PYMNTS MonitorEdge May 2024

Intuit Says AI Is Helping Drive Small Businesses Growth, Certainty

Small businesses are the heart and soul of America’s Main Street. 

But it can be hard to get a pulse check on how they are doing, given today’s dynamic operating environment as well as the sheer variety and volume of small businesses out there — taken together, they make up 40% of the U.S. economy and represent 99.9% of all American businesses.

Still, Intuit, which offers tax preparation software and other tools for small businesses to manage finances, including TurboTax, QuickBooks, Credit Karma and Mailchimp, has a unique vantage point on the small business sector. 

And the company, which reported its third quarter 2024 earnings on Thursday (May 23), says this crucial business segment is doing just fine. 

“We’re seeing an improvement in profitability in small businesses on our platform, and that’s a good sign. … Small businesses are healthier,” said Sasan Goodarzi, Intuit’s chief executive officer, on Thursday’s call. 

Intuit’s own Small Business and Self-Employed Group revenue grew to $2.4 billion, up 18%, and Online Ecosystem revenue increased to $1.8 billion, up 19%.

“The strength of our small business franchise is being driven by our online performance. … In a macro environment that is somewhat uncertain, our online performance for businesses is getting a lot of engagement and usage because it is helping them manage their cash flow and business,” executives told investors. 

Crucially, Intuit executives stressed to investors that the use of artificial intelligence (AI) was proving to be a key tool in its approach to the small business segment. 

Read moreIntuit Adds Proper Finance Team Members to Small Business Group

Digitizing Operations End-to-End

Per its financial results, Intuit’s small business Online Services revenue grew 20%, driven by growth in payments, payroll, and Mailchimp offerings.

The company’s QuickBooks Online Accounting revenue also grew 19% in the quarter, driven by customer growth, higher effective prices, and mix-shift, while the total international online small business ecosystem revenue grew 12% on a constant currency basis.

As a result of the strength of the small business segment, the company also updated its full fiscal year 2024 segment revenue guidance for the Small Business and Self-Employed Group: $9.467 billion to $9.481 billion, growth of approximately 18%, up from previous guidance for growth of 16% to 17%.

And Intuit’s focus on digitizing the experience end-to-end for small businesses is also leaning on one of the 21st century’s most modern digital innovations — generative AI. 

“The era of AI is one of the most significant technology shifts in our lifetime, and our strategy to be the global AI-driven expert platform is delivering significant benefits to our customers and strong results across the company,” said CEO Goodarzi in a statement. “I’m proud of our innovation and performance, and because of our momentum, we are raising Intuit’s revenue, operating income, and earnings per share guidance for the fiscal year.”

That’s because AI algorithms can streamline bookkeeping by automating data entry and transaction categorization. This reduces the manual workload for business owners, minimizes errors, and ensures up-to-date financial records. For example, QuickBooks now features AI-driven categorization that learns from past behavior, making the process increasingly accurate over time.

Read more: Intuit Integrates TurboTax Into Credit Karma and QuickBooks

Intuit began rolling out its generative AI-powered innovations across its TurboTax Online and TurboTax Live products and services in November. These solutions allow customers to do their taxes themselves, do them with help or hand them off to a professional, the company said at the time.

In January, Intuit integrated TurboTax into two of its other products — Credit Karma and QuickBooks — saying it aimed to streamline the tax preparation and filing process for individuals and small businesses. The new integrations combine the tax knowledge engine of TurboTax with the filer’s personal and financial data that is already present in Credit Karma or QuickBooks. 

And as PYMNTS has covered previously, some of the smallest businesses out there — namely freelancers and self-employed individuals — can benefit the most from automated and AI-driven bookkeeping and accounting solutions. 

With nontraditional career paths like freelancing are becoming more mainstream, solo entrepreneurs are recognizing the importance of investing in the infrastructure that supports their work, Josh Greene, co-founder and CEO of coworking app Groove, said in an interview with PYMNTS published in February. 

“I see that people are building a tech stack around themselves in a variety of different ways, whether it’s financial management, whether it’s supplier management with CRMs, whether it’s a sales pipeline, or [this] human infrastructure piece that we’re building,” said Greene.

That is where Intuit executives stressed that they too are focused on playing. 

Still, despite beating Wall Street estimates for its third quarter, Intuit’s stock fell single digits in after-hours as a result of the company’s soft Q4 guidance.