INTU earnings call for the period ending September 30, 2024.
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Intuit (INTU 4.32%)
Q1 2025 Earnings Call
Nov 21, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon. My name is David, and I will be your conference operator. At this time, I’d like to welcome everyone to Intuit’s first quarter fiscal year 2025 conference call. All lines have been placed on mute to prevent any background noise.
After the speakers’ remarks, there will be a question-and-answer period. [Operator instructions] With that, I’ll now turn the call over to Kim Watkins, Intuit’s vice president of investor relations. Ms. Watkins?
Kim A. Watkins — Vice President, Investor Relations
Thanks, David. Good afternoon, and welcome to Intuit’s first quarter fiscal 2025 conference call. I’m here with Intuit’s 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, our Form 10-K for fiscal 2024, 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 statement.
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 K. Goodarzi — Chief Executive Officer and Director
Great. Thank you, Kim, and thanks to all of you for joining us today. It was wonderful to see many of you at investor day. We hope you are inspired by our momentum and innovation that demonstrates the power of our AI-driven expert platform strategy, which is delivering tangible benefits for our customers and fueling into its growth.
With that as context, let’s talk about the first quarter. We have strong start to the year, growing revenue 10% driven by our global business solutions group online ecosystem revenue growth of 20% and Credit Karma revenue growth of 29%. We’re confident in delivering double-digit revenue growth and margin expansion this year, and we’re reiterating our full year guidance. The future is here and it’s AI driven.
And it will fundamentally transform every part of our work and personal life. We’ve transformed the company from a tax and accounting platform to an AI-driven expert platform. We’re leading this transformation by creating done-for-you experiences where the customer is always in control. Enabled by AI, with access to AI powered human experts, our platform fuels the financial success of consumers and businesses.
We have a significant competitive advantage with our scale of data, data services, AI capabilities, ecosystem of applications, and our large network of AI-powered virtual experts. We’re disrupting the categories we operate in to drive better money outcomes for consumers and businesses. The progress we’ve delivered and the proof points we’re observing continue to bolster our confidence in our strategy. I will now share how our Big Bets are solving customer problems and powering our success as a platform.
Starting with our consumer platform, Big Bet 3 is focused on helping customers make smart money decisions, take steps to improve their financial health year round, achieve their best tax outcome, and accelerate the receipt of their refund. We’re focusing on winning as an AI-driven expert platform by leading with ease of use, speed to completion, and best price for our customers. Our strategy is to first win in the do-it-yourself tax category by improving value for low-income filers, accelerating growth with more complex filers, and offering fast refund access. Second, we’re disrupting the assisted tax category.
We’re showing how the new way of taxes done for you is superior in experience, speed, and price. We’ve expanded marketing to drive awareness ahead of tax season and are working on methods to surface our experts in local search and match customers with the best expert for them. Third, we’re driving year-round engagement with our consumer platform, accelerating money benefits, including refund access and growing Credit Karma across our verticals, such as prime and insurance, all of which accelerates monetization. Moving on to our business platform, our vision is to help customers run and grow their businesses end to end.
We made significant progress during the quarter across two of our Big Bets. Our first big bet is to revolutionize speed to benefit, delivering done-for-you experiences with Intuit Assist, our gen AI-powered financial assistant. After successfully piloting Intuit Assist with over 2 million customers, it is now generally available to all U.S. QuickBooks Online customers.
To help businesses manage cash flow, Intuit Assist uses AI agents to automatically turn emails, electronic documents, and hand-written notes into estimates, invoices, and bills. It spots potential cash flow shortages in real-time and suggests solutions like applying for a line of credit. It also generates invoice reminders to help customers get paid 45% faster, an average of five days sooner, and automates accounting by matching transactions to bills and invoices for review. This is the power of our AI-driven expert platform, delivering five tangible benefits to our customers, which we expect to drive increased adoption of our platform.
And we are just getting started. Shifting to Big Bet 5, disrupt the mid-market, which represents an $89 billion TAM. We already have 800,000 mid-market customers in our franchise who can grow into our QBO Advanced and Intuit Enterprise Suite offerings. In fiscal 2024, QBO Advanced customers grew 28%, online ecosystem revenue grew 36%, and ecosystem ARPC was 5x that of the rest of the QBO base.
We introduced Intuit Enterprise Suite, or IES, to expand further upmarket from where we are today with a configurable suite of integrated financial products for mid-market businesses. With IES, we’re focusing on addressing the needs of complex businesses, enabling multi-entity management, leveraging AI agents to boost productivity through powerful automation, and delivering actionable insights. While it’s early days, I’ll share two customer examples that highlight the opportunity ahead and give us confidence in our strategy. We signed an eight-entity RV park operator with approximately $10 million in annual revenue who was evaluating competitive solutions to streamline its workflow and consolidate reporting across entities.
With the seamless upgrade to the IES platform, the company went from outsourcing its multi-entity reporting to a fractional CFO, which took several days, to being able to do this on its own in just five minutes. With this data immediately accessible and at its fingertips, the company can make the decisions it needs to run and grow its business. Their CTO referred to IES as a game changer for their business, and values the relationship-based AI-powered support. We also recently signed an economic development organization with more than $60 million in annual revenue across 18 corporate entities.
As part of its IES contract, this customer also adopted bill pay, payments, and payroll. For customers like this, having all of these services in a single platform solves many challenges by seamlessly integrating data that previously came from multiple apps and point solutions, helping them streamline operations and save time. Last month, we hosted our first-ever Intuit Connect conference with more than 2,000 attendees, including mid-market businesses and the large accounting firms that serve them. We showcased our vision for an end-to-end business platform that fuels revenue and profitability growth for our business customers and the success of accountants.
We spotlighted IES, and the initial reaction we received at the event was overwhelmingly positive. Customers that have already been using the offering are strong advocates, sharing that IES is helping them see how their business is performing, saving them time and helping them make the decisions they need to improve growth and cash flow. In addition, current customers are finding it easier and less costly to upgrade to IES than switch to an entirely new platform. We are excited more than ever to serve the $89 billion mid-market TAM to fuel the success of large businesses and accountants.
Wrapping up, we are honored to be ranked No. 3 on Forbes’ America’s Best Companies list which came out this month. Forbes evaluated the nation’s largest public companies and considered factors such as financial performance, trust, and customer and employee satisfaction. With the progress and momentum we are delivering, we continue to believe we are well-positioned to win as an end-to-end platform with done-for-you experiences that fuel the success of our consumers, small, and mid-market businesses.
Now, let me hand it over to Sandeep.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Thanks, Sasan. We delivered a strong first quarter of fiscal 2025 across the company. Our first quarter results include: revenue of $3.3 billion, up 10%; GAAP operating income of $271 million, versus $307 million last year; non-GAAP operating income of $953 million versus $960 million last year; GAAP diluted earnings per share of $0.70 versus $0.85 a year ago; and non-GAAP diluted earnings per share of $2.50 versus $2.47 last year. Our GAAP results reflect a restructuring charge of $9 million recognized in the quarter related to the organizational changes we announced in July and a $42 million net loss on a private company investment.
Now, turning to the business segments starting with the global business solutions group. Our business platform helps customers run and grow their business end to end. Global business solutions group revenue grew 9% during Q1, driven by online ecosystem revenue growth of 20%, a two-point acceleration from the year-over-year growth we saw in Q4. This was partially offset by a 17% decline in desktop ecosystem revenue, reflecting the desktop offering changes we made in early fiscal 2024 and highlighted last quarter.
The momentum in our online ecosystem is demonstrating the power of our small and mid-market business platform and the mission-critical nature of our offerings as customers look to grow their business and improve cash flow in any economic environment. QuickBooks Online accounting revenue grew 21% in Q1, driven by customer growth, higher effective prices, and mix shift. We continue to prioritize disrupting the mid-market through continued focus on both go-to-market motions and product innovations, which we expect to continue driving ARPC growth. Online services revenue grew 19% in Q1, driven by money offerings, which include payments, capital, and bill pay, payroll, and Mailchimp.
Within money, revenue growth in the quarter reflects payments revenue growth, which was driven by customer growth, higher effective prices, and an increase in total payment volume per customer, and QuickBooks Capital revenue growth. Total online payment volume growth in Q1 was 17%. Within payroll, revenue growth in the quarter reflects customer growth, higher effective prices, and a mix shift toward higher end offerings. Within Mailchimp, revenue growth in the quarter was driven by higher effective prices and paid customer growth.
We’re seeing good progress serving mid-market customers in Mailchimp but are seeing higher churn from smaller customers. We are addressing this by making product enhancements and driving feature discoverability and adoption to improve first-time use and customer retention. While we feel good about the product work we’re prioritizing, we are expecting it to take a few quarters to deliver improved outcomes at scale. In addition, beginning next quarter, we are lapping the price changes we made in Q2 of last year.
We remain confident in, and are executing on, our vision of an end-to-end business platform that integrates the power of Mailchimp and QuickBooks services, enabling our customers to both run and grow their business, all in one place. Third, we’re executing our international strategy, which includes leading with our connected business platform in our established markets and leading with Mailchimp in all other markets as we continue to execute on a localized product and line-up. On a constant currency basis, total international online ecosystem revenue grew 10 percent in Q1. As we shared at investor day, we win as a platform company.
Our online ecosystem revenue growth reflects the progress we are making with our strategy of serving both small businesses and mid-market businesses with more complex needs. This represents an addressable market of over $180 billion, roughly half of which is mid-market. In Q1, online ecosystem revenue grew 20%, including approximately 42% growth in online ecosystem revenue for QBO Advanced and Intuit Enterprise Suite. This reflects our progress serving customers with our mid-market offerings.
Online ecosystem revenue for small business and the rest of the base grew a strong 17%. We are excited about our progress in serving mid-market customers while continuing to focus on small businesses. Looking ahead, we continue to expect online ecosystem revenue in total to grow approximately 20% in fiscal 2025. Turning to desktop.
During Q1, desktop ecosystem revenue declined 17%, including QuickBooks Desktop Enterprise revenue which declined in the low teens. As we described last quarter, Q1 desktop ecosystem revenue reflects changes the company made to its QuickBooks desktop offerings in early fiscal 2024 to complete the transition to a recurring subscription model, including more frequent product updates. We continue to expect desktop ecosystem revenue to return to growth in Q2. And overall, we expect desktop ecosystem revenue to grow in the low single digits in fiscal 2025.
Turning to our consumer platform. Our consumer platform is helping customers make smart money decisions, take steps to improve their financial health year round, achieve their best tax outcome, and accelerate receipt of their tax refund. Starting with Credit Karma. Building on the momentum we saw each quarter in fiscal 2024, Credit Karma revenue growth accelerated to 29% during Q1, reflecting strength in personal loans, auto insurance, and credit cards.
On a product basis, personal loans accounted for 11 points of growth, auto insurance accounted for 9 points, and credit cards accounted for 8 points. Insurance growth reflects the continuing strength we’ve seen in partners’ spend that started in Q3 of fiscal 2024. We are excited about the opportunity ahead for Credit Karma as we execute our strategy to drive engagement, accelerate money benefits across our consumer platform, and grow in prime and insurance. Our vision is to create one consumer platform, with seamless integration of TurboTax and Credit Karma products, that delivers year-round benefits for customers and drives monetization for Intuit.
We are excited by our significant progress this year. Moving to consumer and Pro Tax groups. Consumer group revenue declined 6%, as we lapped the period a year ago that included the extended tax filing deadline for most California filers. Our focus this season is on ease and speed at the best price.
Our strategy is to win in DIY tax, disrupt the assisted tax category, and create one consumer financial platform by delivering year-round benefits leading to engagement and monetization. We launched new experiences during the extension season this year, and the results we saw further bolster our confidence in our strategy as we look ahead. Turning to the Pro Tax group, revenue was $39 million in Q1, down 7%, as we lapped the period a year ago that included the extended tax filing deadline for most California filers. In summary, I’m pleased with our early momentum this fiscal year and our opportunities ahead.
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 $3.4 billion in cash and investments and $6.1 billion in debt on our balance sheet. We repurchased $570 million of stock during the first quarter.
Depending on market conditions and other factors, our aim is to be in the market each quarter to offset dilution from share-based compensation over a three-year period. The board approved a quarterly dividend of $1.04 per share, payable on January 17, 2025. This represents a 16% increase per share versus last year. Moving on to guidance.
We are reaffirming our fiscal 2025 guidance. This includes: total company revenue growth of 12% to 13%, GAAP operating income growth of 28% to 30%, non-GAAP operating income growth of 13% to 14%, GAAP diluted earnings-per-share growth of 18% to 20%, and non-GAAP diluted earnings-per-share growth of 13% to 14%. GAAP guidance reflects an expected $14 million restructuring charge related to the reorganization we announced in July. Our guidance for the second quarter of fiscal 2025 includes total company revenue growth of 13% to 14%.
This includes our expectation for a single-digit decline in consumer group revenue due to some promotional changes in retail channels largely related to our desktop offering. This only impacts revenue timing and does not impact overall unit or revenue expectations for fiscal year 2025. GAAP earnings per share of $0.84 to $0.90, and non-GAAP earnings per share of $2.55 to $2.61. You can find our full fiscal 2025 and Q2 guidance details in our press release and on our fact sheet.
With that, I’ll turn it back over to Sasan.
Sasan K. Goodarzi — Chief Executive Officer and Director
Excellent. Thank you, Sandeep. We remain confident in our long-term growth strategy, including double-digit revenue growth and operating income growing faster than revenue. We have a durable advantage with our depth of data and AI capabilities, and the strategy to win given the proof points we’re observing.
With less than 5% penetration of our $300 billion in TAM, we have a massive runway ahead of us. Let’s now open it up to your questions.
Questions & Answers:
Operator
[Operator instructions] We’ll take our first question from Brad Zelnick with Deutsche Bank. Please go ahead. Your line is open.
Brad Zelnick — Analyst
Great. Thank you so much for taking the question, and congrats on a strong start to the year. As we look through the mix, you know, starting the year with about 20% online ecosystem growth, I think, was just barely in line with what some were modeling. How should we think, Sandeep, about the progression in drivers that will get us to your full year GBS guidance? And what might be the greatest sources of upside?
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Brad, thanks for your question. You know, we are off to a great start in the global business solutions group. You mentioned the 20% on ecosystem revenue growth, which is a two-point acceleration from Q4. And as we look ahead and, you know, it’s the same things that drove the acceleration.
It is a continued strong customer engagement of the platform. We saw good attrition — sorry, good retention — sorry, low attrition after our price changes. We are seeing good mix shift. I shared that the mid-market grew approximately 42%, and that is driving the improvements and should continue for the remainder of the year.
And we’re seeing good adoption of our services. So, all of those things are what we feel confident in, and it reinforces our confidence in the guidance that we reaffirmed today.
Brad Zelnick — Analyst
Thank you, it’s very helpful. Maybe just a quick follow up. If I look at TurboTax marketing expense in the quarter, I think it was up $46 million year on year and a strategy that has you out in front of filers even earlier this year and ahead of the season, which, by the way, we see the ads, and I think they’re great. How should we think about the overall strategy and expected marketing spend over the full season? Thank you.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Brad, as we shared previously, our strategy with the consumer group is to disrupt the assisted tax category. And one of the things that we know for as we have continued to evaluate the market is many customers make the decision on who they’re going to use the following year to do their filing well before January, which is when, traditionally, the consumer group marketing campaigns will start. With that, and as we shared previously, we started our marketing campaigns earlier. And that actually drove really strong consideration by what we call prior assisted, those who got their taxes done through the system method this year.
We saw a strong lift in traffic and consideration and, even more so, in our targeted segments that we are going after for the assisted category. So, that reinforced the guidance, our belief that that was a good spend, good ROI and bolsters the conference for the full year. You should expect us to continue to optimize the spend throughout the entire tax season. And I would expect consumer group marketing budget to be up slightly but not more so than that.
Brad Zelnick — Analyst
Thank you so much. Very helpful.
Operator
We’ll take our next question from Keith Weiss with Morgan Stanley. Please go ahead. Your line is open.
Keith Weiss — Analyst
Thank you, guys, for taking the question, and congratulations on a good start to the year. Sorry to harp on a part of the equation that’s not going as well, but on Mailchimp, the churn at the lower end of the base that you mentioned on the call, I don’t recall hearing that previously from you guys. So, is that a new phenomenon that you’re seeing in the marketplace? And on the flip side of the equation, can you talk to us a little bit about where we are with the integrated sort of like the bundled solution? It seems to make — there’s a lot of industrial logic behind being able to offer your customers both sort of like the backend and the front office solution together. Where are we in sort of teasing out those synergies and getting that bundle in the market and driving good results in the market?
Sasan K. Goodarzi — Chief Executive Officer and Director
Hey, Keith, thanks for your question. Let me take it. You know, first and foremost, when you look at the Intuit Enterprise Suite, Mailchimp is actually part of that suite and available to our customers today. However, in context of a deeply integrated experience across all of our services, I would say think about the expectation of, you know, several quarters from now.
We should be in the marketplace with our really end-to-end experience that where there’s deeper and much depth in the integration of the product and, more importantly, all the data and AI capabilities that allows us to create done for your experiences. So, think about it as several quarters. We are in sort of final stages of building it out and having customers tested. So, that’s one element of your question.
The second element of your question is the reason we called out churn on the low end is because we’ve had an incredibly accelerated set of innovation on the platform, particularly for mid-market customers, from just powerful analytics and segmentation, audience import, SMS capabilities in even more countries. And as we’ve done that for mid-market customers, which has actually been driving customer growth in the mid-market, it made discovery and usability tougher than it should be for the very, very small customers. And so, we have a team that’s really focused on first-time use and first-time benefit so that these smaller customers can get the benefit of some of these larger innovations that I just talked about that our mid-market customers are enjoying. And we just wanted to be clear and call it out.
Keith Weiss — Analyst
Got it. And just to be clear, it’s more so from sort of — it is more of an idiosyncratic issue with that innovation and not a broader market commentary or macro weakness that sometimes you see in smaller customers and more marketing-focused solutions. It’s not about the macro.
Sasan K. Goodarzi — Chief Executive Officer and Director
It is not. It is not at all about the macro. It’s driven entirely by all of our innovation that is benefiting the larger customers. But frankly, I think we have an opportunity to make the first time use for smaller customers much better, which is exactly what we’re working on.
But it is not macro.
Keith Weiss — Analyst
Perfect. Super helpful. Thank you so much.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yup, thank you.
Operator
We’ll take our next question from Siti Panigrahi with Mizuho. Please go ahead. Your line is open.
Siti Panigrahi — Analyst
Thanks for taking my question, and congratulations on a good start to the year. I want to dig into the online ecosystem and mainly QBO online accounting. Good to see that two-point acceleration. But — so you guys started this mid-market go to market sales team hiring.
So, wondering where are you in terms of hiring and ramp. And have you started seeing like the contribution this quarter from that that drove that acceleration? And if so, how should we think about the contribution for subsequent quarter? Is it something we should see now? Or will take a year for that — you know, for that team to wrap and start contributing revenue?
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, Siti, thank you for your question. Let me kick this off. You know, first of all, if you reflect back on what Sandeep talked about earlier, when you look at our overall 20% online ecosystem revenue growth, you know, 42% of that — not 42% of it, but we had 42% growth when you look at our QBO Advanced and Intuit Enterprise platform and all the services that comes with it. And we wanted to explicitly call that out because as we continue to build out our go-to-market capabilities in the mid-market, it will benefit QBO Advanced and services, and it will benefit, of course, with the Enterprise Suite.
And so, we are actually seeing the benefit now, and it’s material. We’ve also added over 200 account managers, business development folks that are very geared toward outside selling. And that is contributing to where we are today, but frankly, the biggest contribution of all those investments that we’ve made are to come. And so, we view that in the quarters to come.
And, therefore, you know, if I were to put a punchline on this, the acceleration that you saw from last quarter to this quarter of 18% to 20% growth with our online ecosystem revenue growth, you know, it came from more services, it came from mid-market, which is both QBO Advanced and Intuit Enterprise Suite. It came from better retention, higher ARPC, better mix. So, we’re sort of clicking on all the key cylinders that strategically we’ve communicated to you all. And we expect that to continue.
Siti Panigrahi — Analyst
Thanks for the color. And quick follow-up to your Q2 guidance for consumer. I understand only — January quarter is a big chunk of that comes from desktop TurboTax. I understand that.
But what was this promotion about? I understand that you guys wanted to push a consumer to online, but what’s driving the extra promotion?
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, you know, it’s, first of all, a couple of factors. The primary factor is, you know, typically, we would do promotions from December time frame to middle of January. And really, what we’ve aligned more so this year with our retail partners because this is TurboTax Desktop is really the buying patterns and the buying behaviors of those consumers that buy our desktop product. What we’ve done is we’ve really lined up the promotional time frame that now starts much later in January and goes beyond January.
And that positions us better to deliver for consumers, deliver for their buying behaviors, again, on TurboTask Desktop. And because of that move, that really shifted revenue into Q3. Our full year is as is, and it just shifted between quarters. And we also, of course, estimate then also the timing of the IRS opening and those factors play into it, but the biggest one is what I just described.
And so, we feel very bullish and confident about the year and, particularly, because of what Sandeep articulated. We launched a lot of our lineup changes, our experiences, and our campaign, which we’ve never tested in the time of the year that we did this year. And frankly, we’re more bullish and confident about this coming season than we have been for a while just because a lot of the results that we saw based on everything that we launched.
Siti Panigrahi — Analyst
Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah. Very welcome, Siti.
Operator
We’ll take our next question from Scott Schneeberger with Oppenheimer. Please go ahead. Your line is open.
Scott Schneeberger — Analyst
Thanks very much. One question for each of you, and I think they’re kind of tied together. Sasan, the early marketing strategy, you know, saw it earlier than ever before, but Brad brought it up, and we talked about it a little bit since. It was good, but I think that you had to — or you had changed that up a little bit due to NATP.
And just curious if you could give us a state of the union on how you are going to market, what that campaign is. And you said that you’re seeing early success. If you could just elaborate a little bit more on that. And then, Sandeep, for you, the EPS guide for the upcoming quarter, we’re seeing revenue growth in the next quarter, but that is guided down year over year.
So, if you could just clarify it a little bit more. I think you’ve given us the big components, but if you could talk us through that a little bit. I’ll turn it over. Thank you both.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, sure, Scott. Thank you for the question. Let me take the tax element, and then I’ll turn it over to Sandeep. You know, first of all, from all the learnings and insights that that we’ve had to really disrupt the assisted tax segment, one element was just really a lot more clarity and precision in terms of timing of decisions by the customers that have somebody else do their taxes for them.
And that’s what really drove the early marketing campaign. And there was a couple of things we were looking for. One, now that we’re in market, does it raise heads? Two, will people engage? And three, how much does price matter when you engage sort of pre-season? And I would tell you that the results were overwhelmingly positive. It raised heads.
There was engagement better than what we thought. And price was a significant factor in a very positive way. And that informs the campaign that we are putting together for season. And really, the campaign we’re putting together for season is really about demonstrating what a new way of taxes looks like and what it means.
And it will focus on experience, speed, and best price. And to specifically answer your question around what we’ve learned, one of the biggest things that we learned in the campaign that we just ran was really the focus is about the new way. And the focus is about a better experience, and it’s about a better price. What we learned is that we have an opportunity to continue to do that but ensure that it doesn’t come across that the experts of the old way is a bad experience.
Because at the end of the day, experts are critical to our experience. The accountants that partner with us. There are a lot of them are on our platform. The 12,000 experts that we have on our platform are the very accountants that we partner with.
And the thing that we learned is to ensure that we really focus on the experience, the speed of it, and the price of it, and then not at all depict that the expert in the old way doesn’t deliver a great experience or is not a good expert. So, that’s the learning that we’ve had. That’s how what we are incorporating as we look at the campaign that we’re developing. I will just end with the punchline that it worked really well, and we’re super excited about it.
Before I turn it over to Sandeep, I wanted to just use this opportunity since you asked about tax to just address something that I know is on the minds of a few folks and, opportunistically, if I could address it. And that was some of the news this week around the new administration and whether or not they would create new tax software or free tax software. And I just wanted to touch on that while I have the floor. First and foremost, I am personally engaged with the new leaders and the new administration coming in.
And what I would share with you is a couple of key priorities that I think all of you have seen in the news, but I’ve personally also learned that really matters to the new leaders and new administration coming in. One is being very aggressive on budget cuts and workforce reduction. This really streamlined the operations of the government. Two is to really look at the regulatory environment and to reduce the regulatory environment that ultimately will benefit consumers and businesses.
Third, reduce fraud, whether it’s from identity theft and/or loans. And then, last but not least is if there’s an opportunity to actually simplify the tax code. I’m actually excited about those priorities because those are all priorities that we can help as a company. I would tell you that the last thing that sort of is on the mind of the new leaders coming in is adding to the bureaucracy and adding to the investment levels of something that already exists in private industry.
So, when it comes to free tax software, as you all know, our stance is it already exists. Private industry has free software available to all Americans. Our perspective and my learning in terms of what’s most important, the last thing that the new folks want to do is to add to that bureaucracy and to add investments in an area where the offerings already exist and private industry already serves it. With all that said, free is available to all consumers.
And if tomorrow, five new free tax offerings become available in the market, it does not have an impact to the structure of the market because free is a commodity for the do-it-yourself category. So, I wanted to just opportunistically touch on that while I have the floor. Sandeep, I’ll turn it over to you on EPS.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Sure. Hey, Scott, on the EPS, one thing to keep in mind is that we always optimize our spend for the full year, and we continue to feel really solid about our guidance for the year. And as I look internally, how we are leveraging AI in how we work as a company, I see tremendous opportunities for us to continue to expand our margin. But now, let me address your question on Q2 specifically.
This is a continuation and all-in strategy on the things that we talked about as it relates to Q1. In consumer group, we are continuing our marketing opportunities. Historically, they would have started in the January timeframe. And now, they’re continuing through November and December, which wasn’t there the past year.
Credit Karma is in a very different position this year. Last year, Q1, we were negative 5%. This year, we’re 29%. We’re seeing partners lean in.
So, we are also leaning into our go-to-market and our marketing campaigns there and seeing exceptionally strong ROI than payback periods there. And lastly, in the global business solutions group, we touched on the approximately 200 people that we have in the mid-market. So, that’s now in a run rate from Q1 heading into Q2. You know, of course, we’ll scale that only as we see ROI and payback periods that are palatable to us.
But the other thing on the global business solutions group to keep in mind is, last year, the campaigns took us a little longer to come into market. This year, our campaigns were ready earlier, and the team decided to go to market earlier because there were opportunities for us to get even better ROI by optimizing that spend through all four quarters as opposed to last year when we leaned in more toward the January busy season. So, those are — again, your key takeaway should be all of this is in line with our strategy, and we continue to have lots of confidence in our full year path to margin expansion as a company.
Scott Schneeberger — Analyst
Great. Thank you both for all the color and Sasan for that extra color and very well put.
Sasan K. Goodarzi — Chief Executive Officer and Director
Thank you very much.
Operator
We’ll take our next question from Raimo Lenschow with Barclays. Please go ahead. Your line is open.
Raimo Lenschow — Analyst
Thank you. Thanks for the clarity from me as well, Sasan. My question is on the payment. If you look at the payment volumes, if I heard you correctly, it was 17%, decelerated a little bit.
Can you talk a little bit about the puts and takes there? Because, you know, obviously, you know, you revamped the payment platform, and so, you know, that should be an area of healthy growth going forward as well. Like, how do I have to think about that number in that context? Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, thank you for the question. A couple of things I would say. One, our momentum around our innovation around money and payments being one element of it continues to be an area where we’re very bullish, particularly, as we penetrate with services, not only with small businesses but also in mid-market. There was a couple of factors that played into the 17% for the first quarter.
One is the storms in the East Coast actually impacted a lot of service-based small businesses. We saw the impact, and we actually saw it start to come back. So, that’s one element. And also, another element is just number of days that fell into this quarter versus the same quarter last year.
So, those factors played into it, and we expect it to, in essence, accelerate as we look ahead.
Raimo Lenschow — Analyst
OK, perfect. And then the other question I had was, as you kind of said earlier, Sasan, you’re kind of now like, you know, more an AI platform. If you think about tax season or — and the QBO business as well, how do you think about like the next iteration for how you weave that into the product to kind of, you know, keep the customer longer in the funnel, etc.? Is there any big changes we can expect for the tax season? I’m not asking you to kind of spill that out, but is there like — how do you think about that evolution of weaving it into the product? Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, great question. You know, first of all, just briefly start with the context of our entire strategy as a company is to create done-for-you experiences. Marketing is done for you, quote-to-cash is done for you, your books are done for you, your accounting is done for you, your taxes are done for you, and connecting you to financial products that are right for you as a consumer are done for you. The customer always in control and always with the path to an AI-powered human expert.
That’s the fundamental essence of our strategy to serve consumers, small businesses, and mid-market customers. And the whole premise of our investments around data and AI has been toward that. You asked about tax, but let me just start 30 seconds with our excitement around Intuit Assist. In essence, done-for-you experiences being available to all of our business customers now.
It has been an incredible amount of work. And the reaction from our small business has been overwhelmingly positive. You know, today, now, all of our small businesses can take an email, they can take a picture of a handwritten note, they can take any file, and we will create on their behalf an estimate, an invoice, a bill. We will do the accounting for them in the background and match and categorize everything for them.
We will ultimately help them if they’re a construction company on the road, tap to pay for the handwritten note that they just took a picture of and get paid right there on the job site, be able to help them with where they’re going to have cash flow shortfalls and make it immediately a line of credit available for them. That’s now all Intuit Assist, the gen AI-powered assistant that will do the work for our customers, generally available for all of our customers. That’s a huge deal. You can imagine, as we look ahead, our goal is to create a done-for-you experience across the entire platform, across Mailchimp and QuickBooks and all of the services.
To answer your question around tax, I think what I would say is you will see, this year, based on all of the investments that we’ve made over the last several years, leveraging data and AI to dramatically streamline experiences by how we leverage the data and how we streamline getting rights at a refund. It’ll make it far more superior and easy. Our focus is best experience, the fastest, and at the best price for those that want to do it themselves, but also for those that want our experts to do it for them. So, our experts are going to be far more effective and efficient.
They’re going to be able to get your taxes done in less than an hour at the best price, all of which is the result of all of the data and AI investments and revamped experiences that we will have in season this year.
Raimo Lenschow — Analyst
Looking forward to that. Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Thank you.
Operator
We’ll take our next question from Taylor McGinnis with UBS. Please go ahead. Your line is open.
Taylor McGinnis — Analyst
Yeah, hi. Thanks so much for taking my question. So, if I look at the implied operating margin guide for the second half, it looks higher than what you guys have done in past years. So, when we just think about the seasonality of this year compared to some past years, is the messaging is that, you know, you’re seeing more front unloading of expenses compared to last and that should drive stronger growth in the second half? Maybe you can just talk about some of the drivers in the second-half expansion, you know, despite some of the continued scaling on the go-to-market investments in other areas.
Thanks.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Sure. Hey, Taylor. So, the investments that we started early on, both on the consumer side, as I shared, that drove a lot of head lifters with the prior year assisted that, you know, came to our side. So, that is something that will pay dividends as you get into the tax season.
The sales force that we are building in mid market, you can imagine building — hiring those 200 people. There’s a training component to it. There’s an efficiency component to it. But that sales force gets more and more effective week by week by week.
So, that helps drive more dividends as you get into the into the back half. And then, on the global business solutions group, the team looked at the spend and is optimizing the spend to drive consideration, drive people and customers into the platform that then will add on services. And as you know, from having followed the company for a long time, services take a while to ramp up as they onboard their employees, as they bring their payment volumes onto our rails. So, it is all consistent with our strategy, which is optimize the spend to maximize ROI for the full year.
And that’s what’s giving us the confidence that the trajectory continues to strengthen into the back half.
Taylor McGinnis — Analyst
Perfect. Thank you so much.
Sasan K. Goodarzi — Chief Executive Officer and Director
Thank you.
Operator
We’ll take our next question from Michael Turrin with Wells Fargo Securities. Please go ahead. Your line is open.
Michael Turrin — Analyst
Hey, great. Thanks very much. Appreciate you taking the questions. Sasan, I’m going to give you a chance to go back to Assist.
We’ve seen the QuickBook announcements as well. Was hoping you could just level set for us how you’re thinking about capturing the value of those, whether it’s through monetization or just other costs or economic benefits you’re observing as you start to get those tools in the hands of more of your customers.
Sasan K. Goodarzi — Chief Executive Officer and Director
And, Michael, are you referring to the Intuit Assist that we just announced this week? Is that what you’re referring to?
Michael Turrin — Analyst
I am. Yep.
Sasan K. Goodarzi — Chief Executive Officer and Director
Got it. Yep, absolutely. So, I would say, you know, the biggest thing that we learned having this in the hands of, you know, 2 million customers before we made it generally available, and also experiences that we had in beta and alpha for new prospects, there’s really, I would say, two big outcomes: improved conversion, improved retention, and really, a third outcome, which is improved adoption of services. Those are — and those, if you think about back to what Sandeep and I shared, I think, it was 18 months ago at investor day, our perspective around creating done-for-you experiences with Intuit Assist, we believe will lead to new customer growth.
It will lead to higher adoption of services. And we believe, over time, there could be offering stand-alone SKUs that are completely — they do all the work for you, and they could be separate-priced SKUs. What we’ve proven so far to ourselves is this creates new customer growth. It could create better retention but also creates better adoption of services.
So, like if you think about what we just launched this week, which is you can take an email, a photo of a handwritten note or a file, and create an estimate, an invoice, and create a bill, that all drives bill pay and payments growth, as an illustrative example. So, those are the things that we’ve learned as we’ve been sort of in beta and alpha. And now that we’re in GA, and particularly what we expect this coming season in TurboTax, new customer growth adoption of our services is what we see as the outcome and why we’re so excited as we look ahead.
Michael Turrin — Analyst
Great. If I can just ask on the Credit Karma bounce back, based on what you’re seeing, is there any way to help just split how much of that is macro versus something product-specific you’ve maybe incorporated into the experience there? And maybe just help level set what you’re seeing today versus what you’re guiding for rest of the year, given the fiscal year guide now sits below the run rate you just put up this quarter. Thank you.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Yeah, absolutely. Michael, I would — you know, it’s a blend of both. If I had to attribute it, I’ll say it’s 50-50 now. On the personal loan side, having a more stable rate environment absolutely helps.
And we saw partners lean into testing and lean into lending on the platform. But it’s also — credit goes to the team, the product team and the go-to-market team at Credit Karma as a — invested into Intuit Assist as they invested into driving the right experiences and driving engagement across the platform and as they added more segments, such as the insurance segment, which has been quite strong starting Q3 last year. So, I would say it’s a blend, and I would probably blend that about a 50-50 mix.
Michael Turrin — Analyst
Helpful. Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Very welcome.
Operator
We’ll take our next question from Alex Zukin with Wolfe Research. Please go ahead. Your line is open.
Alex Zukin — Analyst
Hey, guys. Thanks for taking the question, and congrats on the results. Sasan, I wanted to get your take on just the notion and the topic of what you’re seeing in your business right now from a SMB demand environment perspective. Kind of are you starting to see the beginnings of a recovery? How and when do you expect that to show up? And on the very fast-developing agentic opportunity for kind of AI utilization, monetization in your customer base, when do you believe or strongly think we should start seeing impacts from a monetization standpoint, both with Assist around either, does it change the magnitude, does it change the strategy over the next few quarters?
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, great. Thank you, Alex, for the for the question. I’ll take the first one. I would say a couple of things.
One, it’s a stable environment. Our belief, which is not baked into our guidance, is that we will see an improved environment as we look ahead in 2025, particularly just with some of the things that I mentioned earlier around just interest rates, jobs, you know, the regulatory environment. You know, these things have a real burden on businesses. And we believe that, you know, a better future is to come, none of which we’re making and assuming, but important to say.
So, stable, we believe the future will be better. And I would just end by saying, really the growth that we are experiencing. If you look at our overall guidance for the year and our business franchise of 16% to 17%, and then the 20% online revenue growth that we delivered in Q1 and that we would expect the rest of the year, that’s all because of the power of our platform and the innovation on our platform that is actually saving customers money because they’re digitizing their entire business and are able to run and grow their business in one place rather than multiple apps where they don’t — they spend a bunch of money, they don’t really understand how their business is performing. And we’re digitizing that with our platform.
And so, our growth that you are — that we’re reporting, that you’re experiencing is all because of our innovation. And we believe that as things — demand starts improving, we think that will be impactful positively to our results. The second element of your question, you listen, our core thesis that we have proven over the years, and particularly internally as we just launched Intuit Assistant, made it generally available to all, is that the more we can do the work for customers, the more we will drive new customers into the franchise, the more we will drive penetration of services. And if you look at Intuit Enterprise Suite, you know, the biggest thing that we’re learning from customers is they love the experience.
Our AI agents are doing the work for them, helping them understand the performance of their business, helping them provide insights into things that may happen and actions that they do, they should take. Those are all our AI agents. And we believe our AI agents can ultimately do, you know, the — enable them to do the work of a CFO, of a CMO, of a sales officer of these midsize businesses. And to get to the essence of your, your question, we haven’t baked any of that into our year.
We believe that these are going to be contributors of growth into the future and, of course, our desire is accelerating growth.
Alex Zukin — Analyst
Very helpful. And then, maybe just a follow-up for Sandeep. So, is it as simple to say basically that the maybe slightly smaller earnings beat that we typically see when you have revenue outperformance to the magnitude that you’ve shown and the guide for Q2 on earnings being a bit lighter than consensus, is that just effectively mostly associated with timing of incremental spend for your some of your newer initiatives and some of the hiring from a go-to-market perspective? Is that — is it more just shifting timing to the first half, to Taylor’s point?
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Alex, that’s exactly right. We always have, sometimes, things — if you remember last year, Q1, we had some items move out of the quarter. This year, we had some items move in. We saw opportunities in areas such as Credit Karma to, you know, lean into investments earlier than we would have just given the behavior we were seeing from the partners.
So, all to say we — again, we optimize spend for the year. And when we saw revenue uplift, that gave us a little bit more flexibility to lean into Q1.
Alex Zukin — Analyst
Perfect. Thank you, guys.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah. Thank you, Alex.
Operator
We’ll take our next question from Brad Reback with Stifel. Please go ahead. Your line is open.
Brad Reback — Analyst
Great. Thanks very much. Sandeep, in the quarter, money represented well over half of the growth in online services. Should we expect that to continue here for the rest of the year? Or will the mix shift?
Sandeep Aujla — Executive Vice President, Chief Financial Officer
You know, Brad, we don’t, of course, guide by each sub segment, but we feel very bullish and confident in our money strategy, which includes, of course, payments, bill pay, and capital. The momentum, as you pointed out, has been strong in Q1, and I would expect that to continue throughout the year. And what I would point you back to is our confidence, our utmost confidence in the 20% online ecosystem growth for the year as we continue to scale the business, and the money portfolio is going to be a key contributor — is a key contributor to that confidence.
Brad Reback — Analyst
Got it. And just one follow-up. Given Sasan’s comments on Mailchimp and your comment right there and the overall confidence in the 20%, it would feel like the recovery in Mailchimp is more a driver for next year than needed for this year.
Sandeep Aujla — Executive Vice President, Chief Financial Officer
I would think about the Mailchimp as a several-quarter journey. We really want the team to nail the first-time use experience. We have internal KPS all around customer behavior and all related to FT — first-time use, FTU what we call internally. So, yes, that’s something that, you know, we’re being patient with because we wanted a team to focus on the customer experience.
So, that’s not something that we’re banking on for the confidence I shared in the 20%.
Brad Reback — Analyst
Awesome. Thanks very much.
Sasan K. Goodarzi — Chief Executive Officer and Director
Very welcome.
Operator
We’ll take our next question from Brent Thill with Jefferies. Please go ahead. Your line is open.
Brent Thill — Analyst
Thanks. Sasan, just on the mid-market, you mentioned a couple of — one of the deals in the early remarks. I’m just curious if you can give us more of an update in terms of where you’re at, kind of mile markers. And I think there’s some fear among investors that this is a much lower margin business that’s going to require a heavier lift in a different kind of market.
So, if you could just comment on how you feel long-term dynamics of that plays out?
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, Brent, thank you for your question. In fact, I would say it’s the reverse. It is very high margin, very lucrative, high ARPC. And it’s very similar to, I think, the concerns investors had four or five years ago when we talked about disrupting the assisted category and how we would do that, given we’re talking about experts.
And I would tell you that the answer that we gave then and the answer I’ll give you now, there are a lot of parallels. The essence of our scale is because of all of our data investments, all of our AI investments, and all of our platform services. When you look at QBO Advanced and Intuit Enterprise Suite, it’s actually fueled by a lot of the platform services that we have built over the last several years. And, therefore, when you look at the only thing that we are sort of adding is a couple of hundred folks that are in sales to really capture the opportunity.
But the effectiveness and the efficiency that we have on the other side because of data and AI is significant. And so, this is actually quite lucrative. It’s very high ARPC. It’s not only new customers but existing customers upgrading.
The service opportunity is massive. So, when you look at the fact that it’s a platform driven by all the services that we already have, coupled with higher ARPC, it’s actually far more lucrative than just when you look at our QBO base. So, we actually expected to play a dual role, number one, to continue to accelerate our growth. As you heard Sandeep talk about earlier, the overall online revenue growth was 20%.
And Advanced and Enterprise Suite are growing 42% along with the services. That actually has even a second benefit, which is higher contribution over time to margin. So, it’s actually the reverse of the concern that you articulated, very similar to when we shared in a couple of investor days ago that the variable margin of our TurboTax 5 was actually higher than just the TurboTax on its own. We believe the same will play out here.
Brent Thill — Analyst
Great answer. Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah. Thank you.
Operator
We’ll take our next question from Mark Murphy with JPMorgan. Please go ahead.
Mark Murphy — Analyst
Thank you very much. On the QuickBooks Enterprise Suite, it’s clearly showing robustness. Sasan, how’s the early response you’re seeing if you can speak to the $20,000 ARPC mentioned earlier? Because you had mentioned a couple of, I think, surprisingly large customer wins on the call today. And I’m just wondering if you can comment on the response to some of the advanced functionality that relates to multiple locations and entities and consolidated segment reporting.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yeah, Mark, the way I would answer your question is I frequently will engage our large accountants and accounting firms and these large businesses. And I have the pleasure and the opportunity to engage a lot of them in a couple of days period very recently at Intuit Connect. And listen, I don’t want to downplay what I’m about to say, but money is actually not the object here. These businesses, you know, when I spoke to the CFOs of these businesses or the owners of these businesses, the words that they use is “You’ve changed my life as a business.” This is a game changer for really two, I would say, significant reasons.
You know, one, they can actually see how their business is performing. So, put to the side that they go from days of trying to consolidate and understand how their business performing to now minutes, but knowing how their business is performing every day. Having insights and recommendations from us to inform their decision is actually quite significant. The other is when you go from using multiple apps and point solutions, everything is in one place.
The amount of digitization that happens across all of your money movement, whether it’s bill pay, whether it’s payments, whether it’s payroll, and having all of that inform your dashboard every day is a complete game changer. So, the biggest thing that we hear from them is actually about more things they would like to see. And from new customers that are in sectors that we don’t yet serve, how can we serve them far more quickly because they’re dying to get on into an Enterprise Suite? So, that’s the way I would sort of describe the reaction. The other thing that we’re working on, and I’ll just end with this, is making sure that we also provide capabilities to feel the success of accountants and our sort of monetization model for accountants that not only is good for them but good for us to really, together, be able to serve the market together.
And we’re excited about both.
Mark Murphy — Analyst
Thank you.
Sasan K. Goodarzi — Chief Executive Officer and Director
Yep, you’re very welcome.
Operator
And that is all the time we have for questions today. I’ll turn the program back to our speakers for any additional or closing remarks.
Sasan K. Goodarzi — Chief Executive Officer and Director
All right, well, awesome. Thank you. Listen, everybody, thank you for your time. Thank you for all your questions.
Be safe, and we’ll see you soon. Bye, everybody.
Operator
This does conclude today’s program. Thank you for your participation [Operator signoff]
Duration: 0 minutes
Call participants:
Kim A. Watkins — Vice President, Investor Relations
Sasan K. Goodarzi — Chief Executive Officer and Director
Sandeep Aujla — Executive Vice President, Chief Financial Officer
Sasan Goodarzi — Chief Executive Officer and Director
Brad Zelnick — Analyst
Keith Weiss — Analyst
Siti Panigrahi — Analyst
Scott Schneeberger — Analyst
Raimo Lenschow — Analyst
Taylor McGinnis — Analyst
Michael Turrin — Analyst
Alex Zukin — Analyst
Brad Reback — Analyst
Brent Thill — Analyst
Mark Murphy — Analyst
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