2 and fiscal 2025. Meanwhile, Credit Karma's revenue grew by 29%, driven by personal loans, auto insurance, and credit cards. Intuit plans to integrate TurboTax and Credit Karma to enhance customer benefits and monetization. The consumer group revenue fell by 6% due to last year's extended tax deadline for California, with the focus now on providing ease, speed, and competitive pricing.

The company is focused on enhancing its DIY tax services, disrupting the assisted tax category, and developing a comprehensive consumer financial platform. They reported a revenue of $39 million in Q1 for the pro tax group, a 7% drop compared to the previous year due to an extended tax deadline for California filers. Financially, they ended the quarter with $3.4 billion in cash and investments and $6.1 billion in debt. They repurchased $570 million in stock and plan to continue buybacks quarterly to offset share-based compensation. A dividend of $1.04 per share, a 16% increase, is approved for January 2025. The company reaffirmed its fiscal 2025 guidance, projecting revenue growth of 12-13% and various metrics, despite a $14 million restructuring charge. They foresee a 13-14% revenue growth for Q2, with a slight decline in consumer group revenue due to retail promotional changes.

The paragraph discusses the company's financial expectations and strategy for fiscal year 2025. The revenue timing impact does not alter overall unit or revenue expectations. The GAAP earnings per share are projected to be between $0.84 and $0.90, while non-GAAP earnings per share are expected to range from $2.55 to $2.61. Sasan Goodarzi expresses confidence in long-term growth, aiming for double-digit revenue and faster operating income growth, leveraging data and AI capabilities. Despite having less than 5% penetration of a $300 billion total addressable market, they see significant growth potential ahead. The Q&A session with Brad Zelnick and Sandeep Aujla discusses a strong start to the year with 20% online ecosystem growth and factors driving Global Business Solutions Group's growth, such as strong customer engagement, good retention, and a favorable mix shift.

The paragraph discusses the mid-market's growth of approximately 42%, which is contributing to improvements and is expected to continue throughout the year. Brad Zelnick asks about increased marketing expenses for TurboTax, noting a $46 million year-on-year rise, and inquires about the strategy and marketing budget for the tax season. Sandeep Aujla explains that their strategy is to disrupt the assisted tax category by starting marketing campaigns earlier, as many customers decide on their tax service before January. This early marketing has increased traffic and consideration in targeted segments, justifying the spending and providing confidence for the full year. The consumer marketing budget is expected to increase slightly. Keith Weiss from Morgan Stanley is introduced to ask a question next.

The paragraph discusses Mailchimp's current challenges with customer churn at the lower end, which is a new issue highlighted in the marketplace. In response, Sandeep Aujla mentions that Mailchimp is part of the Intuit Enterprise Suite and that they're working towards a deeply integrated customer experience that combines back-end and front-office solutions. This integrated solution, which incorporates advanced data and AI capabilities for 'done-for-you' experiences, is expected to be available in several quarters. The churn at the lower end is attributed to a faster pace of innovation for mid-market customers, introducing features like powerful analytics, segmentation, and expanded SMS capabilities.

The paragraph discusses the challenges faced by very small customers in accessing innovations that have benefited mid-market customers, causing discovery and usability issues for them. A team is working on improving first-time use and benefits for smaller customers. Sandeep Aujla clarifies that the difficulties are not due to macroeconomic factors but are tied to innovations aimed at larger customers. Keith Weiss finds this clarification helpful. Siti Panigrahi then asks about the online ecosystem and QBO, particularly regarding a new mid-market sales team, inquiring about hiring status, ramp-up, and expected revenue contributions. Sasan Goodarzi is set to respond to these questions.

The paragraph discusses the growth of an online ecosystem with a 20% increase in revenue, driven by a 42% growth in QBO Advanced and Intuit Enterprise platforms. The emphasis is on enhancing mid-market go-to-market capabilities, which benefits these platforms. Over 200 account managers and business development personnel have been added to boost sales, and significant contributions from investments are expected in future quarters. The growth is attributed to more services, better retention, higher ARPC, and a better mix. The conversation then shifts to a follow-up question about consumer guidance for Q2, particularly the promotion of desktop TurboTax. The response explains that promotions are typically held from December to mid-January to shift consumers online.

The paragraph discusses TurboTax's strategic alignment with retail partners, focusing on consumer buying patterns for their desktop product. The promotional period now starts later in January and extends beyond it, which has shifted revenue into the third quarter, keeping the annual forecast intact. Adjustments also considered IRS timing. This year's changes in marketing and product offerings, implemented earlier than usual, have made the company optimistic about the upcoming season. Sandeep Aujla acknowledges this success. The conversation shifts to Scott Schneeberger from Oppenheimer, who asks about the early marketing strategy and its adjustments due to NAPP, seeking more details on its implementation and initial success.

In the paragraph, Sasan Goodarzi addresses a question from Scott regarding the EPS guidance for the next quarter, noting that although revenue is expected to grow, it is projected to be lower year over year. Goodarzi explains that they have gained insights into the assisted tax segment, emphasizing the importance of decision timing for customers who have others do their taxes. An early marketing campaign was launched to assess market engagement and the impact of pricing, which yielded positive results. People engaged more than anticipated, and price was a significant factor. The upcoming campaign will focus on delivering an improved tax experience with better speed and price. Goodarzi notes the importance of not diminishing the value of traditional experts, who remain crucial to the customer experience.

The paragraph discusses the company's partnership with accountants on their platform, emphasizing improvements in experience, speed, and pricing while acknowledging traditional expertise. It also addresses concerns about potential new tax software under a new administration, highlighting key priorities such as budget cuts, workforce reduction, regulatory simplification, fraud prevention, and tax code simplification. The speaker expresses optimism about these priorities and their alignment with the company's goals.

The paragraph discusses the stance of new leaders against expanding bureaucracy and investing in areas where private industry already provides free solutions, specifically regarding free tax software. The argument is that free services are already available and adding more would not affect the market structure. Sandeep Aujla then comments on the company's earnings per share (EPS) strategy, emphasizing optimized spending for the year, leveraging AI for margin expansion, and continuing marketing initiatives through November and December. Credit Karma's improved position is noted, shifting from a negative 5% last year to 29% this year.

The paragraph discusses the company's strategic initiatives and financial performance, particularly in their Global Business Solutions Group. It highlights that the company is seeing strong returns on investment (ROIs) from their marketing efforts and is strategically scaling the mid-market team as they see favorable ROI and payback periods. Campaigns were launched earlier this year to optimize spending throughout the year, differing from last year's approach. The overall strategy aligns with the company's goal of margin expansion. Following this, Raimo Lenschow from Barclays asks about a 17% deceleration in payment volumes, given the recent revamp of the payment platform, to which Sasan Goodarzi suggests that innovation around money remains a focus.

The paragraph discusses the company's bullish outlook on payments, particularly as they expand services to small and mid-market businesses. The 17% growth in the first quarter was influenced by East Coast storms affecting small businesses and the number of days in the quarter compared to the previous year. Looking ahead, the company expects growth to accelerate. Sasan Goodarzi explains their strategy to create AI-driven, done-for-you experiences across various services like marketing, accounting, and taxes, keeping the customer in control while connecting them to suitable financial products. This strategy aims to serve consumers, small businesses, and mid-market customers.

The paragraph discusses the launch of Intuit Assist, a Gen AI-powered assistant designed to streamline business processes for Intuit's customers. This tool helps small businesses by automating tasks like creating estimates, invoices, bills, and categorizing financial data. It also offers solutions for cash flow management and provides a line of credit. Intuit Assist is now available to all customers, creating a more efficient, done-for-you experience across the platform, including Mailchimp and QuickBooks. The company aims to simplify the tax filing process using data and AI, offering both do-it-yourself and expert-assisted options for quicker and more cost-effective tax completion.

The paragraph is part of a conversation about the company's financial outlook, particularly its operating margins for the second half of the year. Taylor McGinnis notes that the projected operating margins appear higher than in previous years and inquires about the factors driving this growth. Sandeep Aujla responds, explaining that early investments on the consumer side and strategic initiatives with the sales force are expected to yield benefits during the tax season. Additionally, optimizations in spending within the Global Business Solutions Group aim to attract more customers and enhance service offerings, which usually takes some time to fully develop. Overall, these efforts are expected to contribute to stronger growth and improved operating margins in the latter half of the year.

In the paragraph, Sasan Goodarzi discusses the benefits Intuit has observed from their recently announced Intuit Assist tool, which has been used by around two million customers before its general release. He highlights three main outcomes: improved customer conversion, improved retention, and increased adoption of services. Goodarzi notes that these results align with Intuit's strategy of creating "done-for-you" experiences and suggest potential for future customer growth and the development of stand-alone product offerings with separate pricing.

The paragraph discusses recent advancements and expectations at a company, highlighting new features that allow users to create estimates, invoices, and bills from emails, handwritten notes, or files, which are expected to boost service adoption and TurboTax customer growth. Michael Turrin asks about the recovery of Credit Karma and how much it is influenced by macroeconomic factors versus product-specific changes. Sandeep Aujla responds, attributing the recovery to a fifty-fifty mix of a stable rate environment and efforts by the product and marketing teams to enhance user experience and engagement, particularly with new segments like insurance. Alex Zukin from Wolfe Research then asks a follow-up question.

In the paragraph, Sasan Goodarzi discusses the current stable environment for SMB demand in his business, with expectations for improvement by 2025 despite challenges like interest rates and regulatory issues. He highlights the company's growth, driven by their platform's innovation, which helps customers save money by digitizing their business operations in one place. The business is experiencing significant revenue growth, supported by this platform's efficiency and cost-saving capabilities for customers.

The paragraph discusses Intuit's growth driven by innovation, particularly through their AI-powered services like Intuit Assist and the Intuit Enterprise Suite. These services enhance customer experience by offering insights and performing tasks typically done by roles like CFOs or CMOs. Although these innovations haven't been factored into their current year's forecast, they are expected to contribute to future growth. In response to a question from Alex Zukin, Sandeep Aujla confirms that the slightly lighter earnings for Q2 compared to consensus are mainly due to the timing of spending on new initiatives and hiring, which is more focused on the first half of the year.

In the paragraph, a discussion takes place between executives about their business performance and strategy. They reflect on how, in previous quarters, some financial items shifted in or out, which allowed them to optimize spending and take advantage of revenue opportunities, notably in Credit Karma. They express confidence in their money strategy, which includes services like payments, bill pay, and capital, as being strong contributors to their expected 20% online ecosystem growth. They also discuss Mailchimp, noting that while it is an ongoing multi-quarter project, they are focused on improving the first-time user experience and believe its recovery will be a more significant driver in the future.

In the paragraph, Sasan Goodarzi addresses concerns about the profitability of the mid-market business, assuring that it is actually a high-margin, lucrative opportunity with high Average Revenue Per Customer (ARPC). He draws parallels to past concerns about disrupting the assisted category and explains that the company's scale and efficiency are driven by data and AI capabilities. Although they are expanding sales staff, the overall opportunity is lucrative, involving both the acquisition of new customers and the upgrading of existing ones, largely fueled by their platform services developed over recent years.

The paragraph discusses the significant growth potential of their platform driven by existing services with higher Average Revenue Per Customer (ARPC), making it more lucrative than just relying on their QuickBooks Online (QBO) base. It highlights dual benefits, including accelerated growth, with online revenue growing at 20% and advanced enterprise suites at 42%, alongside service growth. This leads to higher contribution margins over time. The conversation shifts to Sasan Goodarzi responding to Mark Murphy from JPMorgan about the QuickBooks Enterprise Suite's strong performance and customer response to its advanced features, noting that financial constraints are not a primary concern for their large clients.

The paragraph discusses the significant impact of a business solution that centralizes operations and provides real-time insights, which CFOs and business owners find life-changing. It highlights how the solution consolidates various financial operations into one platform, improving efficiency and decision-making. The reaction from users has been positive, with interest from new sectors. There is also a focus on developing features for accountants to enhance mutual success. The speaker concludes by thanking participants and emphasizing the value of the questions asked.

The program concluded with the operator thanking participants and indicating they can disconnect, followed by Kim Watkins saying goodbye.

This summary was generated with AI and may contain some inaccuracies.