Intuit CFO on why the company is simplifying its structure

Intuit reported strong performance in its third quarter, surpassing expectations across nearly every significant metric. However, alongside this positive news, the company disclosed a reduction of approximately 17% of its workforce.

For the quarter ending April 30, the producer of TurboTax, QuickBooks, Credit Karma, and Mailchimp achieved a total revenue growth of 10%, reaching $8.6 billion. The non-GAAP diluted earnings per share increased by 10% to $12.80, exceeding both the upper limit of its own projections and the consensus from Wall Street. Furthermore, Intuit raised its full-year guidance above previous expectations for revenue and all non-GAAP metrics.

Even the GAAP results would have met consensus estimates and the top end of guidance were it not for the restructuring charge taken, as noted by CFO Sandeep Aujla.

In conjunction with the earnings announcement, Intuit revealed its plans to eliminate approximately 3,000 positions from its global workforce of 18,200 and to close offices in Reno, Nevada, and Woodland Hills, California. This follows a workforce reduction of about 1,800 employees in 2024, which was also centered around an AI realignment.

Intuit's Chairman and CEO Sasan Goodarzi conveyed to employees that the company is concentrating on three key initiatives: scaling its AI-native platform, establishing itself as the central hub for financial activity for both individuals and businesses, and targeting growth in the mid-market sector.

"Our aim is to serve a larger customer base and create exceptional products that promote our customers' success by minimizing complexity and simplifying our structure, resulting in a faster, leaner, and more focused organization," Goodarzi stated. He acknowledged the difficulty of such decisions, expressing empathy for employees impacted by the layoffs.

During his discussion with Aujla, the CFO emphasized the emotional weight of these decisions on the company’s leadership. "Our hearts are clearly with our employees, and we are committed to ensuring they are well-supported throughout this transition." Displaced employees in the U.S. will receive a severance package of 16 weeks of base pay along with an additional two weeks for each year of service, with a final employment date set for July 31.

Aujla articulated that the underlying motivation is to encourage Intuit to "function more like entrepreneurs." He characterized the desired transformation with three core attributes: "a focused organization, a flatter organization, and a faster organization."

When probed about whether "builders who are entrepreneurs" indicated specific skill sets, Aujla clarified that the emphasis is more on mindset than specific abilities. "Velocity is crucial," he remarked. "We must operate with greater speed and focus while reducing management layers. This aligns with how entrepreneurial companies traditionally operate." He explained that this restructuring is in line with Intuit's 40-year legacy of maintaining a "day-one mindset," continuously evaluating whether the company is optimally structured for the future.

The layoffs will encompass various levels of seniority, rather than exclusively targeting middle management. Aujla indicated that the review process included all layers of management. Additionally, roles that primarily facilitate coordination between teams, such as project management and business operations, were scrutinized. "While these roles are valuable, they are becoming increasingly redundant in a flatter organization," he noted. "We aspire to foster more direct, principal-to-principal discussions and reduce the need for a significant coordination structure."

The intent behind these strategic shifts, he emphasized, is to "prepare the company for the upcoming decade and enable us to operate at maximum velocity."

A 'tale of two cities' in tax

Aujla described this year's tax season as "a tale of two cities." While IRS filings were lower than anticipated, Intuit's assisted-tax business exceeded expectations, with a 38% increase in assisted customers and a 36% rise in assisted revenue.

The challenging segment was the DIY filers earning under $50,000—characterized by Aujla as a highly price-sensitive demographic. Intuit is currently reassessing its pricing strategies and exploring adjacent services, including Credit Karma and refund-related offerings, to enhance monetization within this customer segment.

Leaning into buybacks

In Q3, Intuit repurchased $1.6 billion of its stock and raised its dividend by 15%, despite concerns from investors regarding the potential disruption of traditional SaaS models by AI agents.

"We are actively pursuing buybacks because we believe the stock is undervalued," Aujla stated.