Q1 2025 Earnings Summary
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +10% | The increase of $305 million YoY was primarily driven by growth in the Global Business Solutions segment (i.e., Online Ecosystem revenue) and Credit Karma, where strong performance in key verticals contributed to higher overall revenue. |
Online Ecosystem Revenue | +20% | The growth was fueled by increased adoption of QuickBooks Online, higher effective prices, and a shift toward premium offerings, such as QuickBooks Online Advanced, as well as expansion in payroll, payments, and Mailchimp services. |
Credit Karma Revenue | +29% | This jump was primarily driven by stronger performance in Credit Karma’s personal loans, auto insurance, and credit card verticals, reflecting improved consumer demand and partner marketing spend in these areas. |
Consumer Segment Revenue | -6% | The decline reflects a softer tax season start compared to the prior year and a shift in product mix, although the overall yearly impact may be tempered by the seasonal nature of tax product revenue in future quarters. |
Operating Income (EBIT) | -12% | Despite a 10% increase in total revenue, EBIT declined due to higher costs in marketing, staffing, and outside services, along with restructuring charges that impacted operating margins in the quarter. |
Net Income | -18% | This decrease of $44 million YoY was driven by increased operating expenses and a $42 million net loss on a long-term investment, partly offset by higher interest income and gains on executive deferred compensation plan assets. |
Diluted EPS | -18% | The EPS decline mirrors lower net income for the quarter, stemming from rising expenses and investment losses, partially balanced by revenue growth and lower income tax expense. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Company Revenue Growth | FY 2025 | 12% to 13% | 12% to 13% | no change |
GAAP Operating Income Growth | FY 2025 | no prior guidance | 28% to 30% | no prior guidance |
Non-GAAP Operating Income Growth | FY 2025 | no prior guidance | 13% to 14% | no prior guidance |
GAAP Diluted EPS Growth | FY 2025 | 18% to 20% | 18% to 20% | no change |
Non-GAAP Diluted EPS Growth | FY 2025 | 13% to 14% | 13% to 14% | no change |
Restructuring Charge | FY 2025 | $24 million | $14 million | lowered |
Total Company Revenue Growth | Q2 2025 | no prior guidance | 13% to 14% | no prior guidance |
Consumer Group Revenue | Q2 2025 | no prior guidance | single-digit decline | no prior guidance |
GAAP Diluted EPS | Q2 2025 | no prior guidance | $0.85 to $0.90 | no prior guidance |
Non-GAAP Diluted EPS | Q2 2025 | no prior guidance | $2.55 to $2.61 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Company Revenue YoY Growth | Q1 2025 | 5% to 6% growth | 10.2% growth from $2,978 millionTo $3,283 million | Beat |
Small Business & Self-Employed YoY | Q1 2025 | 6% to 7% growth | 8.5% growth from $2,344 million(Q1'24) to $2,544 million (Online Ecosystem 1,943+ Desktop 601) | Beat |
Online Ecosystem YoY | Q1 2025 | ~19% growth | 20.1% growth from $1,618 millionTo $1,943 million | Beat |
Desktop Ecosystem YoY | Q1 2025 | ~-20% decline | -17.2% decline from $726 millionTo $601 million | Beat |
Credit Karma YoY | Q1 2025 | Expected to grow | Grew 29% from $405 millionTo $524 million | Beat |
Consumer Group YoY | Q1 2025 | Expected to decline | -5.9% decline from $187 millionTo $176 million | Met |
ProTax YoY | Q1 2025 | Expected to decline | -7.1% decline from $42 millionTo $39 million | Met |
GAAP Diluted EPS | Q1 2025 | $0.61 to $0.66 | $0.70 | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Small Business & Online Ecosystem Growth | Growth mentioned consistently: • Q4 2024: 18% online ecosystem growth • Q3 2024: 19% • Q2 2024: 21%. | Online ecosystem revenue grew 20%, with ~42% for QBO Advanced/Enterprise Suite; 17% for rest of small-business base. | Consistent focus and strong performance, emphasizing both small-business base and mid-market segments. |
Mid-Market Offerings | • Q4 2024: 28% QuickBooks Online Advanced growth, part of 5-year strategic focus. • Q3 2024 & Q2 2024: Doubling down with dedicated sales teams. | ~42% growth in QBO Advanced & Enterprise; viewed as high-margin with large TAM of $89B. | Accelerating investments and bullish sentiment; seen as a major revenue driver with higher ARPC. |
TurboTax Live & Full-Service | • Q4 2024: 17% revenue growth; full-service customers doubled. • Q3 2024: ~17% revenue growth; projected to reach 30% of Consumer Group revenue. | No mention for Q1 2025. | Omitted in current period; previously highlighted as a key growth driver in assisted tax. |
AI-Powered Solutions & Intuit Assist | • Q4 2024: Rolled out to millions in TurboTax/QuickBooks/Mailchimp. • Q3 2024: Significant adoption in TurboTax & Credit Karma. • Q2 2024: Introduced in multiple products. | Now generally available to all U.S. QuickBooks Online customers; piloted with over 2 million users. | Expanded rollout and continued optimism about AI driving growth and automation. |
Credit Karma | • Q4 2024: Returned to growth with 14% YoY in Q4. • Q3 2024: 8% YoY. • Q2 2024: Flat $375M. | Revenue up 29%, driven by personal loans, auto insurance, and credit cards; ~50-50 macro vs. product improvements. | Rebounded from earlier softness; stronger partner engagement and stable environment. |
Mailchimp | • Q4 2024: Growth from higher effective prices and mid-market expansion. • Q3 2024: Growth deceleration post price changes. • Q2 2024: AI automations introduced. | Focus on mid-market success but higher churn among smaller customers; not macro-related. | Refocusing on first-time user improvements; balancing mid-market focus with small-customer retention. |
Money Strategy | • Q4 2024: End-to-end digitization of financial flows. • Q3 2024: 22% payment volume growth. • Q2 2024: Integrated with Credit Karma. | Strong momentum in payments, bill pay, and capital; supporting 20% online ecosystem growth. | Consistently bullish, central to driving new services adoption and revenue growth. |
Payment Volume Growth | • Q4 2024: 19% YoY. • Q3 2024: 22%. • Q2 2024: Ongoing volume expansion. | 17% YoY; slight slowdown due to East Coast weather impacts but expected to improve. | Moderate deceleration yet remains positive; company expects accelerated growth ahead. |
EPS Guidance & Profitability | • Q4 2024: FY25 GAAP EPS $12.34–$12.54. • Q3 2024: Raised GAAP EPS guidance to 28–29% growth. • Q2 2024: Reaffirmed 11–15% growth. | Guided GAAP EPS of $0.85–$0.90 for Q2 FY25; reaffirmed path to margin expansion. | Consistent upward revisions and confidence in profitability amid continued investments. |
Consumer Group Marketing Spend | No mentions found for Q4, Q3, or Q2 2024. | Campaigns started earlier to target potential assisted filers; budget expected to slightly increase. | New emphasis this period; aiming to disrupt assisted tax category with earlier promotions. |
Restructuring & Workforce Reduction | • Q4 2024: ~$223M charge; ~8% workforce reduction to realign resources. | $9M restructuring charge recognized; relates to July announcements. | Continues from prior quarter, focusing on organizational alignment rather than cost-cutting. |
Macroeconomic Headwinds & Consumer Strain | • Q4 2024: Stable environment, no assumed tailwinds. • Q3 2024 & Q2 2024: Noted uncertainty; some partner conservatism in lending. | CEO stated no macro impact on small-customer churn; issues are innovation-related. | Sentiment eased compared to earlier caution; now less emphasis on macro disruptions. |
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Mid-Market Growth Acceleration
Q: What is driving the online ecosystem and mid-market growth?
A: We achieved 20% online ecosystem revenue growth , with the mid-market segment growing approximately 42%. This acceleration is due to strong customer engagement, low attrition after price changes, favorable mix shift, and adoption of services, which we expect to continue. -
Mailchimp Churn Concerns
Q: Is Mailchimp's increased churn at the lower end a market issue?
A: The higher churn among small customers is not due to macro factors. It's caused by our focus on innovations for mid-market customers, which made usability tougher for very small customers. We're addressing this by improving the first-time user experience for small customers. -
TurboTax Early Marketing Impact
Q: How is the early TurboTax marketing strategy performing?
A: Our early marketing campaigns have been overwhelmingly positive. We saw strong engagement and increased consideration from prior-year assisted users. The strategy focuses on demonstrating a new way of taxes, emphasizing experience, speed, and best price. -
Mid-Market Margin Dynamics
Q: Will mid-market expansion affect margins negatively?
A: On the contrary, the mid-market is a high-margin, lucrative business with high average revenue per customer (ARPC). Our scale is driven by data, AI investments, and platform services, making it efficient despite adding sales personnel. -
Payments Growth Outlook
Q: Why did payment volume growth decelerate to 17%?
A: The 17% growth was affected by East Coast storms impacting service-based small businesses and fewer processing days in the quarter. We expect acceleration moving forward due to our continued innovation in payments. -
Intuit Assist and AI Strategy
Q: How will AI and Intuit Assist impact products?
A: Our strategy is to create "done for you" experiences across our platform. With Intuit Assist, small businesses can automate tasks like creating invoices and bills. This leads to improved conversion, retention, and adoption of services. -
Credit Karma Recovery
Q: What's driving the rebound in Credit Karma?
A: It's a blend of macro improvements and product enhancements. A more stable rate environment accounts for about 50% of the recovery, while investments in product experience and new segments like insurance contribute the other 50%. -
SMB Demand Environment
Q: Are you seeing recovery in SMB demand?
A: The environment is stable, and we believe improvement will come in 2025. Our growth is driven by platform innovation, and better future conditions are anticipated but not yet reflected in our guidance. -
Operating Margin Guidance
Q: Why is second-half operating margin guidance higher?
A: Early investments in marketing and sales will pay dividends in the back half. The mid-market sales force will become more effective over time, and we're optimizing spend to maximize ROI for the full year. -
AI Monetization Impact
Q: When will AI investments start impacting monetization?
A: While not included in this year's guidance, we expect future growth from AI investments. Intuit Assist is leading to new customer growth and higher adoption of services. -
Money Segment Growth
Q: Will money services continue driving online growth?
A: We're bullish on our money strategy, including payments, bill pay, and capital. Momentum has been strong, supporting our 20% online ecosystem growth target for the year. -
Customer Response to QuickBooks Enterprise
Q: How are customers responding to QuickBooks Enterprise Suite?
A: Customers describe it as a "game changer". They benefit from real-time insights and streamlined processes by consolidating functions like bill pay, payments, and payroll into one platform.