Conference Transcript - INTU 2026-02-26

Operator

Good afternoon, everyone. My name is Beau, and I will be your conference operator today. At this time, I would like to welcome everyone to Intuit's second quarter fiscal year 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2. With that, I will now turn the call over to Ms. Anne-Sophie Seniorview, Intuit Senior Vice President of Investor Relations, Corporate and Strategic Finance. Please go ahead, ma'am.

Anne-Sophie Senior-Beau, Head of Investor Relations

Thank you. Good afternoon and welcome to Intuit's second quarter fiscal 2026 conference call. I'm here with Intuit's chairman and CEO, Sasan Goudarzi, and our CFO, Sandeep Ajla. 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 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 the 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 Susanne.

Sasan Goodarzi, CEO

Thanks, Anne-Sophie, and thanks to all of you for joining us today for our three big bets. AI and human intelligence platform innovation is mission critical to our customers' financial life decisions. It's why we win. Intuit is fueling the success of our customers with innovation that enables businesses to operate from lead to cash. Intuit is delivering financial combination of proprietary data and intelligence, which we'll refer to as HI. Insights we gain with our nearly 100% of intelligence combined security, privacy that creates. The foundation delivers what matters most to customers when it comes to financial insights, money management, financial intelligence, and this for years to come. is fueled by $300 billion in TAM, where our power is a new category. Second, accelerating everything that we do for our consumers and the best with a disruptive AI-native ERP platform, where we deliver done-for-you experiences powered by AI and HI, that are continuing to see momentum with our virtual team of AI agents. Over 3 million customers have leveraged agents to do the work for them, with all-time repeat engagement of more than 85%. In January alone, our accounting agents saved time and delivered impact for our customers by categorizing over 237 million transactions. Our business tax agent is putting more money directly back in incremental. Hi and HI capabilities are not only an adoption of 50% in Q2. Given this success, we are rapidly scaling the rollout of Intuit Intelligence, a revolutionary system of intelligence that fundamentally changes how customers engage with our platform. Leveraging Intuit's proprietary data, capabilities, and human intelligence, what are my top expenses and how can I reduce operations? Intuit intelligence automation and with a seamless enabled human expert. Because Intuit intelligence uses deterministic decades of trusted proprietary data, its recommendations are personalized. This is intelligence large language models. The past year, our real-world testing has shown that when AI and HI come together in a single and it positions Intuit for sustained double-digit revenue growth, everything we do. Payments volume for our payments and bill pay customers grow 29%, reflecting continued momentum in helping our customers. Bill pay volume nearly doubled for growing businesses. In Q2, for QBO Advanced, a combination of continuous platform innovation and enterprise suite product release in February, we are deepening our capabilities in the largest verticals within our nearly 90 billion production edition for industry-specific AI-native ERP solutions designed with those, yet many still-related processes. The native ERP financial data to get the role of an ERP with the flexibility, speed, and intelligence of the production leader based in Colorado is using Intuit Enterprise as decision-grade insights. By automating hundreds of intercompany invoices, they've reduced peak month-end reconciliation time by approximately 90% to 18 hours of accounting work per real analysis. Activity continues to increase. I'm eager to build reseller practices. We are making new wholesalers of new contracts efficiency and effectiveness and significantly deepens our partnership with accountants, particularly turning to our consumer platform year-round. While overall IRS returns were down more than five strategic areas of standouts that contribute to our momentum experiences. This season, TurboTax's AI-driven features such foundations are accelerating tax completion and delivering a faster, more confident filing experience. has been used so significant time from manual data entry six million hours of work while putting more money in their pocket throughout the year the strategic advantage shifting to our go-to-market of enabled human intelligence is fundamentally transforming and disrupting the assisted tax seven times bigger than the diy cameras choose assisted deliver peace of mind ability if they get it wrong with our unique platform certainty and expert level accuracy comprise with ai retail locations and expertise more visible and accessible than ever customers where they are and established our expertise locally of the year spending our share of time of financial intelligence by working with leading AI companies to meet consumer with Intuit because if they get it wrong then generic decisions and revenue growth which adoption of our bill pay offering versus a year ago as we

Sandeep Aujla, CFO

continue to strengthen the platform for the encouraging momentum larger customer wins all of customers is taking longer than continue to focus on improving go-to-market and product experience. MailChimp to reach confidence in our strategy and to make progress serving consumers with our nine points and auto insurance accounted for allocation. We have shared before opportunities to drive margin expansion over time given our disciplined approach to capital management and we finished the quarter with approximately three continuing to move 20.997 billion to 21.1818

Sasan Goodarzi, CEO

Thank you, sir.

Operator

Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your telephone. If you would like to withdraw your question, you can press star 2. We ask that you please limit yourself to one question. We'd like to get to as many people as we can. We'll go first today to Sidi Panagrahi with Muzuhu.

Siti Panigrahi, Analyst — Mizuho

Thanks. Thanks for taking my question. Sasan, you deliver a strong Q2 results, no doubt about it. But as you can see right now, market is worried about AI disrupting software. And, in fact, your business, less QuickBooks but more tax. Can you help us understand, like, what is the disconnect? Where do you think market is wrong? And where do you see the opportunity for you and that you are not getting disrupted by AI, rather you're going to benefit from AI? Right. And Sandeep, a quick follow-up I want to ask here that people are pointing to your Q3 operating margin guidance. Is those Q2 strong? Is there any safety and expenses?

Sasan Goodarzi, CEO

You know, first of all, I would just start by restating is a regulated environment. Customers demand human expertise because what they are very focused on is in their high state of any kind. Getting it wrong means huge, huge liabilities for the customer. And that's really the context behind the category, which really informs our advantage. You know, we have a regulatory-driven advantage. We have customer-driven advantage. And when you look at where we are, it's fueled by data, AI, and HI. And, in fact, when you look at the results that we're delivering, where we ended last year, the momentum we've had the first half of the year, it is actually unlocking TAM. It's unlocking ARPC, and it's unlocking margin expansion. how it's fueling. And, you know, our focusing on customers, all about putting points on the board. And it's also, the thing I would point out is it's why companies like open airship with us, because at the end of the day, it comes with a lot of liability, technology, and human intelligence, all by certainty, rest of the year, directory going into the future.

Sandeep Aujla, CFO

Important to keep in mind, you need that, and HI in two, so I just wanted to add that. You followed us for years, and, you know, we are up for the margin expansion for the full year. And what you're seeing is into the slow start to the tax season. So you had some for the full year, and I feel good.

Siti Panigrahi, Analyst — Mizuho

Thank you both.

Operator

Thank you. We'll go next now to Brad Zelnick with Deutsche Bank.

Speaker 9

Great. Thank you very much. It's Nick on for Brad this evening, and I appreciate you taking my question. I'd actually like to build on Citi's question a bit here. When you're talking about the power of AI and HI together, as models continue to improve, How do you see that balance between AI and HI shifting? And where do Intuitnet's customers stand to benefit the most from these models as they continue to advance?

Sasan Goodarzi, CEO

Yeah, I mean, thanks for your question. Let me maybe break the company. There's a disruption in the assisted tax segment. By the way, both assisted consumer tax and assisted business tax is entirely driven by data, AI, and HI. We are winning based on our scale of the best experience, the best price, and the fastest access to money. And as I said a moment ago, customers, I mean, if you look at the size of the assisted category, it's more than seven times the do-it-yourself category. And the reason is customers demand to help them with their decisions and to help them with their liability. And so one area, based on seven years of investments that we've made that we're really benefiting from, right, this was a segment that grew 45 percent last year, well over $2 billion in size. And we are seeing incredible traction, not just through February 6th, but, you know, we've had two months of tax season under our belt. We have about six weeks left, and we're seeing incredible traction with our assisted offering. So that's one significant area where it's a tailwind of, you know, we're just scratching the surface of the disruption. The second area is we're actually winning in mid-market because our entire platform is based on AI and HI, where we are now fundamentally an AI-native ERP platform where we're doing the work for customers. I mean, when you look at some of the customer benefits that we are seeing, you know, from reconciliation, peak reconciliation being done 90% faster at month end to 17 hours a week of accounting work that our platform does with not just AI, but our HI that comes with it, our platform is beyond self-funding. It's actually digitizing and driving growth in mid-market, which is why we're seeing the acceleration. It's why we're seeing accountants actually embrace what Sandeep already said. But it's just a really, really important point that Sandeep made. As you recall, last year, we rolled out a series of AI agents on our platform. And those AI agents were accounting agent, payments agent, finance agent. The accounting agent is saving customers 12 hours a month. Our finance agent is delivering automated P&Ls and automated cashmets a week. We're putting more money and faster money, I should say, into our customers' pockets, whether it's our payment AI agent and or our tax agent, where it's actually helping our customers with reducing their reductions, actually fueling cookbooks 50% year over year. So that's where it's actually, which gives us a lot of pricing power. And that's really the point Sandeep was making is what we have learned beyond, you know, the benefits that we're delivering since last July and how it's actually fueling adoption and consumption of our HI services, which is QB Live, combined experience expertise. Customers are actually willing to pay more for it. Why? Because it comes down to helping them fuel their success, making sure that their compatibility, meaning the future, which I want to bring. Thank you so much.

Operator

We'll go next now to Keith Weiss with Morgan Stanley.

Speaker 10

Excellent. Thank you guys for taking the question, and congratulations on a really solid quarter. I was going to ask about the new Anthropic deal that you guys signed in the quarter. Something that you guys are really excited about, we could see that excitement in the press release, I would say investors are a little bit less excited because of the uncertainty that it brings. And I think the core of the uncertainty is the idea of you're letting the fox into the henhouse, right? Is anthropic and the anthropic model going to be able to get access to all your good proprietary data, access to all your customers, to your workflows, and therefore be able to replicate your business? Can you talk about, one, the relationship itself, what's so exciting from the intuitive part of the equation, But maybe, like, touch on the controls that you have. Like, how do you keep that bear case scenario from happening? How can we help soothe maybe some of those concerns from investors?

Sasan Goodarzi, CEO

Yeah, Keith, thanks for your question. I want to just start with the why, why these partnerships. And Sandeep touched on this, but this is probably the most important premise that is important to be understood, which is in this case, both OpenAI and Entropic, one, they're wonderful partners, but two, they are very interested in this partnership because they actually see and understand financial decisions that customers make and how important safety is. Customers actually demand the combination of technology and human expertise. It's not an easy thing to replicate, frankly, in some ways for them to even worry about because they're by the the experience which gets to the to the second question that you asked and that is or the first question that you asked and that relationship is constructed and the way our platform is engaged they're using our platform through apis and mcps where and it's in the contract this is beyond how the experience works is that build doesn't leave our our delivering the experience that the customer needs the relationship and we've committed to continued use part of the Anthropic deal. So the elements of data is shared, no domain expertise is shared because of partnership with them. And I think the last thing I will just end with is to be where customers are, because it is yet to be determined. Want to engage in their finances, opportunities, really new customers need to determine whether or not customers are willing to engage with their finances through the apps, but the deal.

Sandeep Aujla, CFO

And Keith, one thing I would add is, You know, when Ghan mentioned about these LMS.

Operator

We'll go next now to Steve Enders with Citi.

Speaker 9

Okay, great. Thanks for taking the questions. Maybe I'll just kind of continue the line of thinking on the AI side. Just, you know, as you work and partner with these, you know, model providers and you have your own internally built, you know, generative capabilities as well, just how do you think about what makes sense for you all to kind of focus on? where does it make sense of relying on some of these third parties, and maybe where does kind of the rubber meet the road in terms of what that means for the customer experience moving forward?

Sasan Goodarzi, CEO

Yeah, I'd say that's a really great question and an element that I forgot to share in answering Keith's question. So we think about it in delivering done-for-you experiences with AI, data, and HI to help you from, you know, lead to cash and to help you from credit building to wealth building. And so all of our investments over the years with the proprietary data, data models, is actually LLMs. The majority of our AI capabilities is actually knowledge engineering and machine learning. And of course, we've built out our Intuit financial large language models that really pay to deliver liability for customers, which is why there's so much demand. And, you know, if you think about our category, demand is high and supply is short because there's not too many that do what we do. When you think about, for instance, with Antropic, a company that is looking to need to see. And by the way, every construction company wants to see different things. Every roofer wants to see different things, wants to see different things.

Speaker 10

That's great to hear. Thanks for taking the question. Thank you.

Operator

We go next now to Mark Murphy with J.P. Morgan.

Mark Murphy, Analyst — J.P. Morgan

Thank you so much. I'll add my congrats. Sasan, you had mentioned twice that IRS returns are down 5% year-over-year through February 6th. I assume you mean that more as a timing difference this season, perhaps because I think some of the reports are showing that IRS staffing is down 27% versus last year. Maybe it takes longer. So is it just more back-end loaded tax season, or are you trying to signal anything about the full tax season? And then secondly, Sandeep, can you comment on some of the economic health indicators that you sometimes say, like number of employees, hours worked, the cash balances, credit scores, et cetera, just whether you think there's been any change there?

Sandeep Aujla, CFO

Yeah. Hey, Mark, let me just take both of those. And then the first question, what we wanted to highlight was the fact that the IRS was down five points through February 6th in the timing. But we wanted to – the IRS is down five points. Now, you can compare that to last year. Mark, you followed us for years. Last year, IRS was down about eight points through February 7th, highlighting what's giving us a confidence going into this tax season. So that's purely timing and external versus our – now, getting to your second question, Mark.

Mark Murphy, Analyst — J.P. Morgan

If you could just comment on some of the economic health indicators, like cash balances and hours of work to credit card. The reason I'm asking, Sandeep, is the consumer confidence scores, there was a minor bounce last month. But outside of that, they've looked pretty awful for a while. And yet you've had a better, more positive read on it and very, very strong results. And I'm just wondering if that's continuing.

Sandeep Aujla, CFO

Of course, Mark. So there are two metrics that I look at as my own personal leading indicators when I look at the health of the business. One is, and this is my Uber metrics, like what are the stats on the number of hours being worked by the employees? Those are, which is actually stronger in January than it was in the October. I continue to feel good about it, and it's actually over time frame. The second thing I looked at is what are the cash reserves? Because cashing on the balance sheet cash in the bank matters so much, and that's stable. mid-market and small businesses are actually up the micro business S&B space. The other metrics that we look at are more secondary but still helpful is what's the business revenue and that's remains stable. Kind of a little above S&B is up low single digit and services non-discretionary services manufacturing and the wholesale trade. So you know putting aside all the noise we might see in the press and everything else in the business I continue to feel good about the I just want to remind you, Mark, and you've followed us for years, so you know this, but just for everyone's benefit, we have a well-diversed base of customers across multiple customer sizes, multiple industries, multiple geographies, mind as you think about it.

Mark Murphy, Analyst — J.P. Morgan

Yeah, wonderful. Thank you so much. Really appreciate it.

Operator

Thank you. We go next now to Alex Zoukin with Wolf Research.

Alex Zukin, Analyst — Wolfe Research

Hey, guys. I appreciate you taking the question. Maybe just two quick ones for me. Sasan, I guess to the part about AI, the partnerships that you've talked about, obviously some amazing growth again in GBSG. I wanted to ask how durable are some of the trends that you're seeing over the course of the next few quarters and even beyond that? And then to the Anthropic partnership specifically, I think you did a great job laying out how it is going to improve the customer experience. You've talked about how the data is not going to leave. But maybe talk about just the specific monetization plans, how it impacts potentially gross margins. And then Sandeep, just as a follow-up on MailChimp, I think the language moved to returning to double digits beyond fiscal 26. Maybe just give us a little bit more color there and your thoughts about both the key unlock and what happens if it can't do that.

Sasan Goodarzi, CEO

For your question, I'll jump in on the thing that what those proof points are looking on the side to figure out how to monetize AI to make up for the core. It is fundamental to our platform, juxtaposition against three growth vectors. And so to answer your durability question, you know, one growth disrupting assisted tax, which is both. And, you know, you saw in the last several years, you know, how our trajectory has fundamentally changed. And last year was a $2 billion-plus business growing 45%. And we're seeing incredible traction so far this year. And by the way, we've seen enough of the tax season to know how it's going to play out and our confidence in tax season. So that's very, very durable. We build momentum because of all the investments that we've made. Second, mid-market is very durable. Innovation with our go-to-market motion that we're building. And you can see it in our results, right? Contracts quarter over quarter continue to be up 50%. Our accountants are now starting to contribute to new customers to the franchise. It's up 10 points over the last quarter. New customers to the franchise is actually meaningful now. It's not just our base, and we have a long ways to go in our base. And that's why we're expanding our sales force. My innovation on the business, we've actually been beyond the money impact that it's having for business. the thing that gives us a lot of customers, new customers and existing ones want the combination of both. How we think about when we're seeing the impact of our, we do not share in any of the economic, the usages directly. And we're just really focused on the experience. And I think we have a lot to buy through these LLM apps, but we enjoy all of the things you can have continued margin expansion at the company level.

Sandeep Aujla, CFO

Petron, when it comes to AI, keep in mind the margins are driven by the modernization. We've got three levers for modernization. One is pricing for value. When Sasan shared that the accounting agent is saving people 12 to 14 hours a month, we know that people in value are delivering. So we can actually cross our ecosystem at a time of need. So we're switching that conversation from being a sales pitch to helping address a customer need. As an example, next week, with a click of a button, this is a key point for us all to keep in mind. And AI drives a seamless connection to HI. And we know in HI, particularly QB Live, we see 22 points higher. So in addition to it, we end up consuming even more of our ecosystem. So now let me get to a solution. Business remains to that, as I've shared before, are on the table. And we'll make sure we keep you all apprised as we narrow in on the options.

Alex Zukin, Analyst — Wolfe Research

Sounds like a healthy flywheel. Thanks, guys.

Operator

Thank you. We'll go next now to Gabriela Borges with Goldman Sachs.

Gabriela Borges, Analyst — Goldman Sachs

Hey, good afternoon. Thanks for taking my question. Sasan, I wanted to ask you a little bit of how you see the general purpose knowledge intelligence tools evolving, so specifically something like Claude Cowork. Where do you see the boundary at some of your leading-edge SMB customers between the types of tasks that they can do with Claude Cowork or a general purpose intelligence tool versus where Intuit really excels with some of the domain-specific intelligence? How do those two ecosystems work together? Thank you.

Sasan Goodarzi, CEO

Yeah, Gabriel, thank you for the question. It's really a fairly clean cut, which is the moat that we have, the advantage that we have to deliver for our customers is proprietary data, It's domain-specific AI models, which is knowledge engineering, machine learning, and our Intuit financial large language models, coupled with human expertise, HI. And as I mentioned earlier, in an environment, high-stakes financial decisions where the liability is high, privacy and security is everything for customers. And, you know, it's important to note a billion in TAM, people, experts spend in that TAM actually has not changed in the last 10 years. It hasn't changed in the last six million HIs we talked about earlier. We're actually seeing the need of combining both the technology and human expertise. Be certainty, typically your question, when we think about interested in us, because we do that very well. Beyond being that I would use, you know, when you look at our capabilities versus like capabilities available, you know, if you take the example that I used earlier, which is a construction company, I won't reuse that example, but I'll use the example located in a tourist and what are the tourist trends? How does it get impacted? What could be the I to be present? We both see the need of what's context versus core and vice versa. And that's just a real life example of.

Sandeep Aujla, CFO

I think of as the office of the CFO, office of the CEO to get to analysis. I'll give you an example from a recency case. Shipping should be long tail. Think department, so simply think about what's core versus what's context for us.

Gabriela Borges, Analyst — Goldman Sachs

Good example.

Operator

Thank you. And, ladies and gentlemen, we have time for one more question today. We'll take that now from Daniel Jester with BMO Capital Markets.

Speaker 9

Great. Thanks for squeezing me in. I appreciate it.

Speaker 10

Maybe on the 600 service centers and the in-person opportunity and tax, Maybe how are you judging the success of that?

Sasan Goodarzi, CEO

I think, you know, as you've been listening to the whole call, we've been hearing the combination of human plus intelligence means that that's the optimal way to see the path forward.

Alex Zukin, Analyst — Wolfe Research

And so I guess as you think about the in-person opportunity in tax, you know, what's the takeaway so far this year and how are you thinking about it going forward?

Sasan Goodarzi, CEO

Yeah, thanks for the question. First of all, I'll start with the fact we talked about earlier because it's just, again, facts are friendly. through 5 million customers that visited either our landing page because of the 600 that you just alluded to, and that's through early February, like February 4.2. So that is a very important stat from the perspective of we want to be where the customers are. So, one, by having these 600 locations, it allows us to actually show up locally in search, visibly be seen. And, two, it gives customers confidence that we're local, albeit the majority of the engagement is entirely virtual. So really we're tapping into a customer base that allows us to unlock the TAM based on all the capabilities that we now have as a platform with AI and HI. But that's the importance of the centers. And, again, it's all tech-driven, powerful because of the traffic that it ignites for us.

Operator

Great. Thank you very much. Thank you very much. And, Mr. Ghidorzi, at this time, sir, I would like to turn the conference back to you for any closing comments.

Sasan Goodarzi, CEO

Okay, awesome. Well, thank you, everyone, for your wonderful questions. We look forward to seeing you between now and then and look forward to talking to you about our Q3 results. So until then, be safe, be good. We'll talk to you soon. Bye, everybody.

Operator

Thank you very much. Again, ladies and gentlemen, that will conclude today's Intuit second quarter fiscal year 2026 conference call. Again, thanks so much for joining us, everyone. We wish you all a great remainder of your day.