Intuit(INTU) - 2025 Q1 - Quarterly Report

Revenue Growth - Total net revenue for Q1 Fiscal 2025 increased to $3.283 billion, up from $2.978 billion in Q1 Fiscal 2024, representing a 10.2% growth[10] - Service revenue grew to $2.889 billion, an 18% increase compared to $2.450 billion in the same period last year[10] - Total net revenue increased from $2,978 million in Q1 fiscal 2024 to $3,283 million in Q1 fiscal 2025, driven by growth in Global Business Solutions and Credit Karma segments[85] - Global Business Solutions segment revenue increased from $2,344 million in Q1 fiscal 2024 to $2,544 million in Q1 fiscal 2025[85] - Credit Karma segment revenue increased from $405 million in Q1 fiscal 2024 to $524 million in Q1 fiscal 2025[85] - Net revenue for QuickBooks Online Accounting increased to $965 million from $798 million, a 20.9% growth[86] - Total Online Ecosystem revenue grew to $1,943 million from $1,618 million, a 20.1% increase[86] - Credit Karma revenue rose to $524 million from $405 million, a 29.4% growth[86] - Total net revenue increased to $3,283 million from $2,978 million, a 10.3% growth[86] - Total net revenue for Q1 FY25 increased by $305 million, or 10%, compared to Q1 FY24, reaching $3.283 billion[109] - Global Business Solutions segment revenue increased by $200 million, or 9%, in Q1 FY25 compared to Q1 FY24, driven by growth in Online Ecosystem revenue[115] - Online Ecosystem revenue increased by $325 million, or 20%, in Q1 FY25 compared to Q1 FY24, with QuickBooks Online Accounting revenue up 21% and Online Services revenue up 19%[116] - Credit Karma segment revenue increased by $119 million (29%) in Q1 FY25, driven by growth in personal loans ($44 million), auto insurance ($36 million), and credit cards ($31 million)[123] Net Income and Profitability - Net income for Q1 Fiscal 2025 was $197 million, down from $241 million in Q1 Fiscal 2024, a decline of 18.3%[10] - Net income for the three months ended October 31, 2024 was $197 million, compared to $241 million for the same period in 2023[15] - Basic net income per share for Q1 Fiscal 2025 was $0.70, compared to $0.86 in the same period last year[26] - Diluted net income per share for Q1 Fiscal 2025 was $0.70, compared to $0.85 in the same period last year[26] - Net income for Q1 Fiscal 2025 was $197 million, down from $241 million in the same period last year[26] - Net income for Q1 FY25 decreased by $44 million, or 18%, compared to Q1 FY24, driven by a decrease in operating income and a $42 million net loss on a long-term investment[109] - Total segment operating income increased from $2,084 million in Q1 fiscal 2024 to $2,275 million in Q1 fiscal 2025[85] - Total operating income decreased from $307 million in Q1 fiscal 2024 to $271 million in Q1 fiscal 2025, primarily due to higher unallocated corporate expenses[85] - Operating income for Q1 FY25 decreased by $36 million, or 12%, compared to Q1 FY24, primarily due to increased expenses in marketing, staffing, and outside services[109] - Global Business Solutions segment operating income increased by $175 million, or 10%, in Q1 FY25 compared to Q1 FY24, due to revenue growth and reduced marketing and staffing expenses[117] - Consumer segment revenue decreased by $11 million (6%) in Q1 FY25 compared to Q1 FY24, with operating income dropping by $56 million (42%)[120] - ProTax segment revenue decreased by $3 million (7%) in Q1 FY25, with operating income declining by $2 million (9%)[126] Expenses and Costs - Research and development expenses increased to $704 million in Q1 Fiscal 2025, up from $680 million in Q1 Fiscal 2024[10] - Selling and marketing expenses rose to $962 million in Q1 Fiscal 2025, compared to $769 million in Q1 Fiscal 2024[10] - Total operating expenses increased by $278 million (15%) in Q1 FY25, primarily due to higher marketing ($117 million), staffing ($67 million), and outside services ($46 million) costs[129] - Selling and marketing expenses increased to $962 million (29% of total revenue) in Q1 FY25, up from $769 million (26%) in Q1 FY24[129] - Unallocated corporate costs for all segments totaled $2.0 billion in Q1 FY25, up from $1.8 billion in Q1 FY24, due to increases in general and administrative, product development, and share-based compensation expenses[110] - Restructuring costs associated with the reorganization plan are estimated at $237 million, with $9 million recorded in Q1 fiscal 2025[87][88] - Cost of service revenue as a percentage of service revenue remained consistent at 27% in Q1 FY25 compared to Q1 FY24[128] Cash Flow and Liquidity - Cash and cash equivalents decreased to $2.872 billion as of October 31, 2024, compared to $3.609 billion as of July 31, 2024[12] - Net cash provided by operating activities was $362 million for the three months ended October 31, 2024, compared to a net cash used in operating activities of $97 million in the same period in 2023[15] - Purchases of corporate and customer fund investments increased to $306 million for the three months ended October 31, 2024, up from $92 million in the same period in 2023[15] - Originations and purchases of loans held for investment increased to $666 million for the three months ended October 31, 2024, compared to $377 million in the same period in 2023[15] - Cash, cash equivalents, restricted cash, and restricted cash equivalents increased to $8,034 million at October 31, 2024, up from $3,797 million at October 31, 2023[16] - Total cash and cash equivalents, investments, and funds receivable and amounts held for customers increased to $8.964 billion as of October 31, 2024, compared to $7.995 billion as of July 31, 2024[39] - Funds receivable and amounts held for customers increased to $5.606 billion as of October 31, 2024, compared to $3.921 billion as of July 31, 2024[39] - Total cash, cash equivalents, restricted cash, and restricted cash equivalents increased to $8.034 billion as of October 31, 2024, compared to $7.099 billion as of July 31, 2024[40] - Restricted cash and restricted cash equivalents increased to $5.162 billion as of October 31, 2024, compared to $3.490 billion as of July 31, 2024[42] - Net cash provided by operating activities increased by $459 million to $362 million for the three months ended October 31, 2024[136] - Cash, cash equivalents, and investments totaled $3.4 billion at October 31, 2024, a decrease of $716 million from July 31, 2024[134] - Cash, cash equivalents, and investments decreased by $716 million (18%) to $3.4 billion as of October 31, 2024[135] Debt and Liabilities - Total liabilities increased to $15.057 billion as of October 31, 2024, up from $13.696 billion as of July 31, 2024[12] - Long-term debt increased to $5.625 billion as of October 31, 2024, compared to $5.539 billion as of July 31, 2024[12] - Total principal balance of debt at October 31, 2024 is $6.170 billion, with a net carrying value of $6.124 billion[49] - Future principal payments for debt at October 31, 2024 include $500 million due in fiscal year 2025 and $1.55 billion due in fiscal year 2027[49] - The 2020 Notes have $1.5 billion outstanding as of October 31, 2024, with an effective interest rate ranging from 1.127% to 1.767%[50] - The 2023 Notes have $4.0 billion outstanding as of October 31, 2024, with $106 million in interest paid during the three months ended October 31, 2024[52] - The 2024 Credit Facility provides a $1.5 billion unsecured revolving credit facility, with no amounts outstanding as of October 31, 2024[53] - The 2019 Secured Facility has $370 million outstanding as of October 31, 2024, with a weighted-average interest rate of 6.25%[54] - The 2022 Secured Facility has $300 million outstanding as of October 31, 2024, with a weighted-average interest rate of 6.2%[56] - The commercial paper program established in June 2024 has a capacity of $1.5 billion, with no amounts outstanding as of October 31, 2024[57] - Total other current liabilities decreased from $549 million in July 2024 to $536 million in October 2024[58] - Total other long-term obligations increased from $208 million in July 2024 to $221 million in October 2024[59] - The company has $1.5 billion of senior unsecured notes outstanding as of October 31, 2024, with a maximum interest payment commitment of $75 million[139] - The company issued $4 billion of senior unsecured notes in September 2023, with a maximum interest payment commitment of $2.8 billion[141] - The company entered into a $1.5 billion unsecured revolving credit facility expiring on February 5, 2029, with no amounts outstanding as of October 31, 2024[142] - The company has $670 million outstanding under its secured revolving credit facilities as of October 31, 2024[135] - Established a $1.5 billion commercial paper program in June 2024, with no amounts outstanding as of October 31, 2024 and July 31, 2024[145] Investments and Fair Value - Total assets measured at fair value on a recurring basis were $2.468 billion as of October 31, 2024, down from $3.153 billion as of July 31, 2024[33] - Downward adjustments for long-term investments during Q1 Fiscal 2025 amounted to $42 million[36] - Cumulative upward adjustments for long-term investments through October 31, 2024 amounted to $75 million[36] - Cumulative downward adjustments for long-term investments through October 31, 2024 amounted to $55 million[36] - Carrying value of long-term investments was $90 million as of October 31, 2024, down from $131 million as of July 31, 2024[36] - Total estimated fair value of senior unsecured notes was $5.5 billion as of October 31, 2024 and July 31, 2024[35] - Total available-for-sale debt securities remained stable at $636 million as of October 31, 2024, compared to $615 million as of July 31, 2024[40] - Long-term investments decreased by $41 million (31%) to $90 million as of October 31, 2024[135] Shareholder Equity and Dividends - Total stockholders' equity decreased from $18,436 million at July 31, 2024 to $18,136 million at October 31, 2024[13] - Share-based compensation expense was $511 million for the three months ended October 31, 2024, up from $495 million in the same period in 2023[13] - Dividends and dividend rights declared increased to $1.04 per share for the three months ended October 31, 2024, compared to $0.90 per share in the same period in 2023[13] - Quarterly cash dividends declared totaled $295 million for the three months ended October 31, 2024[70] - The company repurchased 915,000 shares for $570 million during the three months ended October 31, 2024[67] - The company repurchased 915,000 shares of common stock and increased its stock repurchase authorization by $3 billion, bringing the total authorization to $4.3 billion[138] - Quarterly cash dividends declared totaled $1.04 per share, amounting to $295 million for the three months ended October 31, 2024[138] Segment Performance - Global Business Solutions segment revenue increased from $2,344 million in Q1 fiscal 2024 to $2,544 million in Q1 fiscal 2025[85] - Credit Karma segment revenue increased from $405 million in Q1 fiscal 2024 to $524 million in Q1 fiscal 2025[85] - Consumer segment revenue decreased by $11 million (6%) in Q1 FY25 compared to Q1 FY24, with operating income dropping by $56 million (42%)[120] - ProTax segment revenue decreased by $3 million (7%) in Q1 FY25, with operating income declining by $2 million (9%)[126] - The company reclassified $65 million from Consumer segment operating income to other corporate expenses in Q1 FY25 due to reorganization of technology and customer success functions[120] Reorganization and Strategic Initiatives - The company reorganized certain technology and customer success functions, resulting in a reclassification of $332 million from Global Business Solutions, $65 million from Consumer, and $8 million from ProTax to other corporate expenses for the three months ended October 31, 2023[20] - The company renamed its Small Business & Self-Employed segment as the Global Business Solutions segment on August 1, 2024, to better align with the global reach of the Mailchimp and QuickBooks platform[20] - Intuit's AI-driven expert platform strategy focuses on delivering "done for you" experiences and connecting customers with AI-powered human expertise[100] - The company is creating a unified consumer platform with TurboTax and Credit Karma to help optimize spend, access money, and grow wealth[102] - Intuit aims to disrupt the mid-market with an integrated ecosystem, including QuickBooks, workforce solutions, and Mailchimp's marketing offerings[102] - Intuit secured a $300 million revolving credit facility, with $150 million committed and $150 million uncommitted, to fund loans to small businesses[89] - The company reorganized its Global Business Solutions, Consumer, and ProTax segments, reclassifying $332 million, $65 million, and $8 million in expenses, respectively, to other corporate expenses[95] Tax and Compensation - Effective tax rate for the three months ended October 31, 2024 was approximately 8%[65] - Total unrecognized tax benefits at July 31, 2024 were $327 million[66] - The company's effective tax rate for Q1 FY25 was approximately 8%, excluding discrete tax items primarily related to share-based compensation[133] - Share-based compensation expense was $511 million for the three months ended October 31, 2024, up from $495 million in the same period in 2023[13] - Total share-based compensation expense increased from $495 million in October 2023 to $511 million in October 2024[72] - Share-based awards available for grant increased from 27,317 thousand shares at July 31, 2024 to 29,033 thousand shares at October 31, 2024[73] - Nonvested RSUs and restricted stock decreased from 10,924 thousand shares at July 31, 2024 to 9,677 thousand shares at October 31, 2024, with a weighted-average grant date fair value of $509.71[75] - Unrecognized compensation cost related to non-vested RSUs and restricted stock was approximately $4.5 billion with a weighted-average vesting period of 2.9 years[75] - Stock options outstanding decreased from 1,772 thousand shares at July 31, 2024 to 1,631 thousand shares at October 31, 2024, with a weighted-average exercise price of $455.16[77] - Unrecognized compensation cost related to non-vested stock options was approximately $117 million with a weighted-average vesting period of 3.0 years[77] Loans and Receivables - Funds receivable and amounts held for customers increased to $5.606 billion as of October 31, 2024, up from $3.921 billion as of July 31, 2024[12] - Net notes receivable balance for term loans to small businesses increased to $1.0 billion as of October 31, 2024, compared to $912 million as of July 31, 2024[44] - Total sales of term loans during the three months ended October 31, 2024 amounted to $106 million, compared to $35 million during the same period in 2023[46] - The company has a remaining monthly commitment to sell $248 million in participation interests in unsecured term loans to small businesses through July 31, 2027[46] - The company purchased term loans from its originating bank partner with principal balances of $650 million during the three months ended October 31, 2024, compared to $279 million during the same period in 2023[44] - The company had commitments to purchase $22 million in term loans that were originated on or prior to October 31, 2024[44] Intangible Assets and Amortization - Acquired intangible assets net value at October 31, 2024 is $5.662 billion, with a weighted-average life of 13 years[48] - Total expected future amortization expense for acquired intangible assets is $5.662 billion, with $472 million expected in fiscal year 2025[48] Leases and Operating Costs - Operating lease cost increased from $26 million in October 2023 to $29 million in October 2024[62] - Total net lease cost increased from $29 million in October 2023 to $31 million in October 2024[62] - Present value of lease liabilities