Q4 2021 Intuit Inc Earnings Call

<unk> like to welcome everyone to Intuit's fourth quarter and fiscal year 2021 conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

If you would like to withdraw your question press the pound key.

With that I'll now turn the call over to Kim Watkins Intuit's, Vice President of Investor Relations Ms. Watkins.

Thanks Ricky.

Good afternoon, and welcome to <unk> fourth quarter fiscal 2020 conference call I'm here with Intuit CEO.

<unk>, the Dorothy and Michelle Clutterbuck our CFO.

Before we start I'd like to remind everyone that our remarks will include forward looking statements. There are a number of factors that could cause intuit's results to differ materially from our expectations. You can learn more about these risks in the press release, we issued earlier. This afternoon, our Form 10-K for fiscal 2020, and our other SEC filings all of these.

Documents are available on the Investor Relations page of Intuit's website at Intuit Dotcom.

We assume no obligation to update any forward looking statements.

Some of the numbers in these remarks are presented on a non-GAAP basis, we've reconciled the comparable GAAP and non-GAAP numbers in today's press release.

Unless otherwise noticed noted all growth rates refer to the current period versus the comparable prior year period, and the business metrics and associated growth rates refer to worldwide business metrics.

Copy of our prepared remarks, and supplemental financial information will be available on our website. After this call ends and with that I'll turn the call over to Suzanne.

Thanks, Kim and thanks to all of you for joining us today.

Had a very strong fourth quarter capping off an outstanding year.

Full year revenue grew 25%, including the addition of credit Karma.

Total revenue growth was fueled by 16% growth for the small business and self employed group and 14% growth for the consumer group, while credit Karma had a very strong year delivering another record quarter in Q4.

I'm buying platform revenue, which includes Quickbooks online turbotax online and credit Karma grew 39% to $6.6 billion in fiscal year 2021. This includes 18 points from the addition of credit Karma.

I am proud of what the team has accomplished this year and our game plan to win remains durable let.

Let me now turn it over to tax this.

This year marks our fourth consecutive year of double digit revenue growth we.

We built a durable strategy and we've made outstanding progress this year with customer growth of 6% and our share of total returns up approximately one point.

We extended our lead in the do it yourself category by focusing on Underpenetrated segments, including Investor customers, where we tripled the growth rate from last year.

We continue to transform the $20 billion assisted segment with Turbotax live accelerating total customer growth by nearly 100%.

We have a highly predictable model and our platform with significant runway for growth as we accelerate innovation.

Recently, we announced plans not to renew our participation in the IRS free file program.

We expect no impact to revenue from this decision.

I wanted to make sure that you understand how this decision fits within our overall strategy free.

Free offerings are critical part of our strategy to serve and grow with customers over time offering benefits to power their prosperity.

Intuit has delivered nearly $100 million pre tax filings over the past eight years and with nearly nearly 90% of those free tax filing is coming outside of the IRS free file program.

Looking ahead with no IRS free file program constraints.

<unk> can enjoy all of the innovation, we have to offer on our turbotax credit Karma and men's platform.

Our AI driven expert platform strategy and five big bets are driving strong momentum and accelerating innovation across the company.

These big bets are focused on the largest problems our customers face and represent durable growth opportunities for intuit.

As a reminder, these big bets are revolutionize speed to benefit.

Connect people to experts.

Unlock smart money decisions.

Be the center of small business growth and disrupt the small business mid market.

Today I'll highlight the notable progress we've made this quarter on three of these big bets and will provide a detailed update on all five big bets at Investor Day next month.

Our second Big bet is to connect people to experts, we're solving one of the largest problems our customers face lack of confidence by connecting people to experts virtually with turbotax live and Quickbooks life.

With Turbotax live we're transforming the $20 billion assisted category by providing 86 million filers, who have previously relied on in person assistance the opportunity to access tax experts to help them do their taxes for complete their return digitally.

This expertise provides confidence for consumers and creates a halo effect for our entire turbotax experience.

The Turbotax life funnel was strong this season.

<unk> awareness grew over 20% and turbotax live customers new to Intuit grew more than 100%.

Our full service do it for me offering attracted new customers from the assisted segment at a rate nearly 25% higher than our turbotax live do it with me offering.

Our third big bet is to unlock smart money decisions with credit Commerce data platform and powerful network effects, we're making progress towards our goal of creating a personal financial assistant that helps consumers find the right financial products, but more money in their pockets and access financial expertise and advice.

To deliver on this goal of our strategic focus is to grow the core including credit cards, and personal loans expand growth verticals, including home loans auto loans and insurance.

And develop emerging verticals focused on digital money offerings, such as savings and checking accounts.

Karma also provides an additional monetization engine, increasing our combined wallet share with both free and paying customers.

Credit Karma achieved another record high revenue quarter in Q4 with the number of members, reaching a new all time high field, partly by the Turbotax integration and monthly active users and frequency of member visits remained strong.

Within the core credit card and personal loan revenue achieved another record high on a combined basis, reflecting an increase in transactions per member.

The growth verticals also achieved an all time revenue high again this quarter, reflecting strong momentum in auto insurance, followed by home loans and auto loans.

And we're developing the emerging verticals by emerging verticals by focusing on innovation with credit Karma money part of our digital money offering.

Just this past month or just this month, we announced the integration of Quickbooks online payroll to deliver a better checking experience. So a portion of our small business employees that help them manage all aspects of their financials all in one place.

These results are evidence that successful innovation drives credit Karma members to the platform, creating more opportunities to connect them with products that are right for them, resulting in more monetization opportunities for intuit.

The all time highs, we achieved are driven by focused innovation and both bolstering our proprietary AI powered light box technology and investing in growth verticals, such as home and auto as well as pent up demand from our partners.

Box enables credit Karma to present offers to members who have a higher likelihood of approval.

Partners usage of Lightbox in Q4 is at an all time high with over 50% of credit card and over 40% of personal loan transactions flowing through versus less than 40% and 20% a year ago.

This is the power of a network effect solving a two sided problem, we expect pent up demand across our core verticals to taper this coming year. After a very strong year of investments by our partners returning to pre Covid investment levels.

I am very pleased with our progress and excited about the upcoming innovations.

I'll end by circling back to our first big bet, which is our foundational bet to revolutionize speed to benefit for our customers.

Our goal is to put more money in our customers' pockets eliminate friction and deliver confidence at every touch point by using AI and customer insights.

This year, we accelerated our use of AI, increasing the number of models deployed across our platform by nearly 50% saving our customers millions of hours of work.

Our application of AI has dramatically increased the number of experiments, we ran by more than 35% this year.

It easier for our turbotax customers to never enter data saving them millions of hours of manual entry and modernize our payroll offering tripling released velocity.

We are very pleased with our results and remain confident in our game plan to win accelerated by digital tailwind.

Across all of our big bets, we're building momentum and accelerating innovation, which we believe positions us well for durable growth in the future.

We will continue to invest aggressively including in key talent to drive even faster innovation going forward now, let me hand, it over to Michelle.

Thanks for the time good afternoon, everyone for the fourth quarter of fiscal 2021, we delivered revenue of $2.6 billion.

Operating income of $402 million versus $483 million last year, non-GAAP operating income of $715 million versus $616 million last year.

GAAP diluted earnings per share of $1.37 versus $1.68 cents, a year ago and non-GAAP diluted earnings per share of $1.97 versus a dollar and 81 since last year.

Turning to the business segments, and the small business and self employed group revenue grew 19% during the quarter and 16% in fiscal 2021.

Online ecosystem revenue grew 30% in the fourth quarter and 26% for the year.

With the aim of being the source of truth for small businesses, our strategic focus within small business and self employed is threefold grow the core connect the ecosystem and expand globally.

First we continue to focus on growing the core Quickbooks online accounting revenue grew 28% in fiscal Q4, driven mainly by customer growth mix shift and higher effective prices.

Second we continue to focus on connecting the ecosystem.

Online services revenue, which include payments payroll time tracking and capital grew 35% in fiscal Q4.

Within payments revenue growth reflects ongoing customer growth along with an increase in charge volume per customer.

Within payroll, we continued to see revenue tailwind during the quarter from growth in payroll customers and a mix shift to our full service offering.

During the quarter, we continued migrating customers to our new full service lineup, which added approximately five point the online services growth.

We're also seeing the number of employees per customer back to pre pandemic levels.

Third our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q4.

Total international online revenue grew 47% on a constant currency basis.

We believe the best measure of the health and success of our strategy is online ecosystem revenue growth, which we expect to grow better than 30% over time. This is driven by 10% to 20% expected growth in both customers and <unk> P C.

Desktop ecosystem revenue grew 5% in the fourth quarter and 4% for the full year.

Quickbooks desktop enterprise revenue grew mid single digits in fiscal 2021.

Consumer group revenue grew 14% in fiscal 2021 above the high end of our longer term expectation of 8% to 12%.

Fiscal 2021 it was the fourth consecutive year of double digit revenue growth for the consumer group.

Turbotax units grew 6% this season.

There are four primary drivers in our consumer business.

Note that these metrics exclude approximately 8 million stimulus filing plus season.

This data reflects the season through July 31, 2021 versus the prior season and through July 31.2020.

The first is the total number of returns filed with the IRS, which we estimate will be up approximately 3% this season higher than our prior estimate of up approximately 1%.

The second is the percentage of those returns filed using do it yourself software.

We estimate the DIY category share of total IRS returns was down slightly this season versus our prior estimate of approximately flat.

The third driver is our share.

Our share of total tax returns expanded approximately one point to 31% this season and our share of the DIY category grew approximately one point.

Our total share excluding free file customers. This season was approximately 29%.

The fourth is the average revenue per return, which increased again this season.

Growth reflects a stronger contribution by turbotax live and mix shifts to our premier offering which is used by investors.

We estimate our retention rate rose slightly year over year, excluding filers seeking stimulus payments last season that didn't return again this season and we're pleased with these results.

Including these filers, we estimate total retention was down approximately two points.

Turning to the pro connect group, we reported $517 million of revenue in fiscal 2021 up 5%.

Moving on to credit Karma revenue was $405 million in Q4, another all time high reflecting record highs for both the core and growth protocols.

Sequential growth predominantly reflects strength in credit cards and personal loans at transactions per member increase.

At the San shared earlier, we expect pent up demand across the core vertical to taper sometime in fiscal 2022.

After a strong year of investment by our partners.

We remain excited about the opportunities ahead for this platform.

Turning to our financial principles, we remain committed to growing organic revenue double digits and growing operating income dollars faster than revenue.

As I've shared before as we lean into our platform strategy, we see the opportunity for margin expansion over time.

We take a disciplined approach to capital management investing the cash we generate in opportunities that yield an expected return on investment greater than 15%.

We continued to reallocate resources to top priorities with an emphasis on becoming an AI driven expert platform.

Principles remain our long term commitment.

Our first priority for the cash we generate is investing in the business to drive customer and revenue growth, we consider acquisitions to accelerate our growth and fill out our product roadmap.

We return excess cash that we can't invest profitably in the business to shareholders via both share repurchases and dividends.

We finished the quarter with approximately $3.9 billion in cash and investments on our balance sheet.

We repurchased $467 million of stock during the fourth quarter and $1 billion during fiscal 2021.

The board approved a new $2 billion repurchase authorization, giving us a total authorization of approximately $3.3 billion to repurchase shares.

Pending on market conditions and other factors our aim is to be in the market each quarter.

The board approved a quarterly dividend of 68 cents per share payable October 18th 2021. This represents a 15% increase versus last year.

Moving onto guidance, our full year fiscal 'twenty 'twenty two guidance includes revenue of $11.05 billion to $11.2 billion growth of 15% to 16%, including a full year of credit Karma.

GAAP earnings per share of $7.46 to.

To $7.66 and non-GAAP earnings per share of $11.05 to $11.25.

We expect the GAAP tax rate of 20% in fiscal 2022.

Note that our revenue guidance for credit Karma of $1.345 billion to $1 three $8 billion translates into 18% to 21% growth. If we had a full year of credit Karma revenue during fiscal 2021.

I'd like to provide some additional context around our operating margin expectations.

As I've shared before we continue to see opportunities to leverage the platform and drive margin expansion over time.

However, our guidance implied GAAP operating margin declined just over two points in fiscal 2022 versus fiscal 2021.

This reflects the impact of the credit Karma acquisition, along with investments were making in stock compensation to attract and retain talent.

We are confident these are the right decisions to drive long term growth.

On a non-GAAP basis, our guidance implies operating margin in fiscal 2020 to expand approximately 60 basis points.

As I shared last quarter of fiscal 2021 was a very unique year as we took a conservative approach to investment during the first half of the year. When we were deep in the pandemic and then the business started to bounce back more quickly than we anticipated in the second half.

Our fiscal 2022, non-GAAP operating margin implies an average appoint of expansion each year since fiscal 2019, even though our initial guidance. After closing the credit Karma acquisition included a negative two points non-GAAP operating margin impact.

We continue to see margin expansion opportunities ahead.

Our Q1 fiscal 'twenty 'twenty two guidance includes revenue growth of 36% to 38%.

GAAP earnings per share of <unk> 14 to 19.

And non-GAAP earnings per share of 94 to 99 cents.

You can find our full Q1 and fiscal 'twenty 'twenty two guidance detailed in our press release and on our fact sheet.

And with that I'll turn it back over to Suzanne.

Super Thank you Michele I'm proud of the team and always accomplished together and I'm optimistic about the future. We have a large addressable market with digital tailwind that include a shift to virtual solutions acceleration to online and omni channel capabilities and digital money offerings.

With our strategy of becoming an AI driven expert platform and five big bets, we are positioned well for accelerated innovation and growth.

Let's now open it up to your questions.

Thank you, ladies and gentlemen, if you would like to ask a question. Please press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key.

Our first question comes from the line of Kirk <unk> of Evercore ISI. Your line is open.

Oh, yeah. Thanks, Thanks, very much and congrats on a great fiscal year. She found in the press release, you guys called out sort of online payments and payroll is two really important growth factors for small business. I was wondering if you could just unpack those a little bit more what are you seeing there and how sustainable do you think those trends are around those two.

Parts of the offer thanks.

Yeah. Thank you Kirk and good to hear from you you know I'll just take us back to several years ago. When we talked about the importance of having a platform that really allows our customers to not only grow their business, but do you have to be able to manage their money and ensure that they are compliant and you know we've been heavily investing.

In payments, making it very easy for our customers to discover making sure that we provide them with choice.

Accelerating our innovation in areas like instant deposit getting paid upfront those sorts of things and you know that along with our investments in payroll.

<unk> areas, where we're really focused on making the experience you know far better innovating in things like same day payroll or next day payroll the shift of full service, where we are experts to help run your payroll and help you with your taxes. Those are just of course, two very big and important an illustrative examples where those.

Innovations are really.

Continuing to accelerate and beginning to pay off especially in a time, where we have digital tailwind where you have customers that are looking to move online do more of their stuff online if they're already online and that is starting to pan out when you look at our overall services revenue, whether it's payroll payments time tracking all of those.

Areas are contributing and I think to your question. Yes. This is sustainable we are continuing to become that platform that customers look to to be able to run their business. Our innovations are starting to pay off and we're not standing still our innovations are in fact accelerating and we would you know.

<unk> to expect that we'll be there for our customers and and grow with them and I think last thing I would say, especially with our move into the mid market, where we're starting to serve larger customers. Those are larger transactions and as we continue to penetrate non consumption in the mid market. We would continue to see that pay off.

That's great and maybe just one follow up for Michelle just a credit Karma guide I realize you guys called out. The fact that there is a bit of pent up demand on the back half. This year your fiscal year, how should we think about that in terms of just the cadence of the growth over the course of the year, obviously, it's a little bit lumpy given the yeah. We don't have full sort of year over year comps you have.

Kind of curious how you how we should maybe think about either first half second half or any color around that would be helpful. Thanks.

Hey, Curt Thanks for your question yes.

We're pretty excited about credit Karma and as we continue to look for where in Q4 was just yet another all time high for revenue and so we felt really good about that as we see strength in both credit cards and personal loans.

Transactions per member increasing them, yes, you're right as you heard yeah, sometimes we didn't see you know some of the pent up demand, we expect that will taper in fiscal 'twenty 'twenty. Two we had a pretty strong year of investment by our partners and so we do expect that to return to more pre COVID-19 investment level.

So as to how you might think about that across the year, yeah, there's not a whole lot of seasonality within CK mm. So, but we you know obviously, we haven't guided the individual quarters, except for Q1, but we are pretty excited about what we see and we think there's still a lot of opportunity for credit Karma next year.

Super Thanks very much.

Thank you.

Thank you. Our next question comes from Ken Wong of Guggenheim Securities. Please go ahead.

Great. Thank you for taking my question and I Echo the sentiments on a strong year.

First maybe just touching on payroll I think Michelle you mentioned five points of growth contribution on the online services side, but should we think of this as a tough comp or would you say that we're still very early in driving adoption of full service and we could potentially see this be additive longer term.

Oh, I'm, sorry, I wasn't sure if that was for me.

Yes.

No idea.

To answer that question.

You know what I I'd be I'd be happy to the diamond and that Michelle Please.

Don't hesitate to jump in as well you know first of all I would just take you back to our longer term expectations is to deliver 30% online revenue growth and theres always going to be.

Puts and takes relative though payments and payroll and accounting revenue so.

Please let your sort of Uber compass B, 30% online revenue growth with that said you know as I mentioned earlier as I was answering <unk> question. We are seeing the impact of our innovations you know pay off and more and more of our customers are migrating to full service payroll more of our customers are actually wanting to get started on full service payroll.

Because of the capabilities that it has and it comes with expertise to help them solve the very problem that frankly is the biggest problem that.

That is onset and that is about confidence. So we have runway ahead of us can when it comes to payroll and I would just say you accomplished should be 30% online revenue growth.

Got it Fantastic and then and then just a quick follow up on the tax side.

Yeah at a high level any any.

Possibly share with some of the components of that 10% to 11% consumer growth is going to be coming from next year.

Yeah, Yeah, it can and will of course unpack. This a more detailed level at our upcoming Investor Day I would just tell you that I am delighted with our continued strategic progress.

And that will really fit into our future growth, which I think is the element of your question. What do you mean, when you think about our performance I know I'm repeating some of the stats, but I think they're worth repeating.

One we increased our total share of IRS returns by one point.

The two areas that really matter most that we're focused on underpenetrated segments and transforming the assisted segments. We saw really superb results, our overall investor volume tripled year over year Turbo.

Turbotax live awareness increased 20% our total customers grew a 100%.

Our new customers to the franchise to Turbotax live grew over 100%.

And with our full service offering it actually attracted new customers from the prior year assisted segment at 25% higher rates then.

Turbotax live do it with me and our retention rate stayed flat to a little bit up overall, so when you look at all the key sort of metrics a dock.

Knock on wood, it's very very healthy and we expect that to inform next year's growth and we do assume by the way that IRS returns is going to be about flattish next year. So that's probably one important assumption that's worthwhile sharing but this is just a continuation as you probably heard me say multiple times, where on a 10 year plus run.

In these in these opportunity areas. We're focused on in next year I was just going to be another sort of important pivotal year in our quest to transform assisted and penetrated the underpenetrated segment.

Great Fantastic work guys.

Alright, Thank you Ken.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your question. Please.

Excellent. Thank you guys for taking the question and Echo the congratulations a really strong end to what was a pretty remarkable fiscal year for all the team at Intuit I wanted to dig into the FY 'twenty to guide a little bit, particularly around small business.

So you've been talking about sort of a return to 30% plus growth in the online ecosystem side of equation, but if I'm doing my math right and that's probably a big part of your question here, if I could actually do math, but.

If I'm doing my math, right and we're growing online and 30% plus that would imply with your guide that desktop is actually now shrinking and down 10% in FY 'twenty, two or 10% plus is something changing in desktop or am I, just doing my math wrong or sort of how should we think about that balance between sort of what had been a very durable sort of revs.

Stream in desktop and a ramping online business.

Hey, Keith Thanks for your question well first of all I would say you know we've been really excited about how small business has performed this year and you know obviously you can see with next year with our guide of 12% to 14% we feel that it will be strong next year also.

So we feel that you know you really need to continue to look at online ecosystem revenue growth and we do expect that to be 30% or better over time.

We haven't guided to it and you don't do it quarterly, but we do expect it to be there over the longer term is being driven by you know the 10% to 20% growth on those customers and they are P. C. Now when I go to the other side, which you were asking about around desktop.

You know desktop we have overtime. We you know the last few years, we've seen some we've seen some growth in it and obviously you know this past year in 2021, we saw 4% growth.

But we do anticipate that that will just continue to decline over time, we've got more and more customers as they come in they choose the online versions and so you've got eight nine out of 10 customers that come in and choose <unk>. So that's where I would help you with your math on that.

Got it and then just to be clear is there any kind of structural change in terms of trying to more aggressively shift people from the desktop version to the online version or is this just sort of normal course business and this is the trend line that you've been seeing overtime.

Yeah, we have.

Jos I'm not to force people to move onto online.

Do think that there is a much better value proposition and they just have much better experience, if they're using our online product, but we want them to use whatever works for them, but we have seen more and more people as they choose desktop of achieving the plus product where they have a subscription that.

That is part of what we what we've been saying.

Got it excellent. Thank you so much guys.

Thank you Keith.

Thank you. Our next question comes from Alex <unk> of Wolfe Research. Your line is open.

Hey, guys. Thanks for taking the question I Echo again, all the congratulations.

I wanted to start with just digging a little bit on credit Karma since the growth is so much better than I think we've been modeling in anybody's related I'm thinking I wanted maybe unpack both in the quarter and also in the guidance. What are you starting to see synergies that you're realizing whether it's monetizing your the intuit free user base.

With credit Karma or whether its cross selling to the cargo base and then I have a quick follow on on the margins.

Sure Alex Great Great to hear from me and thank you for your kind.

Trying to comment on credit Karma, Let me just I'll briefly start at the top in terms of what we are seeing first of all the.

The accelerated innovation that we are seeing with credit Karma is really paying off and that accelerated innovation is how we're using our combined data to be able to deliver personalized experiences leveraging our life box for our customers.

And then in <unk>.

During that we're providing relevant offers to customers in the areas that they need us most and now we can provide you know multiple relevant offers whether it's card personal loans and auto insurance.

Home loans and beyond but I think then more importantly, then when they the offers in front of them, we have the ability to actually help them with the the potential of their approval and make it very easy when they click to actually get the offer and so those those are all critical areas of innovation that are really paying off and I think it's a testament to the platform.

<unk>.

That when our partners decided to really go after customer acquisition that.

They invested.

Good chunk of their dollars on the platform and it just demonstrates the network effect and the power of the data and the trust of the members that we have so that's the first element that we believe will continue.

Given our accelerated innovation because our ultimately our penetration rate may be one of the highest in credit cards, but it's one of the lowest when you look at auto insurance and we have so much room for increased our wallet share in terms of synergies, Alex we're actually quite bullish about the possibility.

Into the future and I would want you to think about those synergies into the future and there are really several areas of synergy one is.

Really making credit karma benefits part of the entire <unk>.

Turbotax experience, that's one big opportunity the other big opportunity is making it seamless and contextual in terms of turbotax as part of the credit Karma experience to be able to do your taxes and then third what we just announced which is credit karma being part of the payroll experience, where our payroll customers can I.

Deposit their monies into a free checking and savings account and be able to access their money early overtime. If they wish so those are significant opportunities because there you're talking about.

Millions and millions of turbotax customers payroll customers and of course.

Over well over 100 million credit Karma customers that we're going to launch turbotax to this past year.

I'll remind us it feels like a long time, but we just closed credit Karma in December these past eight months, we have been experimenting.

With incredible purpose incredible speed and incredible intention and it's informed what we are rolling out and what we're doing in the year to come I would just say in terms of those things turning into sort of material customer and revenue growth. There we're not counting on that in the near term we're counting on that more on the midterm because we want.

I really continue to nail the experience in creating ecosystem benefit across all of our members. So that's the way I would want you to think about not only what youre seeing in credit karma, but the growth rates that are ahead of us.

That's super clear and I appreciate the level of detail in that answer.

Michel maybe for you I know myself I was dealing with a lot of questions around margin leverage potential on the guide in versus the level of investment that you guys clearly see as an opportunity in the business, but I think you've delivered.

I think it was your best incremental operating margin leverage guide in the last few years at least so I want to unpack, both what you're trying to tell us with the ability to deliver both growth and margin leverage at this scale.

Package, if you can from a gross margin versus Opex savings perspective, right I know I remember a few years ago. There was fear with lives, particularly coming into the model that it would be gross margin dilutive and yet the gross margins have actually improved this year. So I wanted to understand a little bit about when you think about that incremental margin leverage whereas.

Is that coming from and how should we think about the durability of that opportunity.

Right Great question. Thank you.

First of all thank you for acknowledging that the margin delivery. We have this year and I'll. Let you mentioned gross margin and you know we have continued to say that we expect gross margin to remain fairly flat over time.

Right. We did have a lot of questions as we got into the Turbotax live business as to whether that was going to deteriorate margins, but it has remained flat.

Flattish over time, I mean that was the last expectation we gave that I gave last year at Investor Day, and you know a big focus is obviously then on op margin and we see the opportunity there and continue to see opportunities.

To drive margin leverage really as we become more and more of a platform company FY 'twenty, one was a little a little unique and that with the pandemic in full swing at the beginning.

We weren't exactly sure how you know exactly how things are going to play out and we were a little bit more conservative with investments and then the business ended up bouncing back much more quickly than we thought.

So as I mentioned earlier, you know when you look over all the way back from 2019, we've got about on average a point of margin expansion and so we feel really good about that and especially with our guide looking forward 60 basis point, so when I think about where.

See the expansion now it is really all across the business is helping us drive it getting leverage whether it's in technology and looking at how we can.

Get rid of duplicate technology in your services more whether it's in customer success and really leaning into our platform there to deliver for all our customers or opportunities. We have in our go to market and enabling additional technology. There. So we do think that we continue to have opportunities.

To drive that leverage.

Perfect. Thank you guys great job. Thank.

Thank you Alex.

Thank you. Our next question comes from Brent Thill of Jefferies. Your line is open.

Sits on if you could expand on the small business side and what Youre seeing on the international approach and the traction.

On the U S and how critical that is to this next year for you.

And maybe just a quick follow up for Michelle on on Quickbooks.

Life, if you could give us an update in terms of traction in any any.

Any trend lines, you're seeing there. Thank you.

Great Hey, Brent just a follow up question to the last question that you asked about trend lines were those just a general trend lines that we're seeing in small business I want to make sure. We captured your question correctly more specific more specifically to quickbooks online.

I'm sorry on Quickbooks live my my my.

Apologies Quickbooks live.

Got it okay, great. So let me start with.

Your question around the international you know first of all.

As I mentioned in the last earnings call and I think the same trend continues yes.

One thing that's unchanged as small businesses across the globe are still recovering some have recovered two back to pre COVID-19 levels. Some have actually accelerated their business because they changed their model, but at least what we see in our sort of data 20% of ish of small businesses.

<unk> are still struggling and struggling as defined by they have you know their net deposits are down over 25%.

I think it's important just as a general perspective to recognize that small businesses are in general still in recovery mode with that said our platform has become more critical than ever and.

The digital nature of our platform to be able to run your business grow your business manager your cash flow and be compliant is more important than ever which is why based on our innovation. Overall, we're seeing this acceleration and then if I put that in context of geography, I would say U S.

You know really a bounce.

Bounce back in terms of the usage of our platform and in fact, an acceleration probably above all it's happened in the U S. I would say you know Canada is sort of next in terms of the recovery and I would just put you know countries like the UK, France, Australia as really being <unk>.

Much slower in the recovery and really the reason is.

As you've seen there's a lot of open shutdown open shut down.

And that's really impacted just the sentiment of both accountants and small businesses, but even in that context, it's actually quite exciting that we delivered 47%.

Revenue growth in constant currency last quarter, and 43% for the whole year.

But with that said you know, we're just we're assuming a much slower recovery international.

Then we are in the in the U S.

Because I think it's just really important that we get out of this health crisis and then once we do we believe the small businesses will allow will bounce back much much faster.

Outside the U S International is still important for our future.

But what I just shared is just how we've taken that into account strategically and both.

Economically in our guidance as we look ahead.

And maybe with that I'll turn it over to Michelle to answer your Quickbooks live question.

Great Hey, Brian I'd say, you know, we're continuing to make some progress with Quickbooks live and it actually goes back to what I mentioned earlier on the opportunities for our platform leverage because it's actually built on the same platform. That's turbotax live and that's what enabled us to bring it to market. So much more quickly right now we're still focused.

On achieving product market fit I'm seeing some early signs here as a way to bring in customers, who are new to intuit. So help us with customer acquisition and we do think that there's a great opportunity for us to use the life product to help penetrate non consumption, which as you know is a huge.

Opportunity.

The pandemic over this last year has really been an opportunity as we've seen the acceleration to a virtual world and so obviously customers are you know much more anxious to are much more open to using these types of experiences and so our platform really enables that.

It it does solve one of the biggest problems we have with small business customers, which are confident you'll also see that on the turbotax side too.

I expert interest has continued to remain really strong and so that's been a good thing for us to see.

A few customer pinpoints. We're currently working on is on solving them streamlining and automating document collection, and then enabling messaging within the offering so customers can more easily communicate with their bookkeeper and then last thing I'd say is you know last year, we launched the setup SKU. So that we could really help small business.

It is come in and get set up on Quickbooks and have that confidence right from the get go and we've seen some good success with that.

Thank you.

Thank you Brett.

Next question comes from Kash Rangan of Goldman Sachs. Your line is open.

Hi, Thank you very much congratulations for an exciting finish to the fiscal year. So kind of wanted to get your thoughts on the small business ecosystem as you look at the business a few years out.

And it looks like clearly the company is having increasing success with the payroll and payments, but I'm curious with the outages with the small businesses perpetually understand on my T, but that could be changing with.

Digital transformation, so as you move slightly up market and small business and land bigger deals with quickbooks events.

One of the things that you're learning about that part of the market the huge intuit, particularly given that we've got a wide range of assets.

Carbon et cetera, So how do you bring those assets to bear in a way that you can get a big chunk of the it spending that is good.

Could it potentially be unleashed in the higher end as you move upmarket into small business ecosystem. Thank you so much.

Yeah, Great Great question and great to hear from you I'll take you back to the fact that we have declared which is we truly want to be the center of small business growth and for US it's really about.

Helping customers grow their business, it's helping our customers manage all of their money flow and it's also ensuring that they can take good care of their employees and be compliant and I think particularly there are two areas to answer. Your question you know as we move up market, but its also relevant one of them is very relevant to just.

Smaller businesses that were continue.

Continuing to focus on and that is one how do we help you grow your business.

Both are relevant to the businesses that we serve today, but also very relevant to the mid market customers and so to be able to manage your your marketing. Your sales. Your services is one element the other element, which is particularly important for mid market customers. It's just all their G&A.

And we believe that the the life platform that we've created the engine that we've created will actually help us go beyond a bookkeeping taxes in accounting to be able to focus on some of their how they run their business and particularly with a lot of G&A. So those are the two areas.

Wonderful. Thank you so much and congrats alright.

Alright, thank you.

Our next question comes from City Pentagon Mizuho Your line is open.

Thanks for taking my question and I won't say call my congratulations for great into this challenging year. So sudden I wanted to ask you about you know follow up on two of Turbotax, mainly turbotax life full service. This is the first to your you guys learn so I'm wondering like what have you learned this year.

And hopefully next Susan maybe it will go back to normal, let's say like so what's your expectation baked into your guidance in terms of adoption of food service.

Yes, hi sit in and thank you for your kind words.

I would I would just start with a really this has been a very intentional multiyear effort to have one platform across turbotax, where you can do your taxes yourself.

You can get assistance to do your taxes or will do your taxes for you and a platform where you can choose to go back and forth within the year or in a multi year period, we want to be the platform for your taxes and of course, obviously beyond that with the capabilities that we have with credit Karma second.

Element I would say is what we learned this year going to full launch is that full service offering has a halo effect and build confidence offer customers, which is why we were able to attract.

New customers from prior assisted method at a 25% higher rates into full service because they know that they can digitally.

Provide us all of their.

Data and we have excellent experts to be able to take very good care of them. So that's the biggest learning that we had it was a hypothesis that we have from prior year experimentation and we're going to continue to.

Scale that as we look at is just a very critical part of our platform and as I've said before we believe that we're in the very very early innings of a 10 year plus opportunity here and we just see full service playing a very important role as we look ahead.

That's great. Thank you. So so yeah. Thank you.

Our next question comes from Scott Schneeberger of Oppenheimer. Your line is open.

Thanks, very much congratulations from me too.

Two tax questions. The first one if you could I guess he was.

This opportunity to describe a little bit more the decision process to exit free file Alliance and then I think you were Michelle mentioned should not have a revenue impact I'm just curious any thoughts on margin impact for the for the go forward. Thank you.

Yes sure. Thank you Scott good to hear from you.

First of all just as a reminder, you know we were one of the founding members of the free file Alliance program with the IRS and.

It has been frankly, an incredible partnership with the IRS and the private industry and when we when we really founded this program with the IRS Theres really two goals and I'll simplify it the really the two goals, where we wanted at that time to ensure that electronics.

Filling was used by more than 80 plus percent of all consumers and we wanted to make sure that free filing was available to 80% plus of consumers.

And when you forward the clock mission accomplished on both in fact, we've exceeded both metrics as an industry on both fronts.

And you know free has now become prevailing across the entire industry and so we felt that the time was right now that the mission has been accomplished to really.

Sort of change our approach to how we can deliver benefits for customers free will always be an important part of our strategy, but there are constraints when you come in through the free file Alliance program and those constraints are for instance, we can't provide you benefits on other platforms like our free credit Karma platform and so as we look ahead, not only where we'd be able to provide you know free tax.

Offerings to our customers, but as they grow we grow with them. They can benefit from credit Karma that can benefit from mint. If there are small business. They can benefit from quickbooks things that we ultimately couldn't talk to them about if they were part of the free file Alliance program. So mission accomplished and that's the reason for why we chose to get out and I just want to state again the partner.

The IRS has absolutely been phenomenal and with private industry to achieve the goals of FFA.

Thanks, and then just any any.

Any thoughts on margin or on the go Oh sure.

Yeah, My apologies I failed to answer that knowing that the margins no impact to revenue and some of the.

The resources actually where that where all FFA, where I'll reallocating them to you know really important work in turbotax. So there's no impact.

Understood and just a real quick follow up from an earlier question you mentioned, a flattish IRS industry growth anticipated for next year is that because you know what.

We saw what looks like 3% this year and just the tough comp or any any other factors that go into that.

Interesting.

Yeah, you know Scott I'll, just start with it it's an assumption we make an assumption every year as to what we think it will be because it's important for our planning and because there's been two years of pretty strong total return growth. We're just assuming next year is going to be flat would it be wrong it could grow but our assumption going in is that it's flat.

Thanks very much appreciate it.

Absolutely Scott.

Thank you. Our next question comes from Michael <unk> of Wells Fargo. Your line is open.

Thanks, Good afternoon, and congrats on the strong results of the year.

Going back to credit Karma.

Wondering if there's anything you can add around how much visibility you have there been framing targets for the upcoming year relative to other segments of your business I think the commentary is clear on the Q4 strength, but just wondering how to parse between 18% to 21% growth you referenced which is a solid starting point and in a guy that's modestly down relative to the run rate that sandwiches.

Liberty.

Yes, sure Michael and thank you for I know you've been waiting for a while in the in the queue here.

We have you know we have very good visibility around I'll just be specific we have well over one.

100 million customers, we see the monthly active users, which is growing quite nicely.

We actually based on the data that we have and how.

How we are leveraging that data with our customers' permission as part of life box in a number of partners that come into life box, we actually can see spend behavior as we can see our customers activity. We can see their financial situations are.

Do you need to be better positioned to be able to offer them products that are right for them. So when we see our member growth when we see our member activity.

Number of transactions, which is the number of offerings that we now have the activity of our partners, which we're very engaged with our partners see this platform as a great growth opportunity for them and the fact that we continue to be very intentional that we are an agnostic platform. We have pretty good visibility into you know into the future with our with credit Karma.

And we feel of course, you know good and confident about the guidance that we provided.

That's helpful. Thanks.

Okay.

Yeah. Thank you Michael.

Thank you. Our next question comes from Brad Reback of Stifel. Your line is open.

Thanks, very much Susana I believe earlier in the call you talked about retention rates in turbotax being flat year over year, what types of things have to happen to see that pick up.

Yeah. Thank you Brad good to hear from you.

First of all with with all of the sort of movement in the last couple of years with the pandemic and the growth that we've experienced.

One we're actually quite pleased with the retention rates and I would tell you. The biggest lever around retention is what we are doing with turbotax live which is ensuring that our customers know and understand that theres an expert to help them.

Every step of the way, but I think secondly, we haven't talked much about this and we'll spend a little bit of time on this at Investor day is how.

How we are now leveraging our data to never lose a customer and I give a lot of credit to our.

Our turbotax team, where we've been working on this for several years, it's not a new body of work, but the shift from just a engaging you once a year when it's tax time to actually understanding and leveraging what we know about you if something has changed in your life. If you bought a house. If you bought a car. If you got married if you've got divorced.

If you move from one state to another that's actually engage you sort of year round relevance to giving you confidence that those changes can be addressed by us. So it's the combination of levering leveraging data apply AI to that data with our models to understand who could be at risk and then engaging those customers proactively.

And by the way depending on their needs not just what turbotax that could also be engaging them with the benefits of credit Karma. Those are the two big things data and AI and the capabilities of Turbotax live engaging customers year round, where we are quite confident over the long term, we can continue to increase our retention rates.

And then just one quick follow up high level any sense of why DIY went backwards this year.

You know Brad the numbers are still wonky, what's happened the last couple of years and as so many people that don't have to file their taxes came in to.

So do their taxes to get a stimulus checks and so what really matters are some of the underlying under lying.

Numbers that we provided and the fact that we gained share overall IRS returns and within DIY.

Even though DIY went down but it's just a walk in the number of stimulus customers that came in that ultimately did not to file their taxes again this year. So.

That's that's the reasoning is we look at all the cohorts.

Great that makes total sense, thanks very much.

Hi, Brad Thank you.

Yes.

Our next question comes from Sterling Auty of Jpmorgan. Your line is open.

Great. Thanks for taking our questions. This is Jackson ader on for Sterling Tonight.

The first one is on the the credit Karma.

Where you're expecting maybe to see some of the pent up demand return to more normal levels. We're just curious whether that is more driven on the in the core markets or some of the emerging market.

Yeah. Thank you Jackson you know its primarily you know origination and credit cards and personal loans. One one data point is public. The other one is in our own data that we see there are up double digits strongly compared to pre COVID-19 levels and we believe those are just going to you know at some point paper.

You know in the back half of the year and that and it's primarily from what we see in credit cards and personal loans and it is really our innovation on the platform that will continue the the the guidance growth that we provided of 18% to 21%, but it's really in credit cards and personal loans that we believe originations will go back to pre COVID-19 levels with square song.

There was pent up demand so it grew double digits.

Perfect and then a follow up Michelle.

The Turbotax Premier SKU, I think being better than maybe you had expected entering the year can you just remind us what goes what does premier was retention rate look like relative to maybe the overall turbotax platform.

Hey, Jackson. Thanks for the question they are premier as you know.

We've done a good amount of work with on somebody over the last couple of years and specifically used by our investors and so obviously, we've continued to see growth. That's one of the underpenetrated segments that we've focused on and we have not provided any detailed information on our retention rate.

Below are the higher level for turbotax. So that's just not an area that we really don't intend to just because of the competitive nature.

Alright fair enough. Thank you.

Thank you Jackson.

Thank you. Our next question comes from Brad Sills of Bank of America Securities. Your line is open.

Great. Thanks, guys and I'll Echo the congratulations on a real nice finish to the year.

One of the things that stands out to me is the outlook for small business very very strong relative to kind of how you provide outlook heading into the year. Historically. So my question is is there a price increase in there and just more generally if you think longer term historically the company has raised price commensurate with more value that's delivered in the product for quick.

Books, how do you feel about your ability to just.

Monetize more and more of the market with just more and more value added features coming over the long term what are some of those things that you think might enable you to take price over time. Thank you so much.

Yeah. Thank you Brad for your question and your kind words, let me make a couple of comments one the.

<unk> really are the majority of our growth is coming from customer growth.

And mix and when I say mix, it's milk for instance, Quickbooks advanced which goes after the mid market.

Type mix, it's a it's really not driven by price, although we have increased price this year and it's the first time we've done it.

Over the last couple of years.

And I would tell you that if we run tests and it's exactly as you said, if we look at our price value equation, we have very clear pricing principles and with experimentation and data we choose when to.

To move forward with a price increase and I would tell you that our innovation just in the last couple of years literally last year, our innovation across the company, which include small business doubled year over year in terms of when we measure that by code deployment that impact and it's doubled again this year.

And and and that shows up in how we leverage data and AI across the platform to deliver insights to customers. It shows up in payments and payroll and time tracking and then what we've announced which is moving up market several years ago with Quickbooks advanced it's being able to serve product based businesses.

Quickbooks Commerce, it's being able to go after non consumption with Quickbooks live which is a higher sort of price tag for customers.

And then our disruptive offering with Quickbooks cash, which is in essence, you can start with a business bank account and be able to run your business through that so just the innovation is is I would just say staggering focused on cohorts of customers and going after their needs then and with an open platform, we're able to really.

<unk>.

Focus on what matters more to customers and monetize so we believe that capability is one that we'll have for years to come.

That's great. Thanks, so much the sun.

Sure. Thank you Brad.

Thank you our next question comes from.

Matt Pfau of William Blair. Your line is open.

Yeah.

Hey, guys. Thanks for fitting me in just wanted to ask one question on the small business segment and.

Specifically around some of the key metrics there like a gross customer additions.

Charge volumes employees and under payroll have you seen any change in in some of those key metrics you track as Covid variance have started to impact various parts of the U S. Thanks.

Yeah, Matt. Thank you for your question. The short answer is no we're continuing to see strength.

By industry by geography, given some of the tailwind at our innovation that I spoke about earlier, so what the Delta area being the primary driver of the Covid cases, and you know what we're seeing in different states within the U S. Having different impacts we've really not seen an impact.

Our results in charge of all your number of employees. So the strength remains.

Perfect. Thanks, guys.

Thank you.

Yeah.

Thank you. Our next question comes from Michael Millman Millman Research Your line is open.

Thank you so a cut.

Couple of questions.

On this year's and next year's guidance because it's this year's guidance.

That's the lowest number related to your conservatism on last years guidance and what should we expect over two years to three year range and secondly on.

Passengers per car as current years tax.

To what extent did you have a.

Assisted benefit from people.

Misunderstanding are concerned about the stimulus and wanting to sit down.

And it was a one year phenomenon.

And we go back to reduced assisted.

Increasing it yourself. Thank you.

Yes.

Yeah. Thank you Michael for your question you know a couple of things I'll I'll start with your first question. We're very excited about the innovation across the company.

The customer segments were pursuing and the impact of that that we are seeing.

And in that context, we feel very good about our guidance and long term expectations and once it gets to the second question and that is the long term you know what we'll do at Investor day as we do every year is we'll share our long term.

Expectation as well.

We'll talk about that at Investor day. So if you wouldn't mind, maybe waiting another three weeks, we'll talk about that a little bit more and the third part of your question around tax and assisted and you know we have a blip from the pandemic I would say the short answer is really no.

This year a lot of our a lot of accountants and stores were actually open I think what you're seeing here is just.

It's the impact from our innovation, it's the raising the awareness that we have life expertise available for customers, whether we do it with you or do it for you.

And then in that context. This was not a blip because of the pandemic. If anything most places are actually open and this was just based on our strategy and the result of our execution.

Thank you.

You're very welcome.

Ladies and gentlemen, I'm not showing any further questions would you like to close with any additional remarks.

Yes. Thank you well thank you very much for the wonderful questions and.

I want to just thank our employees, our customers and our partners for another great quarter and I wish all of you to be safe out there and we'll talk to you next quarter. Thank you.

Ladies and gentlemen, thank you for participating this concludes today's conference call.

Yeah.

[music].

[music].

[music].

Good afternoon. My name is Latif and I will be your conference facility at this time I would like to welcome everyone to Intuit fourth quarter and fiscal year 2021 conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key what's that I'll now turn the call over to Kim Watkins.

So its vice president of Investor Relations Ms Watkins.

Thanks Latif.

Good afternoon, and welcome to Intuit's fourth quarter fiscal 'twenty 'twenty conference call I'm here with Intuit CEO, he sounded Rd, and Michelle Clutterbuck our CFO.

Before we start I'd like to remind everyone that our remarks will include forward looking statements. There are a number of factors that could cause intuit's results to differ materially from our expectations. You can learn more about these risks in the press release, we issued earlier this afternoon our form.

<unk> 10-K for fiscal 2020, and our other SEC filings all of these documents are available on the Investor Relations page of Intuit's website at Intuit Dotcom.

We assume no obligation to update any forward looking statements.

Some of the numbers in these remarks are presented on a non-GAAP basis, we've reconciled the comparable GAAP and non-GAAP numbers in today's press release.

Unless otherwise noticed noted all growth rates refer to the current period versus the comparable prior year period, and the business metrics and associated growth rates refer to worldwide business metrics.

Copy of our prepared remarks, and supplemental financial information will be available on our website. After this call ends and with that I'll turn the call over to at the time.

Thanks, Ken and thanks to all of you for joining us today.

Had a very strong fourth quarter capping off an outstanding year.

Full year revenue grew 25%, including the addition of credit Karma.

Total revenue growth was fueled by 16% growth for the small business and self employed group and 14% growth for the consumer group, while credit Karma had a very strong year delivering another record quarter in Q4.

I'm buying platform revenue, which includes Quickbooks online turbotax online and credit Karma grew 39% to $6.6 billion in fiscal year 2021.

<unk> 18 points from the addition of credit Karma.

I'm proud of what the team has accomplished this year and our game plan to win remains durable let.

Let me now turn it over to tax this.

This year marks our fourth consecutive year of double digit revenue growth. We've built a durable strategy and we've made outstanding progress this year with customer growth of 6% and our share of total returns up approximately one point.

We extended our lead in to do it yourself category by focusing on Underpenetrated segments, including Investor customers, where we tripled the growth rate from last year.

We continue to transform the $20 billion assisted segment with Turbotax live accelerating total customer growth by nearly 100%.

We have a highly predictable model and our platform with significant runway for growth as we accelerate innovation.

Recently, we announced plans not to renew our participation in the IRS free file program, we expect no impact to revenue from this decision.

I wanted to make sure that you understand how this decision fits within our overall strategy.

<unk> offerings are critical part of our strategy to serve and grow with customers over time offering benefits the power their prosperity.

Intuit has delivered nearly 100 million fee tax filings over the past eight years and with nearly nearly 90% of those free tax filing is coming outside of the IRS free file program.

Looking ahead with no IRS free file program constraints customers can enjoy all of the innovation, we have to offer on our turbotax credit Karma and men's platform.

Our AI driven expert platform strategy and five big bets are driving strong momentum and accelerating innovation across the company.

These big bets, our focus on the largest problems our customers face and represent durable growth opportunities for them to us.

As a reminder, these big bets are revolutionize speed to benefit.

Connect people to experts.

Unlock smart money decisions.

Be the center of small business growth and disrupt the small business mid market.

Today I'll highlight the notable progress we've made this quarter on three of these big bets and we will provide a detailed update on all five big bets at Investor Day next month.

Our second Big bet is to connect people to experts, we're solving one of the largest problems our customers face lack of confidence by connecting people to experts virtually with turbotax live and Quickbooks live with.

With Turbotax live we're transforming that $20 billion assisted category by providing 86 million filers, who have previously relied on in person assistance the opportunity to access tax experts to help them do their taxes for complete their return digitally.

This expertise provides confidence for consumers and creates a halo effect for our entire turbotax experience.

The Turbotax life funnel was strong this season.

Customer awareness grew over 20% and turbotax live customers new to Intuit grew more than 100%.

Our full service and do it for me offering attracted new customers from the assisted segment at a rate nearly 25% higher than our turbotax live to do it with me offering.

Our third big bet is to unlock smart money decisions with credit comments data platform and powerful network effects, we're making progress towards our goal of creating a personal financial assistant that helps consumers find the right financial products, but more money in their pockets and access financial expertise and advice.

To deliver on this goal of our strategic focus is to grow the core including credit cards, and personal loans expand growth verticals, including home loans auto loans and insurance <unk>.

And developed emerging verticals focused on digital money offerings, such as savings and checking accounts.

Credit Karma also provides an additional monetization engine, increasing our combined wallet share with both free and paying customers.

Credit Karma achieved another record high revenue quarter in Q4, but the number of members, reaching a new all time high field, partly by the Turbotax integration and monthly active users and frequency of member visits remained strong.

Within the core credit card and personal loan revenue achieved another record high on a combined basis, reflecting an increase in transactions per member.

The growth verticals also achieved an all time revenue high again this quarter, reflecting strong momentum in auto insurance, followed by home loans and auto loans.

And we're developing the emerging verticals by emerging verticals by focusing on innovation with credit Karma money.

Part of our digital money offering.

Just this past month or just this month, we announced the integration of Quickbooks online payroll to deliver a better checking experienced a portion of our small business employees that help them manage all aspects of their financial lives all in one place.

These results are evidence that successful innovation drives credit Karma members to the platform, creating more opportunities to connect them with products that are right for them, resulting in more monetization opportunities for intuit.

The all time highs, we achieved are driven by focused innovation and both bolstering our proprietary AI powered lightbox technology.

And investing in growth verticals, such as home and auto as well as pent up demand from our partners.

White box enables credit Karma to present offers the members have a higher likelihood of approval.

Partners at usage of Lightbox in Q4 is now at an all time high with over 50% of credit card and over 40% of personal loan transactions flowing through versus less than 40% and 20% a year ago.

This is the power of a network effect solving a two sided problem, we expect pent up demand across our core verticals to taper this coming year. After a very strong year of investments by our partners returning to pre Covid investment levels I am very pleased with our progress and excited about the upcoming innovations.

I'll end by circling back to our first big bet, which is our foundational bet, so revolutionize speed to benefit for our customers.

Our goal is to put more money in our customers' pockets, eliminating friction and deliver confidence at every touch point by using AI and customer insights.

This year, we accelerated our use of AI, increasing the number of models deployed across our platform by nearly 50% saving our customers millions of hours of work.

Our application of AI has dramatically increased the number of experiments, we ran by more than 35%. This year made it easier for our turbotax customers to never enter data saving millions of hours of manual entry and monetize our payroll offering tripling released velocity.

We are very pleased with our results and remain confident in our game plan to win accelerated by digital tailwind.

Across all of our big bets, we're building momentum and accelerating innovation, which we believe positions us well for durable growth in the future.

We will continue to invest aggressively including in key talent to drive even faster innovation going forward now, let me hand, it over to Michelle.

Thanks <unk> good.

Good afternoon, everyone for the fourth quarter of fiscal 2021, we delivered revenue of $2.6 billion GAAP operating income of $402 million versus $483 million last year, non-GAAP operating income of $715 million versus 616 million.

Last year GAAP diluted earnings per share of $1.37 versus a dollar and 68, a year ago and non-GAAP diluted earnings per share of $1.97 plants versus $1.81 cents last year.

Turning to the business segments, and the small business and self employed group revenue grew 19% during the quarter and 16% in fiscal 2021.

On line ecosystem revenue grew 30% in the fourth quarter and 26% for the year.

With the aim of being the source of truth for small businesses, our strategic focus within small business and self employed is threefold grow the core connect the ecosystem and expand globally.

First we continue to focus on growing the core Quickbooks online accounting revenue grew 28% in fiscal Q4, driven mainly by customer growth mix shift and higher effective prices.

We continue to focus on connecting the ecosystem online services revenue, which includes payments payroll time tracking and capital grew 35% in fiscal Q4.

Within payments revenue growth reflects ongoing customer growth along with an increase in charge volume per customer.

Within payroll, we continued to see revenue tailwind during the quarter from growth in payroll customers and a mix shift to our full service offering.

During the quarter, we continued migrating customers to our new full service lineup, which added approximately five point the online services growth.

We're also seeing the number of employees per customer back to pre pandemic levels.

Third our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q4.

Total international online revenue grew 47% on a constant currency basis.

We believe the best measure of the health and success of our strategy and online ecosystem revenue growth, which we expect to grow better than 30% over time.

This is driven by 10% to 20% expected growth in both customers and <unk>.

Desktop ecosystem revenue grew 5% in the fourth quarter and 4% for the full year.

Quickbooks desktop enterprise revenue grew mid single digits in fiscal 2021.

Consumer group revenue grew 14% in fiscal 2021 above the high end of our longer term expectation of 8% to 12%.

Fiscal 2021 was the fourth consecutive year of double digit revenue growth for the consumer group.

Turbotax units grew 6% this season.

There are four primary drivers in our consumer business.

Note that these metrics exclude approximately 8 million stimulus filing plus season.

This data reflects the season through July 31, 2021 versus the prior season and through July 31.2020.

The first is the total number of returns filed with the IRS, which we estimate will be up approximately 3% this season higher than our prior estimate of up approximately 1%.

The second is the percentage of those returns filed using do it yourself software.

We estimate the DIY category share of total IRS returns was down slightly this season versus our prior estimate of approximately flat.

The third driver is our share.

Our share of total tax returns expanded approximately one point to 31% this season and our share of the DIY category grew approximately one point.

Our total share excluding free fall customers. This season was approximately 29%.

The fourth is average revenue per return, which increased again. This season. This growth reflects a stronger contribution by turbotax live and mix shifts to our premier offering which is used by investors.

We estimate our retention rate rose slightly year over year, excluding filers seeking stimulus payments last season that didn't return again this season and we're pleased with these results.

Including these filers, we estimate total retention was down approximately two points.

Turning to the protein next group, we reported $517 million of revenue in fiscal 2021 up 5%.

Moving on to credit Karma revenue was $405 million in Q4, another all time high reflecting record highs for both the core and growth protocols.

Sequential growth predominantly reflects strength in credit cards and personal loans as transactions per member increased.

That's the science here at earlier, we expect pent up demand across our core vertical to taper sometime in fiscal 2022. After a strong year of investment by our partners we.

We remain excited about the opportunities ahead for this platform.

Turning to our financial principles, we remain committed to growing organic revenue double digits and growing operating income dollars faster than revenue.

As I've shared before and we leaned into our platform strategy, we see the opportunity for margin expansion over time.

We've taken a disciplined approach to capital management investing the cash we generate in opportunities that yield an expected return on investment greater than 15%.

We continue to reallocate resources to top priorities with an emphasis on becoming an AI driven expert platform.

These principles remain our long term commitment.

Our first priority for the cash we generate is investing in the business to drive customer and revenue growth, we consider acquisitions to accelerate our growth and fill out our product roadmap.

We return excess cash that we can't invest profitably in the business to shareholders via both share repurchases and dividends.

We finished the quarter with approximately $3.9 billion in cash and investments on our balance sheet.

We repurchased $467 million of stock during the fourth quarter and $1 billion during fiscal 2021.

The board approved a new $2 billion repurchase authorization, giving us a total authorization of approximately $3.3 billion to repurchase shares.

Depending on market conditions and other factors our aim is to be in the market each quarter.

The board approved a quarterly dividend of <unk> 68 per share payable October 18th 2021. This represents a 15% increase versus last year.

Moving on to guidance, our full year fiscal 2022 guidance includes revenue of $11.05 billion to $11.2 billion growth of 15% to 16%, including a full year of credit Karma.

GAAP earnings per share of $7.46 to.

To $7.66.

Non-GAAP earnings per share of $11 five to $11.25.

We expect a GAAP tax rate of 20% in fiscal 2022.

Note that our revenue guidance for credit Karma of 134, 5 billion to $1.38 billion translates into 18% to 21% growth. If we had a full year of credit Karma revenue during fiscal 2021.

I'd like to provide some additional context around our operating margin expectations.

As I've shared before we continue to see opportunities to leverage the platform and drive margin expansion over time. However.

However, our guidance implies GAAP operating margin declined just over two points in fiscal 2022 versus fiscal 2021.

This reflects the impact of the credit Karma acquisition, along with investments were making in stock compensation to attract and retain talent.

We are confident these are the right decisions to drive long term growth.

On a non-GAAP basis, our guidance implies operating margin in fiscal 2020 to expand approximately 60 basis points.

As I shared last quarter fiscal 2021 was a very unique year as we took a conservative approach to investment during the first half of the year. When we were deep in the pandemic and then the business started to bounce back more quickly than we anticipated in the second half.

Our fiscal 2022, non-GAAP operating margin implies an average appoint of expansion each year since fiscal 2019, even though our initial guidance. After closing the credit Karma acquisition included a negative two point non-GAAP operating margin impact.

We continue to see margin expansion opportunities ahead.

Our Q1 fiscal 'twenty 'twenty two guidance includes revenue growth of 36% to 38% GAAP earnings per share of 14 to 19.

And non-GAAP earnings per share of <unk> 94 to 99 cents.

You can find our full Q1 and fiscal 2022 guidance details in our press release and on our fact sheet.

And with that I'll turn it back over to Suzanne.

Super Thank you Michelle.

Proud of the team and always accomplished together and I'm optimistic about the future. We have a large addressable market with digital with <unk> that include a shift to virtual solutions acceleration to online and omnichannel capabilities and digital money offerings.

With our strategy of becoming an AI driven expert platform and five big bets, we are positioned well for accelerated innovation and growth.

Let's now open it up to your questions.

Thank you, ladies and gentlemen, if you would like to ask a question. Please press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key.

Our first question comes from the line of Kirk <unk> of Evercore ISI. Your line is open.

Oh, yeah. Thanks, Thanks, very much and congrats on a great fiscal year. She found in the press release, you guys called out sort of online payments and payroll is two really important growth factors for small business. I was wondering if you could just unpack those a little bit more what are you seeing there and how sustainable do you think those trends are around those two.

Parts of the offering thanks.

Yes, Thank you Curt and good to hear from you you know I will just take us back to several years ago. When we talked about the importance of having a platform that really allows our customers to not only grow their business, but to be able to manage their money and ensure that they are compliant and you know we've been heavily investing.

In payments, making it very easy for our customers to discover making sure that we provide them with choice.

Accelerating our innovation in areas like instant deposit getting paid upfront those sorts of things and you know that along with our investments in payroll.

<unk> areas, where we've really focused on making the experience far better innovating in things like same day payroll or next day payroll the shift to full service, where we are experts to help run your payroll and help you with your taxes. Those are just of course, two very big and important illustrative examples where those.

Innovations are really.

Continuing to accelerate and beginning to pay off especially in a time, where we have digital tailwind where you have customers that are looking to move online do more of their stuff online if they're already online and that is starting to pan out when you look at our overall services revenue, whether it's payroll payments time tracking all of those.

Areas are contributing and I think to your question. Yes. This is sustainable you know we are continuing to become that platform that customers look through to be able to run their business. Our innovations are starting to pay off and we're not standing still our innovations are in fact accelerating and we would.

<unk>.

I expect that will be there for our customers and and grow with them and I think last thing I would say, especially with our move into the mid market, where we're starting to serve larger customers. Those are larger transactions and as we continue to penetrate non consumption on the mid market. We would continue to see that pay off.

That's great and maybe just one follow up for Michelle just a credit Karma guide I realize you guys called out. The fact that there was a bit of pent up demand on the back half. This year your fiscal year, how should we think about that in terms of just the cadence of the growth over the course of the year.

It's a little bit lumpy given the yeah, we don't have full sort of year over year comps, yet, but I was just kind of curious how we should maybe think about either first half second half or any color around that would be helpful. Thanks.

Hey, Curt Thanks for your question yes.

We're pretty excited about credit Karma and as we continue to look for where in Q4 was just you know theyre all time high for revenue and so we felt really good about that as we see strength in both credit cards and personal loans and.

Transactions per member increasing them, yes, you're right as you heard it's a content.

Didn't see some of the pent up demand, we expect that will taper and fiscal 2022, we had a pretty strong year of investment by our partners and so we do expect that to return to more pre COVID-19 investment levels as to how you might think about that across the year, you know theres not a whole lot of seasonality within CK.

So, but we obviously, we haven't guided the individual quarters, except for Q1.

But we are pretty excited about what we see and we think theres still a lot of opportunity for credit Karma next year.

Super Thanks very much.

Thank you.

Thank you. Our next question comes from Ken Wong of Guggenheim Securities. Please go ahead great.

Great. Thank you for taking my question.

The sentiments on a strong year.

First maybe just touching on payroll I think Michelle you mentioned five points of growth contribution on the online services side that should we think of this as a tough comp or would you say that we're still very early in driving adoption of full service and we could potentially see this be additive longer term.

Okay.

Oh, I'm, sorry, I wasn't sure if that was for me.

Got you.

Yeah.

Yes.

I would answer that question.

I'd be I'd be happy to the diamond and that Michelle Please.

Don't hesitate to jump in as well.

First of all I would just take you back to <unk>.

Our longer term expectations is to deliver 30% online revenue growth and theres always going to be puts.

Puts and takes relative though payments and payroll and accounting revenue. So please let your sort of Uber compass be 30% online revenue growth with that said you know as I mentioned earlier as I was answering <unk> question.

We are seeing the impact of our innovation pay off and more and more of our customers are migrating to full service payroll more of our customers are actually wanting to get started on full service payroll because of the capabilities that it has and it comes with expertise to help them solve the very problem that frankly is the biggest problem that that.

That is answer and that is about confidence. So we have runway ahead of us can when it comes to payroll and I would just say your company should be 30% online revenue growth.

Got it Fantastic and then and then just a quick follow up on the tax side.

At a high level any any.

Possibly share what some of the components of that 10% to 11% consumer growth is going to be coming from next year.

Yeah, Kevin will of course unpack this a more detailed level at our upcoming Investor Day I would just tell you that I am delighted with our continued strategic progress.

And that will really feed into our future growth, which I think is the element of your question. What do you mean, when you think about our performance I know I'm repeating some of the stats, but I think they're worth repeating.

One we increased our total share of IRS returns by one point.

The two areas that really matter most that we're focused on underpenetrated segments and transforming the assisted segments. We saw really superb results, our overall investor volume tripled year over year.

Turbotax live awareness increased 20% our total customers grew a 100%.

Our new customers to the franchise from Turbotax live grew over 100%.

And with our full service offering it actually attracted new customers from the prior year assisted segment at 25% higher rate than Turbotax live do it with me and our retention rate stayed flat to a little bit up overall, so when you look at all the key sort of metrics Doc.

Knock on wood, it's very very healthy and we expect that to inform next year's growth and we do assume by the way that IRS returns is going to be about flattish next year. So that's probably one important.

Assumption, that's worthwhile sharing but this is just a continuation as you've probably heard me say multiple times, where on a 10 year plus run in these in these.

Opportunity areas, we're focused on in next year I was just going to be another sort of important pivotal year in our quest to transform assisted and.

Penetrated the Underpenetrated segment.

Great Fantastic what guys alright.

Alright, Thank you Ken.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your question. Please.

Excellent. Thank you guys for taking the question and Echo the congratulations really strong end to what was a pretty remarkable fiscal year for all the team at Intuit I wanted to dig into the FY 'twenty to guide a little bit, particularly around small business, Michelle you've been talking about sort of a return to <unk>.

30% plus growth in the online ecosystem started to be equation, but if I'm doing my math right and that's probably a big part of the equation here, if I could actually do math.

If I'm doing my math, right and we're growing online, 30% plus that would imply with your guide that desktop is actually now shrinking and down 10% in FY 'twenty, two or 10% plus is something changing in desktop or am I, just doing my math wrong or sort of how should we think about that balance between sort of what had been a very durable sort of revenue.

Stream in desktop and a ramping online business.

Hey, Keith Thanks for your question well first of all I'd say you know we've been really excited about how small business has performed this year and you know obviously you can see with.

With next year with our guide of 12% to 14% we feel that it will be strong next year also.

So we feel that you know you really need to continue to look at online ecosystem revenue growth and we do expect that to be 30% or better over time, and we haven't guided to it and you don't do it quarterly, but we do expect it to be there over the longer term.

It's being driven by a 10% to 20% growth in both customers and the RPC now when I go to the other side, which you were asking about around desktop.

Desktop we have overtime. We you know the last few years, we've seen some we've seen some growth in it and obviously you know this past year in 2021, we saw 4% growth but.

But we do anticipate that that will just continue to decline over time, we've got more and more customers as they come in they choose the online versions and so you've got eight nine out of 10 customers that come in and choose to be Oh, So that's where I would help you with your math on that.

Got it and just to be clear is there any kind of structural change in terms of trying to more aggressively shifted people from the desktop version to the online version or is this just sort of normal course business and this is the trend line that you've been seeing over time.

Yeah. We have you know we've chosen not to force people to move onto online. We do think that there is a much better value proposition and they just have a much better experience if they're using our online.

Product, but we want them to use whatever works for them, but we have seen more and more people as they choose desktop, though choosing the plus product where they have the subscription.

So that is part of what we what we've been seeing.

Got it excellent. Thank you so much guys.

Thank you Keith.

Thank you our next question comes.

Comes from Alex Zukin of Wolfe Research Your line is open.

Hey, guys. Thanks for taking the question I Echo again, all the congratulations.

I wanted to start with just digging a little bit on credit Karma since the growth is so much better than I think we've been modeling in anybody's related I'm thinking I wanted maybe unpack both in the quarter.

So in the guidance what are you starting to see synergies that you're realizing whether its.

Monetizing your the Intuit free user base with credit Karma or whether its cross selling to the carbo base and then I have a quick follow up on the margins.

Sure Alex Great Great to hear from me and thank you for your.

I'll try and comment.

On credit Karma, Let me just I'll briefly start at the top in terms of what we are seeing first of all the.

The accelerated innovation that we are seeing with credit Karma is really paying off and that accelerated innovation is how we're using our combined data to be able to deliver personalized <unk>.

Leveraging our life box for our customers.

Then ensuring that we're providing relevant offers to customers in the areas that they need it most and now we can provide multiple relevant offers whether it's cards.

Personal loans and auto insurance.

Home loans and beyond.

But I think then more importantly, then when they the offers in front of them, we have the ability to actually help them with the.

The potential of their approval and make it very easy when they click to actually get the offer and so those those are all critical areas of innovation that are really paying off and I think it's a testament to the platform.

That win.

Experience our partners decided to really go after customer acquisition.

That they invested.

Good chunk of their dollars on the platform and it just demonstrates the the network effect and the power of the data and the trust of the members that we have so that's the first element that we just believe we will.

You know continue given our accelerated innovation because our ultimately our penetration rate may be one of the highest in credit cards, but it's one of the lowest when you look at auto insurance and we have so much room for increased our wallet share in terms of synergies Alex we're actually.

<unk> quite bullish about the possibilities into the future.

And I would want you to think about those synergies into the future and there are really several areas of synergy one is really making credit karma benefits part of the entire turbotax experience, that's one big opportunity the.

The other big opportunity is making it seamless and contextual in terms of turbotax as part of the credit Karma experience to be able to do your taxes and then third what we just announced which is credit karma being part of the payroll experience, where our payroll customers can actually deposit their monies into a free checking.

Account and be able to access their money early overtime, if they wish so those are significant opportunities because there you're talking about.

Millions and millions of turbotax customers payroll customers and of course over well over 100 million credit Karma customers that we're gonna launch turbotax.

Savings this past year.

Ill remind us it feels like a long time, but we just closed credit Karma in December these past eight months, we have been experimenting.

With incredible purpose incredible speed and incredible intention and it's informed what we are rolling out and what we're doing in the year to come.

He was just saying in terms of those things turning into sort of material customer and revenue growth. There we're not counting on that in the near term are counting on that more on the midterm because we want to really continue to nail the experience in creating ecosystem benefit across all of our members. So that's the way I would want you to think about not only what.

Youre seeing in credit Karma, but the growth rates that are ahead of us.

That's super clear and I appreciate the level of detail in that answer Susana Michel maybe for you I know myself I was dealing with a lot of questions around margin leverage potential on the guide versus the level of investment that you guys.

Clearly see as an opportunity in the business, but I think you've delivered.

I think it was their best incremental operating margin leverage guide in the last few years at least so I want to unpack, both what youre trying to tell us with the ability to deliver both growth and margin leverage at this scale.

Packet.

From a gross margin versus Opex savings perspective, right I know I remember a few years ago. There was fear with lives, particularly coming into the model that it would be gross margin dilutive and yet the gross margins have actually improved this year. So I wanted to understand a little bit about when you think about that incremental margin leverage where is that coming.

From and how should we think about the durability of that opportunity.

Great Great question.

Q.

First of all thank you for acknowledging that the margin.

Delivery, we have this year.

I thought you mentioned gross margin and we have continued.

And to say that we expect gross margin to remain fairly flat over time.

We did have a lot of questions as we got into the Turbotax live business as to whether that was going to deteriorate margins, but it has remained flat.

Flattish over time, I mean that was the last expectation we gave that I gave last year at Investor day.

And you know a big focus is obviously then on op margin and we see the opportunity there and continue to see opportunities.

To drive margin leverage really as we become more and more of a platform company FY 'twenty, one was a little a little unique in that.

With the pandemic in full swing at the beginning we weren't exactly sure. How you know exactly how things are going to play out and we were a little bit more conservative with investments and then the business ended up bouncing back much more quickly than we thought so as I mentioned earlier you know when you look over all the way back from 'twenty.

19, you we've got about on average a point of margin expansion.

And so we feel really good about that and especially with our guide looking forward 60 basis point. So when I think about where we will see the expansion, though it is really all across the businesses.

This is helping us drive it getting leverage whether it's in technology and looking at how we can.

Get rid of duplicate technology in your services more whether it's in customer success and really leaning into our platform there to deliver for all our customers or opportunities we have in our go to market and enabling.

<unk> technology. There. So we do think that we continue to have opportunities to drive that leverage.

Perfect. Thank you guys great job.

Thank you Alex.

Thank you. Your next question comes from Brent Thill of Jefferies. Your line is open.

<unk>.

Second if you could expand on the small business side and what you're seeing on the international approach and the traction.

Beyond the U S and how critical that is to this next year for you.

And maybe just a quick follow up for Michelle on on Quickbooks.

If you can give us an update.

Detraction in any any.

And the trend lines, you're seeing there. Thank you.

Yeah.

Great Hey, Brent just a follow up question to the last question that you asked about trend lines were those just a general trend lines that we're seeing in small business I want to make sure. We captured your question correctly more specific more specifically to quickbooks online.

And tore.

<unk> life, My my apologies Quickbooks live.

Got it okay, great. So let me start with your.

Your question around the international you know first of all.

As I mentioned in the last earnings call and I think the same trend continues.

One.

Online that's unchanged as small businesses across the globe are still recovering some have recovered two back to pre COVID-19 levels. Some have actually accelerated their business because they change the model, but at least what we see in our sort of data, 20% ish of small businesses.

Are still struggling and struggling as defined by they have you know.

Net deposits are down over 25%.

So I think it's important to just a.

As a general perspective to recognize that small businesses are in general still in recovery mode with that said our platform has become more critical than ever.

And.

The digital nature of our platform to be able to run your business grow your business manager your cash flow and be compliant is more important than ever which is why based on our innovation overall, we're seeing this acceleration.

And then if I put that in context of geography, I would say U S. As you know.

Really a bounce back.

In terms of the usage of our platform and in fact, an acceleration probably above all it has happened in the U S. I would say you know Canada is sort of next in terms of the recovery and I would just put you know countries like the UK, France, Australia.

As you know really being much much slower.

Lower in the recovery and really the reason is.

As you've seen there's a lot of open shutdown open shut down.

And that's really impacted just the sentiment of both accountants and small businesses, but even in that context, it's actually quite exciting that we delivered 47%.

Revenue growth in constant currency last quarter, and 43% for the whole year.

But with that said you know we're just we're assuming a much slower recovery are international.

Then we are in the in the U S.

Because I think it's just really important that we get out of this health crisis and then once we do we believe the small.

Mall businesses will allow will bounce back much much faster outside the U S International is still important for our future.

But what I just shared is just how we've taken that into account strategically and both are in our.

<unk> in our guidance as we look ahead, and maybe with that I'll turn it over to Michelle to answer your Quickbooks.

It looks life question.

Great Hey, Brian I'd say, you know, we're continuing to make some progress with Quickbooks live and it actually goes back to what I mentioned earlier on the opportunities for our platform leverage because it's actually built on the same platform as turbotax live and that's what enabled us to bring it to market so much more quickly.

Right now, we're still focused on achieving product market fit I'm seeing some early signs here as a way to bring in customers, who are new to intuit. So help us with customer acquisition and we do think that there's a great opportunity for us to use the life product to help penetrate.

Trade non consumption, which as you know is a huge opportunity.

Dominic over this last year has really been an opportunity as we've seen the acceleration to a virtual world and so obviously customers are you know much more anxious to or much more open to using these types.

Experiences and so our platform really enables that.

It it does fall off one of the biggest problems, we have with small business customers, which are confident you'll also see that on the turbotax side too.

I expert interest has continued to remain really strong and so that's been a good thing for us to see.

Types, a few customer pinpoints. We're currently working on is on solving them streamlining and automating document collection.

And then enabling messaging within the offering so customers can more easily communicate with their bookkeeper and then last thing I'd say is you know last year, we launched the setup SKU. So that we could really helps them.

Honest is come in and get set up on Quickbooks and have that confidence right from the get go and we've seen some good success with that.

Thank you.

Thank you Brett.

Next question comes from Kash Rangan of Goldman Sachs. Your line is open.

Hi, Thank you very much congratulations for an exciting finish to the fiscal year. So kind of wanted to get your thoughts on on the small business ecosystem as you look at the business a few years out.

And it looks like clearly the companies, having increasing success with the payroll and payments, but I'm curious with the outages with the small businesses.

This is perpetually understand on my T, but that could be changing with Disney.

Digital transformation, so as you move slightly up market and small business and land bigger deals with quickbooks events.

What are the things that you're learning about that part of the market the huge intuit, particularly well given that you've got a wide range of assets.

Carbon et cetera, So how do you bring those assets to bear in a way that you can get a big chunk of the it spending that is good.

Could it potentially be unleashed in the higher end as you move upmarket into small business ecosystem. Thank you so much.

Yeah, Great Great question, guys and great to hear from you.

I'll take you back to the fact that we have declared which is we truly wants to be the center of small business growth and for US it's really about.

Helping customers grow their business, it's helping our customers manage all of their money flow and it's also ensuring that they can take good care of their employees and be compliant.

Client and I think particularly there are two areas to answer your question as we move up market, but its also relevant one of them is very relevant to just the smaller businesses that that we're continuing.

Continuing to focus on and that is one how do we help you grow your business.

Both are relevant to their businesses.

We serve today, but also very relevant to the midmarket customers and so to be able to manage your your marketing. Your sales. Your services is one element I think the other element, which is particularly important for mid market customers. It's just all their G&A.

And we believe that the the life platform that we've created.

<unk> the engine that we've created will actually help us go beyond a bookkeeping taxes in accounting to be able to focus on some of their how they run their business and particularly with a lot of G&A. So those are the two areas.

Wonderful. Thank you so much congrats alright.

Alright, thank you.

Hi.

Next question comes from City Pentagon Mizuho Your line is open.

Thanks for taking my question and I won't say called my congratulation for grid into this challenging year.

I wanted to ask you about you know follow up on two of Turbotax, mainly turbotax life full service. This.

Is the first to your you guys. Lawrence I'm wondering like what have you learned this year and hopefully next Susan maybe it will go back to normal let's say like so what's your expectation baked into your guidance in terms of adoption of all full service.

Yes, hi sit in and thank you for your kind words.

I would I would just start with really this has been a very intentional multiyear effort to have one platform across turbotax, where you can do your taxes yourself.

You can get assistance to your taxes or will do your taxes for you and a platform where you can choose to go back and forth.

First within the year or in a multi year period, we want to be the platform for your taxes and of course, obviously beyond that with the capabilities that we have with credit Karma second element I would say is what we learned this year going to full launch is that full service offering has a halo.

Hello effect and build confidence offer customers, which is why we were able to attract.

New customers from prior assisted method at 25% higher rate into full service because they know that they can digitally provide us all of their data and we have excellent experts.

To be able to take very good care of them. So that's the biggest learning that we had it was a hypothesis that we had from prior year experimentation and we're going to continue to.

Scale that as we look at is just a very critical part of our platform and as I've said before we believe that we're in the very very early innings of a 10 year plus opportunity here.

And we just see full service playing a very important role as we look ahead.

That's great. Thank you Susan Yeah. Thank you.

Our next question comes from Scott Schneeberger of Oppenheimer. Your line is open.

Thanks, very much congratulations from me too.

Two tax questions the first.

Scott if you could I guess to use this opportunity to describe a little bit more the decision process to exit free file Alliance and then I think you were Michelle mentioned should not have a revenue impact I'm just curious any thoughts on a margin impact for the go forward. Thank you.

Yes sure.

First one since you Scott good to hear from you you know first of all just as a reminder, you know we were one of the founding members of the free file Alliance program with the IRS and it has been frankly, an incredible partnership with the IRS and the private industry and when we when we really found.

Sure. Thanks, This program with the IRS, where there was really two goals.

I'll simplify it are the really the two goals, where we wanted at that time to ensure that electronic filing was used by more than 80 plus percent of all consumers and we wanted to make sure that free filing was available to 80%.

Plus of consumers.

And when you forward the clock mission accomplished on both in fact, we've exceeded both metrics as an industry on both fronts.

And you know free has now become prevailing across the entire industry and so we felt that the time was right now that the mission has been.

Accomplished to really sort.

Sort of change our approach to how we can deliver benefits for customers free will always be an important part of our strategy, but there are constraints when you come in through the free file Alliance program and those constraints are for instance, we can't provide you benefits on other platforms like our free credit Karma platform and so as we look ahead.

Not only will we be able to provide free tax offerings to our customers, but as they grow we grow with them. They can benefit from credit Karma that can benefit from mint. If there are small business. They can benefit from quickbooks things that we ultimately couldn't talk to them about if they were part of the free file Alliance program. So mission accomplished and that's the reason for.

For why we chose to get out and I just want to state again, the partnership with the IRS has absolutely been phenomenal and with private industry to achieve the goals of FSA.

Thanks, and then just any any thoughts on margin or on the go Oh sure.

Yeah, My apologies I failed to answer.

Without knowing that the margins no impact to revenue and some of the.

The resources actually were that were on FFA, where all reallocating them to you know really important work and turbotax. So there's no impact.

Understood and just a real quick follow up from an earlier question you mentioned, a flattish IRS industry growth anticipated for next year.

Is that because we saw what looks like 3% this year and just the tough comp or any other factors that go into that.

Interesting.

Yeah, you know Scott I'll, just start with it it's an assumption we make an assumption every year. So what we think it will be because it's important for planning and because there has been two years of pretty strong.

<unk> total return growth. We're just assuming next year is going to be you know flat would it be wrong it could grow but our assumption going in is that it's flat.

Thanks very much appreciate it.

Absolutely Scott.

Thank you. Our next question comes from Michael <unk> of Wells Fargo. Your line is open.

Hey, there.

Thanks, Good afternoon, and congrats on the strong results of the year going back to credit Karma, but just wondering if there's anything you can add around how much visibility you have there been framing targets for the upcoming year relative to other segments of your business I think the commentary is clear on the Q4 strength, but just wondering how to parse between 18% to 21% growth you referenced.

References.

Solid starting point and in a guy that's modestly down relative to the run rate that segment just delivered.

Yes, sure Michael and thank you for I know you've been waiting for a while in the in the queue here.

We have very good visibility around and I'll just be specific we have well over.

100 million customers.

We see the monthly active users, which is growing quite nicely.

We actually based on the data that we have and.

How we are leveraging that data with our customers' permission as part of light box and a number of partners that come into life box, we actually can see spend behavior as we can see our customers activity.

We can see their financial situations and our.

Do you need to be better positioned to be able to offer them products that are right for them. So when we see our member growth when we see our member activity.

Number of transactions, which is the number of offerings that we now have the activity of our partners, which we're very.

Engage lift because our partners see this platform as a great growth opportunity for them and the fact that we continue to be very intentional that we are an agnostic platform. We have pretty good visibility into you know into the future with with credit Karma and and we feel of course, you know good and confident about the guidance that we provided.

That's.

Thanks for the Investor day.

Thank you Michael.

Thank you. Our next question comes from Brad Reback of Stifel. Your line is open.

Great. Thanks, very much Susana I believe earlier in the call you talked about retention rates in turbotax being flat year over year, what types of things.

Things have to happen to see that tick up.

Yeah. Thank you Brad good to hear from you.

First of all with with all of the sort of movement in the last couple of years with the pandemic and the growth that we've experienced.

One we're actually quite pleased with the retention rates.

I would tell you the biggest lever around retention is what we are doing with turbotax live which is ensuring that our customers know and understand that there is an expert to help them every step of the way, but I think secondly, we haven't talked much about this and we'll spend a little bit of time on this.

Are they is you know.

How we are now leveraging our data to never lose a customer and I give a lot of credit to our turbotax team, where we've been working on this for several years, it's not a new.

A body of work, but the shift from just a engaging you once a year when it's tax time.

And best of luck to actually understanding and leveraging what we know about you if something has changed in your life. If you bought a house. If you bought a car. If you got married if you've got divorced if you move from one state to another it's actually engage you sort of year round relevance to giving you confidence that those changes can be addressed by us. So it's the combination of levering.

Leveraging data.

Fly AI for that data with our models to understand who could be at risk and then engaging those customers proactively and by the way depending on their needs not just what turbotax that could also be engaging them with the benefits of credit Karma. Those are the two big things data and AI and the capabilities of Turbotax live engaging customers.

Levering year round, where.

We are quite confident over the long term, we can continue to increase our retention rates.

And then just one quick follow up high level any sense of life DIY went backwards this year.

You know Brad the numbers are so lumpy what's happened the last couple of years with so many people.

Customers don't have to file their taxes came in.

To do their taxes to get a stimulus checks and so what really matters are some of the underlying under lying.

Numbers that we provided and the fact that we gained share overall IRS returns and within DIY.

Even though the.

They went down but it's just a walk in the number of stimulus customers that came in that ultimately did not to file their taxes again this year. So.

That's that's the reasoning is we look at all the cohorts.

Great. It makes total sense, thanks very much.

Hi, Brad Thank you.

Our next question comes.

Sterling Auty of Jpmorgan Your line is open.

Great. Thanks for taking my questions. This is Jackson ader on for Sterling Tonight.

The first one is on the the credit Karma.

Where you're expecting maybe to see some of the pent up demand return to more normal levels.

So I'm just curious whether that is more driven on the in the core markets or some of the emerging market.

Yeah. Thank you Jackson, it's primarily you know origination and credit cards and personal loans. One one data point is public the other one is in our own data that we see you know they were up double.

It's strongly.

Compared to pre Covid levels, and we believe those are just going to you know at some point paper.

In the back half of the year and it's primarily from what we see in credit cards and personal loans and it's really our innovation on the platform that will continue the the the guidance growth that we provided of 18.

Only 1%, but it's really in credit cards and personal loans that we believe originations will go back to pre COVID-19 levels, which were strong. It's just there was pent up demand so grew double digits.

Okay, perfect and then a follow up Michelle.

The Turbotax Premier SKU, I think being better than maybe you had expected entering.

Can you just remind us what goes what does premier.

Premier is retention rate look like relative to maybe the overall turbotax platform.

Yeah.

Hey, Jackson. Thanks for the question they are premier as you know we've.

We've done a good amount of work on somebody over the last couple of years and specifically yes.

And you our investors and so obviously, we continue to see growth. That's one of the Underpenetrated segments that we've focused on and we have not provided any detailed information on our retention rate.

Below are the higher level for turbotax. So that's just not.

By area that we really don't then two just because of the competitive nature.

Alright fair enough. Thank you.

Thank you Jackson.

Thank you. Our next question comes from Brad Sills Bank of America Securities. Your line is open great. Thanks, guys and I'll Echo the congratulations.

Not in life finished the year.

One of the things that stands out to me is the outlook for small business you know very very strong relative to kind of how you provide outlook heading into the year. Historically. So my question is is there a price increase in there and just more generally if you think longer term historically the company has raised price commenced.

With more value that's delivered in the product for Quickbooks, how do you feel about your ability to just.

Monetize more and get more of the market with just more and more value added features coming over the long term what are some of those things that you think might enable you to take take price over time. Thank you so much.

Thank you Brad.

For your question and your kind words.

Let me make a couple of comments one the really are the majority of our growth is coming from customer growth and mix and when I say mix. It's milk for instance, Quickbooks advanced which goes after the mid market.

Type mixes.

It's really not driven by price, although we have.

Increased price this year and it's the first time, we've done it.

Over the last couple of years.

And I would tell you that if we run tests and it's exactly as you said, if we look at our price value equation, we have very clear pricing principles and with experimentation and data we choose when to.

To move forward with our.

Price increase and I would tell you that our innovation just in the last couple of years literally last year, our innovation across the company, which include small business doubled year over year in terms of and we measure that by code deployment and impact and it doubled again this year.

And that shows up in how.

We leverage data and AI across the platform to deliver insights to customers. It shows up in payments and payroll and time tracking and then what we've announced which is moving up market several years ago with Quickbooks advanced.

Being able to serve product based businesses with Quickbooks Congress, it's being able to go after non consumption with.

Quickbooks live which is a higher price tag for customers and then our disruptive offering with Quickbooks cash which is in essence, you can start with a business bank account and be able to run your business through that so just the innovation is is.

I would just say staggering focused on cohorts up.

Customers and going after their needs and with an open platform, we're able to really.

On what matters more to customers and monetize so we believe that capability is one that we'll have for years to come.

That's great. Thanks, so much the sun.

Alright, Thank you Brad.

Thank you our next question comes from.

<unk> of William Blair. Your line is open.

Yeah.

Hey, guys. Thanks for fitting me in just wanted to ask one question on the small business segment and specifically.

Specifically around some of the key metrics there like you know growth too.

Customer additions.

Charge volumes employees and under payroll have you seen any change in in some of those key metrics you track as Covid variance that started to impact various parts of the U S. Thanks.

Yes, Matt. Thank you for your question. The short answer is no we're continuing to.

To see strength.

By industry by geography, given some of the tailwind at our innovation that I spoke about earlier, so what the Delta area being the primary driver of the Covid cases in.

What we're seeing in different states within the U S having different impacts.

We've really not seen an impact.

<unk> results in charge volume number of employees. So the strength remains.

Perfect. Thanks, guys.

Thank you.

Yeah.

Thank you. Our next question comes from Michael Millman Millman Research your.

Your line is open.

Thank you.

<unk>.

Couple of questions.

This year's and next year's guidance because this year's guidance.

That's the lowest semi number related to your conservatism on last years guidance and.

What should we expect over two year to three year range and secondly on.

Last year's Tahar This current year's tax to.

To what extent did you have.

Assisted benefit from people.

Mr.

Understanding are concerned about the stimulus and wanting to sit down and it was a one year phenomenon and we go back to reduced.

As did and increasing do it yourself.

Thank you.

Yeah. Thank you Michael for your question you know a couple of things.

I'll start with your first question, we're very excited about the innovation across the company.

The customer segments were pursuing and the impact of that that we are seeing.

And in that context, we feel very good about our guidance and long term expectations and once it gets to the.

One question and that is the long term, what we will do at Investor day as we do every year is we'll share our long term expectations.

We'll talk about that at Investor day. So if you wouldn't mind, maybe waiting another three weeks, we'll talk about that a little bit more.

And the third part of your question around.

The second one assisted and you know we have a blip from the pandemic I would say the short answer is really no. This year a lot of our a lot of accountants and stores were actually opened I think what youre seeing here is just.

It's the impact from our innovation, it's the raising the awareness that we have life X.

Package available for customers, whether we do it with you or do it for you.

And in that context.

This was not a blip because of the pandemic if anything most places will actually open and this was just based on our strategy and the result of our execution.

Thank you.

They're very.

Experts.

Ladies and gentlemen, I'm not showing any further questions would you like to close with any additional remarks.

Yes. Thank you well thank you very much for the wonderful questions and.

I want to just thank our employees, our customers and our partners.

For another great quarter.

Welcome and I wish all of you to be safe out there and we'll talk to you next quarter. Thank you.

Ladies and gentlemen, thank you for participating this concludes today's conference call.