TLDR
- Intuit reported strong Q2 fiscal 2025 results with 17% revenue growth, reaching $3.96 billion, beating market expectations of $3.83 billion
- The Global Business Solutions Group grew 19% year-over-year, while Credit Karma showed impressive 36% growth
- Intuit’s adjusted operating margin increased by 370 basis points to 31.8%, with earnings per share of $3.32, up from $2.50 last year
- The company maintained its full-year outlook, projecting revenue between $18.16-18.35 billion
- Despite recent positive earnings, INTU stock has underperformed the S&P 500 in 2024 but analysts see growth potential based on strong fundamentals
Intuit Inc. (INTU) recently reported its fiscal Q2 2025 earnings, showcasing robust growth across key segments. The financial software company posted revenue of $3.96 billion, representing a 17% increase compared to the same period last year.
This figure surpassed market expectations of approximately $3.83 billion. The strong performance was largely driven by the company’s AI-powered tools and services.
The Global Business Solutions Group (GBSG) stood out as a primary growth driver. This segment grew by 19% year-over-year, with QuickBooks products showing particularly strong momentum.
Credit Karma, Intuit’s platform for credit analysis and financial services comparison, delivered even more impressive results. The division posted 36% year-over-year growth, though it represents a smaller portion of the company’s overall business.
Not all segments performed equally well. The Consumer arm and ProTax division showed mixed results with nearly flat revenue growth.
Operating income on a GAAP basis grew by more than 26% year-over-year. This improved the operating margin to approximately 15%, up from 11% in Q2 2024.
Intuit’s adjusted operating margin increased by 370 basis points year-over-year to 31.8% in Q2. This expansion helped boost earnings per share to $3.32, compared to $2.50 in the same quarter last year.
The company’s CEO highlighted the progress Intuit is making in “fueling the financial success of consumers, businesses, and accountants with our AI-driven expert platform.” This focus on AI-powered automation appears to be yielding positive results.
Following the earnings announcement, INTU stock saw an 8% increase in pre-market trading. This positive reaction came despite the stock’s underperformance relative to the broader market in 2024.
The stock has declined approximately 10% year-to-date
Year-to-date, INTU stock has declined approximately 10%, while the S&P 500 has gained 28%. This discrepancy is partly attributed to pessimistic guidance provided in the previous quarter.
Looking ahead, Intuit maintained its full-year outlook. The company projects revenue between $18.16 billion and $18.35 billion for fiscal year 2025.
Earnings per share are expected to range between $19.16 and $19.36 on an adjusted basis. This guidance suggests continued confidence in the company’s growth trajectory.
Intuit’s business model features several competitive advantages. These include high switching costs for customers, a comprehensive ecosystem of solutions, and proprietary data that enhances its AI capabilities.
The company has outlined long-term expectations of 15-20% compound annual growth rate (CAGR) for revenue. This is expected to come from 5-10% annual growth in customer numbers and 10-20% growth in average revenue per customer.
To achieve these targets, Intuit has identified several strategic priorities. These include revolutionizing speed to benefit, connecting people to experts, unlocking smart money decisions, becoming the center of small business growth, and disrupting the mid-market.
The small business growth initiative alone represents a $97 billion opportunity across payments, invoicing, banking, and related services. Workforce solutions add another $23 billion potential market, while international expansion could tap into more than $55 billion in additional opportunities.
Industry trends appear to support Intuit’s growth prospects. Mordor Intelligence estimates that the accounting software market will grow at a 9% CAGR between 2025 and 2030.
This growth is driven by increasing adoption of online applications by small and medium enterprises (SMEs). Intuit’s track record shows a revenue CAGR exceeding 10% since 2019, with double-digit growth every fiscal year since 2016.
The company faces potential risks
The company faces some potential risks to its growth trajectory. These include evolving technologies making it easier for competitors to develop similar applications.
Direct competitors like FreshBooks and Sage offer similar solutions, often at lower price points. However, Intuit’s QuickBooks remains the industry benchmark.
Potential indirect competition could emerge from large tech companies’ AI solutions. Products like Google’s Gemini or Microsoft’s Copilot might eventually develop capabilities that overlap with Intuit’s offerings.
From a valuation perspective, Intuit currently trades at a price-to-sales ratio of approximately 10.3x. This is slightly below its five-year average of 10.7x.
Given the company’s strong Q2 results, robust sales growth, and expanding margins, analysts suggest that a higher valuation multiple than the historical average may be justified.
Intuit’s earnings yield of 3.3% appears attractive for a company expected to grow its net income by around 15% over the next 5-10 years. This growth potential makes it a compelling option for investors seeking long-term compounding returns.
Despite the recent positive momentum, investors should note that INTU stock has shown high volatility in recent years. The stock returned 70% in 2021, -39% in 2022, 62% in 2023, and 1% in 2024.
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