Intuit Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brad Zelnick - Deutsche Bank - Analyst : Great. Thank you so much for taking the question. Congrats on a strong start to the year. As we look through the mix, starting the year with about 20% online ecosystem growth, I think was just barely in line with what some were modeling. How should we think, Sandeep, about the progression in drivers that will get us to your full year GBS guidance? And what might be a source of upside?

Question: Brad Zelnick - Deutsche Bank - Analyst : It's very helpful. Maybe just a quick follow-up. If I look at TurboTax marketing expense in the quarter, I think it was up $46 million year on year. And a strategy that has you out in front of filers even earlier this year and ahead of the season, which by the way, we see the ads, and I think they're great. How should we think about the oral entertainment expected marketing spend over the full season? Thank you.

Question: Keith Weiss - Morgan Stanley - Analyst : Thank you guys for taking the question. Congratulations on a good start to the year. Sorry to harp on a part of the equation that's not going as well. But on Mailchimp, the churn at the lower end of the base that you mentioned on the call, I don't recall hearing that previously from you guys. So is that a new phenomenon that you're seeing in the marketplace? And on the flip side of the equation, can you talk to us a little bit about where we are with the integrated sort of like the bundled solution? It seems to me a industrial logic, but you had being able to offer your customers both sort of like the back end and the front office solution together. Where are we in sort of teasing out synergies and getting that bundle in the market and driving good results in the market?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. And just to be clear, it's more of an idiosyncratic issue with that innovation and not a broader market commentary or macro weakness that sometimes you see in smaller customers and more marketing-focused solutions, it's not about the macro?

Question: Keith Weiss - Morgan Stanley - Analyst : Perfect. Super helpful. Thank you so much.

Question: Sitikantha Panigrahi - Mizuho Securities - Analyst : Thanks for taking my question. And congratulations on a good start to the year. I want to dig into the online ecosystem and then the QBO online account. Good to see that 2 point acceleration. So you guys started this mid-market go-to-market sales team hiring. So wondering where are you in terms of higher-end ramp? And have you started seeing like the contribution this quarter from that that drove that acceleration? And if so, how should we think about the contribution for subsequent quarter? Is it something we should see now? Or will it take a year for the team to ramp and start contributing there?

Question: Sitikantha Panigrahi - Mizuho Securities - Analyst : And quick follow-up to your Q2 guidance for Consumer. I understand that always January quarter is the big chunk of that comes from Desktop TurboTax, understand that. But what was this promotion about? I understand like you guys wanted to push a consumer to online, but what's driving the promotion?

Question: Scott Schneeberger - Oppenheimer - Analyst : Thanks very much. One question for each of you, and I think there they're kind of tied together. Sasan, the early marketing strategy sought early than ever before that Brad brought it up when we talked about it a little bit since it was good. But I say you had -- or you had change that up a little bit due to NAPP. And just curious if you could give us a state of the union on how you are going to market, what that campaign is, and you said that you're seeing early success if you could just elaborate a little bit more on that? And then Sandeep, for you, the EPS guide for the upcoming quarter. We're seeing revenue growth in the next quarter, but that is guided down year over year. So if you could just clarify it a little bit more. I think you've given us the big components, but just if you could talk us through that a little bit.

Question: Raimo Lenschow - Barclays Capital - Analyst : Thank you. Thanks for the clarity from me as well, Sasan. My question is on the payment. If you look at the payment volumes, if I heard you correctly, it was 17%, decelerated a little bit. Can you talk a little bit about the puts and takes there? Because obviously, you revamped the payment platform and so that should be an area of healthy growth going forward as well, like how do we have to think about that number in that context?

Question: Raimo Lenschow - Barclays Capital - Analyst : Okay. Perfect. And then the other question I had was as you kind of said earlier, Sasan, you're kind of now like more an AI platform. If you think about tax season or the QBO business as well, how do you think about like the next iteration for how you weave that into the product to kind of keep the customer longer in the funnel, et cetera. Is there any big changes we can expect for the I'm not asking you to kind of spell that out. But is there -- like how do you think about that evolution of weaving it into your product?

Question: Taylor McGinnis - UBS Group AG - Analyst : Yeah, hi. Thanks so much for taking the question. So if I look at the implied operating margin guidance for the second half, it looks higher than what you guys have done in past years. So we need to think about the seasonality of this year compared to some past years, is the messaging to that you're seeing more front-end loading of expenses compared to last, and that should drive stronger growth in the second half. Maybe you can just talk about the drivers in the second half expansion despite some of the continued scaling on the go-to-market investments in other areas? Thanks.

Question: Michael Turrin - Wells Fargo - Analyst : Hey, great. Thank you so much. Apppeciate you taking the questions. Sasan, I'm going to give you a chance to go back to Assist. We've seen the QuickBooks announcements as well. I was hoping you could just level set for us how you're thinking about capturing the value of those, whether it's through monetization or just other costs or economic benefits you're observing as you start to get those tools in the hands of more of your customers?

Question: Michael Turrin - Wells Fargo - Analyst : I am, yes.

Question: Michael Turrin - Wells Fargo - Analyst : Great. If I can just ask on the Credit Karma bounce back. Based on what you're seeing, is there any way to help just split how much of that is macro versus something product-specific, you may be incorporated into the experience there? And maybe just help level set what you're seeing today versus what you're guiding for rest of the year given the fiscal year guide now sits below the run rate you just put up this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 9:30PM, INTU.OQ - Q1 2025 Intuit Inc Earnings Call

Question: Aleksandr Zukin - Wolfe Research - Analyst : Hey, guys. Thank you for taking the questions. Congrats on the results. So I wanted to get your take on just the notion and the topic of what you're seeing in your business right now from an SMB demand environment perspective, kind of -- are you starting to see the beginnings of a recovery? How and when do you expect that to show up? And on the very fast developing a Gen tech opportunity for kind of AI utilization monetization in your customer base, when do you believe or strongly think we should start seeing impacts from a monetization standpoint, both with assist around either does it change the magnitude? Does it change the strategy over the next few quarters?

Question: Aleksandr Zukin - Wolfe Research - Analyst : Very helpful. And then maybe just a follow-up for Sandeep. So is it as simple to see to say basically that the maybe slightly smaller earnings beat that were typically that we typically see when you have revenue outperformance to the magnitude that you've --and the guide for earnings being a bit lighter than consensus. Is that just effectively mostly associated with the timing of incremental spend for some of your newer initiatives? And some of the hiring from a go-to-market perspective. Is it more just shifting timing to the first half to Taylor's point?

Question: Brad Reback - Stifel - Analyst : Great. Thanks very much. Sandeep, in the quarter, money represented well over half of the growth in online services, should we expect that to continue here for the rest of the year? Or will the next shift?

Question: Brad Reback - Stifel - Analyst : Got it. And just one follow-up. Given Sasan's comments on Mailchimp and your comment right there on the overall confidence in the 20%, it would feel like the recovery in Mailchimp is more a driver for next year. than needed for this year?

Question: Brent Thill - Jefferies - Analyst : Thanks. Sasan, just on the mid-market, you mentioned a couple -- one of the deals in the earlier remarks, but I'm just curious if you can give us more of an update in terms of where you're at, kind of mile markers and I think there's some fear among investors that this is a much lower margin business is going to require a heavier lift in a different go to market? So if you could just comment on how you long-term dynamics of that plays out?

Question: Mark Murphy - JPMorgan - Analyst : Thank you very much. On the QuickBooks Enterprise suite, it's clearly showing robustness. Sasan, how is the early response you're seeing, if you can speak to the $20,000 ARPC I mentioned earlier because you had mentioned a couple of, I think, surprisingly large customer wins on the call today. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 9:30PM, INTU.OQ - Q1 2025 Intuit Inc Earnings Call And I'm just wondering if you can comment on the response to some of the advanced functionality that relates to multiple locations and entities and consolidated segment reporting?