Intuit Inc. (INTU): AI-Powered Earnings Surge Fuels Long-Term Value Creation

Clyde MorganThursday, May 22, 2025 5:16 pm ET
56min read

May 22, 2025Intuit Inc. (NASDAQ: INTU) has delivered yet another quarter of exceptional performance, proving its AI-driven strategy is not just a buzzword but a $7.8 billion revenue engine. With Q3 fiscal 2025 results surpassing expectations and full-year guidance raised to reflect accelerating growth, Intuit’s blend of AI innovation and operational excellence positions it as a must-own stock for tech investors. Here’s why this is a buy-and-hold opportunity.

The Earnings Beat: A Blueprint for AI-Driven Growth

Intuit’s Q3 results were nothing short of transformative, with 15% year-over-year revenue growth to $7.8 billion, shattering estimates of 12–13%. The Consumer Group, led by TurboTax, grew 11% to $4.0 billion, while the Global Business Solutions (GBS) segment surged 19% to $2.8 billion. Even Credit Karma, a newer vertical, delivered a 31% revenue pop to $579 million.

Key highlights:
- TurboTax Live: Revenue jumped 47% to $2.0 billion (40% of Consumer Group sales), driven by a 24% rise in TurboTax Live units and a 13% increase in average revenue per return (ARPR).
- QuickBooks Online: Grew 21% as pricing power and AI-enhanced features boosted customer retention and upselling.
- Margin Expansion: GAAP EPS hit $10.02 (+19%), while non-GAAP EPS rose 18% to $11.65, reflecting AI’s efficiency gains.

AI Integration: The Hidden Catalyst for Growth

While the earnings report emphasized financials, the true story lies in Intuit’s AI strategy. CEO Sasan Goodarzi framed the quarter as proof that Intuit is becoming a “one-stop shop of AI-agents and AI-enabled human experts” for consumers and small businesses. This isn’t just marketing fluff:

  1. TurboTax’s AI Edge:
  2. The “Beat Your Price” campaign used AI to tailor tax prep experiences, driving higher ARPR and customer engagement.
  3. Despite a 1% dip in total TurboTax Online units (due to fewer “pay-nothing” customers), AI’s ability to upsell premium services kept revenue rising.

  4. QuickBooks’ AI-Driven Platform:

  5. AI is automating accounting workflows, reducing errors, and enabling real-time financial insights. This has fueled QuickBooks Online’s 21% growth, with international markets (8% constant-currency growth) poised for further expansion.

  6. Credit Karma’s Data Advantage:

  7. AI analyzes user data to offer personalized credit and insurance products, driving 31% revenue growth. This segment’s momentum suggests Intuit is building a financial wellness ecosystem unmatched in the sector.

Guidance Hike: A Bullish Signal for Long-Term Investors

Intuit raised its full-year revenue guidance to $18.723–18.760 billion (+15% growth), with non-GAAP EPS now expected to hit $20.07–$20.12 (+18–19%). The fourth-quarter outlook is equally strong, projecting 17–18% revenue growth. Notably, the company:
- Reiterated its capital allocation strength, with $754M in Q3 buybacks and a 16% dividend hike.
- Maintained a fortress balance sheet, ending Q3 with $6.2B in cash and minimal debt.

Risks? Yes. But Manageable.

Critics will point to MailChimp’s decelerating growth (part of GBS) and TurboTax’s slight dip in total units. However:
- MailChimp’s slowdown is offset by QuickBooks’ dominance in SMB tools and Credit Karma’s rapid scaling.
- TurboTax’s strategic shift to higher-value services (e.g., Live units) validates that AI-driven upselling is the future, not unit count.

Why Buy Now?

Intuit’s valuation is undervalued relative to its AI-powered growth trajectory:
- P/E Ratio: At 23x trailing non-GAAP EPS, it’s cheaper than peers like Adobe (35x) and Salesforce (30x).
- Free Cash Flow: The $4.3B non-GAAP operating income suggests strong cash generation to fund innovation.

Final Take: A Compelling Buy

Intuit isn’t just a tax software company—it’s a technology leader leveraging AI to redefine financial services. With $7.8B in revenue, margin expansion, and a $20B+ market cap, the stock is primed for sustained outperformance.

Action Item: Buy INTU now, targeting $600+ in 12 months. The AI dividend is compounding—don’t miss the train.

Disclaimer: This is a hypothetical analysis based on provided data. Always conduct your own research.