INTU

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Intuit delivered solid Q3 fiscal 2026 results, with revenue rising 10% to $8.6 billion and non-GAAP EPS exceeding expectations. This performance led management to raise full-year guidance. The quarter was characterized by significant growth in the "assisted tax" segment (TurboTax Live), which saw a 36% revenue increase and now accounts for 53% of total tax revenue. This success helped offset a disappointing performance in the low-end DIY tax segment, where Intuit lost market share among price-sensitive filers earning under $50,000. To address this, CEO Sasan Goodarzi announced a shift to value-based pricing and increased cross-monetization through the Credit Karma platform. Simultaneously, Intuit announced a 17% workforce reduction to streamline operations and pivot more aggressively toward AI. The restructuring targets management layers and duplicative roles to increase organizational velocity. In the Global Business Solutions segment, mid-market revenue grew 38%, and the company is expanding its Enterprise Suite. Despite a macro-level contraction in total IRS filers, Intuit remains confident in its "AI-driven expert platform" strategy, aiming to leverage proprietary data and human expertise to maintain a competitive moat. The company continues to prioritize capital returns, significantly increasing share repurchases during the quarter.

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Intuit Inc.: Aggressive Share Buybacks Masking Unsecured Lending Pivot and Massive Restructuring Costs

Full Earnings Call Transcript — Q3 • 2026-05-20

Operator: Good afternoon. My name is Cloe, and I will be your conference operator today. At this time, I would like to welcome everyone to Intuit's Third Quarter Fiscal Year 2026 Conference Call. [Operator Instructions] With that, I'll now turn the call over to Anne-Sophie Seigneurbieux, Intuit's Senior Vice President of Investor Relations, Corporate and Strategic Finance. Ms. Seigneurbieux?
Anne-Sophie Seigneurbieux: Thank you, Cloe. Good afternoon, and welcome to Intuit's Third Quarter Fiscal 2026 Conference Call. I'm here with Intuit's Chairman and CEO, Sasan Goodarzi; and our CFO, Sandeep Aujla. Before we start, I'd like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit's results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon or our Form 10-K for fiscal 2025 and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit's website at intuit.com. We assume no obligation to update any forward-looking statements. Some of the numbers in these remarks are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP numbers in today's press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period, and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. With that, I'll turn the call over to Sasan.
Sasan Goodarzi: Great. Thank you, Anne-Sophie, and thanks to all of you for joining us today. We delivered strong overall results this quarter with Q3 revenue growing 10% as we made significant progress executing on our AI-driven expert platform strategy. As a result, we're raising total company guidance for revenue and all non-GAAP metrics for the full fiscal year. We delivered significant growth in key areas across the company, assisted tax, money portfolio and mid-market, all growing north of 30%. We also experienced headwinds with the most price-sensitive segment of DIY filers in TurboTax, which I will unpack shortly. First, let me reground everyone on our durable strategy to win as an AI-driven expert platform. In our category, accuracy, compliance, security and trust of financial decisions are critical given the liability that comes with that. Our powerful combination of proprietary data, domain-specific AI platform capabilities and AI-powered human expertise is setting the standard for trusted financial intelligence. Ultimately, customers buy confidence, not code, which is why they spend at least 7x more on accounting and tax experts than on software alone. Intuit brings together data, AI and human expertise into a single system of intelligence that does the work for customers. Our platform enables businesses to manage from lead to cash and consumers from credit building to wealth building, all in one place so they can make high-stakes financial decisions with confidence. As we look at our overall performance, we see both exceptional momentum and meaningful opportunity. Our Big Bets have ignited growth engines, assisted tax, money portfolio and mid-market that are all growing north of 30%. Our focus now is on scaling these growth engines with an even greater speed and impact. Let's now talk about our overall Consumer performance and tax. Our Consumer platform grew 8% this quarter. Credit Karma grew 15%, and we expect TurboTax to grow 7% for the full year. To set context, total IRS filers are expected to decline by approximately 30 basis points this season, representing a gap of roughly 2 million units versus macro expectations and the most significant industry-wide contraction since the post-COVID tax season. As the category leader, this headwind impacted results among both existing and new customers across all demographics. Against this backdrop, we expect TurboTax Online paying units to grow 2%, driven by share gains among higher ARPU filers. We also expect ARPU to increase 11%, reflecting continued demand for assistance and faster access to refunds. We saw significant strength in an area that's critical to our strategy and long-term growth formula, disrupting the $37 billion assisted tax category, 88% of the total TurboTax TAM. We expect TurboTax Live customers to grow 38% this year with new TurboTax Live customers up 29%, excluding the impact of onetime offers. Our local expert strategy played a key role in TurboTax Live acquisition with 36% of those acquired through local channels being new to TurboTax. As a result, we expect TurboTax Live revenue to grow 36% this year, well above our long-term expectation of 15% to 20% revenue growth. TurboTax Live will, therefore, represent over half of TurboTax revenue, up 11 points versus last year, a significant milestone in our journey to disrupt the assisted category. This is a testament to the value we're delivering in a high-stakes regulated environment. Shifting to the DIY segment, representing a $5 billion TAM or 12% of our total TurboTax TAM. I'm constructively dissatisfied with our performance. We faced pressure among the most price-sensitive DIY filers earning less than $50,000 a year. We lost on price. To reaccelerate this part of our business, we will evolve our business model by delivering the right lineups and price points to meet simple filers needs at the low end and lean into the power of our broader Consumer platform to monetize beyond tax. The flywheel effect we saw across our Consumer platform this season gives us further confidence in our strategy. Average revenue per user is approximately 30% higher for customers using both TurboTax and Credit Karma compared to customers using TurboTax alone, and we are seeing over 35% of TurboTax customers adopt our fast money offerings. As a result, we expect to deliver 26% revenue growth across our consumer money portfolio this year. We also saw the impact of improved end-to-end consumer experiences. Credit Karma members with simple tax situations could have up to 80% of their taxes done before even starting in TurboTax. This is helping drive a 54% increase in tax filers who start their filing experience in Credit Karma this year, up 25 points. This progress underscores our ability to drive ARPU expansion by deepening engagement, delivering more value across the Consumer platform and monetizing beyond tax. To summarize, in a $37 billion assisted TAM, we expect to grow TurboTax Live customers 38% and revenue 36%, representing over half of our TurboTax franchise. We have significant momentum and confidence in our trajectory. Our plan is clear. First, build on our momentum with TurboTax Live, where we have the largest TAM and a significant ARPU opportunity; and second, evolve our DIY business model to deliver the right value at the right price point for the most price-sensitive filers and monetize beyond tax with our Consumer platform. We're confident in our platform assets and proof points to deliver on our long-term growth goals. Now turning over to our all-in-one business platform that's becoming the control tower for businesses and accountants, fueling their growth and consolidating their tech stacks. Starting with mid-market. Our AI native platform continues to gain traction in a nearly $90 billion TAM. In Q3, online ecosystem revenue for QBO Advanced and Intuit Enterprise Suite grew approximately 38%. We're scaling our direct sales team by approximately 30%, as we shared last quarter, and sales productivity continues to improve. This translates to 37% quarter-over-quarter growth of total Intuit Enterprise Suite contracts. In our money portfolio, we're making strong progress by putting money at the center of everything that we do. Total online payment volume grew 30% this quarter, including Bill Pay, reflecting continued momentum in helping customers get paid faster and manage cash flow more effectively. We are growing our line of credit offerings with Buy Now, Pay Later, directly embedded within QuickBooks and the launch of Intuit Business Credit Card. These additions will give small and mid-market businesses even greater access to capital and control over their financial operations. Across the platform, we continue to scale new AI capabilities, bringing together insights, forecasts and industry-specific KPIs so our customers can run their business and grow with confidence. Our AI agents are delivering value at scale with our accounting AI agents powering recommendations across more than 50 million transactions each week and business tax AI agents identifying millions of dollars in deductions. Looking ahead, we are launching a sweeping expansion and a new lineup of our AI-driven expert platform in August. This represents a significant step forward, a unified system of intelligence that serve as a strategic control tower for both businesses and accountants seamlessly moving from insights to autonomous execution. On a single platform, accountants can run and grow their practices while managing and advising their clients. And based on their partnership tier, we will connect them with new customers to fuel their success and strengthen our network effect. Businesses operate from the same control tower, where AI agents don't just surface insights, but take action across the business to manage performance, KPIs and complete critical workflows autonomously, all in one place. With a base of approximately 10 million business customers and 1 million accountants, this breadth of data, customers and an ecosystem of industry-specific domain expertise fuels a powerful network effect and durable competitive advantage. Underpinning all of this is our commitment to trusted intelligence. Built on 4 decades of leadership in accuracy, compliance and security, our platform enables customers to operate with confidence, making better decisions and running their businesses from a single integrated platform. As we evolve our lineup with expanded functionality, we expect to take pricing actions at the higher end of our portfolio, reflecting the increased value we are delivering to customers. We will also introduce a consumption-based model for our AI and human intelligence services, enabling customers to scale usage and unlock greater benefits and business outcomes. Based on initial tests, we see the strongest adoption among more complex customers on the Advanced and Plus offerings. We are also expanding our offerings to meet the needs of the next wave of entrepreneurs. With a 94% year-over-year increase in people planning to start a business in 2026, we launched QuickBooks Free and QuickBooks Lite to provide a low-friction entry point for millions of new businesses. These tiers ensure that early-stage businesses scale, they grow with the Intuit platform. Before I wrap up, I want to address the decision we announced earlier today. We are reducing our full-time workforce by 17% to simplify our organizational structure to become a faster, leaner and more focused company. We are at an important inflection point with strong category leadership and multiple growth engines across our 3 Big Bets. To fully capitalize on this opportunity, we must operate with greater velocity, urgency and discipline. These deliberate actions are about scaling our growth engines and strengthening our core. We're sharpening our cost structure to deliver durable long-term growth and margin expansion. This is how we build the next chapter of Intuit, services and software powered by data, AI and human intelligence. We're positioning the company to deliver durable growth you can count on. Let me now hand it over to Sandeep.
Sandeep Aujla: Thanks, Sasan. We delivered solid third quarter company-wide results for fiscal 2026, exceeding the top end of our guidance across revenue, operating income and earnings per share. Our third quarter results include revenue of $8.6 billion, up 10%; GAAP operating income of $4 billion versus $3.7 billion last year; non-GAAP operating income of $4.7 billion versus $4.3 billion last year; GAAP diluted earnings per share of $11.09 versus $10.02 a year ago; and non-GAAP diluted earnings per share of $12.80 versus $11.65 last year, reflecting our overall disciplined approach to managing the business, including continued AI efficiencies. Now turning to the business segments. Consumer platform revenue grew 8% in Q3, driven by TurboTax, which grew 7%; and Credit Karma, which grew 15%. TurboTax revenue was in line with last year. Beginning with TurboTax. While we did not have the overall tax season we expected, we made significant progress against our strategic growth priority of disrupting the assisted category. As Sasan shared, we expect TurboTax Live customers to grow 38% this year and revenue to grow 36%, well ahead of our stated long-term growth expectations of 15% to 20%. TurboTax Live will, therefore, represent 53% of total TurboTax revenue this year. These results reinforce our conviction in our strategy to deliver powerful done-for-you experiences for customers with a unique combination of AI and AI-driven human expertise. Overall, we expect total online paying units to grow 2% this year on share gains from higher ARPU filers. We saw strong monetization across simple and complex filers, driving an expected 11% increase in ARPU as more customers chose our assisted offerings and faster access to refunds. In total, we expect to deliver more than $25 billion in refunds through our fast money offerings this year. Our priorities are clear: build on our exceptional momentum in TurboTax Live, where we continue to see significant ARPU opportunity and evolve our DIY model at the low end to better serve price-sensitive filers. We know what we need to do, and the team is well positioned to execute given the strength of our assets across TurboTax and Credit Karma. Within the ProTax Group, revenue in Q3 was in line with last year. For the full year, we expect ProTax Group revenue growth of approximately 4%. Turning to Credit Karma, where revenue growth of 15% reflects continued momentum with our members and partners. On a product basis, personal loans accounted for 9 points of growth, auto insurance accounted for 5 points and home loans accounted for 1 point. Overall, we have conviction in our strategy and confidence in the actions we are taking to serve consumers with our all-in-one platform, engaging them year-round to make smarter financial decisions by delivering done-for-you experiences, AI-powered local tax expertise and faster access to money. Turning now to the Global Business Solutions Group. We continue to make progress serving businesses with our all-in-one business platform and delivering done-for-you experiences powered by AI and human expertise. Global Business Solutions Group revenue grew 15% during the quarter or 17% excluding Mailchimp, while online ecosystem revenue grew 19% in Q3 or 22% excluding Mailchimp. This growth is underpinned by continued momentum in mid-market with online ecosystem revenue for QBO Advanced and Intuit Enterprise Suite growing 38%. Online ecosystem revenue for small businesses and the rest of the base grew 16%. In Q3, we delivered strong growth in both online accounting and online services. QuickBooks Online accounting revenue grew 22%, driven by higher effective prices, customer growth and mix shift. Online services revenue grew 15% in Q3 or 22% excluding Mailchimp. This growth was driven by money, which includes payments, capital and Bill Pay as well as payroll. Within money, revenue growth in the quarter was driven by payments revenue growth, fueled by customer growth and increase in total payment volume per customer and higher revenue yield. Total online payment volume, including Bill Pay, grew 30% in Q3, reflecting a continued momentum in payments and adoption of our Bill Pay offering. Online payment volume growth, excluding Bill Pay, was 18%. Within payroll, revenue growth in the quarter reflects mix shift, customer growth and higher effective prices. Earlier this month, we announced the launch of QuickBooks Workforce and advanced integrated suite of offerings, transforming how we -- how businesses run their human capital management end-to-end. And we're excited about the opportunity this unlocks, particularly for mid-market customers. Within Mailchimp, revenue was down slightly versus a year ago as we continue to focus on improving churn and acquisition among smaller customers while building on momentum in SMS and the mid-market. As part of the workforce changes announced earlier today, we are rightsizing our investment in Mailchimp. Overall, we have confidence in our strategy and online ecosystem growth continues to be strong. This performance underscores powerful traction across our growth vectors and positions Intuit to lead and win over the long term. Turning to Desktop. Desktop Ecosystem revenue grew 6% in Q3 with QuickBooks Desktop Enterprise revenue growing in the high single digits. Now shifting to our balance sheet and capital allocation. Our financial principles guide our decisions. They remain our long-term commitment and are unchanged. We finished the quarter with approximately $6.8 billion in cash and investments and $6.2 billion in debt on our balance sheet. We are leaning meaningfully into share repurchases this year. We repurchased $1.6 billion of stock during the third quarter, more than double the same period last year. In the first 3 quarters of fiscal 2026, share repurchases are up over 60% versus last year. This reflects both our strong conviction in our long-term trajectory and our belief that our shares represent compelling value at current levels. We maintain our aim to be in the market each quarter. The Board approved a quarterly dividend of $1.20 per share, payable on July 17, 2026. This represents a 15% increase versus last year. Delivering long-term shareholder value is central to how we manage the company. We continue to execute on opportunities to drive margin expansion over time through a disciplined approach to capital management and ongoing efficiency gains. As Sasan mentioned, we announced today the decision to reduce our full-time workforce by approximately 17%. This leaner structure will accelerate how we operate with greater focus, speed, agility and an even stronger commitment to profitability. We are committed to delivering annual EPS growth of at least mid-teens over the coming years. While these decisions are never easy, they are a reflection of our disciplined approach to capital management, and we are confident it will ultimately allow us to deliver durable revenue growth, expanded margins and growing capital returns to shareholders over the long term. Moving on to guidance. We are raising total company guidance for revenue and all non-GAAP metrics for the full fiscal year. Guidance includes total company revenue of $21.341 billion to $21.374 billion, growth of 13% to 14%. Our guidance includes Global Business Solutions Group revenue growth of approximately 16%, with Desktop revenue growth in the mid-single digits and overall Consumer Group revenue growth of approximately 10%. The Consumer Group outlook is supported by TurboTax growth of approximately 7%, Credit Karma growth of approximately 19% and ProTax growth of approximately 4%. GAAP diluted earnings per share of $15.79 to $15.84, growth of approximately 16% and non-GAAP diluted earnings per share of $23.80 to $23.85, growth of approximately 18%. We expect a GAAP tax rate of approximately 24% in fiscal 2026. Our guidance for the fourth quarter of fiscal 2026 includes total company revenue growth of 11% to 12%, GAAP earnings per share growth of $0.73 to $0.79 and non-GAAP earnings per share of $3.56 to $3.62. As a reminder, guidance for GAAP metrics includes $300 million in restructuring charges related to our workforce changes. You can find our full fiscal 2026 and Q4 guidance details in our press release and on our fact sheet. Lastly, I'd like to officially welcome Kendra Goodenough to her new role as Intuit's Vice President of Investor Relations. I know she is looking forward to partnering with you all going forward. With that, I'll turn it back over to Sasan.
Sasan Goodarzi: Great. Thank you, Sandeep, and welcome, Kendra. One of our biggest strengths as a company is taking a day 1 approach to fueling long-term success, which is the most important thing to do in the era of AI. We are redefining the future of trusted financial intelligence to take advantage of our $300 billion in TAM by: one, aggressively scaling our growth engines already growing over 30%; second, reimagining our business model to win in our core category; and third, sharpening our cost structure to become leaner and faster, delivering long-term value for both our customers and our shareholders. As a management team, we take pride in reinventing ourselves, and that is exactly what we are doing. With that, let me now open it up to your questions.
Operator: [Operator Instructions] We'll take our first question from Keith Weiss with Morgan Stanley.
Keith Weiss: I think the focus is going to be on sort of the tax results and the disappointment there. I wanted to dig in on that side of the equation first. There's -- of course, gives us feel a little bit like 2023, 2024, right? The overall tax filings were disappointing, losing share at the low end of the market. And it felt like in that scenario, putting out a low-end SKU was a decent fix and got TurboTax back on track. But this environment is different, right? We're thinking about emerging competitors. We're thinking about GenAI changing the competitive landscape. So how good is that analogy of '23, '24? Or how do you have to differently kind of fix the business today versus that period?
Sasan Goodarzi: Keith, thanks for your question. I think a couple of things that I would say. One is -- one of the things that we were very assertive and aggressive in tackling to win customers that are less than $50,000 in income was really around onetime offers to get them into the franchise and ultimately be able to grow with those customers. I think the thing that we have learned is 2 things that are very different. One is we need a durable approach to winning with these customers that are, again, less than $50,000 in income. And secondarily, we now have incredible capabilities to monetize beyond tax, which is a lot of what we referred to just a moment ago around the ARPU increase when you look at TurboTax plus Credit Karma, our ARPU is well over 30%, 35% of our TurboTax customers attach the money offering. And so what's very different is those 2 things. We need a durable approach and a durable model to win with these customers, and you need a durable way to be able to actually monetize beyond tax, of which we have. And I think to make it real, Keith, for you and everybody else is it's a shift from complexity-based to value-based. And what that means is if you earn less than $50,000 and you have a W-2, you may fall into a SKU that's free. But if you then have a W-2 plus you donate it to a charity, you may fall into a SKU that you have to pay for. And these aren't, by the way, customers that are just free. These are actually customers that are paying other competitors. But the shift from complexity to value-based is that based on the value that these folks that are less than $50,000 are looking for, we're going to have a model where we are very competitive on price. But then we have significant ARPU opportunities that we've already proven that where we can monetize that actually allows us to make up from a monetization perspective from other benefits that we deliver. So that's what's very different than 2023. And I would just tell you that none of this has anything to do with AI. This is all about being priced right for customers that are less than $50,000 in income. They're actually willing to have experiences that are far worse for them as long as the price is right. And that's the approach and the shift we will be making in our model as we look ahead.
Sandeep Aujla: Keith, just one thing to add. In the sub-$50,000 segment, there are millions of customers that we serve exceptionally well. Millions of them are using our live offerings. And many of them come back and use the same SKU over and over again. What Sasan is referring to is the price-sensitive segment of the under $50,000, which is a segment of the under $50,000, not the entire of the under $50,000. So just distinction I wanted to call out as well. Keith, thank you for your partnership over the years. I think given your retirement, this is your final call. We appreciate the partnership you've brought to Intuit over the years. Thank you.
Keith Weiss: Thank you so much. Appreciate that.
Operator: We'll move next to Siti Panigrahi with Mizuho.
Sitikantha Panigrahi: Sasan, if you see some of the areas doing well, your assisted category, you mentioned mid-market or even money, but then there are segments that drag on the business. So I have a high-level question. As investors now, they're concerned about this AI disrupting software and growth rates, how do you give the confidence to the shareholder that Intuit can continue to deliver that durable growth and margin expansion, especially the area you think is your focus are growth drivers. And you talked about that services as a software, why do you think that's the right approach to deliver that durable growth?
Sasan Goodarzi: Yes, Siti, thanks for your question. I think the place that I would start is when you think about the consumers, businesses and accountants that we serve, these are high-stake decisions that these constituents make. And let me just, for a moment, focus on businesses and accountants. When you think about what we have created is an end-to-end platform that's actually a system of intelligence that helps you manage your business, to run your business and to grow your business. And remember, businesses are trying to manage customers. They're managing cash flow. They're trying to understand which customers are profitable. They're managing money coming in and money going out. They're managing payroll, and they're ensuring that they can be compliant and have their taxes done and books done right. We have created a platform, a true control tower that not only helps businesses grow and run their business, but we're actually with our launch of our Intuit Accountant Suite have created a network effect where these same accountants are not only able to grow their firm, grow their practices and manage their clients, but also be able to now provide expert services because every business has to have an accountant to be able to help them with advice, books and inventory decisions as an illustrative example. And so when it comes down to running a business, that's why we bet the entire company on data AI and one of the largest network of AI-powered expertise, which is our accountants to really fuel the success of businesses. And I think a really important proof point around that is our growth engines. And when you look at our growth engines, you've got mid-market, you've got our money portfolio and you've got assisted tax that's growing north of 30%. That's a substantial part of the company, which brings me to the second point I wanted to make, and that is when you look at the total addressable market of tax, 88% of it is assisted. And with assisted tax, very similar to the importance of accounting and bookkeeping, customers spend over 7x on people to help them make decisions versus just software and code. And we have a platform where it's all in one that has both technology and people on one platform to help customers get their taxes done right. And we're -- you can see from our results, we really are just at the beginning of what's possible in assisted tax, and that's going to be a fuel for years. So if I were to put a bow around it, what gives us confidence and what should give you and investors confidence is, one, we are actually looking to scale our growth engines even further and taking things like assisted tax money and mid-market that are already growing north of 30% and scaling them faster. Two, we're actually reimagining how we continue to win in our core and core tax is an illustrative example of we serve millions of customers very well that make income less than $50,000, but there is a smaller set of price-sensitive customers where we can now durably change our model because we can also monetize beyond tax. And this is a company that is very focused on effectiveness and efficiency of how we run the company, which is partly albeit a very hard decision, why we reduced our workforce by 17% because it was all in service of less layers, less coordination roles, much more efficient and effectiveness in how we run the company. That's what gives us the confidence in the durability of both the top line growth and margin expansion, and you can expect this company to grow EPS, GAAP and non-GAAP north of 15%. So probably a longer answer than you were looking for, but I want to unpack it holistically.
Operator: We'll take our next question from Brent Thill with Jefferies.
Sang-Jin Byun: This is John Byun on behalf of Brent Thill. Just maybe a couple of questions around the tax side. You mentioned the IRS filers will be down about 30 basis points. Wondering if you may have more color as to why they may be versus a typical growth of 0% to 2%. And as you look forward, the assisted tax side has been so strong to offset whatever margin pressure you had on the DIY side. I mean wondering how you think about that going forward now that assisted is more than half.
Sasan Goodarzi: Sure. Let me -- thank you for your question. Let me start with the last question first. The reason we are really bullish about just our Consumer platform trajectory and growth moving forward is I think the biggest highlight from this tax season was really around, one, assisted segment performance. When you look at new assisted customer growth, it grew 29%. When you look at total customer growth, it grew 38% and our revenue grew 38% and -- or 36%, I should say. And now it's 53% of our entire franchise, and that's up 11 points over last year. And we continue just to be at the tip of the iceberg in terms of what's possible because what we did with our local strategy really worked this year. And Credit Karma is becoming a meaningful impact because there's a 54% increase in filings of taxes through Credit Karma. Those are big highlights. And as you look at us continuing to scale, pursuing 88% of the total addressable market, it gives us a lot of confidence. In the DIY segment, remember, the goal that we've articulated is that we want to maintain revenue share. And we actually expect this year to maintain our revenue share in the DIY category. And in that context, that's why we feel very good about a business model change for the price-sensitive segment of these folks that are $50,000 or less because these folks are paying. They're just overall price sensitive to what they pay. And we're going to evolve our model to not only be competitive on price, but then be able to monetize beyond tax. So that's overall what gives us confidence, irrespective of the total filings. Now let me get to that, which I think was the initial part of your question. We expect that the total filings will decline about 30 basis points and -- or 30 bps, and we expected it to go up. Now by the way, e-files will be up, one , but we actually -- e-files doesn't include the manual filings. What we saw this year across the entire base is there was a big chunk of manual filers that just did not file. And as a category champion, this was really just within DIY. It's worth about 2 million units. But I think the reason I'm reiterating it irrespective of total filings is when we look at our assisted opportunity and when we look at our opportunity with our model change in DIY, that's what gives us confidence as we look at irrespective of whether or not the total IRS returns grow at one point or is flat year-over-year.
Sandeep Aujla: John, the one factor I would also add is your question around the growth we're seeing in assisted tax. Sasan mentioned how we are scaling the number of customers. The other thing that I find really encouraging is as we are adding new customers at such a healthy rate, we are also seeing retention go up. The retention was up 2 points in TurboTax Live, just another factor to play into how this offering is really resonating with our customer base.
Operator: We'll take our next question from Brad Zelnick with Deutsche Bank.
Brad Zelnick: I wanted to ask a little bit more about the restructuring, which I know you take very seriously. And I appreciate it's intended to best position the company ahead for durable long-term growth. But can you share more detail on how much might be attributable to AI efficiencies and perhaps a structural shift from labor to tokens? How much is rightsizing Mailchimp? And how you're thinking about reinvesting the savings?
Sasan Goodarzi: Yes. Thank you for the question. Let me start it off, and I'll tag team with Sandeep. First of all, Brad, as you mentioned, these, for us, are always very hard decisions because at the end of the day, we're in a people business, and culture matters a lot, and we don't take decisions like this lightly. With that said, and it's very important for us as a company, one of the things that, Brad, we take a lot of pride in is to treat everything that we do like it's day 1. So if today is day 1 as a CEO and as a management team, what would we do? And really, let me tell you what this is not about. This was not about AI. As you know, we are very invested in AI and the tools that we use internally, which is what's driving a lot of our efficiencies and margin expansion. And also AI is embedded in everything that we do that helps us serve customers, which is what's fueling our growth. We always look at how we can continue culturally to have a company that's a company of builders and move fast. And one of the things that we've been really studying for the last year is beyond the tools that we are putting in place across the company, what is actually the biggest blockers and what's getting in our way. And really, there are several things that led to this 17% reduction. The first is we significantly reduced the number of management layers and to reduce the complexity of information flow of how fast we make decisions so we can push decision-making to our frontline folks that are the builders. The second, by reducing and looking at reducing the number of management layers, it also led us to reducing the number of what we call coordination heavy roles that we had in place. These -- by the way, these could be PMO, BizOps, more product and designer -- product managers and designers that you may need because of what's possible in terms of how fast you can build. So that was the second big area. And I would say that the third big area was now that we've put TurboTax and Credit Karma together as a unit and as a platform, we got to a place where as we are concluding all of the integration work, we had a lot of duplication. And so we reduced the number of roles that were, in essence, duplicates. And then last but not least, that's worthy of mentioning is really sizing and resizing Mailchimp in context of the growth opportunities ahead. Those are all, I would say, the main drivers of the restructuring. And if I take it back to, well, what are we doing with the restructuring? Where is it going? I would say there are 3 things that matter most, again, with a sort of a day 1 mentality and mindset. One is making sure that we feel good about our growth engines. When you look at assisted tax, money and mid-market, they're all growing well north of 30%, and we want to be able to scale those faster. The second is we want to reimagine particularly in DIY tax, how we ensure for a certain segment of customers that are less than $50,000, how do we ensure that we can win with those customers. And then third, by being faster, flatter and more focused, it allowed us to look at the workforce reduction. So a big chunk of this, you can count on it to go to margin expansion and EPS growth and a smaller part of it is going to go to scaling the growth engines because we actually feel good that the growth engines are actually funded quite well just because of the productivity that we're seeing internally. So again, probably a longer answer that you were looking for, but I wanted to unpack it. And just, Sandeep, would you add anything?
Sandeep Aujla: Sasan, I covered it, Brad. For me, as a management team, our responsibility is to deliver for all of our stakeholders, our customers and our shareholders included in that. So as Sasan mentioned, we're investing in our 3 Big Bets, and we're playing offense in our core. Where this is different than the actions we took in 2024 is, as Sasan mentioned, majority of the cost reductions we do expect to flow to the bottom line. And at the core, this is all about the 3 assets Sasan called out, focused organization, flatter organization, faster organization. Let me also touch on Mailchimp because you asked about that specifically. With the actions we are taking there, we believe the Mailchimp revised cash flow profile will generate more value to Intuit that a third party is likely to pay for that asset in the current equity and debt environment for software. So that's another consideration set that you all should have in mind as you look at what we're doing with Mailchimp.
Operator: We'll move next to Alex Zukin with Wolfe.
Aleksandr Zukin: I guess maybe in the spirit of Keith's and Siti's question, I think one of the main questions today is whether the performance around taxes, if there's anything structural that is changing? It doesn't sound like it's AI. It does sound like it was maybe a bit of a surprise. So maybe walk through why -- what kind of surprised you specifically? And is there any structural change that you feel like could actually impact the durability or the shape of growth going forward and how some of the changes that you're -- kind of what changes are you making on -- with kind of the rightsizing of the employee base to get in front of that specific dynamic?
Sasan Goodarzi: Yes, Alex, thanks for your question. And I'll actually start with the essence of your question, which is structure. And when you look at the total tax TAM, it's $42 billion. And out of that $42 billion, about $37 billion is assisted. And we are structurally very advantaged to go after that 88% of the total addressable market, and it shows up in our results. Our penetration is still incredibly low. And you can see that although overall customers grew 38%, new customers in the assisted segment grew 30% -- or 29% and revenue at 36%. So we're structurally advantaged there. Why? The reason we're structurally advantaged is we have built out a virtual expert platform that is all driven by all of our data, data engines and data ingestion capabilities AI that does a lot of that. I mean this -- what we're doing is incredibly complex from matching customers to the right experts to the routing to the capacity planning to doing a lot of the work for our experts, so our experts can manage the relationship with the end client. And structurally, we win on experience, we win on price and access to fast money and other benefits that we provide across our Consumer platform. So we have a big structural advantage there. When you look at the DIY segment, it's $5 billion of the total spend. And within that $5 billion, there is an element of that spend that is those that are $50,000 and less in income. And within that, Alex, there are those that are very price sensitive. I would just say that this is an area that did not just sneak up on us. This is an area where we've been very focused on what's the best way to win these very price-sensitive customers. And the biggest thing that we have done in the last 3 to 4 years is onetime offers. And I would say durably, the biggest thing that we have learned is these customers care about price. And they care about price -- they're willing to pay for benefits beyond tax. But what they care about is can they come back in the same SKU the next year. And this is the thing that Sandeep was touching on earlier, where a lot of the customers come back in the same SKU year after year. And so what we are going to do durably different for a very small segment of this DIY segment that are less than $50,000 is a durable model change where we are competitive on price where we can ultimately monetize with benefits that are outside of tax. And now we have all the capabilities to do that where we didn't several years ago. So to sort of zoom out and answer your question, we're structurally advantaged for almost 90% of the TAM. And we now have all the assets and capabilities to be able to go after those that are less than $50,000 in income and particularly that segment that is very price sensitive. And actually, anything that we put our minds to, we can turn around fairly, fairly quickly. All of that really is irrespective of the workforce reductions that we did. And I think that was one element of your question. We've done this from a place of strength, replacing the roof while the sun is shining to make sure that we can be more focused, faster and flatter in an environment where we want to be able to move faster than entrepreneurs, but at the scale of the company. So I would not connect the workforce reductions at all to DIY tax. They're discretely different choices and decisions.
Aleksandr Zukin: Excellent. And super clear. I appreciate that, Sasan. I guess maybe on the GBSG side, you highlighted meaningfully increasing headcount and sales capacity last quarter. Can you highlight the traction around both attracting top sales talent to the org and impacts kind of the outputs that you're seeing from that initiative in both the quarter and the pipeline?
Sasan Goodarzi: Yes. I'm really glad you asked that, and I want to just actually amplify something Sandeep and I touched on in the script, but it's really important. There are -- and I'll answer your question around sales productivity. There are 2 very important in line with our strategy, important pivots that we have made. One is we've traditionally thought about accountants as partners and as a channel. The strategic pivot we've made because of what's possible and what's ahead of us, which I'll get into in a moment, we are treating accountants like customers. The reason that's important is when you look at our platform and your question about sales, we now have one single unified platform. That accountants use to not only run their firm, run their practice, but to be able to manage all of their clients that are Intuit clients and be able to use all of our capabilities to not only drive automation within the firm to drive their profitability, but actually to also be able to deliver added value services that they can monetize and drive their revenue growth. The reason I mentioned that is we -- based on what we are launching in August, we will actually also have opportunities to monetize based on consumption, not just subscription. A few examples of that would be AI agent builder capabilities that helps them customize industry-specific KPIs and reporting that they can monetize. But based on their usage, we will monetize on consumption. And that is now leveraging the distribution of customers that they have that otherwise we wouldn't monetize in the past. That's a very important strategic way to think about accountants. At the same time, businesses are using the same platform, but it's built for them. And the reason I wanted to share and start with the control tower where it's one platform and really strengthening our network effect is that's where our added sales force goes into play, where they are now selling an end-to-end platform that's a unified platform, not only to get more end businesses on our platform, but to actually get accountants to accelerate the number of customers that they bring on to our platform. And so we're seeing productivity improvement. We've opened up the aperture where we're now really pursuing more new to the franchise beyond going after our base. And the productivity has increased, and it shows up in a 37% quarter-over-quarter contract increase in Intuit Enterprise Suite. So again, probably longer answer, Alex, than you were looking for, but I want to unpack the pivots because they're actually important for our long-term growth.
Operator: We'll take our next question from Taylor McGinnis with UBS.
Taylor McGinnis: Maybe on the Global Solutions business group. So it looks like excluding Mailchimp, there was a bit of a deceleration in the online businesses, particularly on the services side. So I'm wondering, one, can you provide a bit more color on what drove that in the quarter? And then secondly, as we look at the Global Solutions business group growing at 15%, any changes to your level of comfort in the 15% to 20% outlook in the near term? I know you mentioned actually just now on some newer AI solutions. So any upcoming monetization or pricing efforts that could potentially be a tailwind there?
Sandeep Aujla: Taylor, on the services, let me start there. What we are seeing is services performance continues to be strong, both including and excluding Mailchimp. But the delta you're seeing versus Q2 -- in Q2, we had benefits from tax-related things in the payroll side, the 1099 and other things that we charge separately for. So that's what drove a bit of that decel in Q3 versus the Q2 print. In terms of the broader GBSG, we remain confident in our strategy around the mid-market, as Sasan mentioned, there's a lot of headroom with IES. We're scaling up our sales force. We see a meaningful opportunity for us to drive new to the franchise growth with our counter partnerships as well as our sales force. And there's still tons of opportunity in our base that the team, I'm confident will execute on and get those into IES. You also saw us launch QuickBooks Workforce. That gives us confidence in driving platform adoption and taking our payroll offering to be something that really resonates with the mid-market. And we'll continue to do product work on both QuickBooks Advanced and IES to provide deeper functionality that resonates with the more complex customers. So these are all things that, in addition to the work we're doing on the money platform that we talked about previously, that gives us confidence in strong durable growth on the Global Business Solutions platform.
Operator: We'll move next to Kirk Materne with Evercore.
S. Kirk Materne: Just one for Sasan and then a follow-up for Sandeep. Sasan, you mentioned that what's going on in tax has nothing to do with AI. That makes sense. AI has kind of got more powerful in the last year. But can you just talk about what you are seeing with AI, whether it's with your tools or competitors and why you feel that, that trend with models getting more powerful over the next year and coming years doesn't sort of disintermediate some of the strength, frankly, you're seeing in the assisted category. And then for Sandeep, can you just talk about Mailchimp, what rightsizing means in terms of the drag on the overall sort of GBS business? Can you kind of keep the drag to a minimum while obviously taking up the cash flow from that business?
Sasan Goodarzi: Yes, Kirk, thanks for your question. And let me take it in a couple of parts just to ensure my answer is specific and not generic. First of all, on assisted tax, it's important to start with the customer. And that is customers that the 88% of our TAM that go to somebody else to do their taxes for them has nothing to do with how good software gets. This is all about confidence. And they want somebody else to do their taxes for them because they want to delegate the liability of these very high-stake decisions for somebody else to ensure that they are accountable for it and that they have confidence in the outcome. So it's really important to recognize that over the years, if you look at the structure of the market, the money that's spent on tax experts, accountants and bookkeepers, if you look at the structure of the spend, it's actually gone up in the last 5 years, in the last year, doesn't matter how good technology becomes for that customer, they want to ensure that they have the confidence that they're running their business the right way, that they're getting their taxes done correctly, whether it's a consumer or a business. So with all of that said, with the customer psyche and with our declaration years ago where we've built out a virtual expert platform that's all driven by data, AI and AI-powered human expertise, this is where we're structurally advantaged to be able to virtually help you get your taxes done at the best experience at the best price and provides you benefits like fast access to money, which is quite significant, and I think it shows up in our results, particularly when you look at new assisted customer growth. So from a -- the role that AI plays, it's really important to recognize that the majority of people are buying confidence to get assistance. And it's irrespective of how much software improves, it helps us actually serve them. So that was really assisted tax. I also want to touch on the business platform, the whole fuel of our growth in mid-market and money, the system of intelligence that we have created as a control tower to help businesses and accountants run their business for accountants to serve businesses is all driven by data and AI. And it's important to recognize that businesses, while they use Google, they use LLMs to do searches, do queries, you can't run your business with an LLM because you're managing your books, you're managing your money, you're managing your payroll and accuracy and compliance of doing that matters and running a business is mission-critical. And so the psyche of businesses is such that -- and accountants is that they need us to be their AI platform to provide expertise so they can run and grow their business. And I think the biggest thing that our partnership with an Anthropic and an OpenAI really fuels is when you look at our $300 billion in total addressable market where we have 6% penetration, it's actually opening up the funnel for us with high-intent customers that are just getting started that may want to start with basic capabilities like invoicing and how do I manage my customers, and we help them do that by connecting the QuickBooks within an LLM. But once they actually become a legitimate business, they want to run their business on our platform. And that's where what we've built, which is really a network effect where accountants recommend us, they use our platform to run their firm and the business. that's where we are very much differentiated with all of our data, AI and expert capabilities that we've invested in. So again, hopefully, that answers your question more specifically around how we think about consumers and businesses.
Sandeep Aujla: And Kirk, let me address the second phase of your question around Mailchimp. The part of being a disciplined operator is that you can do multiple things at the same time. So our Mailchimp team will still be focused on driving product improvements to resonate the product with the small businesses, driving SMS and other innovation adoption, driving mid-market sales. But we are also looking at the cost profile and adjusting it commensurate with its growth profile. So think about a Desktop business where we are able to run that business for solid profitability and then take that profitability, that cash flow and reinvest in our growth engines, the 3 Big Bets that we've been calling out on this call and also take those cash flows and return them to the shareholders. As you know, where the market is right now for software generally and particularly where the market is for the segment of software that Mailchimp operates in, the turns of revenue you can get from a third party just aren't there right now, and that's what we're making sure we're running this for profitability and maximizing the value for our shareholders.
Operator: Thank you. We've reached the end of our question-and-answer session. I would now like to turn back to management for any additional or closing remarks.
Sasan Goodarzi: Great. Well, thank you for all the questions, and we look forward to talking to you next quarter. Bye, everybody.
Operator: Ladies and gentlemen, thank you for participating. This concludes today's conference. Goodbye.