Mid-Market Growth: Will Intuit Unlock Its Biggest Lever?

Core Insights - Intuit Inc. is focusing on expanding into the mid-market, identifying it as a significant growth opportunity with nearly half of its total addressable market in this segment [1] - The Intuit Enterprise Suite (IES), launched a year ago, is addressing mid-market challenges and gaining traction by consolidating workflows into a single AI-native platform [1][3] - Fiscal 2025 showed strong momentum with mid-market revenues increasing by 40% year over year and customer growth of 23% to nearly 350,000 [2][9] Company Performance - Average revenue per contract reached $27,000, with nearly doubled average revenue from customers upgrading within the franchise [2] - IES offers features such as multi-entity consolidation, multidimensional reporting, and AI-powered agents, enhancing cost efficiency and platform stickiness [3] - Intuit's AI+HI advantage utilizes extensive customer data to deliver personalized financial solutions, enhancing feature deployment [4] Market Positioning - Management sees potential for scaling mid-market operations beyond current levels, with 800,000 QuickBooks Online users providing a natural upsell opportunity [5] - Intuit aims to capture a $89 billion total addressable market in the mid-market segment [5] Competitive Landscape - Oracle's cloud infrastructure business saw a 51% revenue increase to $10.2 billion, with total cloud services reaching $24.5 billion, reflecting a 24% year-over-year growth [6] - SAP's cloud revenues grew by 24% year over year to €5.13 billion, driven by strong Cloud ERP Suite performance [7] Stock Performance and Valuation - Intuit's stock has increased by 14.5% over the past six months but has underperformed compared to the broader industry and S&P 500 [8] - The company's shares are considered expensive, trading at a forward Price/Sales ratio of 9.13X, above the industry average of 8.76X [10] Earnings Estimates - The Zacks Consensus Estimate for fiscal 2026 and 2027 EPS has been revised upward recently, indicating positive sentiment [12]