Intuit Chief Executive Brad Smith is enjoying a bit of a lift.

That's because his company, the No. 1 maker of personal finance and tax software, late Tuesday reported fiscal third-quarter earnings and sales that beat analyst views, helped by better-than-expected sales of its TurboTax and other tax software. The results lifted Intuit's shares as much as 7.6% Wednesday. The stock closed up 3.4%, at 28.14.

Excluding stock-based compensation and restructuring costs, the company posted earnings of $1.39 a share, up 23% from the year-earlier period, on record revenue of $1.31 billion, up 15%. Analysts polled by Thomson Reuters had expected earnings of $1.33 per share on sales of $1.29 billion.

Intuit (NasdaqGS:INTU - News) also raised its full-year earnings and revenue guidance. It now expects per-share profit of $1.61 to $1.63 on revenue of $3.05 billion to $3.06 billion. Its earlier forecast called for a profit of $1.56 to $1.58, while analysts expected $1.59. The company's earlier revenue forecast had been $3.02 billion.

How did Intuit manage this in a sluggish economy, when some small businesses are cutting back on software and tech purchases?

Smith, a five-year veteran of Intuit promoted to CEO in January, says it's the result of targeted marketing and the offering of free basic versions of software that often lead to sales when customers look to upgrade.

He spoke with IBD on Wednesday about Intuit's performance and trends for the rest of the year.

IBD: What fueled Intuit's increased guidance for the year?

Smith: We had a really strong tax season both in our TurboTax and professional tax business. And then we had a strong performance in our small-business ecosystem with our QuickBooks small-business accounting, payroll and payments software.

IBD: Is the slow U.S. economy making much of an impact?

Smith: No, it's not. Overall, the company is clearly performing well.

IBD: But there must have been some impact?

Smith: The area we've seen the economy impact us is in our small-business (product) QuickBooks. We sell desktop PC versions of the software in retail stores, and retail traffic is down a little right now. But our team proved in the third quarter that by targeting our marketing messages, we were able to grow in the tough economy.

IBD: Can you give examples of how you targeted your marketing?

Smith: We increased our TV advertising. Today, 60% of small businesses are still running their business out of a shoe box or with a spreadsheet. So our TV ads made them aware that there's a better alternative.

IBD: What else did Intuit do?

Smith: We also offered a free version of our QuickBooks bookkeeping product, called Simple Start. Basically, what that does is show that regardless of how tough the economy is, you can get the product for free, and as the economy gets healthier, there are other products and services that you can buy that attach to that free software. So we're able to monetize this business over time.

That same "free" model has really helped drive our success in our tax business, too. You could get a free version of TurboTax to do your federal taxes. You could also do your state taxes. But if you wanted to do that, you had to pay for the (software) to do your state taxes.

IBD: What is the psychology behind this type of marketing strategy?

Smith: It gets people who were doing paper and pencil taxes to use your product and start changing their habits, so we can make sales to them (in the future).

IBD: So, Intuit's performance last quarter isn't necessarily a sign that the economy's getting better?

Smith: What hasn't changed are the macro-economic conditions. Small-business sentiment and (retail) traffic hasn't changed a lot. What did change is our ability to execute better in these conditions.

IBD: Are you expecting the economy to rebound?

Smith: We're not banking on a rebound in the economy anytime soon, when we put together our (revised outlook). We're just putting our plan together assuming this is the market we're going to compete in, and how we're going to grow in this market. And if the economy rebounds, it will just be gravy.

IBD: Were there any unusual factors, such as favorable currency rates, that helped Intuit last quarter?

Smith: Intuit is predominantly a North American company. So there were no gains from currency fluctuations. We do have some small piece of our businesses in Canada and the U.K. That small piece of revenue grew 20% in the quarter. About 7 points of that growth was due to currency, but the gain was small.

IBD: What was the biggest lesson you learned?

Smith: It's about good execution in a tough market. Our team didn't use the economy as a crutch. Most companies in the downturn played defense. We kept our foot on the gas and played offense.