INTUIT INC

Previous wording

On August 1, 2023, we reorganized certain technology functions in our Consumer and ProTax segments that support and benefit our overall platform. Additionally, certain workplace and real estate functions in our Small Business & Self-Employed segment are now managed at the corporate level. As a result of these reorganizations, costs associated with these functions are no longer included in segment operating income and are now included in other corporate expenses. For thethree and nine months ended April 30, 2023, we reclassified expenses totaling$18 million and$37 million from Small Business & Self-Employed,$43 million and$126 million from Consumer, and$14 million and$45 million from ProTax to other corporate expenses, respectively. See Note 12, "Segment Information," for more information.

Current wording

On August 1, 2024, we reorganized certain technology and customer success functions in our Global Business Solutions, Consumer, and ProTax segments that support and benefit our overall platform and are managed at that level rather than at the segment level. As a result of these reorganizations, costs associated with these functions are no longer included in segment operating income and are now included in other corporate expenses. For thethree months ended October 31, 2023, we reclassified expenses totaling$332 million from Global Business Solutions,$65 million from Consumer, and$8 million from ProTax to other corporate expensesto conform to the current presentation. See Note 12, "Segment Information," for more information.

Previous wording

Intuit helps consumers and small businesses prosper by delivering financial management, compliance, and marketing products and services. We also provide specialized tax products to accounting professionals, who are key partners that help us serve small business customers. We organize our businesses into four reportable segments – Small Business & Self-Employed, Consumer, Credit Karma, and ProTax.

Current wording

Intuit helps consumers and small and mid-market businesses prosper by delivering financial management, compliance, and marketing products and services. We also provide specialized tax products to accounting professionals. We organize our businesses into four reportable segments – Global Business Solutions, Consumer, Credit Karma, and ProTax.

Previous wording

Small Business & Self-Employed: This segment serves small businesses and the self-employed around the world, and the accounting professionals who assist and advise them. Our QuickBooks offerings include financial and business management online services and desktop software, payroll solutions, time tracking, merchant payment processing and bill pay solutions, checking accounts through an FDIC member bank partner, and financing for small businesses. Our Mailchimp offerings include marketing automation and customer relationship management.Consumer: This segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Credit Karma: This segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto, and personal loan, and insurance products; online savings and checking accounts through an FDIC member bank partner; and access to their credit scores and reports, credit and identity monitoring, credit report dispute, credit building tools, and tools to help understand net worth and make financial progress.ProTax: This segment serves professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, and ProConnect Tax Online in the U.S., and ProFile and ProTax Online in Canada.

Current wording

Global Business Solutions: This segment serves small and mid-market businesses around the world, and the accounting professionals who assist and advise them. Our QuickBooks offerings include financial and business management online services and desktop software, payroll solutions, time tracking, merchant payment processing and bill pay solutions, checking accounts through an FDIC member bank partner, and financing for small and mid-market businesses. Our Mailchimp offerings include marketing automation and customer relationship management.Consumer: This segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada. Credit Karma: This segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto, and personal loan, and insurance products; online savings and checking accounts through an FDIC member bank partner; and access to their credit scores and reports, credit and identity monitoring, credit report dispute, credit building tools, and tools to help understand net worth and make financial progress. ProTax: This segment serves professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, and ProConnect Tax Online in the U.S., and ProFile and ProTax Online in Canada.

Previous wording

As we continue to build our AI-driven expert platform, we prioritize resources on our five big bets across the company. These priorities focus on solving the problems that matter most to customers and include:

Current wording

As we execute our global AI-driven expert platform strategy, we prioritize resources on our five Big Bets across the company. These priorities focus on solving the problems that matter most to customers and include:

Previous wording

•Revolutionizing speed to benefit: When customers use our products and services, we use the power of data-driven customer insights to help deliver value instantly and aim to make interactions with our offerings frictionless, without the need for customers to manually enter data. We are accelerating the application of AI to deliver breakthrough innovations to customers. We are also investing in other emerging technologies, such as decentralized technologies, with a goal to revolutionize the customer experience and help customers put more money in their pockets faster. This priority is foundational across our business, and execution against it positions us to succeed with our other four strategic priorities.

Current wording

•Revolutionizing speed to benefit: When customers use our products and services, we use the power of AI to deliver value instantly and aim to make interactions with our offerings frictionless, without the need for customers to manually enter data. We are accelerating the application of AI as we strive to deliver “done for you” experiences to our customers. This is foundational, and execution against this priority positions us to succeed with our other four Big Bets.

Previous wording

•Connecting people to experts: The largest problem our customers face is lack of confidence to file their own taxes or to manage their books. To build their confidence, we connect our customers to experts. We offer customers access to experts to help them make important decisions – and experts, such as accountants, gain access to new customers so they can grow their businesses. We are also expanding how we think about virtual experiences by broadening the segments we serve beyond tax and accounting, to play a more meaningful role in our customers’ financial lives.

Current wording

•Connecting people to experts: The largest problem our customers face is lack of confidence to file their own taxes or to manage their books. To build their confidence, we connect our customers to experts. We offer customers access to experts to help them make important decisions – and experts, such as accountants, gain access to new customers so they can grow their businesses. We are also expanding our virtual expert network and broadening the segments we serve beyond tax and accounting to play a more meaningful role in our customers’ financial lives.

Previous wording

•Be the center of small business growth: We are focused on helping customers grow their businesses by offering a broad, seamless set of tools that are designed to help them get and retain customers, get paid faster, manage and get access to capital, pay employees with confidence, and use third-party apps to help run their businesses. At the same time, we want to position ourselves to better serve product-based businesses to benefit customers who sell products through multiple channels.

Current wording

•Be the center of small business growth: Globally, we are focused on helping customers grow their businesses by offering a broad, seamless set of tools that are designed to help them get and retain customers, get paid faster, manage and get access to capital, pay employees with confidence, and use third-party apps to help run their businesses. Our money solutions enable customers to manage their money and improve cash flow. This is an important driver to improving the success of our small and mid-market business customers.

Previous wording

•Disrupt the small business mid-market: We aim to disrupt the mid-market with a tailor-made ecosystem of offerings. QuickBooks Online Advanced, as well as our workforce solutions, payments, and bill pay offerings, are designed to address the needs of small business customers with 10 to 100 employees. Additionally, Mailchimp’s marketing platform enables mid-market businesses to digitally promote their business across email, social media, landing pages, ads, websites, and more, all from one place. These offerings enable us to increase retention of these larger customers and attract new mid-market customers who are over-served by available offerings.

Current wording

•Disrupt the mid-market: We aim to disrupt the mid-market with a tailor-made, integrated ecosystem, which includes our QuickBooks offerings, as well as our workforce solutions and money offerings. These solutions are designed to address the more complex needs of mid-market businesses. Mailchimp’s marketing offerings enable mid-market businesses to digitally promote their business across email, social media, landing pages, ads, websites, and more, all from one place. These offerings enable us to increase retention of these larger customers and accelerate mid-market demand.

Previous wording

AI is transforming multiple industries, including financial technology. Disruptive start-ups, emerging ecosystems, and mega-platforms are harnessing new technology to create personalized experiences, deliver data-driven insights, and increase speed of service. These shifts are creating a more dynamic and highly competitive environment where customer expectations are shifting around the world as more services become digitized and the array of choices continues to increase.

Current wording

AI, including GenAI, is transforming multiple industries, in particular financial technology. Disruptive start-ups, emerging ecosystems, and mega-platforms are harnessing new technology to create personalized experiences, deliver data-driven insights, and increase speed of service. These shifts are creating a more dynamic and highly competitive environment where customer expectations are shifting around the world as more services become digitized and the array of choices continues to increase.

Previous wording

Our growth strategy depends upon our ability to initiate and embrace disruptive technology trends, to enter new markets, and to drive broad adoption of the products and services we develop and market. Our future growth also increasingly depends on the strength of our third-party business relationships and our ability to continue to develop, maintain, and strengthen new and existing relationships. To remain competitive and continue to grow, we are investing significant resources in our product development, marketing, and sales capabilities, and we expect to continue to do so in the future. Much of our future success also depends on our ability to continue to attract, retain, and develop highly skilled employees in a highly competitive talent environment.

Current wording

Our growth strategy depends upon our ability to innovate, develop, and introduce emerging technologies, including AI and GenAI, to drive broad adoption of our products and services and enter new markets. Our future growth also increasingly depends on the strength of our third-party business relationships and our ability to continue to develop, maintain, and strengthen new and existing relationships. To remain competitive and continue to grow, we are investing significant resources in our product development, marketing, and sales capabilities, and we expect to continue to do so in the future. Much of our future success also depends on our ability to continue to attract, retain, and develop highly skilled employees, including those in technical and leadership roles who are critical to our strategic growth, in a highly competitive talent environment.

Previous wording

As we offer more online services, the ongoing operation and availability of our platforms and systems and those of our external service providers is becoming increasingly important. Because we help customers manage their financial lives, we face risks associated with the hosting, collection, use, and retention of personal customer information and data. We are investing

Current wording

As we offer more online services, the ongoing operation and availability of our platforms and systems and those of our external service providers is becoming increasingly important. Because we help customers manage their financial lives, we face risks associated with the hosting, collection, use, and retention of personal customer information and data. We are investing significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities, and we expect to continue to do so in the future.

Previous wording

We operate in industries that are experiencing an increasing amount of fraudulent activities by malicious third parties. We implement additional security measures, and we continue to work with state and federal governments to implement industry-wide security and anti-fraud measures, including sharing information regarding suspicious activity. We received ISO 27001 certification for a portion of our systems, and we continue to invest in security measures and to work with the broader industry and government to protect our customers against this type of fraud.

Current wording

We operate in industries that are experiencing an increasing amount of fraudulent activities by malicious third parties. We implement additional security measures, and we continue to work with state and federal governments to implement industry-wide security and anti-fraud measures, including sharing information regarding suspicious activity. We continue to invest in security measures and to work with the broader industry and government to protect our customers against this type of fraud.

Previous wording

The most important financial indicators that we use to assess our business are revenue growth for the company as a whole and for each reportable segment; operating income growth for the company as a whole; earnings per share; and cash flow from operations. We also track certain non-financial drivers of revenue growth and, when material, identify them in the applicable discussions of segment results below. Service offerings are a significant part of our business. We expect our total service revenue as a percentage of our total revenue to grow over the long term.

Current wording

The most important financial indicators that we use to assess our business are revenue growth for the company as a whole and for each reportable segment; operating income growth for the company as a whole; earnings per share; and cash flow from operations. We also track certain non-financial drivers of revenue growth and, when material, identify them in the applicable discussions of segment results below. Service offerings are a significant part of our business. Our total service revenue was $13.9 billion, or 85% of our total revenue, in fiscal 2024, and we expect our total service revenue as a percentage of our total revenue to grow over the long term.

Previous wording

Key highlights for the first nine months of fiscal 2024 include the following:

Current wording

Key highlights for the first three months of fiscal 2025 include the following:

Previous wording

In preparing our condensed consolidated financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our net revenue, operating income or loss, and net income or loss, as well as on the value of certain assets and liabilities on our condensed consolidated balance sheets. We believe that the estimates, assumptions, and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. There were no significant changes in those critical accounting policies and estimates during the first nine months of fiscal 2024. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit and Risk Committee of our Board of Directors.

Current wording

In preparing our condensed consolidated financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our net revenue, operating income or loss, and net income or loss, as well as on the value of certain assets and liabilities on our condensed consolidated balance sheets. We believe that the estimates, assumptions, and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2024 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. There were no significant changes in those critical accounting policies and estimates during the first three months of fiscal 2025. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit and Risk Committee of our Board of Directors.

Previous wording

Total net revenue for the third quarter of fiscal 2024 increased $719 million, or 12%, compared with the same quarter of fiscal 2023. Our Small Business & Self-Employed segment revenue increased during the quarter due to growth in our Online Ecosystem revenue. Consumer segment revenue increased due to the interrelated factors of a shift in mix to our higher-priced service offerings, such as TurboTax Live, and higher effective prices. See “Segment Results” later in this Item 2 for more information about the results for all of our reportable segments.

Current wording

Total net revenue for the first quarter of fiscal 2025 increased $305 million, or 10%, compared with the same quarter of fiscal 2024. Our Global Business Solutions segment revenue increased during the quarter due to growth in our Online Ecosystem revenue. Credit Karma segment revenue increased during the quarter due to strength in our personal loan, auto insurance, and credit card verticals. Revenue in our Consumer and ProTax segments was seasonally light, consistent with the same quarter of fiscal 2024. See “Segment Results” later in this Item 2 for more information about the results for all of our reportable segments.

Previous wording

Operating income for the third quarter of fiscal 2024 increased $327 million, or 12%, compared to the same quarter of fiscal 2023. The increase in operating income was due to the increase in revenue described above, partially offset by increases in expenses. Expenses increased due to staffing, marketing, outside services, and share-based compensation. See "Cost of Revenue" and “Operating Expenses” later in this Item 2 for more information.

Current wording

Operating income for the first quarter of fiscal 2025 decreased $36 million, or 12%, compared to the same quarter of fiscal 2024. The decrease in operating income was due to an increase in expenses, partially offset by the increase in revenue described above. Expenses increased due to marketing, staffing, and outside services. See "Cost of Revenue" and “Operating Expenses” later in this Item 2 for more information.

Previous wording

Net income for the third quarter of fiscal 2024 increased $302 million, or 14%, compared with the same quarter of fiscal 2023. The increase in net income was due to the increase in operating income described above, partially offset by an increase in the associated income tax expense. Diluted net income per share increased to $8.42 for the third quarter of fiscal 2024 compared to $7.38 for the same quarter of fiscal 2023, in line with the increase in net income.

Current wording

Net income for the first quarter of fiscal 2025 decreased $44 million, or 18%, compared with the same quarter of fiscal 2024. The decrease in net income was due to the decrease in operating income described above, a $42 million net loss on a long-term investment, partially offset by an $18 million increase in the net gains on executive deferred compensation plan assets, an $8 million increase in interest income due to higher investable balances, and a decrease in income tax expense. Diluted net income per share decreased to $0.70 for the first quarter of fiscal 2025 compared to $0.85 for the same quarter of fiscal 2024, in line with the decrease in net income.

Previous wording

The information below is organized in accordance with our four reportable segments. See“Executive Overview – About Intuit” earlier in this Item 2 and Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for more information. All of our segments operate and sell to customers primarily in the United States. Total international net revenue was approximately 6% and 8% of consolidated net revenue for the three and nine months ended April 30, 2024, respectively. Total international net revenue was approximately 6% and 8% of consolidated net revenue for the three and nine months ended April 30, 2023, respectively.

Current wording

The information below is organized in accordance with our four reportable segments. See“Executive Overview – About Intuit” earlier in this Item 2 and Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for more information. All of our segments operate and sell to customers primarily in the U.S. Total international net revenue was approximately 10% of consolidated net revenue for each of the three months ended October 31, 2024 and 2023.

Previous wording

segment are now managed at the corporate level. As a result of these reorganizations, costs associated with these functions are no longer included in segment operating income and are now included in other corporate expenses. For thethree and nine months ended April 30, 2023, we reclassified expenses totaling$18 million and $37 million from Small Business & Self-Employed,$43 million and$126 million from Consumer, and$14 million and $45 million from ProTax to other corporate expenses, respectively.

Current wording

On August 1, 2024, we reorganized certain technology and customer success functions in our Global Business Solutions, Consumer, and ProTax segments that support and benefit our overall platform and are managed at that level rather than at the segment level. As a result of these reorganizations, costs associated with these functions are no longer included in segment operating income and are now included in other corporate expenses. For thethree months ended October 31, 2023, we reclassified expenses totaling$332 million from Global Business Solutions,$65 million from Consumer, and$8 million from ProTax to other corporate expensesto conform to the current presentation.

Previous wording

Segment operating income or loss is segment net revenue less segment cost of revenue and operating expenses. See“Executive Overview – Industry Trends and Seasonality” earlier in this Item 2 for a description of the seasonality of our business. We include expenses such as corporate selling and marketing, product development, general and administrative, and non-employment related legal and litigation settlement costs, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. For our Credit Karma reportable segment, segment expenses include certain direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, amortization of acquired technology, amortization of other acquired intangible assets, goodwill and intangible asset impairment charges, and professional fees and transaction charges related to business combinations. These unallocated corporate costs for all segments totaled $4.2 billion in the first nine months of fiscal 2024 and $3.8 billion in the first nine months of fiscal 2023. Unallocated corporate items increased in the fiscal 2024 period, due to increases in share-based compensation expense, general and administrative expense, and corporate product development expense. See Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for reconciliations of total segment operating income or loss to consolidated operating income or loss for each fiscal period presented.

Current wording

Segment operating income or loss is segment net revenue less segment cost of revenue and operating expenses. See“Executive Overview – Industry Trends and Seasonality” earlier in this Item 2 for a description of the seasonality of our business. We include expenses such as corporate selling and marketing, general and administrative, and non-employment related legal and litigation settlement costs, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. As part of our platform strategy, we also include customer success and product development for our Global Business Solutions, Consumer, and ProTax segments in unallocated corporate items as we do not allocate these expenses to the segments because they are managed at the platform level. Customer success includes the costs of tax and bookkeeping experts that support our TurboTax Live and QuickBooks Live offerings. For our Credit Karma reportable segment, segment expenses include certain direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, amortization of acquired technology, amortization of other acquired intangible assets, goodwill and intangible asset impairment charges, professional fees and transaction charges related to business combinations, and restructuring charges. These unallocated corporate costs for all segments totaled $2.0 billion in the first three months of fiscal 2025 and $1.8 billion in the first three months of fiscal 2024. Unallocated corporate items increased in the fiscal 2025 period, due to increases in general and administrative expense, product development expense, share-based compensation expense, and restructuring. See Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for reconciliations of total segment operating income or loss to consolidated operating income or loss for each fiscal period presented.

Previous wording

Small Business & Self-Employed segment revenue includes both Online Ecosystem and Desktop Ecosystem revenue.

Current wording

Global Business Solutions segment revenue includes both Online Ecosystem and Desktop Ecosystem revenue.

Previous wording

•QuickBooks Online, QuickBooks Live, QuickBooks Online Advanced and QuickBooks Self-Employed financial and business management offerings;

Current wording

•QuickBooks Online, QuickBooks Live, QuickBooks Online Advanced, QuickBooks Self-Employed, and QuickBooks Solopreneur financial and business management offerings;

Previous wording

•Merchant payment processing and bill pay services for small businesses that use online offerings;

Current wording

•Merchant payment processing and bill pay services for small and mid-market businesses that use online offerings;

Previous wording

•Desktop payroll products (QuickBooks Basic Payroll, QuickBooks Assisted Payroll, and QuickBooks Enhanced Payroll);

Current wording

•Desktop payroll products (QuickBooks Assisted Payroll, and QuickBooks Enhanced Payroll);

Previous wording

•Merchant payment processing services for small businesses that use desktop offerings;

Current wording

•Merchant payment processing services for small and mid-market businesses that use desktop offerings;

Previous wording

Segment service revenue is primarily derived from our Online Ecosystem revenue and revenue from the services and support that are provided as part of our QuickBooks Desktop subscription and desktop payroll offerings, as well as merchant payment processing services. Segment product and other revenue is primarily derived from revenue related to delivery of software licenses and the related updates, including version protection, for our QuickBooks Desktop subscriptions and desktop payroll offerings, which are part of our Desktop Ecosystem.

Current wording

Segment service revenue is primarily derived from our Online Ecosystem revenue and revenue from the services and support that are provided as part of our QuickBooks Desktop subscription and desktop payroll offerings, as well as merchant payment processing services. Segment product and other revenue is primarily derived from revenue related to delivery of software licenses and the related updates, including version protection, for our QuickBooks Desktop subscriptions and desktop payroll offerings, which are part of our Desktop Ecosystem. Our money offerings consist of our merchant payment processing services, financing for small and mid-market businesses (QuickBooks Capital), and bill pay services.

Previous wording

Revenue for our Small Business & Self-Employed segment increased $366 million, or 18%, in the third quarter of fiscal 2024 and $1.1 billion, or 18%, in the first nine months of fiscal 2024 compared with the same periods of fiscal 2023. The increase in both periods was due to growth in Online Ecosystem revenue, which contributed to $286 million and $852 million of the increase for the three and nine months ended April 30, 2024, respectively.

Current wording

Revenue for our Global Business Solutions segment increased $200 million, or 9%, in the first quarter of fiscal 2025 compared with the same period of fiscal 2024. The increase was due to growth in Online Ecosystem revenue, which contributed to $325 million of the increase for the three months ended October 31, 2024.

Previous wording

Online Ecosystem revenue increased $286 million, or 19%, in the third quarter of fiscal 2024 compared with the same period of fiscal 2023. Online Services revenue increased $149 million, or 20%, in the third quarter of fiscal 2024, due to increases in revenue from our payments offerings of $59 million, our payroll offerings of $52 million, and Mailchimp of $20 million. Revenue increases were due to the interrelated factors described below. Online payments revenue increased due to higher effective prices, customer growth, and an increase in total payment volume per customer. Online payroll revenue increased due to customer growth, higher effective prices, and a shift in mix to higher-end offerings. Mailchimp revenue increased due to higher effective prices and paid customer growth. QuickBooks Online Accounting revenue increased $137 million, or 19%, in the third quarter of fiscal 2024 due to customer growth, higher effective prices, and a shift in mix to our higher-priced offerings.

Current wording

Online Ecosystem revenue increased $325 million, or 20%, in the first quarter of fiscal 2025 compared with the same period of fiscal 2024. QuickBooks Online Accounting revenue increased $167 million, or 21%, in the first quarter of fiscal 2025 due to the interrelated factors of customer growth, higher effective prices, and a shift in mix to our higher-priced offerings. Online Services revenue increased $158 million, or 19%, in the first quarter of fiscal 2025, due to increases in revenue from our money offerings of $91 million, our payroll offerings of $53 million, and Mailchimp of $17 million. Revenue increases were due to the interrelated factors described below. Money revenue increased $91 million due to a $65 million increase in payments revenue from payments customer growth, higher effective payments prices, and an increase in total payment volume per customer, and a $26 million increase from QuickBooks Capital. Online payroll revenue increased due to customer growth, higher effective prices, and a shift in mix to higher end offerings. Mailchimp revenue increased due to higher effective prices and paid customer growth.

Previous wording

In August 2023, we reorganized certain technology functions that support and benefit our overall platform. As a result, these costs are no longer included in segment operating income and are now included in other corporate expenses. For the three and nine months ended April 30, 2023, we reclassified $43 million and $126 million, respectively, from Consumer to other corporate expenses.

Current wording

In August 2024, we reorganized certain technology and customer success functions that support and benefit our overall platform and are managed at that level rather than at the segment level. As a result, these costs are no longer included in segment operating income and are now included in other corporate expenses. For the three months ended October 31, 2023, we reclassified $65 million from Consumer to other corporate expenses to conform to the current presentation.

Previous wording

Revenue for our Credit Karma segment increased $33 million, or 8%, in the third quarter of fiscal 2024 compared to the same period in fiscal 2023, due to increases in revenue from Credit Karma Money of $12 million, our credit card vertical of $8 million, our auto insurance vertical of $7 million, and our personal loan vertical of $6 million.

Current wording

Revenue for our Credit Karma segment increased $119 million, or 29%, in the first quarter of fiscal 2025 compared to the same period in fiscal 2024, due to increases in revenue from our personal loan vertical of $44 million, our auto insurance vertical of $36 million, and our credit card vertical of $31 million.

Previous wording

Segment operating income increased $33 million, or 7%, in the first nine months of fiscal 2024 compared with the same period of fiscal 2023, due to the increase in revenue described above. Expenses were relatively flat in the first nine months of fiscal 2024 compared to the same period of fiscal 2023.

Current wording

Segment operating income decreased $2 million, or 9%, in the first three months of fiscal 2025 compared with the same period of fiscal 2024. In our first fiscal quarter, our ProTax segment typically generates nominal operating income or operating losses because revenue is minimal while we continue to incur operating expenses for general and administrative functions. Expenses were relatively flat in the first three months of fiscal 2025 compared to the same period of fiscal 2024.

Previous wording

Our cost of revenue has three components: (1) cost of service revenue, which includes the direct costs associated with our online and service offerings, such as costs for data processing and storage capabilities from cloud providers, ongoing production support costs, customer support costs, costs for the tax and bookkeeping experts that support our TurboTax Live and QuickBooks Live offerings, and costs related to credit score providers; (2) cost of product and other revenue, which includes the direct costs of manufacturing and shipping or electronically downloading our desktop software and financial supplies products; and (3) amortization of acquired technology, which represents the cost of amortizing developed technologies that we have obtained through acquisitions, over their useful lives.

Current wording

Our cost of revenue has three components: (1) cost of service revenue, which includes the direct costs associated with our online and service offerings, such as staffing costs for ongoing production support, customer support, and tax and bookkeeping experts that support our TurboTax Live and QuickBooks Live offerings, costs for data processing and storage capabilities from cloud providers, and costs related to credit score providers; (2) cost of product and other revenue, which includes the direct costs of manufacturing and shipping or electronically downloading our desktop software and financial supplies products; and (3) amortization of acquired technology, which represents the cost of amortizing developed technologies that we have obtained through acquisitions, over their useful lives.

Previous wording

Cost of service revenue as a percentage of service revenue was relatively consistent in both the third quarter and first nine months of fiscal 2024 compared with the same periods of fiscal 2023.

Current wording

Cost of service revenue as a percentage of service revenue was relatively consistent in the first quarter of fiscal 2025 compared with the same period of fiscal 2024.

Previous wording

Cost of product and other revenue as a percentage of product and other revenue was relatively consistent in both the third quarter and first nine months of fiscal 2024 compared with the same periods of fiscal 2023. Costs of product and other revenue are expensed as incurred, and we do not defer any of these costs when product and other revenue is deferred.

Current wording

Cost of product and other revenue as a percentage of product and other revenue was relatively consistent in the first quarter of fiscal 2025 compared with the same period of fiscal 2024. Costs of product and other revenue are expensed as incurred, and we do not defer any of these costs when product and other revenue is deferred.

Previous wording

Total operating expenses as a percentage of total net revenue was flat in the third quarter of fiscal 2024 compared to the same period of fiscal 2023. Total net revenue for the third quarter of fiscal 2024 increased $719 million, or 12%, while total operating expenses for the quarter increased $306 million, or 14%. The increase in total operating expenses was due to increases of $104 million for marketing expenses, $99 million for staffing due to higher headcount, and $48 million for share-based compensation.

Current wording

Total operating expenses as a percentage of total net revenue increased in the first quarter of fiscal 2025 compared to the same period of fiscal 2024. Total net revenue for the first quarter of fiscal 2025 increased $305 million, or 10%, while total operating expenses for the quarter increased $278 million, or 15%. The increase in total operating expenses was due to increases of $117 million for marketing, $67 million for staffing, and $46 million for outside services.

Previous wording

Interest expense of $182 million and $180 million for the first nine months of fiscal 2024 and 2023, respectively, consisted of interest on our senior unsecured notes, unsecured term loan, and secured revolving credit facilities.

Current wording

Interest expense of $60 million and $65 million for the first three months of fiscal 2025 and 2024, respectively, consisted of interest on our senior unsecured notes and secured revolving credit facilities.

Previous wording

(1) Interest income for the three and nine months ended April 30, 2024 increased compared to the same periods of fiscal 2023 due to higher average interest rates.

Current wording

(1) Interest income for the three months ended October 31, 2024 increased compared to the same periods of fiscal 2024 due to higher average investable balances.

Previous wording

For the three and nine months ended April 30, 2024, we recognized excess tax benefits on share-based compensation of $40 million and $123 million, respectively, in our provision for income taxes. For the three and nine months ended April 30, 2023, we recognized excess tax benefits on share-based compensation of $17 million and $15 million, respectively, in our provision for income taxes.

Current wording

We recognized excess tax benefits on share-based compensation of $28 million in our provision for income taxes for each of the three months ended October 31, 2024 and 2023.

Previous wording

Our effective tax rates for the three and nine months ended April 30, 2024 were approximately 22% and 19%, respectively. Excluding discrete tax items primarily related to share-based compensation, our effective tax rate for both periods was approximately 24%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the tax benefit we received from the federal research and experimentation credit.

Current wording

Our effective tax rate for the three months ended October 31, 2024 was approximately 8%. Excluding discrete tax items primarily related to share-based compensation, our effective tax rate was approximately 24%. The difference from the federal statutory rate of 21% was primarily due to state income taxes and non-deductible share-based compensation, which were partially offset by the tax benefit we received from the federal research and experimentation credit.