Morning Note: Market News and an Update from Intuit.

Market News

The US House narrowly passed President’s sweeping tax-cut bill, which now passes on to the Senate. The US is pushing the EU to make unilateral tariff reductions or face reciprocal duties of 20%, the FT reported. Washington will tell Brussels today that Europe’s focus on mutual tariff reductions falls short of US expectations.

US equities were little changed last night – S&P 500 (-0.04%); Nasdaq (+0.28%) – while the 30-year Treasury yield touched 5.15%, the highest level since October 2023, before retreating. Gold firmed to $3,333 an ounce.

In Asia this morning, equities were mixed: Nikkei 225 (+0.5%); Hang Seng (flat); Shanghai Composite (-0.9%). Japan’s 10-year government bond yield held steady around 1.56%, near its highest level since 2008, as stronger-than-expected inflation data fuelled expectations of further policy tightening by the Bank of Japan. Core inflation rose to 3.5% year-on-year in April—surpassing forecasts and marking the highest reading in over two years—while headline inflation remained unchanged at 3.6%. The jump was driven by rising food and energy costs.

UK retail sales gained 1.2% in April, continuing a surprisingly strong start to the year for the British economy. Consumer confidence improved to -20 in May, GfK said, also beating estimates. The FTSE 100 is currently 0.4% higher at 8,777, while Sterling trades at $1.3475 and €1.1880.

Brent Crude slipped to $64 a barrel on latest OPEC+ production headlines. President Trump is expected to sign executive orders as soon as today that aim to jump-start the nuclear energy industry by easing the regulatory process on approvals for new reactors and strengthening fuel supply chains. Uranium holding company Yellow Cake is up 7% this morning.

Source: Bloomberg

Company News

Last night, Intuit released results for the three months to 30 April, the third quarter of its financial year to July 2025. The group highlighted another strong quarter and raised its full-year guidance. In response, the shares were marked up by 8% in after-hours trading.

Intuit supplies finance software to individuals, small companies, and accountants. With its strong brands (Quickbooks and TurboTax), the company is the de facto standard for consumer tax preparation software and small business financial management software in the US, and increasingly overseas. The company is focused on expanding its share in DIY, transforming the assisted tax preparation category, and expanding beyond tax with a consumer platform. Growth prospects remain attractive, with large cross-selling opportunities in the US as the group migrates its customer base to the cloud, while underpenetrated international markets provide a growth opportunity. The group also owns Credit Karma (consumer credit) and Mailchimp (marketing automation platform) taking it deeper into personal finance and small business marketing services.

With data and AI core to its strategy, the group is accelerating innovation across its global financial technology platform. In the latest quarter, the company’s done-for-you experiences drove a 12% reduction in the average time a customer spent on their return, with more than half of its DIY and do-it-with-me customers completing their return in under an hour.

In the near term, there is some risk of customer churn if business failures pick up and from increased bad debts from working capital loans made by the company. However, over the medium term, with its suite of online products, Intuit believes it has an addressable market of $300bn+ driven by the shift to virtual solutions, the acceleration to online and omnichannel capabilities, digital money offerings, and the need to help consumers improve their financial health. The group is aiming to grow its revenue by double-digits in organic terms and expand its operating margin.

Despite an uncertain macro environment, in the latest quarter, total revenue grew by 15% to $7.75bn, ahead of the consensus forecast of $7.55bn, driven by an outstanding tax season.

In the Consumer division, revenue rose by 11% to $4.0bn. The company now expects 24% growth in TurboTax Live customers to result in 47% growth in TurboTax Live revenue, well above its long-term expectation of 15% to 20% revenue growth.

In the Global Business Solutions Group, revenue grew 19% to $2.8bn, split between Online Ecosystem (+20% to $2.1bn) and Desktop Ecosystem (+18% to $746m). Within the Online Ecosystem, QuickBooks Online Accounting grew 21%, driven by higher effective prices, customer growth, and mix-shift. Online Services grew 18%, driven by growth in money and payroll offerings. Total international online revenue grew by 8% on a constant currency basis.

The consumer credit business Credit Karma reports as a separate division. During the latest quarter, revenue grew by 31% to $579m, driven by strength in credit cards, personal loans, and auto insurance.

The smallest division, ProTax grew by 9% to $278m.

The company’s operating margin ticked up from 77% to 78%, while operating income grew by 17% to $4.3bn. Diluted EPS rose 18% to $11.65, well above both the consensus forecast ($10.91) and company guidance ($10.89 and $10.95).

The business is highly cash generative and ended the quarter with net debt of only $0.2bn. Intuit takes a disciplined approach to capital management, investing cash in opportunities that yield an expected return on investment greater than 15%. The group repurchased $754m of shares during the quarter and has $2.8bn remaining of its authorisation. A quarterly dividend of 104c has been declared, 16% higher than last year.

The company has lifted up its guidance for the financial year to July 2025. Revenue is now expected to grow by 15% (vs. 12%-13% previously) to $18.74bn, while adjusted EPS is now expected to grow by 18%-19% (vs. 13%-14% previously) to $20.07-$20.12. For the current quarter, the group is targeting revenue growth of 17% to 18% and EPS of $2.63-$2.68.

On the call, the group highlighted once again that, against an uncertain macroeconomic backdrop, 80% of Small Business and Self-Employed Group revenue is subscription-based and mission critical. The other 20% transaction-based portion includes revenue from QuickBooks payments, capital, and per employee pricing for time tracking and payroll.

Source: Bloomberg