Investing.com -- Consumer finance and small business software provider, Intuit Inc (NASDAQ: INTU ). has seen an upgrade in its outlook from stable to positive, following strong revenue growth and above-average profitability. The revision is backed by the company's ongoing strength in its Credit Karma and QuickBooks segments, with S&P Global Ratings-adjusted leverage projected to be under 0.5x in the next 12 months.

The 'A-' issuer credit rating of Intuit was affirmed, as well as the 'A-' issue-level rating on the unsecured notes and the 'A-2' short-term rating on its commercial paper program.

The positive outlook is a reflection of the expectation that Intuit will continue to deliver strong operating results in fiscal 2025, with revenue growth in the low-teens area and a reported annual free operating cash flow (FOCF) of about $5.6 billion. Accounting for ongoing share buybacks and dividends, the company is expected to maintain S&P Global Ratings-adjusted leverage well under 2x, which could lead to a ratings upgrade.

Intuit's strong growth, significant scale, and market leadership are key drivers of the positive rating action. The company continues to record impressive growth across its product portfolio, positioning itself for long-term success. With key business units like TurboTax and Professional Tax generating more than $5 billion in revenues in 2025, QuickBooks and Mailchimp generating over $11 billion, and Credit Karma nearing $2 billion, Intuit is seen as a leader in both the tax and small-business software markets.

The company has also benefited from average revenue per user (ARPU) growth, particularly with its expanded tax platform that offers do-it-yourself and full-service solutions. Over the past few years, Intuit has outperformed industry averages in operating performance and has successfully integrated major acquisitions such as Credit Karma and Mailchimp, broadening its product portfolio. With projected revenues above $18 billion and S&P adjusted EBITDA of about $7.4 billion in fiscal 2025, Intuit is well set up for an upgrade over the next 6-12 months.

Intuit's minimal leverage, improving FOCF, and strong liquidity support a view of minimal financial risk. The company has a history of conservatively managing its balance sheet, with expectations to maintain S&P Global Ratings-adjusted net leverage under 0.5x for the next few years. Given ongoing double-digit percent revenue growth and improving EBITDA margins, the company is projected to generate FOCF of about $5.6 billion in fiscal 2025 and $6.5 billion in fiscal 2026. Strong liquidity, with cash and equivalents balance projected to range between $2.5 billion to $5 billion during 2025, also supports the ratings view.

Intuit's adoption of AI has allowed for high value-added products. The company's data platforms enable it to leverage large amounts of financial data from small businesses and consumers to provide tailored, high-value products. Intuit's proprietary generative AI operating system, GenOS, features custom-trained financial large language models that specialize in solving tax, accounting, marketing, cash flow, and personal finance problems. Generative AI is being used within the Mailchimp platform to assist in email campaigns.

The outlook could be revised to stable if Intuit adopted a more aggressive financial policy, such that acquisitions or shareholder returns resulted in leverage sustained above 2x. This could occur if S&P Global Ratings-adjusted net debt increased more than $14 billion from current levels without any incremental EBITDA, which is viewed as unlikely.

There is potential to raise the rating on Intuit to 'A' over the next 6-12 months if the company continues its strong financial performance while maintaining S&P Global Ratings-adjusted net leverage under 2x.

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